<PAGE>
===============================================================================

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

                                   FORM 10-Q

(MARK ONE)

<Table>
<C>        <S>
   [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

<Table>
<C>        <S>

         FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

                                  OR

   [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

                  FOR THE TRANSITION PERIOD FROM           TO

                       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 (the "Act") during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes [X]     No [ ]

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

     As of August 2, 2004 there were outstanding 27,507,697 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>
                                PART I
                        FINANCIAL INFORMATION
Item 1.  Financial Statements...............................         1
       Consolidated Balance Sheets (unaudited) -- June 30,
         2004 and December 31, 2003.........................         1
       Consolidated Statements of Operations and
         Comprehensive Income (Loss) (unaudited) -- Three
         and six months ended June 30, 2004 and 2003........         2
       Consolidated Statements of Cash Flows
         (unaudited) -- Six months ended June 30, 2004 and
         2003...............................................         3
       Notes to Consolidated Financial Statements
         (unaudited)........................................         4
Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations................        10
Item 3.  Quantitative and Qualitative Disclosures About
         Market Risk........................................        15
Item 4.  Controls and Procedures............................        16

                               PART II
                          OTHER INFORMATION
Item 2.  Changes in Securities and Use of Proceeds..........        16
Item 4.  Submission of Matters to a Vote of Security
         Holders............................................        16
Item 6.  Exhibits and Reports on Form 8-K...................        17
Signatures..................................................        18
</Table>

                                        i
<PAGE>

                                     PART I

                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                           W-H ENERGY SERVICES, INC.

                          CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                  (UNAUDITED)

<Table>
<Caption>
                                                              JUNE 30,   DECEMBER 31,
                                                                2004         2003
                                                              --------   ------------
<S>                                                           <C>        <C>
                                       ASSETS
Current Assets:
  Cash and cash equivalents.................................  $ 11,606     $ 11,878
  Accounts receivable, net of allowance of $4,285 and
     $4,465, respectively...................................    88,917       80,888
  Inventories...............................................    46,108       37,384
  Deferred income taxes.....................................     5,425        6,600
  Prepaid expenses and other................................     3,287        5,930
  Assets held for sale......................................     5,008       30,652
                                                              --------     --------
     Total current assets...................................   160,351      173,332
Property and equipment, net.................................   212,690      201,176
Goodwill and other intangibles, net.........................   116,545      116,876
Other assets, net...........................................     7,566        9,941
                                                              --------     --------
     Total assets...........................................  $497,152     $501,325
                                                              ========     ========

                        LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accrued liabilities.......................................  $ 26,372     $ 26,388
  Accounts payable..........................................    24,234       16,120
  Current maturities of long-term debt......................        --       10,763
  Liabilities associated with assets held for sale..........     1,273        5,511
                                                              --------     --------
     Total current liabilities..............................    51,879       58,782
Long-term debt, net of current maturities...................   160,310      166,962
Deferred income taxes.......................................    27,239       25,269
Other long-term obligations.................................     2,850        2,852
                                                              --------     --------
     Total liabilities......................................   242,278      253,865
                                                              --------     --------
Commitments and Contingencies
  Shareholders' Equity:
  Preferred stock, $0.01 par value, 10,000,000 shares
     authorized, none issued and outstanding................        --           --
  Common stock, $0.0001 par value, 100,000,000 shares
     authorized, 27,474,972 and 27,400,878 shares issued and
     outstanding, respectively..............................         3            3
  Additional paid-in capital................................   213,758      211,683
  Deferred compensation.....................................    (1,209)          --
  Other comprehensive income................................     6,653        6,667
  Retained earnings.........................................    35,669       29,107
                                                              --------     --------
     Total shareholders' equity.............................   254,874      247,460
                                                              --------     --------
     Total liabilities and shareholders' equity.............  $497,152     $501,325
                                                              ========     ========
</Table>

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

                                        1
<PAGE>

                           W-H ENERGY SERVICES, INC.

     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                  (UNAUDITED)

<Table>
<Caption>
                                           FOR THE THREE MONTHS ENDED    FOR THE SIX MONTHS ENDED
                                                    JUNE 30,                     JUNE 30,
                                           ---------------------------   -------------------------
                                               2004           2003          2004          2003
                                           ------------   ------------   -----------   -----------
<S>                                        <C>            <C>            <C>           <C>
Revenues.................................  $   108,434    $    89,017    $   215,978   $   176,184
Costs and expenses:
  Cost of revenues.......................       63,531         50,219        126,447        97,615
  Selling, general and administrative....       20,350         16,108         41,871        33,227
  Research and development...............        3,305          3,015          6,343         5,568
  Depreciation and amortization..........       11,031          8,708         21,769        17,132
                                           -----------    -----------    -----------   -----------
     Total costs and expenses............       98,217         78,050        196,430       153,542
                                           -----------    -----------    -----------   -----------
     Operating income....................       10,217         10,967         19,548        22,642
Other (income) expense:
  Interest expense, net..................        5,301          1,973          7,569         3,761
  Other (income) expense, net............           (7)           110            (88)           17
                                           -----------    -----------    -----------   -----------
     Income before income taxes..........        4,923          8,884         12,067        18,864
  Provision for income taxes.............        1,896          3,508          4,646         7,351
                                           -----------    -----------    -----------   -----------
     Income from continuing operations...        3,027          5,376          7,421        11,513
     Income (loss) from discontinued
       operations, net of tax............       (1,432)           384           (859)          115
                                           -----------    -----------    -----------   -----------
     Net income..........................  $     1,595    $     5,760    $     6,562   $    11,628
                                           ===========    ===========    ===========   ===========
Comprehensive income (loss):
  Net income.............................  $     1,595    $     5,760    $     6,562   $    11,628
  Foreign currency translation
     adjustment..........................       (2,979)         1,571            (14)          810
                                           -----------    -----------    -----------   -----------
  Comprehensive income (loss)............  $    (1,384)   $     7,331    $     6,548   $    12,438
                                           ===========    ===========    ===========   ===========
Earnings per share:
  Basic..................................
       From continuing operations........  $      0.11    $      0.20    $      0.27   $      0.42
       From discontinued operations......        (0.05)          0.01          (0.03)         0.01
                                           -----------    -----------    -----------   -----------
          Total..........................  $      0.06    $      0.21    $      0.24   $      0.43
                                           ===========    ===========    ===========   ===========
  Diluted................................
       From continuing operations........  $      0.11    $      0.19    $      0.26   $      0.41
       From discontinued operations......        (0.05)          0.02          (0.03)         0.01
                                           -----------    -----------    -----------   -----------
          Total..........................  $      0.06    $      0.21    $      0.23   $      0.42
                                           ===========    ===========    ===========   ===========
Number of shares used in calculation of
  Earnings per share:
  Basic..................................   27,449,217     27,139,096     27,429,731    27,090,912
  Diluted................................   28,174,623     28,084,087     28,134,147    27,970,195
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        2
<PAGE>

