##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-31346
  W-H Energy Services,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Texas

76-0281502(State or other jurisdiction
    of
    incorporation or organization)

(IRS Employer
    Identification No.)   2000 West Sam Houston Parkway South,
 Suite 500
 Houston, Texas 77042
 (Address of principal executive
    offices and zip code)
  (713) 974-9071
 (Registrants telephone
    number, including area code)
  þ o
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ




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##### 



W-H
    ENERGY SERVICES, INC.
  INDEX
  PagePART I
    FINANCIAL INFORMATIONItem 1.


Financial Statements


3Consolidated Balance Sheets
    (unaudited)  September 30, 2007 and
    December 31, 2006 (as adjusted)


3Consolidated Statements of Operations and
    Comprehensive Income (unaudited)  Three months and
    nine months ended September 30, 2007 and 2006 (as
    adjusted)


4Consolidated Statements of Cash Flows
    (unaudited)  Nine months ended September 30,
    2007 and 2006 (as adjusted)


5Notes to Consolidated Financial Statements
    (unaudited)


6Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


13Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


19Item 4.


Controls and Procedures


20PART II
    OTHER INFORMATIONItem 6.


Exhibits


20Signatures


21Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350   2




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##### Table of Contents



PART I
  FINANCIAL
    INFORMATION
  Item 1.
    Financial
    Statements  W-H
    ENERGY SERVICES, INC.
    CONSOLIDATED BALANCE SHEETS
    (In thousands, except per share amounts)
    (Unaudited)
  September 30,


December 31,2007


2006(As adjusted)Current Assets:Cash and cash equivalents

$
14,609


$
36,329Accounts receivable, net of allowance of $6,450 and $5,596,
    respectively


250,732



204,755Inventories


100,521



78,127Deferred income taxes


8,120



7,870Prepaid expenses and other


36,604



14,906Total current assets


410,586



341,987Property and equipment, net


419,389



343,496Goodwill, net


135,019



119,550Other assets, net


18,154



19,248Total assets

$
983,148


$
824,281Current Liabilities:Accrued liabilities

$
71,773


$
64,757Accounts payable


56,648



56,668Total current liabilities


128,421



121,425Long-term debt


158,088



150,000Deferred income taxes


61,857



56,637Other long-term obligations


16,656



993Commitments and ContingenciesShareholders Equity:Preferred stock, $0.01 par value, 10,000 shares
    authorized, none issued and outstanding






Common stock, $0.0001 par value, 100,000 shares
    authorized 30,677 and 30,158 shares issued and outstanding,
    respectively


3



3Additional paid-in capital


290,911



272,010Other comprehensive income


8,203



9,759Retained earnings


319,009



213,454Total shareholders equity


618,126



495,226Total liabilities and shareholders equity

$
983,148


$
824,281    3




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W-H
    ENERGY SERVICES, INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
    INCOME
    (In thousands, except per share amounts)
    (Unaudited)
  For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2007


2006


2007


2006(As adjusted)





(As adjusted)Revenues

$
282,992


$
238,851


$
833,631


$
656,415Costs and expenses:Cost of revenues


156,640



125,224



449,445



345,766Selling, general and administrative


43,320



38,910



131,564



110,931Research and development


5,922



4,635



16,123



12,480Depreciation and amortization


20,417



15,624



57,131



45,924Total costs and expenses


226,299



184,393



654,263



515,101Operating income


56,693



54,458



179,368



141,314Other expense (income):Interest expense, net


2,336



2,167



6,225



6,537Other expense (income), net


15



(58
)


(26
)


37Income before income taxes


54,342



52,349



173,169



134,740Provision for income taxes


19,630



20,836



63,559



51,434Net income

$
34,712


$
31,513


$
109,610


$
83,306Comprehensive income:Net income

$
34,712


$
31,513


$
109,610


$
83,306Increase (decrease) in interest rate swap valuations


(1,821
)


(1,990
)


(1,405
)


321Foreign currency translation adjustment


(345
)


412



(151
)


1,515Comprehensive income

$
32,546


$
29,935


$
108,054


$
85,142Earnings per share:Basic

$
1.14


$
1.05


$
3.62


$
2.82Diluted

$
1.11


$
1.02


$
3.52


$
2.73Number of shares used in calculation of earnings per share:Basic


30,473



29,901



30,288



29,542Diluted


31,291



30,753



31,104



30,501    4




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W-H
    ENERGY SERVICES, INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (Unaudited)
  For the Nine MonthsEnded September 30,2007


2006(As adjusted)Cash Flows from Operating Activities:Net income

$
109,610


$
83,306Adjustments to reconcile net income to cash provided by
    operating activities  Depreciation and amortization


