<PAGE> 1
                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D. C. 20549

                                      FORM 10-K

       (X)         ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
                         THE SECURITIES EXCHANGE ACT OF 1934
                                    (Fee Required)

                   For the fiscal year ended March 31, 1999
                                          or
       ( )        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                        OF THE SECURITIES EXCHANGE ACT OF 1934

                            Commission File Number 0-12757

                              TMBR/SHARP DRILLING, INC.
                (Exact name of registrant as specified in its charter)

                     TEXAS                                  75-1835108
           (State of Incorporation)             (I.R.S.  Employer Identification
     No.)

                    4607 WEST INDUSTRIAL BLVD., MIDLAND, TEXAS   79703
                    (Address of principal executive offices)   (Zip Code)

               Registrant's telephone number (area code) (915) 699-5050

          Securities registered pursuant to Section 12(b) of the Act:  None

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

                             Common Stock, $.10 Par Value
                                   (Title of Class)

          Indicate  by check  mark  whether the  registrant  (1) has  filed  all
     reports  required to  be filed  by Section  13 or  15(d) of  the Securities
     Exchange Act  of 1934 during the  preceding 12 months (or  for such shorter
     period that  the registrant was required to file such reports), and (2) has
     been subject to such filing requirements for the past 90 days.

                                                     Yes  X      No

          Indicate  by check mark if disclosure of delinquent filers pursuant to
     Item 405  of  Regulation S-K  is  not contained  herein,  and will  not  be
     contained,  to the best of  Registrant's knowledge, in  definitive proxy or
     information statements incorporated by  reference in Part III of  this Form
     10-K or any amendment to this Form 10-K. ( )

          The  aggregate market value of  voting stock held  by nonaffiliates of
     the registrant at June 15, 1999 was approximately $20,598,527.

          At  June 14,  1999, there  were 4,710,886  shares of  the Registrant's
     Common Stock outstanding.

          The  information required by Items 11,  12 and 13 of  Part III of this
     Form  10-K  are  incorporated  by reference  from  the  registrant's  Proxy
     Statement  to  be filed  pursuant  to Regulation  14A with  respect  to the
     registrant's Annual Meeting to be held in August, 1999.
<PAGE> 2




                              TMBR/SHARP DRILLING, INC.

                                      FORM 10-K

                                  TABLE OF CONTENTS



     Part I                                                            Page

          Item  1.  Business . . . . . . . . . . . . . . . . . . . .      3
          Item  2.  Properties . . . . . . . . . . . . . . . . . . .     16
          Item  3.  Legal Proceedings  . . . . . . . . . . . . . . .     17
          Item  4.  Submission of Matters to a Vote of
                      Security Holders . . . . . . . . . . . . . . .     18

     Part II

          Item  5.  Market for Registrant's Common Equity
                      and Related Stockholder Matters  . . . . . .       18
          Item  6.  Selected Financial Data  . . . . . . . . . . . .     20
          Item  7.  Management's Discussion and Analysis
                      of Financial Condition and Results
                      of Operations  . . . . . . . . . . . . . . . .     21
          Item  7A. Quantitative and Qualitative Disclosure
                      About Market Risk  . . . . . . . . . . . . . .     28
          Item  8.  Financial Statements and Supplementary Data  . .     28
          Item  9.  Changes in and Disagreements with Accountants
                      on Accounting and Financial Disclosure . . . .     53

     Part III

          Item 10.  Directors and Executive Officers
                      of the Registrant  . . . . . . . . . . . . . .     53
          Item 11.  Executive Compensation . . . . . . . . . . . . .     54
          Item 12.  Security Ownership of Certain Beneficial
                      Owners and Management  . . . . . . . . . . . .     54
          Item 13.  Certain Relationships and Related Transactions .     54

     Part IV and signatures

          Item 14.  Exhibits, Financial Statement Schedules
                      and Reports on Form 8-K  . . . . . . . . . . .     55
          Signatures . . . . . . . . . . . . . . . . . . . . . . . .     60








                                         -2-


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                                        PART I


     Item 1.  BUSINESS

     General

          TMBR/Sharp Drilling,  Inc. (the "Company") was  incorporated under the
     laws of  Texas in  October, 1982  under the  name TMBR  Drilling, Inc.   In
     August, 1986, the Company changed its name to TMBR/Sharp Drilling, Inc.

          The principal executive  offices of  the Company are  located at  4607
     West  Industrial Blvd., Midland, Texas,  79703 and its  telephone number is
     (915) 699-5050.

          The  Company is engaged  in two lines  of business,  which include the
     domestic  onshore  contract  drilling    of  oil  and  gas  wells, and  the
     acquisition, exploration for, development, production  and sale of oil  and
     natural gas.

          The Company  provides domestic  onshore contract drilling  services to
     major  and independent  oil  and gas  companies.   The Company  focuses its
     operations in the Permian Basin of west  Texas and eastern New Mexico.   In
     addition to its drilling rigs,  the Company provides the crews and  most of
     the ancillary  equipment used in the  operation of its drilling  rigs.  Rig
     utilization for the fiscal year ended  March 31, 1999 was approximately 27%
     compared to 78% for the year ended March 31, 1998.

          The  Company owns  17 drilling  rigs, at  June 14,  1999, 2  rigs were
     operating on behalf of the Company for its own account, 1 was operating for
     non-affiliated oil producers, and  14 were "stacked" (non-operating).   All
     of the Company's rigs are operational and  actively marketed in the Permian
     Basin  of  west Texas  and eastern  New Mexico.    The Company  markets its
     contract  drilling services to both major oil companies and independent oil
     producers.  The depth capabilities  of the Company's rigs range  from 8,500
     feet to 30,000 feet.

          An onshore drilling rig consists of engines, drawworks, mast, pumps to
     circulate drilling fluids, blowout  preventers, the drillstring and related
     equipment.  The  size and type  of rig utilized  for each drilling  project
     depends  upon  the location  of  the  well, the  well  depth and  equipment
     requirements specified in the drilling contract, among other factors.

          The Company believes it has  established a reputation for reliability,
     high  quality equipment and  well-trained crews.   The  Company continually
     seeks to modify and upgrade  its equipment to maximize the  performance and
     capabilities of its drilling rig fleet, which the Company believes provides
     it with a competitive advantage.  The Company has the capability to design,
     repair  and modify its  drilling rig fleet  from its  principal support and
     storage facilities in  Midland, Texas,  and an additional  storage yard  in
     Odessa, Texas.

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          The  Company's  oil  and  gas exploration  and  production  operations
     complement  its onshore drilling operations.   These activities are focused
     in the  mature producing regions  in the  Permian Basin of  west Texas  and
     eastern New Mexico.  Oil and gas operations comprised approximately  10% of
     the  Company's revenues  for the  fiscal year  ended March  31, 1999.   The
     Company's  proved reserves, all  of which were  proved developed producing,
     were approximately 1,163 MBOE (million barrels of oil equivalent) and had a
     present value of future net revenues of approximately $6.4 million at March
     31, 1999.   At March 31, 1999, the Company owned interests in approximately
     21,018  gross (2,862 net)  acres of developed  oil and gas  properties, and
     approximately 6,727 gross (386 net) acres of undeveloped properties.

          Industry conditions  began to  deteriorate during  the latter part  of
     1997 and have continued to the present, primarily  because of declining oil
     prices.  Recently, there has  been an excess supply of, and  reduced demand
     for, crude oil worldwide.  This excess supply has placed downward pressures
     on oil  prices in  the United  States as  well as  worldwide.   Natural gas
     prices also declined during this period because of warm weather conditions,
     which reduced demand.

          The  contract drilling  industry is  highly sensitive  to oil  and gas
     industry  conditions.     Many  oil  and  gas  exploration  companies  have
     significantly reduced their  drilling budgets  due to the  low oil and  gas
     prices.  As a  result, the Company encounters substantial  competition from
     other  drilling contractors.    In  recent  years, competition  within  the
     drilling industry has  been intense  due to depressed  demand for  contract
     drilling services.

          The Company's profitability and cash flows are highly dependent on the
     prices of oil and natural gas.   Current  low oil  prices and,  to a lesser
     degree, natural gas prices, continue to have a material adverse effect on
     the Company's cash flows and profitability.  If prices remain depressed
     for a sustained period of time, this could have a material adverse effect
     on the Company's future operations and financial condition.

          The  Company  has  no   material  patents,  licenses,  franchises,  or
     concessions which it considers significant to its operations.

          The nature of the Company's business is such that it does not maintain
     or require a "backlog" of products, customer orders, or inventory.

          The Company's operations are not  subject to renegotiation of  profits
     or termination of contracts at the election of the federal government.

          The  Company has  not been  a party  to any  bankruptcy, receivership,
     reorganization, adjustment, or similar proceeding.

          Generally,  the  Company's business  activities  are  not seasonal  in
     nature.  However, weather conditions can hinder drilling activities.








                                         -4-

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     CONTRACT DRILLING OPERATIONS

     Drilling Rigs

          The  following table sets forth the type and depth capabilities of the
     Company's 17 onshore drilling rigs.

          Rig No.        Depth Capacity      Type
             2                  8,500        Weiss W-45
             3                  8,500        Weiss W-45
             4                  8,500        Unit 15
             6*                12,500        National 75A
             7                 10,000        Unit 15
            10                 12,500        National 75A
            12                 11,500        National 50A
            14                 12,500        BDW 650
            17                  9,500        Unit 15
            22                 13,500        Brewster N-75
            23*                13,500        National 75A
            24                 13,500        Gardner Denver 700
            27                 13,500        Gardner Denver 700
            28                 16,000        Gardner Denver 800
            29                 16,000        Gardner Denver 800
            55*                30,000        Gardner Denver DW-2100
            56                 20,000        National 110-M
          ----------------
          *In active operation at June 14, 1999.

          Major overhauls, repairs and general maintenance for the drilling rigs
     are  primarily conducted  at the  Company's  principal support  and storage
     facilities in Midland, Texas.   The Company emphasizes the  maintenance and
     periodic improvement of its  drilling equipment and believes that  its rigs
     are generally in good condition.  See "Item 2. Properties".

     Drilling Contracts

          The  Company's   drilling  contracts  are  usually   obtained  through
     competitive bidding or as  a result of direct negotiations  with customers.
     Drilling contracts  typically  obligate the  Company  to pay  all  expenses
     associated with  drilling an oil or  gas well, including wages  of drilling
     personnel, maintenance  expenses and  incidental purchases of  rig supplies
     and  equipment.   The  majority of  the  Company's contracts  are "footage"
     contracts with the remainder being "daywork" or "turnkey" contracts.  Under
     a footage  contract, the Company charges  an agreed price per  foot of hole
     drilled, whereas a day-work  contract permits the Company  to charge a  per
     diem fixed rate for  each day the rig is in operation.   A turnkey contract
     specifies a total price for drilling a well  plus providing other services,
     materials  or  equipment which  are  typically  the  responsibility of  the
     operator under footage or daywork contracts.  Prices for all contracts vary
     depending on the  location, depth, duration, complexity  of the well  to be
     drilled, operating conditions and other  factors peculiar to each  proposed
     well.    Under  footage and  turnkey  contracts,  the  Company manages  the
     drilling operation and the type of equipment to be used, subject to certain
     customer specifications.  The  Company also bears  the risk and expense  of
     mechanical malfunctions, equipment shortages, and other delays arising from


                                         -5-

<PAGE> 6
     problems caused in drilling a well.   Daywork contracts permit the operator
     of  the well  to manage  drilling  operations and  to specify  the type  of
     equipment to be used.  Under daywork contracts, the Company generally bears
     none of the  risk due to time delays  caused by unforeseeable circumstances
     such as stuck  or broken drill pipe or blowouts.   Of the 3 rigs working at
     June 14, 1999, 2 were subject to daywork contracts and one was subject to a
     footage contract.

          The Company's operations  are subject to many hazards,  including well
     blowouts and fires that could cause personal injury, suspension of drilling
     operations, damage to or  destruction of equipment and damage  to producing
     formations  and surrounding areas.   The Company believes  it is adequately
     insured for public liability and damage to the property of others resulting
     from its operations.

     Rig Utilization

          The Company's  contract drilling revenues depend  upon the utilization
     of its  drilling  rigs and  the contract  rates received  for its  drilling
     operations.   These two  factors  are affected  by a  number of  variables,
     including  competitive conditions in the drilling industry and the level of
     exploration  and development activity conducted by oil and gas producers at
     any given time.   The level of domestic drilling  activity has historically
     fluctuated and cannot  be accurately predicted because  of numerous factors
     affecting  the petroleum  industry, including  oil and  gas prices  and the
     degree  of  government  regulation  of  the  industry.   Contract  drilling
     revenues and  rig utilization rates for  the past five years  are set forth
     below.

                           Contract Drilling
            Year Ended         Revenues          Number of      Percent of
             March 31,      (in thousands)       Rigs Owned     Utilization
               1995            $ 18,357              15            43.5%
               1996              21,298              15            45.1%
               1997              18,483              15            51.6%
               1998              34,891              17(a)         78.2%
               1999              12,948              17            26.6%

     ____________________
          (a)  Of  the total  number of  rigs owned,  one was  owned only  for a
               portion of the fiscal year ended March 31, 1998.

     Customers

          During the  fiscal year ended  March 31,  1999, the Company  drilled a
     total of 64 wells for approximately 16 customers.  The following table sets
     forth certain information with  respect to the principal customers  for the
     Company's contract drilling services during such period.

                                                Percent  of      Number of Wells
     Name of Customer                         Total Revenues         Drilled


     Penwell Energy, Inc.                           14%                  2
     Marathon Oil Company                           13%                 10
     Tom Brown, Inc.                                12%                 10

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<PAGE> 7



          The loss  of any  one or  more of  the above  customers  could have  a
     material adverse effect on the  Company, depending upon the demand  for the
     Company's drilling  rigs at the time of such loss and the Company's ability
     to attract new customers.

     Competition

          The  Company encounters  substantial competition  from other  drilling
     contractors in its contract drilling  operations.  The Company's  principal
     market areas of west Texas and eastern New Mexico are highly fragmented and
     competitive.  Companies compete  primarily on the basis of  contract rates,
     suitability and availability of equipment and crews, experience of drilling
     in  certain  areas,  and reputation.    The  Company  believes it  competes
     favorably  with respect to all of these  factors.  Competition is primarily
     on a well-by-well basis and may  vary significantly at any particular time.
     Drilling  rigs  can be  stacked  or moved  from  one region  to  another in
     response to  perceived long-term changes in levels  of activity.  In recent
     years,  competition within  the  industry  has  been  intense  due  to  the
     depressed  demand  resulting  from lower  oil  and  gas  prices and  excess
     deliverability of natural gas.

     Employees

          At  June  4,  1999,   the  Company  had  32  salaried   employees  and
     approximately  68 hourly paid employees.  Employees of the  Company are not
     covered by any collective  bargaining agreements and the Company  has never
     experienced a strike or work stoppage.  The  Company considers its employee
     relations to be satisfactory.

     REGULATION

     Oil and Gas

          The Company's operations  are regulated by  certain federal and  state
     agencies.  In particular, oil and gas production and related operations are
     or have  been subject to price  controls, taxes and other  laws relating to
     the oil and gas industry.  The Company cannot predict how existing laws and
     regulations may  be interpreted by  enforcement agencies or  court rulings,
     whether additional laws and regulations will be adopted, or the effect such
     changes  may  have  on its  business,  financial  condition  or results  of
     operations.

          The  Company's  oil  and   gas  exploration,  production  and  related
     operations are  subject to extensive  rules and regulations  promulgated by
     federal, state and local agencies.   Failure to comply with such  rules and
     regulations  can result in substantial penalties.  The regulatory burden on
     the oil and gas industry increases the Company's cost of doing business and
     affects  its  profitability.    Because  such  rules  and  regulations  are
     frequently amended or reinterpreted,  the Company is unable to  predict the
     future cost or impact of complying with such laws.