                           W-H ENERGY SERVICES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)

<Table>
<Caption>
                                                              FOR THE SIX MONTHS ENDED
                                                                      JUNE 30,
                                                              ------------------------
                                                                 2004          2003
                                                              -----------   ----------
<S>                                                           <C>           <C>
Cash Flows from Operating Activities:
  Net income................................................   $   6,562     $ 11,628
  Adjustments to reconcile net income to cash provided by
     operating activities --
     Depreciation and amortization..........................      21,769       17,132
     Gain on the sale of assets.............................      (5,720)      (3,848)
     Deferred tax provision.................................       3,145        4,616
     Amortization of deferred compensation..................         109          202
     Write-off of deferred financing costs..................       3,123           --
     Amortization of deferred financing costs...............         685          470
     Tax benefit from employee stock option plan............         387          312
     Changes in operating assets and liabilities, excluding
      effects of acquisitions and discontinued
      operations --
       Increase in accounts receivable, net.................      (8,057)      (7,749)
       Increase in inventories..............................      (8,737)      (1,889)
       Decrease (increase) in prepaid expenses and other....       2,641         (322)
       Increase in other assets, net........................      (1,695)        (106)
       Increase (decrease) in accounts payable and accrued
        liabilities.........................................       8,089       (1,678)
                                                               ---------     --------
          Net cash provided by operating activities.........      22,301       18,768
                                                               ---------     --------
Cash Flows from Investing Activities:
  Additions to property and equipment.......................     (36,232)     (29,732)
  Proceeds from sale of property and equipment..............       9,428        6,772
                                                               ---------     --------
          Net cash used in investing activities.............     (26,804)     (22,960)
                                                               ---------     --------
Cash Flows from Financing Activities:
  Proceeds from the issuance of debt........................     181,802       48,263
  Payments on debt..........................................    (199,217)     (46,476)
  Proceeds from the exercise of stock options and stock
     purchase warrants......................................         370          423
                                                               ---------     --------
          Net cash (used in) provided by financing
            activities......................................     (17,045)       2,210
                                                               ---------     --------
Effect of exchange rate changes on cash.....................        (130)       1,155
Effect of discontinued operations on cash...................      21,406       (1,014)
Net decrease in Cash and Cash Equivalents...................        (272)      (1,841)
Cash and Cash Equivalents, beginning of period..............      11,878        9,098
                                                               ---------     --------
Cash and Cash Equivalents, end of period....................   $  11,606     $  7,257
                                                               =========     ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        3
<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 primarily for the drilling, completion and production
of oil and natural gas wells. W-H has the following primary lines of business:
(i) drilling related products and services, which include logging-while-drilling
("LWD"), measurement-while-drilling ("MWD"), directional drilling ("DD"), rental
tools (including drill pipe), down-hole drilling motors and drilling fluids and
(ii) completion and workover related products and services, which include
cased-hole wireline logging, perforating, tubing conveyed perforating and
associated rental equipment, polymers and specialty chemicals, rental tools
(including tubing) and coiled tubing.

  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 for the year ended December 31, 2003 filed with the
Securities and Exchange Commission. 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 six months ended June 30, 2004 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2004.

  DISCONTINUED OPERATIONS

     In March 2004, W-H committed to the divestiture of its maintenance and
safety related products and services segment. Accordingly, this segment has been
included in the Consolidated Statements of Operations and Comprehensive Income
(Loss) as discontinued operations and in the Consolidated Balance Sheets as
assets and liabilities held for sale. On April 20, 2004, W-H completed the sale
of Well Safe, Inc. ("WSI"), one of the two companies that comprise the
maintenance and safety related products and services segment, for cash
consideration of $28.0 million. Additionally, in June 2004, W-H wrote down the
value of the remaining company that made up its maintenance and safety segment
based on independent indications of market value received during the quarter.
The net result of this activity was a loss of approximately $1.4 million
associated with discontinued operations for the quarter ended June 30, 2004.
Summary financial results for this segment are as follows:

<Table>
<Caption>
                                                  THREE MONTHS ENDED   SIX MONTHS ENDED
                                                       JUNE 30,            JUNE 30,
                                                  ------------------   -----------------
                                                    2004      2003      2004      2003
                                                  --------   -------   -------   -------
<S>                                               <C>        <C>       <C>       <C>
Revenues........................................  $ 3,483    $7,772    $13,238   $15,295
Income (loss) before taxes......................  $(2,295)   $  481    $(1,362)  $    43
</Table>

                                        4
<PAGE>

  RECLASSIFICATIONS

     Certain prior period amounts have been reclassified to conform to the
current presentation.

  ACCOUNTING POLICIES AND PROCEDURES

     W-H has not added to or changed its accounting policies since December 31,
2003. For a description of these policies, refer to Note 2 of the consolidated
financials statements in W-H's Annual Report on Form 10-K for the year ended
December 31, 2003.