57,131



45,924Provision for doubtful accounts


1,580



1,920Gain on sales of equipment


(17,487
)


(13,971
)Deferred tax provision


9,154



12,098Share-based compensation


4,235



3,888Amortization of deferred financing costs


430



382Excess tax benefit from share-based compensation


(4,748
)


(13,112
)Changes in operating assets and liabilities, excluding effects
    of acquisitions  Accounts receivable, net


(42,768
)


(45,487
)Inventories


(22,079
)


(20,110
)Prepaid expenses and other


(22,083
)


(2,702
)Other assets, net


853



(307
)Accounts payable, accrued liabilities and other


10,534



40,288Net cash provided by operating activities


84,362



92,117Cash Flows from Investing Activities:Additions to property and equipment


(145,459
)


(103,022
)Acquisition of businesses, net of cash acquired


(12,583
)


(8,724
)Proceeds from sales of equipment


32,715



20,901Net cash used in investing activities


(125,327
)


(90,845
)Cash Flows from Financing Activities:Proceeds from the issuance of debt


106,777



25,760Payments on debt


(98,689
)


(40,760
)Proceeds from the exercise of stock options


6,418



16,538Excess tax benefit from share-based compensation


4,748



13,112Net cash provided by financing activities


19,254



14,650Effect of exchange rate changes on cash


(9
)


1,423Net increase (decrease) in cash and cash equivalents


(21,720
)


17,345Cash and cash equivalents, beginning of period


36,329



9,914Cash and cash equivalents, end of period

$
14,609


$
27,259    5




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##### Table of Contents



W-H
    ENERGY SERVICES, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
  1.
    Business
    Organization  Description
    of Company
    Basis
    of Presentation
  Form 10-Q Regulation S-X. Form 10-K
  Reclassifications
    Accounting
    Policies and Procedures
  Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes
  FIN 48-1,
  accrue-in-advance
 6




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W-H
    ENERGY SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Form 10-K
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
    (as amended)
  2.
    Acquisitions    3.
    Earnings
    per Share   7




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W-H
    ENERGY SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2006


2007


2006Basic weighted average shares outstanding


30,473



29,901



30,288



29,542Dilutive effect of stock options and restricted shares


818



852



816



959Diluted weighted average shares outstanding


31,291



30,753



31,104



30,501   4.
    Inventories    September 30,


December 31,2007


2006Finished goods

$
75,928


$
66,069Work-in-process


11,828



7,626Raw materials and supplies


24,150



16,594Inventory reserve


(11,385
)


(12,162
)Inventories

$
100,521


$
78,127   5.
    Credit
    Facility         8




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W-H
    ENERGY SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Litigation    7.
    Income
    Taxes        8.
    Related
    Party Transaction   9




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##### Table of Contents



W-H
    ENERGY SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    Shareholders
    Equity  Stock
    options
    Weighted AverageNumber of


Weighted Average


Remaining


AggregateOptions


Price per Share


Contractual Term


Intrinsic Value(Years)


(Amounts in thousands)Outstanding at December 31, 2006


1,951,904


$
16.94Granted






Exercised


(346,740
)


17.79






$
14,400Expired/canceled


(14,238
)


15.89Outstanding at September 30, 2007


1,590,926



16.80



5.0



26,722Exercisable at September 30, 2007


1,223,676



15.33



4.3



18,762   Restricted
    Stock
        WeightedAverageNumber of


Fair ValueShares


per ShareNonvested balance at December 31, 2006


142,000


$
49.51Granted


67,000



47.91Vested


(54,250
)


38.47Forfeited






Nonvested balance at September 30, 2007


154,750



52.69   10.
    Operating
    Segments  Form 10-K
 10




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W-H
    ENERGY SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Drilling
    Related Products and Services
    Completion
    and Workover Related Products and Services
    Summary
    Information
      Drilling


Completion


Corporate


TotalRevenues

$
187,456


$
95,536


$



$
282,992Operating income


40,114



21,726



(5,147
)


56,693Depreciation and amortization


12,542



7,825



50



20,417Total assets


608,640



324,321



50,187



983,148Capital expenditures


28,365



19,216



102



47,683     Drilling


Completion


Corporate


TotalRevenues

$
149,478


$
89,373


$



$
238,851Operating income


31,515



27,714



(4,771
)


54,458Depreciation and amortization


9,556



6,013



55



15,624Total assets


455,512



273,089



40,482



769,083Capital expenditures


22,769



16,703



30



39,502     Drilling


Completion


Corporate


TotalRevenues

$
545,858


$
287,773


$



$
833,631Operating income


120,403



73,610



(14,645
)