                                         -7-



<PAGE> 8

          The State of Texas and many other states require permits for  drilling
     operations,  drilling bonds  and reports  concerning operations  and impose
     other  requirements relating to the  exploration and production  of oil and
     gas.  Such states also have statutes or regulations addressing conservation
     matters, including provisions for the unitization or pooling of oil and gas
     properties, the establishment of  maximum rates of production from  oil and
     gas wells and the  regulation of spacing, plugging and  abandonment of such
     wells.

          Sales of gas by the Company are  not regulated and are made at  market
     prices.    However,  the  Federal  Energy  Regulatory  Commission  ("FERC")
     regulates interstate  and certain  intrastate gas transportation  rates and
     service  conditions,  which affect  the marketing  of  gas produced  by the
     Company, as well as  the revenues received by the Company for sales of such
     production.   Since  the mid-1980s,  FERC has  issued a  series of  orders,
     culminating  in Order  Nos. 636,636-A  and 636-B  ("Order 636"),  that have
     significantly altered the marketing  and transportation of gas.   Order 636
     mandates  a  fundamental restructuring  of  interstate  pipeline sales  and
     transportation service, including the unbundling by interstate pipelines of
     the sales,  transportation, storage and  other components of  the city-gate
     sales services such pipelines previously performed.  One of FERC's purposes
     in issuing the orders was to increase competition within all  phases of the
     gas industry.  Order  636 and subsequent  FERC orders issued in  individual
     pipeline  restructuring proceedings have  been the subject  of appeals, the
     results of which have  generally been supportive of the  FERC's open-access
     policy.  In  1996, the United States Court  of Appeals for the  District of
     Columbia  Circuit largely upheld  Order No. 636,  et seq.   Because further
     review  of certain  of these orders  is still  possible, and  other appeals
     remain pending,  it is  difficult to  predict  the ultimate  impact of  the
     orders on  the Company and its gas marketing efforts.  Generally, Order 636
     has  eliminated   or  substantially   reduced  the   interstate  pipelines'
     traditional role  as wholesalers of  gas, and  has substantially  increased
     competition  and volatility in  gas markets.   While significant regulatory
     uncertainty remains, Order 636 may ultimately enhance the Company's ability
     to market and  transport its gas, although it may  also subject the Company
     to greater competition.

          The sale of oil by the Company  is not regulated and is made at market
     prices.  The price the Company receives from the sale of oil is affected by
     the cost of transporting the product to market.  Effective as of January 1,
     1995,  FERC implemented  regulations  establishing an  indexing system  for
     transportation rates  for interstate  common carrier oil  pipelines, which,
     generally,  would  index  such  rates  to  inflation,  subject  to  certain
     conditions and limitations.   These regulations could increase the  cost of
     transporting  oil  by  interstate   pipelines,  although  the  most  recent
     adjustment  generally decreased  rates.   These regulations  have generally
     been approved on judicial review.  The Company is not able to predict  with
     certainty what  effect, if  any, these  regulations will  have on  it, but,
     other factors being equal, the regulations may, over time, tend to increase
     transportation costs or reduce wellhead prices for oil.


                                         -8-





<PAGE> 9
          The  Company  is required  to comply  with  various federal  and state
     regulations regarding plugging and abandonment of oil and gas wells.

     Environmental

          Various  federal, state and  local laws and  regulations governing the
     discharge of materials into  the environment, or otherwise relating  to the
     protection  of the  environment, health  and safety,  affect the  Company's
     operations  and  costs.    These  laws  and regulations  sometimes  require
     governmental  authorization before  certain activities,  limit or  prohibit
     other activities  because of protected areas or species, impose substantial
     liabilities for pollution related to  Company operations or properties, and
     provide  penalties  for  noncompliance.     In  particular,  the  Company's
     exploration and  production operations,  its activities in  connection with
     storage  and transportation of oil  and other liquid  hydrocarbons, and its
     use  of   facilities  for   treating,  processing  or   otherwise  handling
     hydrocarbons and related  exploration and production wastes  are subject to
     stringent  environmental  regulation.    As with  the  industry  generally,
     compliance  with  existing   and  anticipated  regulations  increases   the
     Company's overall cost  of business.   While these  regulations affect  the
     Company's capital expenditures and earnings, the Company believes that such
     regulations  do not affect its competitive position in the industry because
     its  competitors   are  similarly  affected   by  environmental  regulatory
     programs.   Environmental  regulations  have historically  been subject  to
     frequent change and, therefore, the Company is unable to predict the future
     costs  or other future impacts  of environmental regulations  on its future
     operations.  A discharge  of hydrocarbons or hazardous substances  into the
     environment could subject the Company to substantial expense, including the
     cost to comply with  applicable regulations that require a  response to the
     discharge, such as containment or cleanup, claims by neighboring landowners
     or  other third  parties  for personal  injury,  property damage  or  their
     response costs and penalties assessed, or other claims sought by regulatory
     agencies for response cost or for natural resource damages.

          The following are examples of some environmental laws that potentially
     impact the Company and its operations.

          Water.  The  Oil Pollution Act ("OPA") was enacted  in 1990 and amends
     provisions of the Federal Water Pollution Control Act of 1972 ("FWPCA") and
     other  statutes as they pertain to prevention  of and response to major oil
     spills.    The OPA  subjects  owners  of facilities  to  strict, joint  and
     potentially  unlimited  liability  for  removal  costs  and  certain  other
     consequences of an oil spill, where such spill is into navigable waters, or
     along  shorelines.    In the  event  of  an  oil  spill into  such  waters,
     substantial liabilities could be imposed upon the Company.  States in which
     the  Company  operates have  also enacted  similar  laws.   Regulations are
     currently being developed  under the  OPA and similar  state laws that  may
     also impose additional regulatory burdens on the Company.

          The  FWPCA  imposes restrictions  and  strict  controls regarding  the
     discharge of  produced  waters,  other oil  and  gas wastes,  any  form  of

                                         -9-






<PAGE> 10
     pollutant, and, in  some instances, storm water runoff,  into waters of the
     United States.  The  FWPCA provides for civil, criminal  and administrative
     penalties  for any unauthorized discharges and, along with the OPA, imposes
     substantially potential liability for the costs of the removal, remediation
     or  damages resulting from  an unauthorized discharge.   State laws for the
     control   of  water  pollution   also  provide  for   civil,  criminal  and
     administrative penalties  and liabilities  in the  case of an  unauthorized
     discharge into state  waters.  The cost of compliance with  the OPA and the
     FWPCA  have not historically been material to the Company's operations, but
     there can be  no assurance that  changes in federal,  state or local  water
     pollution control programs will not materially adversely effect the Company
     in the future.  Although  no assurances can be given, the  Company believes
     that compliance with existing  permits and compliance with  foreseeable new
     permit  requirements will  not  have  a  material  adverse  effect  on  the
     Company's financial condition or results of operations.

          Air Emissions.   Amendments to the  Federal Clean Air  Act enacted  in
     late  1990 (the  "1990  CAA  Amendments")  require  or  will  require  most
     industrial operations in the United States to incur capital expenditures in
     order   to  meet   air  emissions   control  standards  developed   by  the
     Environmental  Protection Agency ("EPA")  and state environmental agencies.
     Although no assurances can be given, the Company believes implementation of
     the 1990  CAA Amendments  will not  have a material  adverse effect  on the
     Company's financial condition or results of operations.

          Solid Waste.   The Company  generates non-hazardous solid  wastes that
     are  subject to the requirements  of the Federal  Resource Conservation and
     Recovery Act  ("RCRA") and  comparable  state statutes.   The  EPA and  the
     states  in which  the  Company operates  are  considering the  adoption  of
     stricter disposal standards for the  type of non-hazardous wastes generated
     by the Company.  RCRA also governs the generation, management, and disposal
     of hazardous  wastes.  At  present, the Company  is not required  to comply
     with a substantial portion  of the RCRA requirements because  the Company's
     operations generate minimal quantities of hazardous wastes.  However, it is
     anticipated that  additional wastes,  which could include  wastes currently
     generated  during  operations,  could  in  the  future   be  designated  as
     "hazardous  wastes".   Hazardous wastes  are subject  to more  rigorous and
     costly disposal and management  requirements than are non-hazardous wastes.
     Such  changes  in   the  regulations  may  result   in  additional  capital
     expenditures or operating expenses by the Company.

          Superfund.   The  Comprehensive Environmental  Response, Compensation,
     and Liability Act ("CERCLA"), also known as "Superfund", imposes liability,
     without regard  to fault or  the legality of  the original act,  on certain
     classes  of  persons  in  connection  with  the  release  of  a  "hazardous
     substance" into the environment.   These persons include the  current owner
     or operator of any site where a release historically occurred and companies
     that  disposed or  arranged for  the disposal  of the  hazardous substances
     found at the site.  CERCLA also authorizes the EPA  and, in some instances,
     third parties to act  in response to  threats to the  public health or  the
     environment  and to seek to recover from the responsible classes of persons

                                         -10-






<PAGE> 11
     the costs  they incur.    In the  course of  its  ordinary operations,  the
     Company  may   have  managed  substances  that  may  fall  within  CERCLA's
     definition of  a "hazardous  substance".   the Company  may be jointly  and
     severally  liable under  CERCLA for all  or part  of the  costs required to
     clean up sites  where the Company disposed of or  arranged for the disposal
     of these substances.   This potential liability extends to  properties that
     the Company owned or operated, as well as to properties  owned and operated
     by others at which disposal of the Company's hazardous substances occurred.

          The Company may  also fall into  the category of  a "current owner  or
     operator".  The Company  currently owns or leases numerous  properties that
     for many years have been used for the exploration and production of oil and
     gas.   Although the Company believes it has utilized operating and disposal
     practices  that were standard in the industry  at the time, hydrocarbons or
     other  wastes may have  been disposed of  or released by the  Company on or
     under  the properties owned or leased by the Company.  In addition, many of
     these  properties have been previously  owned or operated  by third parties
     who may  have disposed of or released hydrocarbons or other wastes at these
     properties.  Under CERCLA, and analogous  state laws, the Company could  be
     subject to certain liabilities  and obligations, such as being  required to
     remove or  remediate previously disposed wastes  (including wastes disposed
     of or  released by prior  owners or  operators), to  clean up  contaminated
     property  (including  contaminated  groundwater)  or  to  perform  remedial
     plugging operations to prevent future contamination.


     OIL AND GAS OPERATIONS

          The  Company's  oil  and   gas  operations  involve  the  acquisition,
     exploration for, development and production of oil and natural gas.  During
     the fiscal year  ended March  31, 1999, the  Company's exploration  efforts
     were conducted in west Texas and eastern New Mexico.

          The Company is actively  investing in oil  and gas properties for  the
     purpose  of exploration,  development and production  of oil and  gas.  The
     Company  acquires  or  participates  in  these  arrangements as  a  working
     interest owner and usually provides the contract drilling services for such
     ventures.

          Exploration for oil and natural gas requires substantial expenditures,
     especially for  exploration in more remote  areas.  As is  customary in the
     oil  and  gas industry,  the  drilling  of oil  and  gas  wells is  usually
     accomplished  through participation with other  third parties.   One of the
     parties  experienced with operations in  the area is  usually designated as
     the operator of the property and is responsible for the direct supervision,
     administration and  accounting for wells drilled and  completed pursuant to
     an operating agreement between  the parties.  The Company  typically serves
     as  operator  of  oil  and  gas prospects  assembled  by  the  Company  and
     participates  as  a  non-operating  working  interest  owner  in  prospects
     assembled  and  generated  by third  parties.    As  operator, the  Company
     supervises  the drilling and  completion of wells  and production therefrom

                                         -11-






<PAGE> 12
     and the further  development of surrounding properties.   The operator of a
     well has  significant control  over  its location  and  the timing  of  its
     drilling.   In addition,  the operator of  a well receives  fees from other
     working interest owners as reimbursement for the general and administrative
     expenses attendant  to  the operation  of  the wells.   The  operator  will
     normally receive revenues and pay expenses equal to more than its ownership
     interest in the wells, and then must remit or  collect all but its share to
     or from the other  respective participants in the well.   At June 14,  1999
     the Company was operator of 26 wells.

     Oil and Gas Reserves

          Information  concerning the  Company's  estimated proved  oil and  gas
     reserves  is included in Note  (10) to the  Company's financial statements.
     See "Item 8 - Financial Statements and Supplementary Data".

          The  reserve  information is  only an  estimate.   There  are numerous
     uncertainties  inherent  in  estimating  oil  and  gas reserves  and  their
     estimated values, including many factors beyond the control of the Company.
     Reserve  engineering  is a  subjective  process  of estimating  underground
     accumulations of  oil and natural gas  that cannot be measured  in an exact
     manner,  and the  accuracy of  any reserve  estimate is  a function  of the
     quality of available data and of engineering and  geological interpretation
     and judgment.   As a result,  estimates of different  engineers often vary.
     In  addition, estimates  of reserves  are subject  to revision  due  to the
     results of drilling, testing and production  subsequent to the date of such
     estimates.   Accordingly, reserve  estimates are  often different  from the
     quantities  of oil and gas that are  ultimately recovered.  The accuracy of
     such  estimates is  highly dependent  upon the  accuracy of  the underlying
     assumptions upon which they are based.

          In  general,  the volume  of production  from  oil and  gas properties
     declines  as reserves  are  depleted.   Except  to the  extent the  Company
     acquires  properties containing  proved  reserves  or  conducts  successful
     exploration and  development activities, or  both, the proved  reserves of,
     and volumes  of production  by, the  Company will  decline as reserves  are
     produced.  The Company's future oil  and gas production is therefore highly
     dependent  upon its  level of  success in  acquiring or  finding additional
     reserves.

          The Company has no reserves outside the United States.

          No  major discovery or other  favorable or adverse  event has occurred
     since March 31, 1999 which is  believed to have caused a significant change
     in the estimated proved oil and gas reserves of the Company.

          The  Company's oil and gas reserves and  production are not subject to
     any  long-term supply  or similar  agreements with  foreign governments  or
     authorities.

          The Company's estimate of reserves has not been filed with or included
     in  reports to any  federal agency other  than the Securities  and Exchange
     Commission.


                                         -12-



<PAGE> 13
     Productive Wells and Acreage

          The following  tables set forth the  gross and net productive  oil and
     gas wells and developed and undeveloped acreage in  which the Company owned
     a  working interest  as of  March 31,  1999.   Excluded  from the  table is
     acreage  in which the Company's  interest is limited  to royalty or similar
     interests.


                                                      Productive Wells
                                                Gross                  Net
                                             Oil     Gas           Oil      Gas
     Texas................................... 74      13         10.976    2.175
     New Mexico.............................. 13       5          3.321     .814
                                             ---     ---         ------    -----
               Total......................... 87      18         14.297    2.989
                                             ===     ===         ======    =====


                                                        Acreage
                                           Developed             Undeveloped
                                        Gross       Net       Gross         Net
     Texas............................ 17,687      2,245      6,727          386
     New Mexico.......................  3,331        617         --           --
                                       ------      -----      -----        -----
               Total.................. 21,018      2,862      6,727          386
                                       ======      =====      =====        =====

          Generally,  the  terms  of  developed   oil  and  gas  leaseholds  are
     continuing and  such leases remain in force  by virtue of, and  so long as,
     production from lands under  lease is maintained.  Undeveloped oil  and gas
     leaseholds  are generally for  a primary term,  such as five  or ten years,
     subject  to maintenance with the payment of specified minimum delay rentals
     or extension by production.