2.  EARNINGS PER SHARE

     Basic earnings per share excludes dilution and is computed by dividing net
income available to common shareholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share is computed
considering the dilutive effect of stock options, warrants and restricted
shares. For the three months ended June 30, 2004 and 2003, shares of 725,406 and
944,991, respectively, resulting from the assumed exercise of outstanding
options and warrants, were added to the denominator because the inclusion of
such shares would be dilutive. For the six months ended June 30, 2004 and 2003,
shares of 704,416 and 879,283, respectively, resulting from the assumed exercise
of outstanding options and warrants, were added to the denominator because the
inclusion of such shares would be dilutive. For the three months ended June 30,
2004 and 2003, shares 1,799,492 and 972,337, respectively, were excluded from
the computation of earnings per common share, because the inclusion of such
shares would be anti-dilutive. For the six months ended June 30, 2004 and 2003,
shares of 1,841,811 and 1,390,837, respectively, were excluded from the
computation of earnings per common share, because the inclusion of such shares
would be anti-dilutive.

3.  DEBT

  CREDIT FACILITY

     On June 30, 2004, W-H closed on a $237.5 million revolving credit facility
(the "Credit Facility") that matures on June 30, 2009. The outstanding balance
under the Credit Facility was $160.3 million at June 30, 2004. This amount,
along with a portion of the cash proceeds from the sale of WSI, was used to
repay the entire balance under W-H's previous credit facility. As of June 30,
2004, W-H had approximately $4.7 million in letters of credit issued under the
Credit Facility which leaves W-H with available borrowing capacity of $72.5
million.

     The Credit Facility bears interest, at W-H's election, at either a variable
rate equal to LIBOR, plus a margin ranging from 1.5% to 2.5% 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
0.5% to 1.5% depending upon W-H's leverage ratio. As of June 30, 2004, W-H had
elected to pay interest on its outstanding borrowings at LIBOR plus the then
applicable margin of 2.0%.

     The Credit Facility is secured by a lien on substantially all of W-H's
property and assets, a pledge of all of 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 a debt service coverage ratio, and a specified net worth. The
Credit Facility further 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.

     As a result of the repayment of W-H's previous credit facility, W-H
wrote-off approximately $3.1 million in financing costs that had previously been
deferred. This write-off has been included in the Consolidated Statements of
Operations and Comprehensive Income (Loss) as interest expense. Additionally,
W-H deferred financing costs associated with the Credit Facility of
approximately $1.4 million as of June 30, 2004. These costs will be ratably
amortized to interest expense over the five year term of the Credit Facility.

                                        5
<PAGE>

  SUBORDINATED DEBT

     In connection with the Coil Tubing Services, L.L.C. ("CTS") acquisition in
May 2001, W-H issued $4.5 million in 9% convertible subordinated notes to eight
individuals as partial consideration for the acquisition of CTS. The notes were
paid in full in January 2004.

4.  STOCK OPTIONS

     A summary of W-H's stock options as of June 30, 2004 and December 31, 2003
is as follows:

<Table>
<Caption>
                                                                        WEIGHTED AVERAGE
                                                            NUMBER OF    EXERCISE PRICE
                                                             OPTIONS       PER SHARE
                                                            ---------   ----------------
<S>                                                         <C>         <C>
Outstanding December 31, 2003.............................  3,633,458        $13.20
Granted...................................................    251,500         15.97
Exercised/exchanged.......................................    (76,006)         4.89
Expired/canceled..........................................    (45,575)        20.50
                                                            ---------
Outstanding June 30, 2004.................................  3,763,377         13.46
                                                            ---------
Exercisable at June 30, 2004..............................  2,422,321         10.26
                                                            ---------
</Table>

     The fair value of each option was estimated on the date of grant using the
Black-Scholes option valuation model. The following assumptions were used for
the historical option grants: risk-free interest rate of 4.6%; dividend rate of
zero; average expected life of 6.2 years and expected volatility of 52.5%. The
3,763,377 options outstanding as of June 30, 2004 have a weighted average
remaining contractual life of 7.0 years.

     The Black-Scholes option valuation model and other existing models were
developed for use in estimating the fair value of traded options that have no
vesting restrictions and are fully transferable. In addition, option valuation
models require the input of and are highly sensitive to subjective assumptions,
including the expected stock price volatility. W-H's stock options have
characteristics significantly different from those of traded options and changes
in the subjective input assumptions can materially affect the fair value
estimate.

                                        6
<PAGE>

     Had compensation expense for the stock options granted to employees and
directors been determined using the fair value method, net income and diluted
net income per share for the three and six months ended June 30, 2004 and 2003,
respectively would have been reduced to the following pro forma amounts:

<Table>
<Caption>
                                                             THREE MONTHS     SIX MONTHS ENDED
                                                            ENDED JUNE 30,        JUNE 30,
                                                            ---------------   ----------------
                                                             2004     2003     2004     2003
                                                            ------   ------   ------   -------
<S>                                                         <C>      <C>      <C>      <C>
Net income, as reported...................................  $1,595   $5,760   $6,562   $11,628
Add: Total stock-based employee compensation expense
  included in reported net income, net of related tax
  effect..................................................      67     (124)      67       124
Deduct: Total stock-based employee compensation expense
  determined under fair value based method for all awards,
  net of related tax effect...............................    (596)    (663)  (1,192)   (1,326)
                                                            ------   ------   ------   -------
Pro forma net income......................................  $1,066   $4,973   $5,437   $10,426
                                                            ======   ======   ======   =======
Earnings per share:
  As reported:
     Basic................................................  $ 0.06   $ 0.21   $ 0.24   $  0.43
     Diluted..............................................  $ 0.06   $ 0.21   $ 0.23   $  0.42
  Pro forma:
     Basic................................................  $ 0.04   $ 0.18   $ 0.20   $  0.38
     Diluted..............................................  $ 0.04   $ 0.18   $ 0.19   $  0.37

Weighted-average fair value per share of options
  granted.................................................  $17.75   $18.52   $15.97   $ 18.52
                                                            ======   ======   ======   =======
</Table>

5.  EQUITY

     On May 12, 2004, W-H's shareholders approved the grant of 75,000 shares of
restricted common stock to W-H's Chairman, President and Chief Executive
Officer. Deferred compensation of approximately $1.3 million generated by this
issuance has been recorded in shareholders' equity and is being amortized to
compensation expense under the provisions of Financial Accounting Standards
Board issued Interpretation No. 28, "Accounting for Stock Appreciation Rights
and Other Variable Stock Option or Award Plans -- an interpretation of APB
Opinions No. 15 and 25."