179,368Depreciation and amortization


34,715



22,251



165



57,131Total assets


608,640



324,321



50,187



983,148Capital expenditures


82,958



61,746



755



145,459  11




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##### Table of Contents



W-H
    ENERGY SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Drilling


Completion


Corporate


TotalRevenues

$
413,135


$
243,280


$



$
656,415Operating income


82,950



71,704



(13,340
)


141,314Depreciation and amortization


28,299



17,433



192



45,924Total assets


455,512



273,089



40,482



769,083Capital expenditures


61,048



41,903



71



103,022     Revenues
  For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2007


2006


2007


2006United States

$
252,731


$
215,476


$
739,916


$
591,129North Sea


13,880



10,764



42,603



29,388Other


16,381



12,611



51,112



35,898Total

$
282,992


$
238,851


$
833,631


$
656,415   Operating
    Income
  For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2007


2006


2007


2006(As adjusted)





(As adjusted)United States

$
50,216


$
52,313


$
161,251


$
134,101North Sea


3,375



1,049



7,991



3,378Other


3,102



1,096



10,126



3,835Total

$
56,693


$
54,458


$
179,368


$
141,314   Property
    and equipment, net
  September 30,


December 31,2007


2006United States

$
379,396


$
306,357North Sea


12,390



13,986Other


27,603



23,153Total

$
419,389


$
343,496  12




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Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Statements
  Form 10-K
  Overview
    of Our Products and Services
         13




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Drilling
    Related Products and Services
        ® 3-Dimensional 1 4 ® 1 2 ® ® 3-Dimensional
  tm 3 4 1 2 tm 3 4 tm tm tm tm tm tm tm 3 4
  Completion
    and Workover Related Products and Services
     14




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##### Table of Contents



Geographic
    Expansion
    Results
    of Operations
  Form 10-Q.
  Three
    Months Ended September 30, 2007 Compared to the Three
    Months Ended September 30, 2006
  Revenues.
    
    an increase in demand for our directional drilling services and
    technologically advanced services and tools and drilling fluids
    products due, in part, to a 4% higher average number of rotary
    rigs and a 15% higher average number of non-vertical rigs
    operating in the United States;
    our larger asset base resulting from our capital expenditure
    investments;
    increased international activity in the North Sea, North Africa
    and the Middle East; and
    onshore geographic expansion.    
    higher demand for our cased-hole wireline services and
    completion fluids as a result of an overall increase in activity
    levels;
    an increase in our cased-hole wireline fleet and other capital
    expenditure investments; and
    onshore geographic expansion.  Cost of Revenues. start-up
 15




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##### Table of Contents



Selling, General and Administrative
    Expenses.
  Research and Development Expenses. ® 3-Dimensional
  Depreciation and Amortization.
  Interest and Other Expense.
  Provision for Income Taxes.
  Nine
    Months Ended September 30, 2007 Compared to the Nine Months
    Ended September 30, 2006
  Revenues.
    
    an 8% higher 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, drilling fluids products and rental tools;
    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;
    our larger asset base resulting from our capital expenditure
    investments;
    increased international activity in the North Sea, North Africa,
    and the Middle East;
    onshore geographic expansion supported by an increasing
    non-vertical rig count; and
    improved pricing.    
    higher demand for our cased-hole wireline and coiled tubing
    services as a result of an overall increase in industry activity
    levels; 16




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
    an increase in our coiled tubing and cased-hole wireline fleets
    and other capital expenditure investments;
    onshore geographic expansion;
    increased activity offshore; and
    improved pricing.  Cost of Revenues.
  Selling, General and Administrative
    Expenses.
  Research and Development Expenses. ® 3-Dimensional
  Depreciation and Amortization.
  Interest and Other Expense.
  Provision for Income Taxes.
  Recent
    Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes
  FIN 48-1,
 17




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accrue-in-advance
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
    (as amended)
  Liquidity
    and Capital Resources
    Cash
    flow
       18




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Capital
    resources
  Credit
    Agreement
    Future
    capital requirements
        Off
    balance sheet arrangements
    Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk    Interest Rate Risk.
 19




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Foreign Currency Exchange Risk.
  Stock Price Volatility.
  Item 4.
    Controls
    and Procedures  Disclosure Controls and Procedures.
  Internal Control over Financial
    Reporting.
  and/or
  PART II
  OTHER
    INFORMATION
  Item 6.
    Exhibits    Form 10-Q,
 20




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SIGNATURES
    W-H Energy Services, Inc.
  By:
    /s/  Kenneth
    T. White, Jr.   Chairman of the Board, President and Chief
 Executive Officer
    By:
    /s/  Ernesto
    Bautista, III   Vice President and Chief Financial Officer
    21




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EXHIBIT INDEX
  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*     *
    
    Filed herewith 22