          In addition  to the Company's developed and  undeveloped acreage shown
     above, on  September 5, 1995,  the Company entered  into a 10  year License
     Agreement  with the Government  of the Republic  of Palau and  the State of
     Kayangel which  will allow the Company  to explore for oil  and natural gas
     offshore.   The license covers  approximately 1.1 million  acres within the
     waters  of Palau.    Pursuant  to the  license  agreement,  the Company  is
     required to drill  two wells by March,  2000.  The Company  is currently in
     pursuit of a partner or buyer for its interest.  Any exploration activities
     in the  license area  will be conducted  jointly with  other third  parties
     under a carried interest, farmout or other similar arrangements which would
     allow the Company  to retain  an ownership interest  without incurring  the
     initial costs of exploration.




                                         -13-







<PAGE> 14
     Drilling Activity

          The  following table  sets  forth certain  information concerning  the
     number of gross  and net exploratory and development wells  drilled for the
     Company's account during the periods indicated.


                                          Years Ended March 31,
                                          ---------------------
                               1999                1998                1997
                         --------------      --------------      --------------
     Type of Well        Gross      Net      Gross      Net      Gross      Net

     Exploratory (1)
          Oil              3       1.714       3        .913       3        .700

          Gas              3        .781      --        --         2        .433

          Dry              3       1.108       6        .956       5       1.077


     Development (2)
          Oil             --        --         9       1.592       7       1.835

          Gas              2        .266      --         --       --         --

          Dry              1        .150       3        .355       2        .625


     --------------------------
     (1)  An exploratory well is  a well drilled to find and produce  oil or gas
          in  an unproved area,  to find a  new reservoir in  a field previously
          found  to be  productive of  oil or  gas in  another reservoir,  or to
          extend a known reservoir.

     (2)  A development well  is a well drilled within the proved  area of a oil
          or gas reservoir  to the depth of a stratigraphic  horizon known to be
          productive.

          At June 14,  1999, the Company was participating in  the drilling of 1
     gross  (.25 net)   exploratory  well in Gaines County,   Texas and  1 gross
     (.20 net) exploratory well in Lea County, New Mexico.

          Substantially  all of  the equipment  used  in the  Company's drilling
     operations is owned by the Company; however, certain insignificant items of
     drilling  equipment are leased or  rented as needed  because such equipment
     either cannot be purchased or is only necessary for the drilling of certain
     types of wells located in certain areas.






                                         -14-




<PAGE> 15
          Production,  Prices and Costs.  The following table sets forth certain
     information  regarding the volumes of  the Company's net  production of oil
     and gas, the average sales prices received associated with its sales of oil
     and gas, and the average production (lifting) cost per equivalent barrel of
     oil ("EBO").

                                                Years Ended March 31,
                                         ----------------------------------
                                         1999           1998           1997
                                         ----           ----           ----
     Net Production
          Oil (Bbls)                    68,135         72,880         76,266
          Gas (Mcf)                    568,627        439,711        361,745
          EBO (1)                      162,906        146,165        136,557

     Sales Prices
          Oil ($/Bbl)                   $10.84         $18.24         $23.93
          Gas ($/Mcf)                     1.29           1.80           1.81
          EBO                             9.06          14.55          18.24

     Production (Lifting) Costs
          per EBO                         4.93           6.46           6.77

     --------------------
          (1)  An EBO is one equivalent barrel of oil using the ratio of six Mcf
     of gas to one barrel of oil.


     Title to Properties

          As is  customary in  the oil  and  gas industry,  a preliminary  title
     examination is conducted at the  time oil or gas properties believed  to be
     suitable  for  drilling  are  acquired  by the  operator.    Prior  to  the
     commencement of operations, curative work determined to be appropriate as a
     result  of a title search is  performed with respect to significant defects
     before the operator  commences development.   Title examinations have  been
     performed with respect to  substantially all of the Company's  interests in
     its  producing  properties.    The  Company  believes  that  title  to  its
     properties is good  and defensible in  accordance with standards  generally
     acceptable in the oil and  gas industry, subject to such exceptions  which,
     in the  Company's opinion, are not so  material as to detract substantially
     from the value of such properties.  The Company's properties are subject to
     royalty, overriding  royalty, and other outstanding  interests customary in
     the  industry, and are  also subject to  burdens such as  liens incident to
     operating agreements,  current taxes  not yet due,  development obligations
     under  oil   and  gas  leases,   and  other  encumbrances,   easements  and
     restrictions.   The  Company does  not  believe that  any of  these burdens
     materially interferes  with the use of  its properties in  the operation of
     its business.

     Markets and Customers

          The Company  sells its oil and gas at the wellhead on an "as-produced"

                                         -15-




<PAGE> 16
     basis and does not refine petroleum products.  Other than normal production
     facilities, the  Company does  not  own an  interest  in any  bulk  storage
     facilities or  pipelines.   As is  customary in  the industry, the  Company
     sells  its production  in  any  one  area  to  relatively  few  purchasers,
     including  transmission companies  that have  pipelines near  the Company's
     producing  wells.   Gas purchase  contracts are  generally on  a short-term
     "spot  market" basis and usually contain provisions by which the prices and
     delivery quantities for future  deliveries will be determined.   During the
     year ended  March 31, 1999, Titan Resources I, Inc. and Navajo Refining and
     Crude Marketing  accounted for approximately 32% and  12%, respectively, of
     the Company's oil and gas revenues for such period.  The loss of either one
     of these purchasers could cease or delay the Company's production and  sale
     of  its oil  and gas  reserves to  the  extent that  alternative purchasers
     having  adequate  gathering  facilities  are  not  found  to  replace  such
     purchaser's  volume of oil  or gas purchased.   However, in the  event of a
     loss  of  any   purchaser,  the  Company   believes  that,  under   present
     circumstances, it  would be able to  find other purchasers for  its oil and
     gas production.

     Competition

          The Company encounters strong competition from major oil companies and
     independent producers and operators in acquiring properties and  leases for
     exploration  for oil  and gas.   Competition  is particularly  intense with
     respect to the  acquisition of  desirable undeveloped oil  and gas  leases.
     The principal competitive factors in the acquisition of undeveloped oil and
     gas leases include the staff and data necessary to acquire and develop such
     leases, as well as the amount of consideration and  terms offered.  Many of
     the Company's  competitors have financial resources,  staffs and facilities
     substantially  greater than  those  of  the  Company.    In  addition,  the
     producing  and marketing of natural gas and oil  is affected by a number of
     factors which  are beyond the control  of the Company, the  effect of which
     cannot be  accurately predicted.   Of significant  importance recently  has
     been the  domination  and control  of  oil markets  and  prices by  foreign
     producers.

          The  principal   raw  materials   and  resources  necessary   for  the
     exploration  and development of oil  and gas are  leasehold prospects under
     which oil and  gas reserves may  be discovered, drilling  rigs and  related
     equipment  to  explore for  such  reserves and  knowledgeable  personnel to
     conduct all phases of oil and gas operations.  The Company must compete for
     such  raw materials  and  resources  with  both  major  oil  companies  and
     independent  operators, and  the continued  availability, without  periodic
     interruption,  of such  materials and  resources to  the Company  cannot be
     assured.


     Item 2.  PROPERTIES

          In addition to its drilling rigs and related equipment and its oil and
     gas properties, the Company owns a 31  acre tract of land in Midland, Texas

                                         -16-






<PAGE> 17
     on  which the  Company's executive  offices  are located  and on  which the
     principal  support  and  storage   facilities  for  its  contract  drilling
     operations are located.   Such  facilities include an  office building  and
     fabrication and maintenance shop.  The  facility allows for open storage of
     drilling equipment and drill pipe.

          The Company also owns a 78 acre tract  of land in Odessa, Texas, which
     is presently being utilized as a  secondary storage location.  From time to
     time, the  Company's rigs are stored and stacked  in the field at the rig's
     last location site.

          The  Company   owns  a  warehouse   and  yard  facility   situated  on
     approximately 4  acres in Midland, Texas.  This additional storage is being
     used  to  complement  the existing  Midland  yard  facility.   The  Company
     believes that the support and storage  facilities for its drilling rigs and
     related equipment are more than adequate.


     Item 3.  LEGAL PROCEEDINGS

          In March, 1992,  the Company was notified  by the Texas Department  of
     Insurance  that  the  Company's   former  workers'  compensation  insurance
     carriers,  Sir  Lloyd's  Insurance  Company  and  its  affiliate,  Standard
     Financial Indemnity Corporation ("SFIC"), had been placed in liquidation by
     order of the  201st District Court  of Travis County,  Texas, on March  12,
     1992 in  Cause No. 92-12765, The  State of Texas vs.  Sir Lloyd's Insurance
     Company  and Sir Insurance  Agency, Inc.,  and in  Cause No.  91-12766, The
     State of Texas vs. Standard Financial Indemnity Corporation.  Approximately
     two months before being  ordered into liquidation, SFIC requested  that the
     Company pay policy premiums in the approximate amount of $646,476.  On July
     22,  1993  the  special   deputy  receiver  of  SFIC  billed   the  Company
     approximately $1,061,000  for  retrospective  premiums,  but  adjusted  the
     amount to $854,153 on January 12, 1994.

          In November,  1995, the Company was  notified that a  lawsuit had been
     filed  in Travis County, Texas styled Texas property and Casualty Insurance
     Guaranty Association  vs. TMBR/Sharp  Drilling, Inc. (Cause  No. 95-12318).
     The Texas  Property and Casualty Insurance  Guaranty Association ("Guaranty
     Association") was seeking  a recovery of past  workers' compensation claims
     advanced  by  the Guaranty  Association  related to  the  Company's workers
     compensation insurance  program with SFIC.   The  Guaranty Association  was
     seeking to recover a total of $803,057.

          On  September 9, 1997, the Company entered into a settlement agreement
     with the Guaranty Association.   The Company agreed to pay to  the Guaranty
     Association  the  sum of  $375,000 in  full  satisfaction of  any liability
     relating the Company's workers compensation insurance program with SFIC and
     Sir  Lloyd's  Insurance Company  and the  lawsuit  brought by  the Guaranty
     Association.    The Company  originally  accrued $854,153  relating  to the
     Guaranty  Association's  claim  for reimbursement.    As  a  result of  the
     settlement,  the  Company  eliminated  the  accrual  of  $854,153  and  the

                                         -17-






<PAGE> 18
     difference between the accrued amount and the settlement amount  ($479,153)
     was  recognized   as  miscellaneous  income  in   the  Company's  financial
     statements for the year ended March 31, 1998.

          In  addition, the Company entered into a settlement agreement with the
     insurance  agent that  represented  the Company  at  the time  the  workers
     compensation insurance policies were purchased  from Sir Lloyd's and  SFIC.
     The  agent paid the Company the  sum of $180,000 in  full settlement of all
     claims  and liabilities relating to SFIC and Sir Lloyd's Insurance Company.
     This  amount  was  recognized  as miscellaneous  income  in  the  Company's
     financial statements for the year ended March 31, 1998.

          The Company  provides for  its workers' compensation  claims prior  to
     September  1997 based upon the  most recent information  available from its
     insurance  carrier concerning  claims  and estimated  costs.   However,  in
     future  years  the  Company   may  receive  retroactive  adjustments,  both
     favorable and unfavorable, related to estimates of claim costs for previous
     years, which  may be material to  the Company's results of  operations.  No
     provision  for retroactive adjustments to claim costs is recorded until the
     Company  receives  notification from  its  insurance  carrier because  this
     amount, if any, cannot be estimated.   For claims incurred November 1993 to
     September  1997, the Company is generally responsible for the first $10,000
     ($100,000  prior to  November  1993)  in  claim  costs  for  each  workers'
     compensation injury.   Currently the Company is covered by  a fully insured
     workers compensation policy.

          The Company is a defendant in various lawsuits generally incidental to
     its business.  The Company does not believe that the ultimate resolution of
     such litigation will have  a significant effect on the  Company's financial
     position or results of operations.


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

          There was  no meeting of  security holders  of the Company  during the
     fourth quarter of the fiscal year ended March 31, 1999, and no matters were
     submitted to a vote of security holders during such period.



                                       PART II



     Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS

          The Company's Common  Stock is  traded on the  NASDAQ National  Market
     System under the symbol "TBDI".   The following table sets forth, on  a per
     share  basis for  the periods  indicated, the  range of  high and  low last
     reported sales  prices as reported  by NASDAQ.   The quotations  are inter-




                                         -18-



<PAGE> 19
     dealer prices  without retail mark-ups,  mark-downs or commissions  and may
     not represent actual transactions.


                                                        Price
                                                   --------------
                                                   High       Low
                                                   ----       ---
                Fiscal 1998
                       First Quarter              $14 1/2    $ 9
                       Second Quarter              29 1/4     13 1/2
                       Third Quarter               33 1/4     14 3/8
                       Fourth Quarter              19         10 1/2

                Fiscal 1999
                       First Quarter               13 3/4      8 1/2
                       Second Quarter              10 1/8      3 3/4
                       Third Quarter                6 5/8      2 3/4
                       Fourth Quarter               4 7/16     3

          The  transfer agent for the  Company's Common Stock  is American Stock
     Transfer & Trust Company, New York, New York.

          On February 13, 1997,  the Company privately placed 725,000  shares of
     its Common  Stock to eleven accredited  investors, at a per  share price of
     $11.00.   Rauscher  Pierce Refsnes, Inc.  ("Rauscher") served  as placement
     agent  for the offering.   The  net proceeds from  the sale  of the shares,
     approximately  $7.47 million,  were  used to  repay  all of  the  Company's
     outstanding bank debt (approximately $4.5 million)  and for general working
     capital  purposes.    As  consideration  for  serving  as placement  agent,
     Rauscher received  a 5% cash  commission (an aggregate of  $398,750), and a
     non-accountable expense allowance of  $25,000.  The Company also  issued to
     Rauscher, for nominal consideration, a  five-year stock purchase warrant to
     purchase  36,250 shares of the Company's Common  Stock at an exercise price
     of $13.20  per share.   The  Common Stock  was  sold in  reliance upon  the
     exemption from registration  under Section  4(2) of the  Securities Act  of
     1933, as amended (the "Act"), and Rule 506 of Regulation D under the Act.

          On June 14, 1999, the outstanding shares of the Company's Common Stock
     were held of record by approximately 2,494 stockholders.

          The  Company has  never  declared or  paid any  cash dividends  on its
     Common Stock  and has no  present intention  to pay cash  dividends in  the
     future.   The Company presently intends to  retain all earnings to fund its
     operations and  future growth.   Under  the terms  of the Company's  Credit
     Facility with its  bank lender, the Company is prohibited  from paying cash
     dividends to the holders of Common Stock without the written consent of the
     bank.    See Item  7, "Management's  Discussion  and Analysis  of Financial
     Condition and Results of Operations - Liquidity and Capital Resources".