6.  OPERATING SEGMENTS

     Management has elected to aggregate its business unit segments based on the
differences in each segment's customers, the products and services offered and
other economic characteristics. Based on these requirements, management has
identified the following reportable segments: (i) drilling related products and
services and (ii) 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.

  DRILLING RELATED PRODUCTS AND SERVICES

     The drilling related products and services 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, Brazil and in
selected areas of the Eastern Hemisphere. This segment includes the following
business lines: (i) LWD; (ii) MWD; (iii) DD; (iv) down-hole drilling motors; (v)
rental tools (including drill pipe) and (vi) drilling fluids.

  COMPLETION AND WORKOVER RELATED PRODUCTS AND SERVICES

     The completion and workover related products and services segment provides
products and services primarily to customers onshore in the Gulf Coast region
and offshore in the Gulf of Mexico. These products and services include: (i)
cased-hole wireline logging, perforating, tubing conveyed perforating and
associated

                                        7
<PAGE>

rental equipment; (ii) polymers and specialty chemicals; (iii) rental tools
(including tubing) and (iv) coiled tubing.

  SUMMARY INFORMATION

     W-H recognizes revenues, cost of revenues, selling, general and
administrative expense, research and development expense and depreciation and
amortization expense by segment. Interest expense and other income (expense) are
not monitored by segment. W-H also recognizes total assets and capital
expenditures 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 June 30, 2004 (unaudited):

<Table>
<Caption>
                                             DRILLING   COMPLETION   CORPORATE    TOTAL
                                             --------   ----------   ---------   --------
<S>                                          <C>        <C>          <C>         <C>
Revenues...................................  $ 67,838    $ 40,596     $    --    $108,434
Operating income...........................     3,986       8,749      (2,518)     10,217
Depreciation and amortization..............     7,117       3,848          66      11,031
Total assets, net of assets held for
  sale.....................................   294,491     187,495      10,158     492,144
Capital expenditures.......................    15,345       6,246          49      21,640
</Table>

     As of and for the three months ended June 30, 2003 (unaudited):

<Table>
<Caption>
                                             DRILLING   COMPLETION   CORPORATE    TOTAL
                                             --------   ----------   ---------   --------
<S>                                          <C>        <C>          <C>         <C>
Revenues...................................  $ 55,190    $ 33,827     $    --    $ 89,017
Operating income...........................     5,160       8,038      (2,231)     10,967
Depreciation and amortization..............     5,636       3,004          68       8,708
Total assets, net of assets held for
  sale.....................................   248,706     168,665       8,268     425,639
Capital expenditures.......................    10,678       5,696          16      16,390
</Table>

     As of and for the six months ended June 30, 2004 (unaudited):

<Table>
<Caption>
                                             DRILLING   COMPLETION   CORPORATE    TOTAL
                                             --------   ----------   ---------   --------
<S>                                          <C>        <C>          <C>         <C>
Revenues...................................  $140,893    $ 75,085     $    --    $215,978
Operating income...........................     9,971      14,634      (5,057)     19,548
Depreciation and amortization..............    14,106       7,532         131      21,769
Total assets, net of assets held for
  sale.....................................   294,491     187,495      10,158     492,144
Capital expenditures.......................    24,220      11,924          88      36,232
</Table>

     As of and for the six months ended June 30, 2003 (unaudited):

<Table>
<Caption>
                                             DRILLING   COMPLETION   CORPORATE    TOTAL
                                             --------   ----------   ---------   --------
<S>                                          <C>        <C>          <C>         <C>
Revenues...................................  $111,223    $ 64,961     $    --    $176,184
Operating income...........................    12,155      14,924      (4,437)     22,642
Depreciation and amortization..............    11,040       5,956         136      17,132
Total assets, net of assets held for
  sale.....................................   248,706     168,665       8,268     425,639
Capital expenditures.......................    18,808      10,808         116      29,732
</Table>

                                        8
<PAGE>

     W-H operates in the United States, the North Sea and other geographic
regions. The following is summary information by geographic region (in
thousands) (unaudited):

  REVENUES

<Table>
<Caption>
                                              FOR THE THREE MONTHS   FOR THE SIX MONTHS
                                                 ENDED JUNE 30,        ENDED JUNE 30,
                                              --------------------   -------------------
                                                2004        2003       2004       2003
                                              ---------   --------   --------   --------
<S>                                           <C>         <C>        <C>        <C>
United States...............................  $ 98,263    $77,346    $188,742   $150,519
North Sea...................................     4,119      6,723      11,552     14,853
Other.......................................     6,052      4,948      15,684     10,812
                                              --------    -------    --------   --------
  Total.....................................  $108,434    $89,017    $215,978   $176,184
                                              ========    =======    ========   ========
</Table>

  OPERATING INCOME

<Table>
<Caption>
                                                 FOR THE THREE MONTHS    FOR THE SIX MONTHS
                                                    ENDED JUNE 30,         ENDED JUNE 30,
                                                 ---------------------   -------------------
                                                   2004        2003        2004       2003
                                                 ---------   ---------   --------   --------
<S>                                              <C>         <C>         <C>        <C>
United States..................................   $10,894     $10,627    $20,400    $20,142
North Sea......................................    (1,911)       (324)    (3,271)       639
Other..........................................     1,234         664      2,419      1,861
                                                  -------     -------    -------    -------
  Total........................................   $10,217     $10,967    $19,548    $22,642
                                                  =======     =======    =======    =======
</Table>

  LONG-LIVED ASSETS

<Table>
<Caption>
                                                              JUNE 30,   DECEMBER 31,
                                                                2004         2003
                                                              --------   ------------
<S>                                                           <C>        <C>
United States...............................................  $310,929     $299,461
North Sea...................................................    16,885       18,262
Other.......................................................     8,987       10,270
                                                              --------     --------
  Total.....................................................  $336,801     $327,993
                                                              ========     ========
</Table>

                                        9
<PAGE>

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

FORWARD-LOOKING STATEMENTS

     The following discussion and analysis may contain forward-looking
statements. 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, the current and expected future
prices of crude oil and natural gas, capital expenditures by customers, activity
levels in the oil and natural gas exploration and production industry, the
development and implementation of new technologies, weather conditions in
offshore markets, risks associated with the occurrence of personal injuries,
loss of life, damage or destruction of property, equipment or the environment
and suspension of operations, 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, 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 "Factors That May Affect
Future Results and Accuracy of Forward Looking Statements" contained in our most
recent Annual Report filed on Form 10-K with the Securities and Exchange
Commission.

OVERVIEW OF THE MARKETS FOR OUR PRODUCTS AND SERVICES

     We are a diversified oilfield service company that provides (1) drilling
related products and services and (2) completion and workover related products
and services. Our customers include major and independent oil and natural gas
companies and other oilfield service companies.

     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 depends more on oil and natural gas production activity, which is
less immediately affected by changes in oil and natural gas prices.

  DRILLING RELATED PRODUCTS AND SERVICES

     Revenue from our drilling related products and services segment constituted
approximately 65% of our total consolidated revenue for the first six months of
2004. Approximately 81% of our drilling segment revenue for the first six months
of 2004 was generated in the United States, including the Gulf of Mexico. The
remaining 19% was generated in various international locations, including
Canada, Brazil, Europe, North Africa and the Middle East. The majority of our
revenue continues to be generated domestically. In July 2001, exploration and
development activity levels in the United States peaked and 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 was comprised 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. This increase, however, resulted 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
830, 1,032 and 1,144 for 2002, 2003 and the six months ended June 30, 2004,
respectively. Of these figures, land rigs comprised 717, 924 and 1,048,
respectively, and offshore rigs comprised 113, 108 and 96, respectively, for the
same periods.

     The modest recovery in exploration and development activity levels in the
United States has impacted our revenue and earnings generated in this market.
Although the overall rig count in the United States has increased, the offshore
rig count, where we experience our highest operating margins, has yet to respond
to the

                                        10
<PAGE>

higher levels of natural gas prices and has even declined slightly from 2003. We
believe that the overall outlook for natural gas exploration and development
activity, nonetheless, remains positive. Natural gas production continues to
decline, which should keep upward pressure on natural gas prices and should
eventually generate a recovery in offshore drilling activity. However, the
extent and timing of a recovery in offshore drilling activity remains difficult
to predict.

     Outside of the United States, the North Sea remains our largest drilling
segment market. According to statistics published by Baker Hughes, the number of
rotary rigs operating in the North Sea declined from an average of 67 in January
2002 to an average of 46 in June 2004, after having reached a low of 35 in
January 2004. We do not expect any marked increase in activity levels in the
North Sea in the near term.

     As offshore drilling activity in the United States has stagnated over the
last 24 months, the importance of maintaining market share has become critical.
In response to this market condition, in October 2002, we made a strategic
decision to enter the directional drilling ("DD") business in North America. As
a result of this decision and the growth of the United States land rig count, we
have successfully leveraged our new DD business to effect an increase in the
utilization of our measurement-while-drilling ("MWD") and down-hole drilling
motor fleet. The increased utilization of our MWD and down-hole drilling motor
fleet has helped to offset decreases in utilization of our
logging-while-drilling ("LWD") fleet, which is primarily driven by the United
States offshore rig count.

     Additionally, our 12 1/4" 3-Dimensional Rotary Steerable ("3DRS") and Array
Wave Resistivity ("AWR") technologies are the first new technologies to have
been developed since PathFinder Energy Services, Inc., our MWD/LWD/DD
subsidiary, was acquired in March 1999. Both technologies are being offered to
the market on a commercial basis during the third quarter of 2004. We will
initially offer these technologies to certain of our customers at prices which
reflect a discount from market rates in order to provide an incentive to these
customers to try our new services. We anticipate the first meaningful commercial
revenues from these new technologies to occur in the fourth quarter of 2004. We
expect commercialization of the 3DRS technology to improve the utilization of
our LWD, MWD and DD services, as our customers often require that this type of
technology be offered by a service company as a prerequisite to submitting a bid
for a drilling project or contract. Introduction of our AWR technology is the
first of our next generation of LWD tools, and we expect that it will allow us
to offer our customers advanced resistivity measurements to include high
pressure and high temperature well conditions. We will initially deploy these
technologies in the Gulf of Mexico, Brazil and the North Sea. We are currently
developing an 8 1/2" 3DRS tool and we expect to be able to offer this tool on a
commercial basis by mid-year 2005.

  COMPLETION AND WORKOVER RELATED PRODUCTS AND SERVICES

     This segment provided approximately 35% of our total consolidated revenue
for the first six months of 2004. Revenues provided by the completion and
workover segment are almost entirely derived from the United States and the Gulf
of Mexico. Although activity levels in the completion and workover of existing
oil and natural gas wells are linked to commodity prices, our completion segment
is less commodity price sensitive than our drilling segment. As a result, our
completion and workover segment has provided stability during prolonged
downturns in drilling activity. We have increased our revenue capacity in this
segment through capital spending in 2002, 2003 and the first six months of 2004,
which, when combined with our acquisitions, has strengthened and further
diversified the operations of this segment.