                                         -19-






<PAGE> 20
     Item 6.  SELECTED FINANCIAL DATA

            The following  table sets forth certain selected financial data for
     the Company's operations for each of the five years ended March  31, 1999.
     The data set forth in this table should be read in conjunction with
     "Management's Discussion and Analysis of Financial Condition and Results
     of Operations", and the Company's Financial Statements and related notes
     included elsewhere herein.
<TABLE>
<CAPTION>
                                                                              Years ended March 31,
                                                         ----------------------------------------------------------------------
                                                         1999              1998            1997           1996              1995
                                                         ----              ----            ----           ----              ----
                                                                     (In thousands, except per share amounts)
         <S>                                          <C>              <C>              <C>              <C>              <C>
         INCOME STATEMENT DATA
         Operating revenues:
           Contract drilling                          $ 12,948         $ 34,891         $ 18,483         $ 21,298         $ 18,357
           Oil and gas                                   1,476            2,126            2,491            1,683            1,042
                                                        ------           ------           ------           ------           ------

              Total operating revenues                  14,424           37,017           20,974           22,981           19,399

         Operating costs and expenses:
           Contract drilling                            10,027           23,163           14,190           17,252           14,630
           Oil and gas production                          803              944              924              554              350
           Dry holes and abandonments                      946              476              558              945              629
           Depreciation, depletion
             and amortization                            2,699            4,080            1,784              907              876
           General and administrative                    1,911            1,863            1,560            1,599            1,553
           Writedown of oil and
             gas properties (a)                          1,304            3,120              171            2,624               --
                                                        ------           ------           ------           ------           ------
              Total operating costs
                and expenses                            17,690           33,646           19,187           23,881           18,038
                                                        ------           ------           ------           ------           ------
              Operating income (loss)                   (3,266)           3,371            1,787             (900)           1,361

         Other income (expenses):
           Interest                                        151              133             (278)            (139)            (154)
           Other                                           (72)           1,180               52              117              359
                                                        ------           ------           ------           ------           ------
              Total other income (expense)                  79            1,313             (226)             (22)             205
                                                        ------           ------           ------           ------           ------

         Net income(loss) before income
           tax provision                                (3,187)           4,684            1,561             (922)           1,566
         Provision for income taxes                         --             (140)             (16)             (30)             (30)
                                                        ------           ------           ------           ------           ------
         Net income (loss) before
           extraordinary items                        $ (3,187)         $ 4,544         $  1,545         $   (952)        $  1,536
                                                        ======           ======           ======           ======           ======

                                            -20-




<PAGE> 21
     Net income (loss)
           before extraordinary
           items per share:
                 Basic                                  ($0.68)           $0.98            $0.43           ($0.29)           $0.49
                 Diluted                                ($0.68)           $0.91            $0.38              --             $0.38
                                                        ======           ======           ======           ======           ======

         Weighted average number of
           common shares outstanding:
                Basic                                    4,711            4,615            3,608            3,254            3,109
                Diluted                                  4,711            5,014            4,106            4,075            4,032
                                                         =====            =====            =====            =====            =====


         BALANCE SHEET DATA
           Cash and cash equivalents                  $  1,195         $  1,623         $  1,048         $    339         $  1,590
           Total assets                                 18,923           24,648           19,761           11,660           10,040
           Total debt                                       --               --               --            1,300               --
           Stockholders' equity                         16,735           19,960           14,372            4,959            5,775
</TABLE>
         ____________________

              (a)  During fiscal years ended March 31, 1999, 1998 and 1997, the
                   Company recognized non-cash charges of approximately
                   $1,304,000, $3,120,000 and $171,000, respectively, due to a
                   writedown of the carrying value of its oil and gas
                   properties.  This charge is a result of the adoption of
                   Statement of Financial Accounting Standards No. 121 ("SFAS
                   121") "Accounting for the Impairment of Long-Lived Assets
                   and for Long-Lived Assets to Be Disposed Of".  SFAS 121
                   requires the Company to assess the need for an impairment of
                   capitalized costs of oil and gas properties on a property-by-
                   property basis in contrast to the Company's prior policy of
                   evaluating the undiscounted future net revenues of its oil
                   and gas properties in total.   According to SFAS 121, if an
                   impairment is indicated based on undiscounted future cash
                   flows, then it is recognized to the extent that net
                   capitalized costs exceed discounted future cash flows.










                                         -21-










<PAGE> 22
     Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

        This Form 10-K  Annual Report ("Report") and  the documents incorporated
     by reference in this Report  include certain statements that may  be deemed
     to be "forward-looking statements" within the meaning of Section 27A of the
     Securities Act  of 1933 and Section  21E of the Securities  Exchange Act of
     1934,  as amended  (the  "Exchange  Act").    All  statements,  other  than
     statements  of  historical facts,  included  in  this  Report that  address
     activities,  events or  developments that  the Company  estimates, intends,
     projects, expects, believes or anticipates will or may occur in the future,
     including such  matters as  market conditions, future  capital, development
     and  exploration expenditures  (including the  amount and  nature thereof),
     drilling  rig  utilization rates,  drilling  of  wells, reserve  estimates,
     business strategies and other plans and objectives, expansion and growth of
     the  Company's  operations  and  other such  matters,  are  forward-looking
     statements.  These statements are based on certain assumptions and analyses
     made  by  the Company  in light  of its  experience  and its  perception of
     historical  trends, current  conditions,  expected future  developments and
     other  facts  it  believes are  appropriate  in  the  circumstances.   Such
     statements are subject to a number of assumptions, risks and uncertainties,
     including the  risk factors discussed above, general  economic and business
     conditions,  the  business  opportunities (or  lack  thereof)  that  may be
     presented to  and pursued by the Company, changes in law or regulations and
     other factors,  many of which are beyond the  control of the Company.  Such
     statements are not guarantees  of future performance and actual  results or
     developments may  differ materially  from those projected  in the  forward-
     looking statements.

     Overview

        Since 1982,  the principal business of the Company has been the contract
     drilling of domestic onshore oil and gas wells.  In 1987, the Company began
     acquiring oil and gas  properties and participating in the  exploration for
     and development of oil and gas reserves.

        Contract Drilling Operations

        Drilling  revenues from footage and  daywork contracts are recognized as
     work  is performed  utilizing the  percentage-of-completion method.   Costs
     under footage and daywork contracts  are recognized in the period they  are
     incurred.   The Company utilizes the completed contract method to recognize
     drilling revenues and  expenses relating  to turnkey  contracts.   Expected
     losses on all  in-process contracts are recognized  in the period  the loss
     can reasonably be determined.

        Drilling equipment is depreciated on a  units-of-production method based
     on the monthly  utilization of the equipment.   Drilling equipment which is
     not utilized during a month is depreciated using a minimum utilization rate
     of approximately  25%.   Estimated useful  lives range  from four to  eight
     years.  Other property and equipment is depreciated using the straight-line
     method of depreciation with estimated useful lives of three to seven years.





                                         -22-

<PAGE> 23
        The contract drilling  industry remains highly competitive.   Throughout
     the fiscal  year ended  March 31,  1999, the demand  for drilling  rigs has
     significantly  dropped due  to  extremely weak  oil  prices and  lower  gas
     prices.  The Company believes it owns a sufficient number  of drilling rigs
     to remain  competitive within  its areas  of operation.   In addition,  the
     Company  believes  it   competes  favorably  with  respect   to  the  depth
     capabilities  of its  rigs,  the experience  level  of its  personnel,  its
     reputation  and its  relationship  with existing  customers.   However, the
     Company's  operating results will continue  to be directly  affected by the
     level of drilling activity in the Company's service areas.

        The following  table  sets forth  certain  information relating  to  the
     Company's contract drilling operations for the periods indicated:

                                                   Year Ended March 31,
                                                 1999       1998      1997
                                                 (In thousands, except %s)

          Contract drilling revenues           $12,948    $34,891    $18,483
          Contract drilling expenses            10,027     23,163     14,190

          Contract drilling expenses as
            a percent of drilling revenues        77.4%      66.4%      76.8%

          Rig utilization                         26.6%      78.2%      51.6%


        Oil and Gas Operations

        The Company's oil and gas  producing activities are accounted  for using
     the successful  efforts method  of  accounting.   Accordingly, the  Company
     capitalizes  all costs incurred to  acquire oil and  gas properties (proved
     and  unproved),  all  development  costs,   and  the  costs  of  successful
     exploratory  wells.    The  costs  of unsuccessful  exploratory  wells  are
     expensed.   Geological and geophysical costs,  including seismic costs, are
     charged to  expense when incurred.   In  cases where  the Company  provides
     contract  drilling for oil and gas properties  in which it has an ownership
     interest,  the Company's  proportionate share  of costs  is capitalized  as
     stated  above,  net of  its   working-interest  share of  profits  from the
     related drilling  contracts.  Capitalized costs  of undeveloped properties,
     which  are not depleted  until proved reserves  can be  associated with the
     properties,  are  periodically  reviewed  for possible  impairment.    Such
     unevaluated costs totaled  approximately $78,000 and  $111,000 as of  March
     31, 1999, and March 31, 1998, respectively.

        For properties with  proved or proved  developed oil  and gas  reserves,
     depletion,  depreciation   and  amortization  of   capitalized  costs   was
     calculated  for  fiscal  1999, 1998  and  1997  by  applying the  units-of-
     production method to the estimated amount of such reserves.

        In fiscal 1999, 1998 and  1997, the Company recognized  non-cash charges
     of approximately $1.3 million, $3.1 million and $171,000, respectively, due
     to  writedowns of  the carrying value of its  oil and gas properties.   The
     writedowns are the result of the adoption in 1996 of Statement of Financial
     Accounting Standards No. 121 ("SFAS 121") "Accounting for the Impairment of
     Long-Lived Assets and  for Long-Lived Assets to Be Disposed  Of".  SFAS 121

                                         -23-

<PAGE> 24
     requires the  Company to assess the  need for an impairment  of capitalized
     costs of oil and gas properties on a property-by-property basis. This is in
     contrast to  the  Company's prior  policy  of evaluating  the  undiscounted
     future  net revenues of its oil and  gas properties in total.  According to
     SFAS 121, if an impairment  is indicated based on undiscounted  future cash
     flows, then it is to be recognized to the extent that net capitalized costs
     exceed discounted future cash flows.

        The following  table  sets forth  certain  information relating  to  the
     Company's oil and gas operations for the periods indicated:

                                                 Year Ended March 31,
                                              1999       1998       1997
                                                    (In thousands)

          Oil and gas revenues               $1,476     $2,126     $2,491
          Production expenses                   803        944        924
          Dry holes and abandonments            946        476        558
          Depreciation, depletion and
            amortization                      1,250      1,891        802
          Writedown of properties             1,304      3,120        171


        The Company has not entered into hedging arrangements  and does not have
     any delivery commitments.   While hedging  arrangements reduce exposure  to
     losses of resulting  from unfavorable  price changes, they  also limit  the
     ability to benefit from favorable market price changes.

     RESULTS OF OPERATIONS

     Comparison of Year Ended March 31, 1999 to Year Ended March 31, 1998

        Contract drilling revenues  for fiscal 1999 decreased by 63% from fiscal
     1998.   Rig  utilization rates in  fiscal 1999  and 1998 were  27% and 78%,
     respectively.   The decrease in contract  drilling revenues and utilization
     rates was due to a significant downturn in oil and gas prices which in turn
     negatively impacted  demand for  contract drilling.   Drilling prices  were
     depressed throughout the  year and  the Company chose  to underutilize  its
     drilling equipment rather than  subject it to additional  wear and tear  at
     unacceptable operating margins.  Rig utilization in the Company's operating
     market is difficult  to project  because of wide  fluctuations in  drilling
     activity.   In addition, the number of rigs industry wide that are actually
     available for work cannot be accurately determined.

        Contract  drilling  expenses  were  77%  and  66%  of  contract drilling
     revenues in fiscal 1999 and 1998, respectively.  The increase is due to the
     significant reduction in contract drilling revenues.

        Oil and gas revenues  decreased by  31% in fiscal  1999.  This  decrease
     can be attributed to the decline in oil and gas prices during the year.  In
     fiscal 1998,  the Company sold a  group of fourteen wells  in Ector County,
     Texas.  These wells had high lifting  costs on an equivalent barrel of  oil
     ("EBO") basis.  As a  result of this sale, oil and gas  production expenses
     for the year ended March 31, 1999 decreased by 15%.

        The Company participated  as a working-interest owner in the drilling of

                                         -24-

<PAGE> 25
     12 wells during fiscal 1999, of which four were dry holes.  In fiscal 1998,
     the Company participated as a working-interest owner  in the drilling of 21
     wells, of which nine were dry holes.

        Depreciation,  depletion  and  amortization  expense  decreased  due  to
     several factors.  The decline in the rig utilization rates caused a decline
     in  depreciation  expense as  drilling equipment  is depreciated  using the
     units-of-production  method  based  on   the  monthly  utilization  of  the
     equipment.  Depreciation, depletion and amortization expense on oil and gas
     properties  decreased as  a result  of the reduced  carrying values  of the
     properties from impairments in prior years.

        The Company recognized a non-cash charge of $1.3  million in fiscal 1999
     and $3.1  million in fiscal 1998  related to the writedown  of the carrying
     value of its oil and gas properties.

        Net working capital was 3.2 million at March  31, 1999, compared to $6.0
     million at March 31, 1998.  The loss of  working capital is attributable to
     a decrease in accounts receivable.

     Comparison of Year Ended March 31, 1998 to Year Ended March 31, 1997

        Contract drilling  revenues in  fiscal 1998  increased by  89% from  the
     previous year.   During fiscal  1998, the Company  experienced very  strong
     demand  for its contract drilling services, which resulted in increased rig
     utilization and higher contract prices.  Rig utilization was 78% in  fiscal
     1998 compared to 52% in the prior fiscal year.

        Contract  drilling  expenses   represented  66%  of  contract   drilling
     revenues in  fiscal  1998 versus  77%  in fiscal  1997.   The  decrease  is
     attributable to the  increase in  the average price  received for  drilling
     contracts.

        Oil  and  gas revenues  decreased  by  15%  during fiscal  1998.    This
     decrease was a result of weaker oil and gas prices.  Oil and gas production
     expenses remained relatively constant.

        The Company participated  as a working-interest owner in the drilling of
     21 wells during fiscal 1998, of which nine were dry holes.  In fiscal 1997,
     the Company participated as a working-interest  owner in the drilling of 19
     wells, of which seven were dry holes.

        During the  year  ended  March  31,  1998,  the  Company  completed  the
     assembly  of two  additional  drilling  rigs  from  its  inventory  of  rig
     components.   One  of  the rigs  is  capable  of  drilling to  a  depth  of
     approximately  8,500  feet, the  other  to a  depth  of 10,000  feet.   The
     addition  of these two U-15 Unit  rigs brings the Company's available fleet
     to  17  rigs.   The increase  in  depreciation, depletion  and amortization
     expense  for fiscal  1998 reflects  the added  equipment(the two  U-15 Unit
     drilling  rigs, drill pipe and miscellaneous drilling equipment) as well as
     the larger  number of producing wells in which the Company has an ownership
     interest (a total of 99 wells in fiscal 1998 versus 92 wells in 1997).

        As noted above, the Company recognized a non-cash charge of $3.1 million
     in fiscal 1998 and $171,000 in fiscal 1997 related to the writedown  of the
     carrying value of its oil and gas properties.

                                         -25-

<PAGE> 26
        As  described  in  "Item  3.  Legal  Proceedings",  the  Company  was  a
     defendant  in  a lawsuit  filed by  Texas  Property and  Casualty Insurance
     Guaranty  Association  that  had  resulted  in  the  Company's  accrual  of
     approximately $854,000 for a  contingent liability.  On September  9, 1997,
     the  Company   entered  into  a  settlement  agreement  with  the  Guaranty
     Association.  The Company agreed to pay to the Guaranty Association the sum
     of $375,000 in full satisfaction of any liability relating to the Company's
     workers  compensation programs with SFIC and  Sir Lloyd's Insurance Company
     and the lawsuit  brought by the Guaranty  Association.  As a result  of the
     settlement, the Company recognized approximately $479,000  as miscellaneous
     income during the year ended March 31, 1998.

        In addition,  the Company entered  into a settlement  agreement with the
     insurance  agent that  represented  the Company  at  the time  the  workers
     compensation insurance policies  were purchased from Sir  Lloyd's and SFIC.
     The agent paid  the Company the sum of  $180,000 in full settlement  of all
     claims  and liabilities relating to SFIC and Sir Lloyd's Insurance Company.
     This amount was recognized as miscellaneous  income in the year ended March
     31,  1998.     The   Company  also   recorded  approximately  $236,000   of
     miscellaneous income from the sale of junk drill bits.

        Net  working capital  was $6.0 million  at March  31, 1998,  compared to
     $2.7  million  at  March  31,  1997.    The  gain  in  working  capital  is
     attributable to an increase in cash and trade receivables.