  DISCONTINUED OPERATIONS

     In March 2004, we committed to the divestiture of our maintenance and
safety related products and services segment. Accordingly, this segment has been
included in the Consolidated Statements of Operations and Comprehensive Income
(Loss) as discontinued operations and in the Consolidated Balance Sheets as
assets and liabilities held for sale. On April 20, 2004, we completed the sale
of Well Safe, Inc. ("WSI"), one of the two companies that comprise the
maintenance and safety related products and services segment, for cash
consideration of $28.0 million. Additionally, in June 2004, we wrote down the
value of the remaining company that made up our maintenance and safety segment
based on independent indications of market value

                                        11
<PAGE>

received during the quarter. The net result of this activity was a loss of
approximately $1.4 million associated with discontinued operations for the
quarter ended June 30, 2004. We anticipate that our future operating performance
will be enhanced by this divestiture, as we will be better able to focus our
attention on our core business segments.

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 JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
  2003

     Revenues.  Revenues increased by $19.4 million, or approximately 22%, to
$108.4 million for the three months ended June 30, 2004 from $89.0 million for
the three months ended June 30, 2003. This increase was attributable to higher
demand for certain of our products and services, particularly
drilling/completion fluids, DD services, cased-hole wireline and coiled tubing,
as well as the revenue contributions of Continental Directional Corp. and
HydraCoil, Inc., which were acquired in November 2003, and Dutch, Inc., which
was acquired in December 2003.

     Revenues from our drilling related products and services increased by $12.6
million, or approximately 23%, to $67.8 million for the three months ended June
30, 2004 from $55.2 million for the three months ended June 30, 2003. This
increase was primarily attributable to the growth of our North American DD
business, driven by the increase in land drilling activity levels in the United
States, enhanced demand for our drilling fluids and rental tool products and the
impact of the acquisitions that we consummated during the fourth quarter of
2003.

     Revenues from our completion and workover related products and services
increased by $6.8 million, or approximately 20%, to $40.6 million for the three
months ended June 30, 2004 from $33.8 million for the three months ended June
30, 2003. This increase was the result of higher utilization of our coiled
tubing and cased-hole wireline fleet, demand for our completion fluids and the
impact of the acquisitions that we consummated during the fourth quarter of
2003.

     Cost of Revenues.  Cost of revenues increased by $13.3 million, or
approximately 26% to $63.5 million for the three months ended June 30, 2004 from
$50.2 million for the three months ended June 30, 2003. As a percentage of
revenues, cost of revenues increased to 59% for the three months ended June 30,
2004 from 56% for the three months ended June 30, 2003. The increase in cost of
revenues as a percentage of revenues was due to the continued effects of
softness in pricing, increased insurance costs and our revenue mix. In
particular, our revenue mix was affected by sales increases in our lower margin
fluids products and DD services.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased by $4.3 million, or approximately 27%, to
$20.4 million for the three months ended June 30, 2004 from $16.1 million for
the three months ended June 30, 2003. The increase was primarily attributable to
the operating expenses associated with the businesses we acquired in the fourth
quarter of 2003, as well as increased personnel costs related to expansion
efforts within our DD business and corporate compliance initiatives as mandated
by law. As a percentage of revenues, selling, general and administrative
expenses increased to 19% for the three months ended June 30, 2004 from 18% for
the three months ended June 30, 2003.

     Research and Development Expenses.  Research and development expenses
increased by $0.3 million, or approximately 10%, to $3.3 million for the three
months ended June 30, 2004 from $3.0 million for the three months ended June 30,
2003. This increase was the result of increased research and development
spending on our PathFinder technologies, including our 3DRS and AWR tools and
other research and development initiatives.

     Depreciation and Amortization.  Depreciation and amortization increased by
$2.3 million, or approximately 26%, to $11.0 million for the three months ended
June 30, 2004 from $8.7 million for the three

                                        12
<PAGE>

months ended June 30, 2003. This increase was the result of depreciation
associated with our continued capital expenditures, as well as additional
depreciation and amortization due to our acquisitions.

     Interest and Other Expense.  Interest and other expense for the three
months ended June 30, 2004 was $5.3 million, an increase of $3.3 million, or
approximately 165%, from $2.0 million for the three months ended June 30, 2003.
This increase was primarily due to the $3.1 million write-off of financing costs
related to our previous credit facility.

     Net Income.  Net income for the three months ended June 30, 2004 was $1.6
million, a decrease of $4.2 million, or approximately 72%, from the $5.8 million
reported for the three months ended June 30, 2003.

  SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2003

     Revenues.  Revenues increased by $39.8 million, or approximately 23%, to
$216.0 million for the six months ended June 30, 2004 from $176.2 million for
the six months ended June 30, 2003. This increase was attributable to higher
demand for certain of our products and services, particularly
drilling/completion fluids, DD services, cased-hole wireline and coiled tubing,
as well as the revenue contributions of Continental Directional Corp. and
HydraCoil, Inc., which were acquired in November 2003, and Dutch, Inc., which
was acquired in December 2003.

     Revenues from our drilling related products and services increased by $29.7
million, or approximately 27%, to $140.9 million for the six months ended June
30, 2004 from $111.2 million for the six months ended June 30, 2003. This
increase was primarily attributable to the growth of our North American DD
business, driven by the increase in land drilling activity levels in the United
States, enhanced demand for our drilling fluids and rental tool products and the
impact of the acquisitions that we consummated during the fourth quarter of
2003.

     Revenues from our completion and workover related products and services
increased by $10.1 million, or approximately 16%, to $75.1 million for the six
months ended June 30, 2004 from $65.0 million for the six months ended June 30,
2003. This increase was the result of higher utilization of our coiled tubing
and cased-hole wireline fleet, demand for our completion fluids and the impact
of the acquisitions that we consummated during the fourth quarter of 2003.