     Income Taxes

        At March  31,  1999, the  Company  had  approximately $77.3  million  of
     unused net operating  loss ("NOL") carryforwards for tax purposes.   Use of
     these  carryforwards is dependent  upon the  Company's ability  to generate
     taxable  earnings in  future periods.   These  carryforwards will  begin to
     expire  in the 1999  tax year.   The Company's  ability to  utilize its NOL
     carryforwards may be substantially limited in the future under the Internal
     Revenue Code of 1986, as amended (the "Code").  If  the Company experiences
     an   ownership  change  under  applicable  provisions   of  the  Code,  the
     carryforward would be limited  to an annual amount determined  by specified
     interest rates  and  other variables.    The Company  does  not believe  an
     ownership change has occurred to date.

        The  effective tax  rates  for  fiscal 1999  and  1998 differ  from  the
     statutory tax rate  of 34% primarily due  to the utilization of  NOLs.  Tax
     expense is generally limited to alternative minimum tax.

        The  Company utilizes  an  asset and  liability  approach for  financial
     accounting and  reporting for income taxes.  The Company has a deferred tax
     asset  primarily due to its NOL carryforwards.   The Company has provided a
     valuation allowance for the entire balance  of deferred tax assets as it is
     likely that a portion of the NOLs  may expire before the Company is able to
     use them.

     Liquidity and Capital Resources

        In January  1996, the  Company entered  into a  loan agreement  with its
     bank  lender  providing  for  a  revolving  credit  facility  (the  "Credit
     Facility")  originally  maturing  on  January  15,  1998.    The  aggregate
     principal  amount of the Company's  borrowings outstanding at  any one time

                                         -26-

<PAGE> 27
     under  the revolving facility was limited to  the lesser of $3.0 million or
     one-third of the borrowing base amount  then in effect.  The borrowing base
     amount  was redetermined  by  the bank  monthly.   The Credit  Facility was
     established to finance the  Company's purchases of  drill pipe and oil  and
     gas  exploration activities.  Interest only was payable monthly. The entire
     principal  amount  was  due and  payable  on  January 15,  1998,  which was
     extended  to April  15, 1998.   The  Credit Facility  bore interest  at the
     bank's  base rate and  was secured  by substantially  all of  the Company's
     accounts receivable, drilling rigs and related equipment.

        In August 1996,  the Company entered into  a second loan  agreement with
     its bank lender.  This agreement provided for a $2.0 million revolving line
     of  credit  (the "Line  of  Credit") secured  by substantially  all  of the
     Company's  producing oil  and  gas properties.    The  Line of  Credit  was
     established to finance the Company's oil and gas exploration activities and
     for general  corporate purposes.  The  Line of Credit bore  interest at the
     bank's base  rate, with  interest only  to be paid  monthly.   The original
     maturity  date of February  15, 1998, was  extended to April 15,  1998.  At
     that time, the principal amount then outstanding was  due and payable, plus
     any accrued and unpaid interest.

        On May  26, 1998,  the Company  renewed, extended  and consolidated  the
     prior loan facilities with its bank  lender.  The amended and restated loan
     agreement provides for a  $5.0 million revolving line of credit  secured by
     the Company's drilling rigs and related  equipment, accounts receivable and
     inventory.   Borrowings  under this  line  of credit  bear interest  at the
     Norwest Bank base rate and  accrued interest is payable monthly.   The loan
     facility matures on May 26, 2000.

        The Company  anticipates  that funds  for  its capital  expenditures  in
     fiscal 2000 will be available from a combination of sources,  including (i)
     borrowings under the line  of credit , (ii) funds  raised through issuances
     of equity or debt securities in  public or private transactions, and  (iii)
     internally generated funds.

        The  following  table  sets  forth  information  regarding  the  capital
     expenditures made by the Company during the last three fiscal years.

                                                        Year Ended March 31,
                                                      1999       1998      1997
                                                           (In thousands)
     Oil and gas exploration and development.....   $ 4,242    $ 3,846    $3,424
     Drilling rigs, drill pipe and
       related equipment.........................       261      6,086     2,940
     Other.......................................        --        249       390
                                                     ------     ------     -----
          Total..................................   $ 4,503    $10,181    $6,754
                                                     ======     ======     =====

        The  Company  presently  anticipates  making  capital   expenditures  of
     approximately $4.5  million in its 2000  fiscal year.  Of  this amount, the
     Company  expects that  approximately  $.5 million  will  be spent  for  the
     acquisition  of  drill  pipe,  drill  collars  and  related equipment,  and
     approximately  $4.0 million  for oil  and  gas exploration  and development
     activities.    It  is  the  Company's  policy,  however,  to  make  capital
     expenditures based  on prevailing economic  conditions, the results  of its

                                         -27-

<PAGE> 28
     drilling   activities,   and   other   factors  affecting   its   business.
     Accordingly,  the  amounts  actually  spent in  fiscal  2000  could  differ
     substantially from the amounts estimated.

     Trends and Prices

        The  contract  drilling  industry  is  currently  experiencing decreased
     demand  and  declining prices  for contract  drilling  services due  to the
     weakening of oil and gas prices.  The Company will certainly be affected by
     oil  and gas industry conditions but cannot predict either the future level
     of demand for  its contract drilling services  or future conditions  in the
     contract drilling industry.

        In recent  years,  oil and  gas  prices  have been  extremely  volatile.
     Prices  are affected  by market  supply and  demand factors  as well  as by
     actions of state and local  agencies, the U.S. and foreign  governments and
     international cartels.  The Company has no way of accurately predicting the
     supply of and  demand for oil and gas, domestic  or international political
     events or the  effects of any  such factors on  the prices received  by the
     Company for its oil and gas.

     Year 2000 Issues

        The  Year  2000 (Y2K)  issue  is  the risk  that  systems, products  and
     equipment  utilizing data-sensitive  software or  computer chips  with two-
     digit date  fields will  fail to  properly recognize the  Year 2000.   Such
     failures  by  the Company's  software and  hardware  or that  of government
     entities,  service  providers,  suppliers  and customers  could  result  in
     interruptions of the Company's business which could have a material adverse
     impact on  the  Company.   Significant  uncertainty exists  concerning  the
     potential  effects associated with such  compliance as systems  that do not
     properly recognize  such information could generate erroneous data or cause
     a system to fail.

        In  order  to  address the  Year  2000  issue,  the Board  of  Directors
     appointed  a committee consisting of the President, Chief Financial Officer
     and Legal Counsel to assist the Company in its Year 2000 efforts.

        At March 31, 1999,  the Company had completed  updating and testing  its
     information  systems for Year 2000  compliance and has  determined that the
     Year 2000 issues directly related to its information  systems will not have
     a material impact on  its business, operations nor its  financial position.
     The cost of  planning, implementing and  testing the Company's  information
     systems was minimal and immaterial to its operations as a whole.

        The Company believes  that its greatest risk  for Year 2000 issues  that
     may adversely effect the Company's operations is in the area of third party
     computer systems that are not  Year 2000 compliant and which, as  a result,
     may cause interruptions in  the Company's normal business operations.   The
     Year  2000 committee prepared a formal questionnaire  which was sent to all
     significant customers, suppliers, purchasers  and vendors, to determine the
     extent to which the Company was vulnerable to  those third parties' failure
     to remediate  the Year  2000  problem.   The Company  has received  written
     assurances  from  approximately  50%   of  its  purchasers,  suppliers  and
     customers  who responded  as being  Year 2000  compliant.  The  third party
     confirmation process is still ongoing.

                                         -28-

<PAGE> 29


        Currently, the Company does not  have a remediation or  contingency plan
     in effect but  will continue to monitor  and assess Year 2000  issues and a
     contingency plan will be developed before December 31, 1999.

        In the event that any  of the Company's significant  vendors, customers,
     purchasers and local, state, federal and other U. S. government entities do
     not successfully and  timely achieve  Year 2000  compliance, the  Company's
     business, operations or financial position could be adversely affected.  In
     addition,  there can be no  assurance that unexpected  Year 2000 compliance
     problems  of either the Company  or its vendors,  customers, purchasers and
     local,  state,  federal  and other  U.  S.  government  entities would  not
     materially and adversely affect the Company's business, financial condition
     or operating results.


     Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        The primary sources  of market risk for the Company include fluctuations
     in commodity prices and interest rate fluctuations.  At March 31, 1999, the
     Company  had  not  entered  into any  hedge  arrangements,  commodity  swap
     agreements, commodity futures, options or other similar agreements relating
     to crude oil and natural gas.

        At  March 31,  1999, the  Company did  not have any  amounts outstanding
     under its $5.0 million revolving line of credit which bears interest at the
     lender's base rate in effect from time  to time.  As borrowings under  this
     line  of credit  bear interest  at a  variable rate,  the Company  would be
     subject to interest rate risk if the line of credit was utilized.


     Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                       Page

          Report of Independent Public Accountants                      29

          Balance Sheets, March 31, 1999 and 1998                       30

          Statements of Operations, Years ended
            March 31, 1999, 1998 and 1997                               32

          Statements of Stockholders' Equity,
            Years ended March 31, 1999, 1998 and 1997                   33

          Statements of Cash Flows,
            Years ended March 31, 1999, 1998 and 1997                   34

          Notes to Financial Statements                                 35







                                         -29-

<PAGE> 30
                       REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


     To the Board of Directors and Stockholders of TMBR/Sharp Drilling, Inc.:

        We have audited the accompanying balance  sheets of TMBR/Sharp Drilling,
     Inc. (a Texas corporation)  as of March 31, 1999 and  1998, and the related
     statements of operations, stockholders'  equity and cash flows for  each of
     the  three  years in  the period  ended March  31,  1999.   These financial
     statements and the schedule referred to below are the responsibility of the
     Company's management.  Our responsibility is to express an opinion on these
     financial statements and schedule based on our audits.

        We conducted our audits in  accordance with generally accepted  auditing
     standards.  Those standards require  that we plan and perform the  audit to
     obtain reasonable assurance about whether the financial statements are free
     of material misstatement.   An audit includes examining,  on a test  basis,
     evidence  supporting   the  amounts   and  disclosures  in   the  financial
     statements.   An audit  also includes  assessing the accounting  principles
     used  and significant estimates made  by management, as  well as evaluating
     the overall financial statement  presentation.  We believe that  our audits
     provide a reasonable basis for our opinion.

        In  our opinion,  the  financial statements  referred  to above  present
     fairly,  in  all material  respects, the  financial position  of TMBR/Sharp
     Drilling,  Inc. as  of  March 31,  1999 and  1998, and  the results  of its
     operations and its cash  flows for each  of the three  years in the  period
     ended  March 31,  1999, in  conformity with  generally  accepted accounting
     principles.

        Our audits were made for the purpose of forming an opinion  on the basic
     financial statements taken as a whole.  The schedule listed in the index at
     Item 14(a)2 is  presented for purposes of complying with the Securities and
     Exchange  Commission's rules  and  is not  a part  of  the basic  financial
     statements.   This schedule has  been subjected to  the auditing procedures
     applied  in the  audits  of the  basic  financial statements,  and, in  our
     opinion, fairly states in all material respects the financial data required
     to be set forth therein in relation to the basic financial statements taken
     as a whole.






                                               ARTHUR ANDERSEN LLP

     Dallas, Texas,
       May 21, 1999








                                         -30-

<PAGE> 31
                              TMBR/SHARP DRILLING, INC.

                                    Balance Sheets

                               March 31, 1999 and 1998

                          (In thousands, except share data)


<TABLE>
<CAPTION>
      ASSETS                                               1999            1998
      ------                                               ----            ----
    <S>                                                <C>             <C>
    Current assets:
      Cash and cash equivalents                        $   1,195       $   1,623
      Marketable securities                                   49              87
      Trade receivables,
        net of allowance for doubtful
          accounts of $1,349 in 1999
          and $1,135 in 1998.                              3,451           8,149
      Inventories                                             94              82
      Deposits                                                73              73
      Other                                                  567             664
                                                          ------          ------
         Total current assets                              5,429          10,678
                                                          ------          ------


    Property and equipment, at cost:
      Drilling equipment                                  48,868          48,691
      Oil and gas properties, based on
        successful efforts accounting                     18,742          15,452
      Other property and equipment                         3,569           3,786
                                                          ------          ------
                                                          71,179          67,929
      Less accumulated depreciation,
        depletion and amortization                       (57,858)        (54,132)
                                                          ------          ------
         Net property and equipment                       13,321          13,797
                                                          ------          ------

    Other assets                                             173             173
                                                          ------          ------

              Total assets                             $  18,923       $  24,648
                                                          ======          ======
</TABLE>

    See accompanying notes to financial statements.







                                         -31-

<PAGE> 32
                              TMBR/SHARP DRILLING, INC.

                                    Balance Sheets

                               March 31, 1999 and 1998

                          (In thousands, except share data)
<TABLE>
<CAPTION>

      LIABILITIES AND STOCKHOLDERS' EQUITY                 1999             1998
      ------------------------------------                 ----             ----
    <S>                                                 <C>            <C>
    Current liabilities:
      Trade payables                                    $  1,424       $   2,622
      Other                                                  764           2,066
                                                          ------          ------
         Total current liabilities                         2,188           4,688
                                                          ------          ------
         Total liabilities                                 2,188           4,688
                                                          ------          ------
    Contingencies

    Stockholders' equity:
      Common stock, $0.10 par value
        Authorized, 50,000,000 shares;
        issued, 5,979,625 shares at
        March 31, 1999 and 1998                             598             598
      Additional paid-in capital                         69,429          69,429
      Accumulated deficit                               (53,104)        (49,917)
      Accumulated other comprehensive
        income (loss)                                       (38)             --
      Treasury stock-common, 1,268,739 shares
        at March 31, 1999 and 1998, at cost                (150)           (150)
                                                         ------          ------
         Total stockholders' equity                      16,735          19,960
                                                         ------          ------

           Total liabilities and
             stockholders' equity                     $  18,923       $  24,648
                                                         ======          ======
</TABLE>
    See accompanying notes to financial statements.












                                         -32-



<PAGE> 33
                              TMBR/SHARP DRILLING, INC.

                               Statements of Operations

                      Years Ended March 31, 1999, 1998 and 1997

                          (In thousands, except share data)


                                                1999         1998        1997
                                                ----         ----        ----
    Revenues:
      Contract drilling                     $  12,948    $  34,891   $  18,483
      Oil and gas                               1,476        2,126       2,491
                                               ------       ------      ------
              Total revenues                   14,424       37,017      20,974
                                               ------       ------      ------
    Operating costs and expenses:
      Contract drilling                        10,027       23,163      14,190
      Oil and gas production                      803          944         924
      Dry holes and abandonments                  946          476         558
      Depreciation, depletion and
        amortization                            2,699        4,080       1,784
      Writedown of oil and gas
        properties                              1,304        3,120         171
      General and administrative                1,911        1,863       1,560
                                               ------       ------      ------
              Total operating costs
                and expenses                   17,690       33,646      19,187
                                               ------       ------      ------
              Operating income (loss)          (3,266)       3,371       1,787
                                               ------       ------      ------
    Other income (expense):
      Interest                                    151          133        (278)
      Gain on sales of assets                     127          179          65
      Other, net                                 (199)       1,001         (13)
                                               ------       ------      ------
              Total other income
                (expense), net                     79        1,313        (226)
                                               ------       ------      ------
    Net income (loss) before
      income tax provision                     (3,187)       4,684       1,561
    Provision for income taxes                     --         (140)        (16)
                                               ------       ------      ------
    Net income (loss)                       $  (3,187)   $   4,544   $   1,545
                                               ======       ======      ======
    Net income (loss) per common share:
         Basic                              $   (0.68)   $    0.98   $    0.43
         Diluted                                (0.68)        0.91        0.38
                                             =========    =========   =========
    Weighted average number of
      common shares outstanding:
         Basic                               4,710,886    4,614,959   3,607,925
         Diluted                             4,710,886    5,013,981   4,105,882
                                             =========    =========   =========

    See accompanying notes to financial statements.

                                         -33-
<PAGE> 34

                                   TMBR/SHARP DRILLING, INC.

                               Statements of Stockholders' Equity

                            Years Ended March 31, 1999, 1998 and 1997

                                         (In thousands)

<TABLE>
<CAPTION>
                                                                                Accumulated
                                     Common Stock     Additional                   Other      Treasury Stock        Total
                                     ------------      Paid-In     Accumulated Comprehensive  ---------------   Stockholders'
                                    Shares   Amount    Capital       Deficit   Income (Loss)  Shares   Amount      Equity
                                    ------   ------   ----------   ----------- -------------  ------   ------   -------------

             <S>                    <C>      <C>       <C>           <C>           <C>         <C>     <C>         <C>
             Balance, March 31,
               1996                  4,616   $ 461     $ 60,654      $(56,006)     $ --        1,270   $(150)      $  4,959

             Issuance of
               Common Stock            750      76        7,704           --         --           --      --          7,780

             Exercise of Stock
               Options                 331      33           55           --         --           --      --             88

             Net Income                 --      --           --         1,545        --           --      --          1,545
                                     -----    -----     --------      --------      ----       -----    -----       --------
             Balance, March 31,
               1997                  5,697   $ 570     $ 68,413      $(54,461)     $  --        1,270   $(150)      $ 14,372

             Exercise of
               Stock Options           283      28        1,016            --        --           --      --          1,044

             Net Income                 --      --           --         4,544        --           --      --          4,544
                                     -----    -----     --------      --------      ----       -----    -----       --------
             Balance, March 31,
               1998                  5,980   $ 598     $ 69,429     $ (49,917)     $  --        1,270   $(150)      $ 19,960

             Net Loss                   --      --           --        (3,187)       --           --      --         (3,187)

             Other comprehensive
               income, net of tax
                Unrealized loss
                on marketable
                equity securities       --      --           --            --       (38)          --      --            (38)
                                                                                                                    --------

             Comprehensive Loss                                                                                    $ (3,225)
                                     -----    -----     --------      --------      ----       -----    -----       --------

             Balance, March 31,
               1999                  5,980   $ 598     $ 69,429     $ (53,104)     $(38)       1,270   $(150)      $ 16,735
                                     =====    =====     ========      ========      ====       =====    =====       =======
</TABLE>
             See accompanying notes to financial statements.

                                         -34-
<PAGE> 35
                              TMBR/SHARP DRILLING, INC.
                              Statements of Cash Flows
                      Years Ended March 31, 1999, 1998 and 1997
                                   (In thousands)

                                                   1999       1998       1997
                                                   ----       ----       ----
   Cash flows from operating activities:
     Net income (loss)                          $  (3,187) $   4,544  $   1,545
     Adjustments to reconcile net
       income (loss) to net cash provided
       by operating activities:
         Depreciation, depletion and amortization   2,699      4,080      1,784
         Dry holes and abandonments                   946        476        558
         Gain on sales of assets                     (127)      (179)       (65)
         Writedown of properties                    1,304      3,120        171
         Changes in assets and liabilities:
           Trade receivables                        4,698     (1,931)    (3,276)
           Deposits                                    --         --        350
           Inventories and other assets                85       (109)      (262)
           Trade payables                          (1,198)      (117)      (597)
           Accrued payables and other
             current liabilities                   (1,302)      (584)       585
                                                  --------   --------   --------
             Total adjustments                      7,105      4,756       (752)
                                                  --------   --------   --------
             Net cash provided
               by operating activities              3,918      9,300        793
                                                  --------   --------   --------
   Cash flows from investing activities:
     Additions to property and equipment           (4,503)   (10,181)    (6,754)
     Proceeds from sales of property
       and equipment                                  157        412        102
                                                  --------   --------   --------
             Net cash required
               by investing activities             (4,346)    (9,769)    (6,652)
                                                  --------   --------   --------
   Cash flows from financing activities:
     Proceeds from issuance of common stock            --         --      7,780
     Proceeds from exercise of stock options           --      1,044         88
     Proceeds from bank loan                           --         --      3,200
     Repayments of bank loan                           --         --     (4,500)
                                                  --------   --------   --------
             Net cash provided by
               financing activities                    --      1,044      6,568
                                                  --------   --------   --------
             Net increase (decrease) in
               cash and cash equivalents             (428)       575        709

   Cash and cash equivalents at beginning
     of year                                        1,623      1,048        339
                                                  --------   --------   --------
   Cash and cash equivalents at end of year     $   1,195  $   1,623  $   1,048
                                                  ========   ========   ========

   See accompanying notes to financial statements.

                                         -35-

<PAGE> 36

                              TMBR/SHARP DRILLING, INC.



                            Notes to Financial Statements




     (1)  Organization, Nature of Business and Summary of Significant Accounting
          Policies

     Nature of Operations

          TMBR/Sharp Drilling,  Inc. (the "Company") was  incorporated under the
     laws  of Texas  in October, 1982  under the  name TMBR  Drilling, Inc.   In
     August, 1986, the Company changed its name to TMBR/Sharp Drilling, Inc.

          The Company's  principal businesses are the  domestic onshore contract
     drilling  of oil  and  gas wells  for  major and  independent  oil and  gas
     producers,  and, to a lesser  extent, the exploration  for, development and
     production of  oil and natural gas.   The Company's drilling activities are
     primarily  conducted in  the Permian  Basin of west  Texas and  eastern New
     Mexico.

     Cash and Cash Equivalents

          For  purposes of the statements  of cash flows,  the Company considers
     highly liquid debt  instruments which  have an original  maturity of  three
     months or  less to be cash equivalents.  Cash payments for interest expense
     were  approximately  $0 in  1999  and 1998,  and  $278,000 in  1997.   Cash
     payments for  taxes due totaled $0,  $29,000, and $0 during  1999, 1998 and
     1997, respectively.

     Marketable Securities

            Under  SFAS No. 115, "Accounting for Certain Investments in Debt and
     Equity  Securities", marketable  securities,  such as  those  owned by  the
     Company,  are classified  as available-for-sale  securities  and are  to be
     reported at market value, with  unrealized gains and losses, net  of income
     taxes,  excluded  from earnings  and reported  as  a separate  component of
     stockholders' equity.   The market value  of these securities at  March 31,
     1999  was approximately  $49,000.    An  unrealized loss  of  approximately
     $38,000  was  deducted  from stockholders  equity  and  was  included as  a
     component of other comprehensive income.








                                         -36-




<PAGE> 37
                              TMBR/SHARP DRILLING, INC.



                            Notes to Financial Statements



     Inventories

          Inventories  consist primarily  of  casing and  tubing.   The  Company
     values  its inventories at the  lower of cost  or estimated net recoverable
     value using the specific identification method.

     Property and Equipment

          Drilling  equipment is  depreciated  on  a units-of-production  method
     based  on the  monthly utilization  of the  equipment.   Drilling equipment
     which  is  not  utilized during  a  month  is depreciated  using  a minimum
     utilization rate  of approximately  twenty-five percent.   Estimated useful
     lives range  from four to  eight years.   Other property  and equipment  is
     depreciated using  the straight-line method of  depreciation with estimated
     useful lives of three to seven years.

          Oil  and gas properties are accounted for using the successful efforts
     method  of accounting.  Accordingly, the costs incurred to acquire property
     (proved  and unproved),  all development  costs and  successful exploratory
     costs are capitalized, whereas the costs  of unsuccessful exploratory wells
     are  expensed.  Geological and geophysical  costs, including seismic costs,
     are charged  to expense when incurred.  In cases where the Company provides
     contract drilling  services related to oil  and gas properties in  which it
     has  an ownership  interest,  the Company's  proportionate  share of  costs
     related  to these  properties is capitalized  as stated  above, net  of the
     Company's  working  interest share  of  profits from  the  related drilling
     contracts.   Capitalized costs  of undeveloped  properties,  which are  not
     depleted until proved reserves  can be associated with the  properties, are
     periodically  reviewed for  possible  impairment.   Such unevaluated  costs
     totaled  approximately $78,000 and $111,000 as  of March 31, 1999 and 1998,
     respectively.

          Depletion, depreciation  and amortization  of capitalized oil  and gas
     property  costs is provided  using the units-of-production  method based on
     estimated proved or proved  developed oil and gas reserves,  as applicable,
     of the respective property units.









                                         -37-





<PAGE> 38
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements


          Prior to 1996, the Company provided impairments for significant proved
     oil and gas properties  to the extent that  net capitalized costs  exceeded
     aggregated  undiscounted future net cash  flows.  During  1996, the Company
     adopted Statement of Financial  Accounting Standards No. 121  ("SFAS 121"),
     "Accounting  for the  Impairment  of Long-Lived  Assets and  for Long-Lived
     Assets to  Be Disposed Of".   SFAS 121 requires  the Company to  assess the
     need for an impairment of capitalized costs of oil  and gas properties on a
     property-by-property basis.   According to  SFAS 121, if  an impairment  is
     indicated  based on  undiscounted expected  future cash  flows, then  it is
     recognized  to  the extent  that  net capitalized  costs  exceed discounted
     future  cash flows.   In  connection  with the  adoption of  SFAS 121,  the
     Company provided an impairment of $171,000 in 1997.  Additional impairments
     of  $1,304,000 and $3,120,000 were recorded in 1999 and 1998, respectively.
     Management's estimate  of future cash flows  is based on their  estimate of
     reserves and prices.  It is reasonably possible that a change in reserve or
     price  estimates  could  occur  in  the  near  term  and  adversely  impact
     management's estimate  of future cash  flows and consequently  the carrying
     value of properties.

          Major  renewals and  betterments  are capitalized  in the  appropriate
     property  accounts while the cost of  repairs and maintenance is charged to
     operating  expense in the  period incurred.   For assets sold  or otherwise
     retired, the cost and related accumulated depreciation amounts  are removed
     from the accounts and any resulting gain or loss is recognized.

     Drilling Revenues and Costs

          Drilling revenues from footage and daywork contracts are recognized as

     work is performed utilizing the  percentage-of-completion method.  Costs on
     footage and daywork contracts  are recognized in the period incurred.   The
     Company  utilizes  the  completed  contract method  to  recognize  drilling
     revenues  and expenses relating to  turnkey contracts.   Expected losses on
     all  in-process contracts  are  recognized  in  the  period  the  loss  can
     reasonably be determined.

     Risks and Uncertainties

          The preparation  of financial statements in  conformity with generally
     accepted accounting  principles requires  management to make  estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of contingent  assets  and  liabilities  at  the  date  of  the
     financial  statements and  the reported  amounts of  revenues  and expenses
     during  the reporting  period.   Actual  results  could differ  from  those
     estimates.  Significant estimates with regard to these financial statements
     include the estimate of proved oil and gas reserve volumes  and the related
     present  value of estimated future net revenues therefrom (see Note 9), and
     the valuation allowance for deferred taxes (see Note 4).

                                         -38-



<PAGE> 39
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements



     Net Income (Loss) Per Share of Common Stock

          On   April  1,  1997,  the  Company  adopted  Statement  of  Financial
     Accounting Standards  No.  128  ("SFAS 128")  "Earnings  Per  Share"  which
     superseded Accounting Principles Board Opinion  No. 15 ("APB 15") "Earnings
     Per Share."  SFAS 128 simplifies earnings per share ("EPS") calculations by
     replacing  previously  reported  primary  EPS  with  basic  EPS  which   is
     calculated by  dividing reported earnings available  to common shareholders
     by  the weighted average shares  outstanding.  No  dilution for potentially
     dilutive  securities is included in  basic EPS.   Previously reported fully
     diluted EPS is called  diluted EPS which includes all  potentially dilutive
     securities.

     Stock Based Employee Compensation

          In  October  1995, the  Financial  Accounting  Standards Board  issued
     Statement  of   Financial  Accounting   Standards  No.  123   ("SFAS  123")
     "Accounting for Stock-Based Compensation," which establishes accounting and
     reporting standards for various  stock based compensation plans.   SFAS 123
     encourages the  adoption of  a fair  value based method  of accounting  for
     employee stock options, but permits continued application of the accounting
     method  prescribed by Accounting Principles  Board Opinion No. 25 ("Opinion
     25"), "Accounting for Stock Issued to Employees."   The Company has elected
     to  continue to apply the  provisions of Opinion 25.   Under Opinion 25, if
     the exercise price of  the Company's stock options equals  the market value
     of the  underlying stock on the  date of grant, no  compensation expense is
     recognized.    SFAS  123  requires  disclosure  of  pro  forma  information
     regarding net income and earnings per share as if the Company had accounted
     for  its  employee  stock  options  under  the  fair  value method  of  the
     statement.  See Note 3 "Stockholders' Equity."


     (2)  Debt

          Line of Credit

          On January 16,  1996, the Company entered  into a loan  agreement with
     Norwest  Bank  Texas,  Midland,  N.A.  ("Norwest")  that  provided   for  a
     $3,000,000  revolving line of credit secured by the Company's drilling rigs
     and related equipment, accounts receivable and inventory.  Borrowings under
     the line of credit  bore interest at  the Norwest Bank Minnesota,  National
     Association  base rate  and the  interest was  payable  monthly.   The loan
     agreement  had an extended maturity date of  April 15, 1998, at which time,
     the outstanding principal and  all of the accrued and  unpaid interest were
     due and payable.


                                         -39-




<PAGE> 40
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements



          In August, 1996, the Company entered into a second loan agreement with
     Norwest.  The  second loan  agreement provided for  a $2,000,000  revolving
     line of credit secured by substantially all of  the Company's producing oil
     and gas properties.   Borrowings under the line of  credit bore interest at
     the Norwest base rate  and the interest was  payable monthly.  The line  of
     credit had an extended maturity date of April 15,  1998, at which time, the
     principal  amount outstanding  was due  and payable,  plus any  accrued and
     unpaid interest.   The borrowings under both  loan agreements were paid  in
     full in February, 1997.

          On  May 26,  1998, the  Company renewed  and  extended the  prior loan
     agreements with Norwest Bank  Texas, N.A..  The  amended and restated  loan
     agreement provides for a $5,000,000 revolving line of credit secured by the
     Company's  drilling rigs  and  related equipment,  accounts receivable  and
     inventory.   Borrowings under the renewed and  extended line of credit bear
     interest at the Norwest Bank base rate and the interest is payable monthly.
     The  renewed  and extended  loan agreement  matures on  May  26, 2000.   No
     amounts were outstanding under the line of credit on March 31, 1999.


     (3)  Stockholders' Equity

          (a)  Common Stock

          On  February 13,  1997,  the Company  closed  a private  placement  of
     725,000 shares  of common stock at  a price of  $11.00 per share.   The net
     proceeds from the placement were approximately $7.4 million.

          (b) Stock Option Plans

     1984 Stock Option Plan

          In August of 1984, the Company adopted the 1984 Stock Option Plan (the
     "Plan") which initially  authorized 375,000 shares of  the Company's common
     stock to be issued as either  incentive stock options or nonqualified stock
     options.   This Plan was amended in  August 1986 to increase the authorized
     shares to 475,000  shares of the Company's common stock.   In January 1988,
     the Plan was amended to  reduce the option price on certain  options issued
     prior to  March 31, 1986, to reflect the  then current fair market value of
     the Company's common stock.  The  Plan provides that options may be granted
     to key  employees or directors for  various terms at a price  not less than
     the fair market value of  the shares on the date of the grant.   Options to
     purchase  100,000 shares  of  common stock  are  currently exercisable  and
     outstanding under the Plan.   No additional shares are available  for grant
     as the Plan expired by its own terms in August 1994.  The options that were
     granted prior to the expiration of the Plan, and which are outstanding,
     remain subject to the terms of the Plan.


                                         -40-


<PAGE> 41
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements




     1994 Stock Option Plan

          In July 1994,  the Company  adopted its  1994 Stock  Option Plan  (the
     "1994  Plan") which  authorized  the grant  of  options to  purchase up  to
     750,000 shares of the Company's common  stock.  These options may be issued
     as either  incentive or nonqualified stock options.  The 1994 Plan provides
     that options may be granted to key employees or directors for various terms
     at a price not less than the fair market value of the shares on the date of
     grant.  The 1994 Plan was ratified and approved by  the stockholders at the
     Company's annual  meeting of  stockholders  held on  August 30,  1994.   In
     September 1998, options outstanding  under the plan were amended  to reduce
     the option price to $4.125 per share.