     Cost of Revenues.  Cost of revenues increased by $28.8 million, or
approximately 30%, to $126.4 million for the six months ended June 30, 2004 from
$97.6 million for the six months ended June 30, 2003. As a percentage of
revenues, cost of revenues increased to 59% for the six months ended June 30,
2004 from 55% for the six months ended June 30, 2003. The increase in cost of
revenues as a percentage of revenues was due to the continued effects of
softness in pricing, increased insurance costs and our revenue mix. In
particular, our revenue mix was affected by sales increases in our lower margin
fluids products and DD services.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased by $8.7 million, or approximately 26%, to
$41.9 million for the six months ended June 30, 2004 from $33.2 million for the
six months ended June 30, 2003. The increase was primarily attributable to the
operating expenses associated with the businesses we acquired in the fourth
quarter of 2003, as well as increased personnel costs related to expansion
efforts within our DD business and corporate compliance initiatives as mandated
by law. As a percentage of revenues, selling, general and administrative
expenses remained flat at 19% for the six months ended June 30, 2004 and 2003.

     Research and Development Expenses.  Research and development expenses
increased by $0.7 million, or approximately 13%, to $6.3 million for the six
months ended June 30, 2004 from $5.6 million for the six months ended June 30,
2003. This increase was the result of increased research and development
spending on our PathFinder technologies, including our 3DRS and AWR tools and
other research and development initiatives.

     Depreciation and Amortization.  Depreciation and amortization increased by
$4.7 million, or approximately 27%, to $21.8 million for the six months ended
June 30, 2004 from $17.1 million for the six

                                        13
<PAGE>

months ended June 30, 2003. This increase was the result of depreciation
associated with our continued capital expenditures, as well as additional
depreciation and amortization due to our acquisitions.

     Interest and Other Expense.  Interest and other expense for the six months
ended June 30, 2004 was $7.5 million, an increase of $3.7 million, or
approximately 97%, from $3.8 million for the six months ended June 30, 2003.
This increase was primarily due to the $3.1 million write-off of financing costs
related to our previous credit facility.

     Net Income.  Net income for the six months ended June 30, 2004 was $6.6
million, a decrease of $5.0 million, or approximately 43%, from the $11.6
million reported for the six months ended June 30, 2003.

LIQUIDITY AND CAPITAL RESOURCES

     Our primary uses for cash are working capital, capital expenditures,
acquisitions and principal and interest payments on indebtedness. To the extent
our cash requirements for working capital, capital expenditures, acquisitions
and principal and interest payments on indebtedness exceed our cash flow from
operations, we must fund our cash requirements primarily through debt and equity
financing activities.

  CASH FLOW

     Working capital, excluding assets and liabilities held for sale, was $104.7
million as of June 30, 2004 and $89.4 million as of December 31, 2003. Net cash
provided by operating activities was $22.3 million for the six months ended June
30, 2004 and $18.8 million for the six months ended June 30, 2003. The increase
in working capital and cash flow from operating activities was principally
attributable to higher operating levels across all business segments.

     Net cash used in investing activities was $26.8 million for the six months
ended June 30, 2004 and $23.0 million for the six months ended June 30, 2003.
Net cash used in investing activities was principally the result of capital
expenditures, offset by lost-in-hole proceeds.

     Net cash used in financing activities was $17.0 million for the six months
ended June 30, 2004. Net cash provided by financing activities was $2.2 million
for the six months ended June 30, 2003. Changes in net cash related to financing
activities were primarily the result of borrowings and repayments under our
Credit Facility, which is described below.

     For the six months ended June 30, 2004, we made capital expenditures of
$36.2 million, primarily for rental tool inventory, LWD and MWD tools, wireline
equipment and coil tubing units, including expenditures for the replacement of
equipment lost-in-hole. In addition, we incurred $6.3 million in research and
development expenses for the six months ended June 30, 2004.

  OFF BALANCE SHEET FINANCING AND DERIVATIVE INSTRUMENTS

     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. We have not entered into any derivative or other financial
instruments for trading or speculative purposes.

  CAPITAL RESOURCES

     On June 30, 2004, we closed on a $237.5 million revolving credit facility
(the "Credit Facility") that matures on June 30, 2009. The outstanding balance
under the Credit Facility was $160.3 million at June 30, 2004. This amount,
along with a portion of the cash proceeds from the sale of WSI, was used to
repay the entire balance under our previous credit facility. As of June 30,
2004, we had approximately $4.7 million in letters of credit issued under the
Credit Facility which leaves us with available borrowing capacity of $72.5
million.

     The Credit Facility bears interest, at our election, at either a variable
rate equal to LIBOR, plus a margin ranging from 1.5% to 2.5% depending upon our
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 0.5% to
1.5% depending
                                        14
<PAGE>

upon our leverage ratio. As of June 30, 2004, we had elected to pay interest on
our outstanding borrowings at LIBOR plus the then applicable margin of 2.0%.

     The Credit Facility is secured by a lien on substantially all of our
property and assets, a pledge of all of the capital stock of our domestic
subsidiaries and a pledge of not greater than 65% of the capital stock of each
of our top tier foreign subsidiaries. In addition, the Credit Facility is
guaranteed by all of our domestic subsidiaries. The Credit Facility requires,
among other things, that we maintain certain financial ratios, including a
leverage ratio and a debt service coverage ratio, and a specified net worth. The
Credit Facility further limits the amount of capital expenditures we may make,
the amount of debt we may incur outside of the Credit Facility, the amount of
future investments we may make, our ability to pay dividends and our ability to
engage in certain business combination transactions. As of June 30, 2004, we
were in compliance with these restrictive covenants.

     As a result of the repayment of our previous credit facility, we wrote-off
approximately $3.1 million in financing costs that had previously been deferred.
This write-off has been included in the Consolidated Statements of Operations
and Comprehensive Income (Loss) as interest expense. Additionally, we deferred
financing costs associated with the Credit Facility of approximately $1.4
million as of June 30, 2004. These costs will be ratably amortized to interest
expense over the five year term of the Credit Facility.