          On  September  3,  1996,   the  Company  granted  465,000  shares   of
     nonqualified stock  options to key employees  under the 1994 Plan.   All of
     the nonqualified stock options granted on September 3, 1996 are earned  and
     exercisable  as of May 1, 1997.  On  September 1, 1998, the Company granted
     240,000  shares of  incentive stock  options at  a price  of $4.125  to key
     employees under the  1994 Plan.   On March 9,  1999, 140,000 shares  became
     earned  and exercisable.  The  remaining 100,000 shares  will become earned
     and exercisable over a three year period.  The following sets forth certain
     information concerning these options.

                                          Number            Option Price
                                            of           ---------------------
                                          Shares         Per Share       Total
                                          ------         ---------------------
          Outstanding March 31, 1997     465,000      $ 7.75        $ 3,603,750

          Exercised                      127,500        7.75            988,125
                                         -------       ------         ---------
          Outstanding March 31, 1998     337,500      $ 7.75        $ 2,615,625

          Forfeited                       (5,000)       7.75            (38,750)

          Reduction in option
            price                           --         (3.625)       (1,205,312)

          Granted                        240,000     4.125-4.5375     1,049,400
                                         -------     ------------    -----------
          Outstanding March 31, 1999     572,500    $4.125-4.5375   $ 2,420,963
                                         =======     ============    ===========



                                         -41-





<PAGE> 42
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements


     1998 Stock Option Plan

          In  September  1998,  the  Company  adopted,  subject  to  shareholder
     approval, its 1998 Stock Option Plan (the "1998 Plan") which authorizes the
     grant of options  to purchase up to 750,000 shares  of the Company's common
     stock.   These options may  be issued as  either incentive or  nonqualified
     stock options.  The 1998 Plan  provides that options may be granted  to key
     employees or directors from various terms at a price not less than the fair
     market value  of the  shares on  the date  of grant.   The  Company granted
     options to purchase 50,000 shares of common stock to  two outside directors
     under the 1998 Plan,  subject to shareholder approval.   These nonqualified
     options were granted at $4.125 per share and are exercisable on the date on
     which the shareholders of the Company approve and adopt the 1998 Plan.

          In connection with a private placement completed in February 1997, the
     Company issued and currently  has outstanding a warrant to  purchase 36,250
     common shares  with an exercise  price of $13.20  per share.   This warrant
     became exercisable on February 17, 1998 and expires on February 17, 2002.

          In addition to the aforementioned options, during fiscal year 1989, an
     additional 500,000  shares of  nonqualified stock  options were  granted to
     another director who is also an officer.   These options were granted at an
     exercise price of  $0.25 per share (estimated fair market  value at date of
     grant).    On April  4,  1990,  the Board  of  Directors  also approved  an
     additional 500,000 shares  of nonqualified stock options granted to another
     director  at an exercise  price of $0.25  per share  (estimated fair market
     value at date of grant).

          The  following  sets   forth  certain  information  concerning   these
     nonqualified options:

                                                              Option Price
                                       Number                 ------------
                                      of Shares        Per Share        Total
                                      ---------        ---------        -----
        Outstanding March 31, 1997      368,800         $0.25         $ 92,200

             Exercised                 (149,300)         0.25          (37,325)
                                      ---------                        -------
        Outstanding March 31, 1998      219,500          0.25           54,875
                                      ---------                        -------
        Outstanding March 31, 1999      219,500         $0.25         $ 54,875
                                      =========                        =======

          All nonqualified options outstanding were earned and exercisable as of
     March 31, 1999.

                                         -42-





<PAGE> 43
                              TMBR/SHARP DRILLING, INC.



                            Notes to Financial Statements




          Pursuant to  SFAS 123, "Accounting for  Stock-Based Compensation," the
     Company has elected to account for its stock option plans under Opinion No.
     25,   "Accounting  for  Stock   Issued  to  Employees."     Accordingly  no
     compensation expense has been recognized for these stock option plans.  Pro
     forma information regarding net  income and earnings per share  is required
     by SFAS 123,  and has been determined  as if the Company  had accounted for
     its  employee stock options under the  fair value method of that statement.
     The fair value  of each option grant is estimated on  the date of the grant
     using the Black-Scholes  option pricing model with  the following weighted-
     average  assumptions used for grants in fiscal 1999 and 1997, respectively:
     dividend yield of 0% and 0%, expected volatility of 54.68% and 68.32%, risk
     free interest rate of 4.99%  and 6.7%, and an expected life of  5.0 and 5.0
     years.

             Year of     Option     Exercise     Expected     Fair
              Grant      Shares      Price         Life       Value
             -------     ------     --------     --------     -----
              1997       465,000     $7.75         5.0        $4.87
              1999        96,000     $4.125        5.0        $2.17
              1999       144,000     $4.5375       5.0        $2.07

          For purposes of pro forma disclosures, the estimated fair value of the
     options  is amortized to  expense over  the options'  vesting period.   The
     Company's pro forma information follows:

                               1999              1998              1997
                         ----------------   ---------------   ---------------
                            As       Pro       As      Pro       As      Pro
                         Reported   Forma   Reported  Forma   Reported  Forma
                         --------   -----   --------  -----   --------  -----
                                       (In thousands, except share amounts)

     Net income (loss)
       from continuing
       operations        $(3,187)  $(3,719)  $4,544   $4,261   $1,545   $(436)

     Net income (loss)
       from continuing
       operations per
       share (basic)      $(0.68)   $(0.79)   $0.98    $0.92    $0.43    $(0.10)




                                         -43-





<PAGE> 44
                              TMBR/SHARP DRILLING, INC.



                            Notes to Financial Statements



          The effects  of applying SFAS 123 in this pro forma disclosure are not
     indicative of future amounts, as SFAS 123 does not apply to awards prior to
     1995 and additional awards are anticipated in future years.


     (4)  Income Taxes

          At  March 31, 1999, the  Company had approximately  $77,295,000 of net
     operating loss carryforwards for tax purposes.  Realization of the benefits
     of  these carryforwards is dependent upon the Company's ability to generate
     taxable  earnings  in  future periods.    If  these  carryforwards are  not
     utilized,  they will  begin to  expire in  1999. The  Company's ability  to
     utilize its net  operating loss carryforwards may be  substantially limited
     in the future under Section  382 of the Internal Revenue Code ("IRC").   If
     the Company encounters  a change of control as defined  in IRC Section 382,
     the carryforward would be limited to  an annual amount calculated based  on
     market  value.   The  Company  does not  believe  a change  of  control, as
     defined, has occurred to date.

          The Company utilizes  an asset  and liability  approach for  financial
     accounting  and  reporting  for income  taxes.    The  major components  of
     deferred tax assets and liabilities follows:

                                             March 31, 1999    March 31, 1998
                                             --------------    --------------
          Deferred Tax Assets (Liabilities)
            Federal NOL Carryforwards         $ 26,280,337      $ 23,220,964
            Allowance for Bad Debts                458,585           385,803
            Book over tax depreciation
              and amortization                       7,150           739,967
            Accrued Workers Compensation           (22,044)          139,574
            Other accrued expenses                  20,505            27,353
                                                ----------        ----------
              Total deferred tax assets         26,744,533        24,513,661
              Valuation allowance              (26,744,533)      (24,513,661)
                                                ----------        ----------
                Net deferred tax asset        $     --          $     --
                                                ==========        ==========







                                         -44-





<PAGE> 45
                              TMBR/SHARP DRILLING, INC.



                            Notes to Financial Statements



          The  Company has provided a valuation allowance for the entire balance
     of deferred tax assets at March 31, 1999 and  March 31, 1998, as it is more
     likely than not that the deferred tax asset will not be realized.

          The  effective tax rates for the years  ended March 31, 1999, 1998 and
     1997 differ from the statutory tax rate of 34% primarily due to utilization
     of net operating loss  carryforwards.  Tax expense is generally  limited to
     alternative minimum tax.

          The following table sets  forth a reconciliation of the  tax provision
     using  statutory  rates  to  the  actual  tax  provision  provided  in  the
     statements of operations:

                                            1999       1998        1997
                                            ----       ----        ----

          Tax provision (benefit)
            utilizing statutory rates     $(1,084)   $ 1,545      $ 525

          Utilization of NOL                1,084     (1,405)      (509)
                                            -----      -----        ---
          Tax provision                   $   --     $   140      $  16
                                            =====      =====        ===


     (5)  Related Parties

          During  1999, 1998 and 1997, the Company sold $1,549,000, $113,000 and
     $190,000 and  purchased $131,000,  $139,000 and $119,000,  respectively, of
     goods and  services from entities  affiliated with  individuals serving  as
     officers and/or directors of  the Company.   These purchases and sales  are
     transacted  using  market  rates.    These  transactions  are  included  in
     "contract  drilling  revenue" and  "contract  drilling  expense" or  "other
     income or expense" in the accompanying statements of operations.

          The related  party transactions  discussed in the  preceding paragraph
     are noninterest-bearing and are settled in the normal course of business.








                                         -45-





<PAGE> 46
                              TMBR/SHARP DRILLING, INC.



                            Notes to Financial Statements




     (6)  Employee Benefits

          Effective  May  1,  1995,   the  Company  established  the  TMBR/Sharp
     Drilling,  Inc. Employee Retirement Plan  which is a  401(K) profit sharing
     plan.   Company contributions are discretionary and have been currently set
     at  25% for  each dollar  contributed by  each eligible  employee, limited,
     however, to  a maximum of 5%  of the employee's compensation.   The Company
     has decided to terminate the 401(K) plan effective March 31, 1999.


     (7)  Business Segments and Significant Customers

          The  Company adopted SFAS No.  131, "Disclosures About  Segments of an
     Enterprise  and Related  Information", in  1999 which  changes the  way the
     Company reports information about its operating segments.   The information
     for  1998 and 1997 has been restated  from the prior year's presentation in
     order to conform with 1999 presentation.

          The Company operates in two reportable segments: (i) drilling and (ii)
     oil  and  gas  exploration  and  development.    The   long-term  financial
     performance  of  each of  the reportable  segments  is affected  by similar
     economic conditions.  Both reportable segments operate in the Permian Basin
     of West Texas and Eastern New Mexico.

          The  accounting policies  of  the  segments  are  the  same  as  those
     described  in  Note  1  of  Notes to  Financial  Statements.    The Company
     evaluates performance based on profit or loss from operations before income
     taxes,  accounting  changes, nonrecurring  items  and  interest income  and
     expense.

          The  Company accounts for intersegment sales transfers as if the sales
     or transfers were to third parties, that is, at current prices.












                                         -46-





<PAGE> 47
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements


          The  following tables  present information  related to  the Companies'
     reportable segments.

                                               Years Ended March 31,
                                     ----------------------------------------
                                        1999           1998           1997
                                     ----------     ----------     ----------
                                                  (In thousands)
     Revenues:
       Contract drilling             $  12,948      $  34,891      $  18,483
       Oil and gas                       1,476          2,126          2,491
                                       --------       --------       --------
                                     $  14,424      $  37,017      $  20,974
                                       ========       ========       ========
     Net income (loss) (a):
       Contract drilling             $    (126)     $   8,838      $   1,937
       Oil and gas                      (3,212)        (4,427)          (114)
                                       --------       --------       --------
                                        (3,338)         4,411          1,823
       Corporate income
         (expenses) (b)                    151            133           (278)
                                       --------       --------       --------
                                     $  (3,187)     $   4,544      $   1,545
                                       ========       ========       ========
     Identifiable assets:
       Contract drilling             $  11,877      $  17,775      $  11,711
       Oil and gas                       5,062          4,325          6,179
                                       --------       --------       --------
                                        16,939         22,100         17,890
       Corporate assets (c)              1,984          2,548          1,871
                                       --------       --------       --------
                                     $  18,923      $  24,648      $  19,761
                                       ========       ========       ========
     Depreciation, depletion and
      amortization:
       Contract drilling             $   1,449      $   2,188      $     982
       Oil and gas                       1,250          1,892            802
                                       --------       --------       --------
                                     $   2,699      $   4,080      $   1,784
                                       ========       ========       ========
     Capital expenditures:
       Contract drilling             $     261      $   6,334      $   3,330
       Oil and gas                       4,242          3,847          3,424
                                       --------       --------       --------
                                     $   4,503      $  10,181      $   6,754
                                       ========       ========       ========

                                         -47-





<PAGE> 48
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements


          (a)  General and administrative costs and other income are allocated
               between segments based on identifiable assets.

          (b)  Corporate  income and  expenses  consist of  interest income  and
               expense.

          (c)  Corporate assets are those assets which are not specifically
               identifiable with a segment and consist primarily of cash and
               cash equivalents, short-term investments and prepaid expenses.

          For the  years ended March 31, 1999,  1998 and 1997, contract drilling
     revenues earned from individual customers constituting 10% or more of total
     contract drilling revenues were:

          (a)  five customers in 1999 individually represented approximately
               20%, 15%, 14%, 13% and 11% of drilling revenues.

          (b)  two customers in 1998 individually represented approximately
               14%, and 12% of drilling revenues,

          (c)  four customers in 1997 individually represented approximately
               21%, 18%, 12% and 10% of drilling revenues,

          The loss of one  or more of the above customers  could have a material
     adverse effect on the Company, depending  upon the demand for drilling rigs
     at the time of such loss and the Company's ability to find new customers.

     (8)  Contingencies

          In March, 1992, the  Company was notified by  the Texas Department  of
     Insurance  that  the  Company's  former  workers'  compensation   insurance
     carriers,  Sir  Lloyd's  Insurance  Company  and  its  affiliate,  Standard
     Financial Indemnity Corporation ("SFIC"), had been placed in liquidation by
     order of the  201st District Court  of Travis County,  Texas, on March  12,
     1992 in  Cause No. 92-12765, The  State of Texas vs.  Sir Lloyd's Insurance
     Company and  Sir Insurance  Agency, Inc.,  and in  Cause No.  91-12766, The
     State of Texas vs. Standard Financial Indemnity Corporation.  Approximately
     two months before being  ordered into liquidation, SFIC requested  that the
     Company pay policy premiums in the approximate amount of $646,476.  On July
     22,  1993  the  special   deputy  receiver  of  SFIC  billed   the  Company
     approximately  $1,061,000  for  retrospective  premiums, but  adjusted  the
     amount to $854,153 on January 12, 1994.

          In November, 1995,  the Company was  notified that a lawsuit  had been
     filed in Travis County, Texas styled Texas property and Casualty Insurance

                                         -48-






<PAGE> 49
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements


     Guaranty Association  vs. TMBR/Sharp  Drilling, Inc. (Cause  No. 95-12318).
     The Texas  Property and Casualty Insurance  Guaranty Association ("Guaranty
     Association") was seeking a recovery  of past workers' compensation  claims
     advanced  by  the Guaranty  Association  related to  the  Company's workers
     compensation  insurance program  with SFIC.   The Guaranty  Association was
     seeking to recover a total of $803,057.

          On  September 9, 1997, the Company entered into a settlement agreement
     with the Guaranty Association.   The Company agreed to pay to  the Guaranty
     Association  the  sum of  $375,000 in  full  satisfaction of  any liability
     relating the Company's workers compensation insurance program with SFIC and
     Sir  Lloyd's  Insurance Company  and the  lawsuit  brought by  the Guaranty
     Association.    The Company  originally  accrued $854,153  relating  to the
     Guaranty  Association's  claim  for reimbursement.    As  a  result of  the
     settlement,  the  Company  eliminated  the  accrual  of  $854,153  and  the
     difference between the accrued amount and the settlement amount of $479,153
     was  recognized   as  miscellaneous  income  in   the  Company's  financial
     statements for the year ended March 31, 1998.