  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.
While there are currently no unannounced agreements or ongoing negotiations for
the acquisition of any material businesses or assets, such transactions can be
effected quickly and may occur at any time. Likewise, we will continue to need
to make capital expenditures for tools and equipment and to make research and
development expenditures to maintain and improve the quality of our products and
services. We have made capital expenditures of $36.2 million through June 30,
2004 and currently estimate that we will make an aggregate of approximately $55
to $60 million of such expenditures in 2004. We have made research and
development expenditures of $6.3 million through June 30, 2004 and currently
estimate that we will make an aggregate of approximately $12 to $14 million of
such expenditures in 2004.

     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 expenditure requirements, 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 will require substantial
capital. We currently intend to finance future acquisitions through issuances of
our equity or debt securities and through borrowings under our Credit Facility.
Using debt to complete acquisitions could substantially limit our operational
and financial flexibility, while using stock 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 at the 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. On April 20,
2004, we received $28.0 million in cash in connection with the sale of Well
Safe, Inc. We have used these sale proceeds for capital expenditures, research
and development and to reduce our outstanding indebtedness.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk. 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. Assuming our current level of borrowings, a 100 basis
point increase in interest rates under these borrowings

                                        15
<PAGE>

would have increased our interest expense by approximately $0.8 million for the
six months ended June 30, 2004 and 2003.

     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 and to use shares of our common stock as consideration in
acquisitions is, in part, affected by the market price of our stock. The market
price of our 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

     (a) Disclosure Controls and Procedures.  We maintain controls and
procedures designed to ensure that we are able to collect the information we are
required to disclose in the reports we file with the SEC, and to process,
summarize and disclose this information within the time periods specified in the
rules 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 ensure 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.

     (b) Internal Control over Financial Reporting.  During the period covered
by this report, there have been 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.

                                    PART II

                               OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     On May 12, 2004, our shareholders approved the grant of 75,000 shares of
restricted common stock to Kenneth T. White, Jr., our Chairman, President and
Chief Executive Officer. The issuance of these shares to Mr. White was not
registered under the Securities Act of 1933, as amended, pursuant to the
provisions of Section 4(2) thereof, and no underwriters were involved in this
issuance. Mr. White's restricted shares are subject to forfeiture restrictions
pursuant to which he will be obligated to forfeit and surrender the shares back
to us if he terminates his employment with us while the forfeiture restrictions
are still effective. The forfeiture restrictions would terminate as to one-third
of the restricted shares on the anniversary of the issuance of the restricted
shares in 2005, 2006 and 2007 provided that Mr. White has remained employed by
us. The forfeiture restrictions would also terminate (to the extent still in
effect), if Mr. White's employment with us is terminated because of death or
disability, if such employment is terminated by us without cause, if such
employment is terminated by Mr. White with cause or upon a change of control of
our company. While the forfeiture restrictions are applicable to the restricted
shares, Mr. White will be entitled to vote the restricted shares and receive
dividends declared thereon, if any.

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

     The 2003 annual meeting of the shareholders of the Company was held on May
12, 2004. The purpose of the meeting was to elect members of our Board of
Directors, approve the restatement of our 1997 Stock Option Plan, and to approve
the proposed grant of 75,000 shares of restricted common stock to Kenneth T.
White, Jr.

                                        16
<PAGE>

     At the annual meeting, each of our then current directors was re-elected.
The votes cast for each nominee and the votes withheld were as follows:

<Table>
<Caption>
                                                                 FOR       WITHHELD
                                                              ----------   ---------
<S>                                                           <C>          <C>
Kenneth T. White, Jr........................................  23,479,505     882,916
Jonathan F. Boucher.........................................  23,770,655     591,766
J. Jack Watson..............................................  23,246,468   1,115,953
Christopher Mills...........................................  23,325,090   1,037,331
Robert H. Whilden, Jr.......................................  23,479,855     882,566
Milton L. Scott.............................................  22,935,168   1,427,253
John R. Brock...............................................  23,245,588   1,116,833
</Table>

     In addition, the restatement of our 1997 Stock Option plan received the
following votes: 16,920,142 votes for approval, 4,378,708 votes against,
1,194,756 abstentions, and 1,868,815 broker non-votes. The grant of 75,000
shares of restricted common stock to Kenneth T. White, Jr. received the
following votes: 18,669,160 votes for approval, 3,415,262 votes against, 409,184
abstentions, and 1,868,815 broker non-votes.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     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.

     b.  Reports on Form 8-K

     On April 21, 2004, the Company filed a Current Report on Form 8-K pursuant
to which the Company announced the disposition of Well Safe, Inc., formerly a
consolidated subsidiary of the Company.

     On April 27, 2004, the Company filed a Current Report on Form 8-K pursuant
to which the Company furnished its earnings information for the quarter ended
March 31, 2004.

                                        17
<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.

<Table>
<S>                                      <C>
                                         W-H ENERGY SERVICES, INC.

Date: August 6, 2004                                       By: /s/ JEFFREY L. TEPERA
                                           ----------------------------------------------------------
                                                               Jeffrey L. Tepera
                                                   Vice President and Chief Financial Officer
                                                         (Principal Financial Officer)

Date: August 6, 2004                                     By: /s/ ERNESTO BAUTISTA, III
                                           ----------------------------------------------------------
                                                             Ernesto Bautista, III
                                                    Vice President and Corporate Controller
                                                         (Principal Accounting Officer)
</Table>

                                        18
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
NUMBER                                EXHIBIT TITLE
------                                -------------
<C>      <C>   <S>
10.4       --  W-H Energy Services, Inc. 1997 Stock Option Plan as
               restated, effective as of May 12, 2004 (incorporated by
               reference to Appendix B of the Company's Definitive Proxy
               Statement on Schedule 14A, filed April 6, 2004)
10.8*      --  Credit Agreement, dated as of June 30, 2004, among the
               Company as the borrower, various financial institutions, as
               the lenders, and Wells Fargo Bank, NA, as administrative
               agent
10.12*     --  Restricted Stock Agreement between the Company and Kenneth
               T. White, Jr. dated as of May 12, 2004
11.1*      --  Computation of Per Share Earnings
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