          In  addition, the Company entered into a settlement agreement with the
     insurance  agent that  represented  the Company  at  the time  the  workers
     compensation insurance  policies were purchased from Sir  Lloyd's and SFIC.
     The  agent paid the Company  the sum of $180,000 in  full settlement of all
     claims  and liabilities relating to SFIC and Sir Lloyd's Insurance Company.
     This  amount  was  recognized  as  miscellaneous income  in  the  Company's
     financial statements for the year ended March 31, 1998.

          The Company  provided for  its workers'  compensation claims prior  to
     September  1997 based upon the  most recent information  available from its
     insurance carrier  concerning  claims and  estimated  costs.   However,  in
     future  years  the  Company   may  receive  retroactive  adjustments,  both
     favorable and unfavorable, related to estimates of claim costs for previous
     years, which  may be material to  the Company's results of  operations.  No
     provision  for retroactive adjustments to claim costs is recorded until the
     Company  receives  notification from  its  insurance  carrier because  this
     amount, if  any, cannot be estimated.  For claims incurred November 1993 to
     September  1997, the Company is generally responsible for the first $10,000
     ($100,000  prior to  November  1993)  in  claim  costs  for  each  workers'
     compensation injury.   Currently the Company is covered  by a fully insured
     workers compensation policy.

          The Company is a defendant in various lawsuits generally incidental to
     its business.  The Company does not believe that the ultimate resolution of
     such litigation will have  a significant effect on the  Company's financial
     position or results of operations.

                                         -49-






<PAGE> 50
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements



     (9)  Supplemental Information Related to Oil and Gas Activities

          The  Company's  capitalized  cost of  oil  and  gas  properties is  as
     follows:

                                                             March 31,
                                                             ---------
                                                          1999        1998
                                                          ----        ----
                                                           (In thousands)

               Oil and gas properties                   $18,742     $15,452

               Accumulated depreciation,
                 depletion and amortization             (13,680)    (11,127)
                                                         -------     -------
                                                        $ 5,062     $ 4,325
                                                         =======     =======

          The  Company's  costs  incurred  related  to  oil   and  gas  property
     acquisition, exploration and development activities are as follows:

                                                   Years Ended March 31,
                                                   ---------------------
                                               1999        1998        1997
                                               ----        ----        ----
                                                      (In thousands)

               Property acquisition costs    $   422     $   275     $   194

               Exploration costs               2,481       1,430         920

               Development costs               1,339       2,141       2,310
                                              -------     -------     -------
                                             $ 4,242     $ 3,846     $ 3,424
                                              =======     =======     =======









                                         -50-






<PAGE> 51
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements


          The  Company's  results of  operations  from  oil  and  gas  producing
     activities are as follows:

                                                   Years Ended March 31,
                                                   ---------------------
                                               1999        1998        1997
                                               ----        ----        ----
                                                      (In thousands)
          Revenues                           $ 1,476     $ 2,126     $ 2,491

          Production costs                       803         944         924

          Dry holes and abandonments             946         476         558

          Depreciation, depletion and
            amortization                       1,250       1,892         802

          Writedown of oil and gas
            properties                         1,304       3,120         171

          Income tax provision                   --          --          --
                                              -------      -------    -------
          Results of operations from
            producing activities
            (excluding corporate
            overhead and interest costs)     $(2,827)     $(4,306)   $    36
                                              =======      =======    =======

     (10) Unaudited supplemental oil and gas reserve information

          The reserve information presented below are only estimates.  There are
     numerous uncertainties inherent in estimating quantities of proved reserves
     and  in projecting  future rates  of production  and timing  of development
     expenditures, including many  factors beyond  the control  of the  Company.
     Reserve  engineering  is a  subjective  process  of estimating  underground
     accumulations of  crude oil and natural  gas that cannot be  measured in an
     exact manner, and the accuracy of any reserve estimate is a function of the
     quality of available data and  of engineering and geological interpretation
     and judgment.  The quantities of oil and gas that are ultimately recovered,
     production and operating costs, the amount and timing of future development
     expenditures  and  future oil  and gas  prices  may all  differ  from those
     assumed in such estimates.




                                         -51-






<PAGE> 52
                              TMBR/SHARP DRILLING, INC.


                            Notes to Financial Statements


          The  following sets  forth proved  oil and gas  reserves at  March 31,
     1999, 1998 and 1997:
<TABLE>
<CAPTION>
                                                    1999                     1998                      1997
                                            ---------------------    ---------------------     ---------------------
                                               Oil         Gas          Oil         Gas           Oil         Gas
                                              MBbls        MMcf        MBbls        MMcf         MBbls        MMcf
                                            -------     ---------    -------     ---------     -------     ---------
                                                                        (In thousands)
         <S>                                <C>         <C>          <C>         <C>           <C>         <C>
         Proved Reserves:

           Beginning of Year                 370.4      3,288.9       484.6       2,413.7       368.6       2,815.6

           Revisions of previous
             estimates                       (30.7)      (326.7)     (159.3)      1,069.2       103.5        (120.3)

           Improved recovery                  --           --          --            --           3.7          (5.6)

           Purchases of minerals in
             place and extensions            143.8      2,092.3       131.9         247.5        85.0          85.7

           Sales of minerals in place         --           --         (13.9)         (1.9)       --            --

           Production                        (68.1)      (568.4)      (72.9)       (439.7)      (76.2)       (361.7)
                                             -----      -------       -----       -------       -----       -------
           End of year                       415.4      4,486.1       370.4       3,288.9       484.6       2,413.7
                                             =====      =======       =====       =======       =====       =======


         Proved Developed Reserves:

           Beginning of year                 370.4      3,288.9       484.6       2,413.7       368.6       2,815.6
                                             -----      -------       -----       -------       -----       -------
           End of year                       415.4      4,486.1       370.4       3,288.9       484.6       2,413.7
                                             =====      =======       =====       =======       =====       =======
</TABLE>









                                         -52-





<PAGE> 53
                              TMBR/SHARP DRILLING, INC.

                            Notes to Financial Statements


                                                         March 31,
                                                  -----------------------
                                                    1999           1998
                                                    ----           ----
                                                       (In thousands)

          Standardized Measure

            Future cash inflows                   $12,094        $10,065

            Future production and
              development costs                    (3,211)        (3,205)
                                                   -------        -------
            Future net cash flows                   8,883          6,860

            10% discount factor                    (2,434)        (2,200)
                                                   -------        -------
            Discounted future net cash flows        6,449          4,660

            Discounted income taxes                   --             --
                                                   -------        -------
            Standardized Measure                  $ 6,449        $ 4,660
                                                   =======        =======


                                          1999        1998         1997
                                          ----        ----         ----
                                                 (In thousands)

          Standardized measure,
            beginning of year           $ 4,660     $ 5,665      $ 4,954

          Revisions
               Prices and costs             207      (1,889)         813
               Accretion of discount        466         567          495
                                         -------     -------     --------
          Net revisions                     673      (1,322)       1,308

          Discoveries and additions       1,789       1,499          970
          Production                       (673)     (1,182)      (1,567)
                                         -------     -------      -------
          Standardized measure,
            end of year                 $ 6,449     $ 4,660      $ 5,665
                                         =======     =======      =======



                                         -53-






<PAGE> 54
     Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE

          None.
                                       PART III

     Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The  directors and officers  of the Company  at June 14,  1999 were as
     follows:

                                                                        Director
                                                                      or Officer
          Name                Age         Position with Company          Since
          ----                ---         ---------------------       ----------
     Thomas C. Brown           72    Chairman of the Board of Directors
                                       and Chief Executive Officer        1982

     Joe G. Roper              70    Director and President               1982

     Donald L. Evans (1)       52    Director                             1982

     David N. Fitzgerald (1)   76    Director                             1984

     Don H. Lawson             60    Vice President - Operations          1992

     Jeffrey D. Phillips       38    Vice President - Production          1997

     Patricia R. Elledge       41    Controller/Treasurer                 1994

     James M. Alsup            62    Secretary                            1982

     --------------------------
     (1)  Member of Compensation and Audit Committees

          Directors  of   the  Company  serve   until  the  annual   meeting  of
     stockholders to be  held in  August, 1998,  and until  their successors  in
     office are  elected and qualified.   Each officer is  appointed annually by
     the  Company's Board of  Directors to serve  at the Board's  discretion and
     until his successor in office is elected and qualified.

          Mr. Brown  has served as a Director of the Company since the Company's
     formation in 1982.   He is presently Chairman of the Board of Directors and
     Chief Executive Officer  of the Company  and has served in  such capacities
     since 1990.  Mr.  Brown is also a Director  of Tom Brown, Inc.,  the former
     parent of the Company.

          Mr. Roper  has served as a Director of the Company since the Company's
     formation in  1982.  He  served as Chairman of  the Board of  Directors and
     Chief Executive Officer of the Company  from 1982 until 1990 when he became
     President of the Company.


                                         -54-





<PAGE> 55
          Mr.  Evans has  been a  Director  of the  Company since  the Company's
     formation in 1982.  He served  as President of the Company from  1982 until
     1990 when Mr. Roper  was elected to the office of President.   Mr. Evans is
     currently  the Chairman  of  the Board  of  Directors and  Chief  Executive
     Officer of  Tom Brown,  Inc., positions  he has held  since 1990  and 1985,
     respectively.

          Mr. Fitzgerald  has served  as a  Director of  the  Company since  his
     initial  election to the Board  of Directors in 1984.   He is the President
     and  a  shareholder of  Dave Fitzgerald,  Inc.,  a privately  held oilfield
     equipment  sales company that Mr.  Fitzgerald has owned  and operated since
     1963.  Mr. Fitzgerald is also a Director of Mineral Development, Inc.

          Mr.  Lawson has been employed by the  Company since 1967.  He has been
     the Vice President - Operations of the Company since 1992.

          Mr. Phillips has been employed by the Company since 1995.  He has been
     the  Vice President  - Production since  1997.   From 1993  to 1995  he was
     Operations Manager  for Staley Operating Co., a  privately held exploration
     and production company.

          Ms.  Elledge was  employed  by the  Company  from September,  1989  to
     December, 1993 when she resigned to  relocate.  Ms. Elledge returned to the
     Company  in September,  1994  in  her  current  capacity  as  Controller  -
     Treasurer.

          Mr.  Alsup has been  the Secretary of the  Company since the Company's
     formation in  1982.   He  has been  a partner  in  the law  firm of  Lynch,
     Chappell & Alsup since 1970.

          There  are no  family relationships  between any  of the  Directors or
     officers of the Company, except that Patricia R. Elledge is the daughter of
     Joe G. Roper.

     Item 11.  EXECUTIVE COMPENSATION

          The  discussion  under  "Executive  Compensation"  in  the   Company's
     definitive proxy statement for  the 1999 annual meeting of  shareholders is
     incorporated herein by reference.

     Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The  discussion under  "Principal  Shareholders"  and the  information
     appearing under "Election  of Directors" in the  Company's definitive proxy
     statement for  the  1999 annual  meeting  of shareholders  is  incorporated
     herein by reference.

     Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The discussion  under "Executive Compensation -  Certain Transactions"
     in  the Company's definitive proxy statement for the 1999 annual meeting of
     stockholders is incorporated herein by reference.


                                         -55-




<PAGE> 56
                                       PART IV

     Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

                                                                          Page
                                                                          ----
       (a)1.   See Index  to Financial Statements at Item 8                28

       (a)2.   Financial Statement Schedules
                 Years ended March 31, 1999, 1998 and 1997

               Schedule  II - Valuation and Qualifying Accounts  . . . .   59

                    All  other  schedules   are  omitted  as  the
                    required information is  inapplicable or  the
                    information  is  presented  in the  Financial
                    Statements or related notes.

       (a)3.   Exhibits:

            Exhibit  3.1 - Articles of Incorporation of the Company, as amended.
              (Incorporated by  reference to Exhibit 3.1  in Registrant's Annual
              Report on Form 10-K dated June 28, 1991)

            Exhibit 3.2 - Bylaws of the Registrant, as amended.  (Incorporated
              by  reference to Exhibit 3.2 in Registrant's Annual Report on Form
              10-K dated June 27, 1994)

              Executive Compensation Plans and Arrangements
              (Exhibits  10.1  through and  including  Exhibit  10.26 constitute
              executive compensation plans and arrangements of the Registrant)

            Exhibit 10.1 - Incentive Stock Option Plan. (Incorporated by
              reference to  Exhibit 10.3 in  Registrant's Registration Statement
              on Form 10 as amended, effective October 9, 1984)

            Exhibit  10.2 -  Nonqualified  Stock Option  Agreement dated  August
              29,   1990,  between   Thomas   C.  Brown   and  the   Registrant.
              (Incorporated by reference to Exhibit 10.15 in Registrant's Annual
              Report on form 10-K dated June 25, 1993)

            Exhibit  10.3 -  Nonqualified  Stock Option  Agreement dated  August
              30,  1988, between Joe G. Roper and the Registrant.  (Incorporated
              by  reference to  Exhibit 10.17  in Registrant's Annual  Report on
              Form 10-K dated June 25, 1993)




                                         -56-









<PAGE> 57
            Exhibit 10.4 - Incentive Stock Option Agreement dated November 16,
              1993  between Joe G. Roper  and the Registrant.   (Incorporated by
              reference to  Exhibit 10.5 in  Registrant's Annual Report  on Form
              10-K dated June 27, 1994)

            Exhibit  10.5 - Incentive  Stock Option Agreement  dated December 4,
              1992   between   Patricia   R.   Elledge   and   the   Registrant.
              (Incorporated by reference to Exhibit 10.20 in Registrant's Annual
              Report on Form 10-K dated June 25, 1993)

            Exhibit 10.6  - Incentive Stock  Option Agreement dated  December 4,
              1992 between Don H.  Lawson and the Registrant.   (Incorporated by
              reference to Exhibit 10.21  in Registrant's Annual Report  on Form
              10-K dated June 25, 1993)

            Exhibit 10.7 - Incentive Stock Option Agreement dated November 16,
              1993 between Don H.  Lawson and the Registrant.   (Incorporated by
              reference to Exhibit 10.10 in  Registrant's Annual Report on  Form
              10-K dated June 27, 1994)

            Exhibit 10.8 - 1994 Stock Option Plan.  (Incorporated by reference
              to  Exhibit 10.10 in Registrant's Annual Report on Form 10-K dated
              June 28, 1995)

            Exhibit 10.9 - TMBR/Sharp Drilling, Inc. Employee Retirement Plan.
              (Incorporated by reference to Exhibit 10.11 in Registrant's Annual
              Report on Form 10-K dated June 28, 1995)

            Exhibit 10.10 - Bonus Agreement dated October 2, 1997, between Joe
              G. Roper and the Registrant.   (Incorporated by reference to
              Exhibit 10.1 in Registrant's Quarterly Report on Form 10-Q dated
              February 11, 1998)

            Exhibit  10.11 -  Bonus  Agreement dated  October  2, 1997, between
              Thomas C. Brown and the Registrant.    (Incorporated by reference
              to Exhibit 10.2 in Registrant's  Quarterly Report on Form 10-Q
              dated February 11, 1998)

            Exhibit 10.12 - Bonus Agreement dated October 2, 1997, between David
              N. Fitzgerald and  the Registrant.  (Incorporated by  reference to
              Exhibit  10.3 in Registrant's Quarterly  Report on Form 10-Q dated
              February 11, 1998)

            Exhibit  10.13  - Bonus  Agreement  dated October 2, 1997, between
              Donald L. Evans and the Registrant.    (Incorporated by reference
              to Exhibit 10.4 in Registrant's  Quarterly Report on Form  10-Q
              dated February 11, 1998)





                                         -57-






<PAGE> 58
            Exhibit 10.14 - Bonus Agreement dated October 2, 1997, between
              Patricia  R.  Elledge  and   the  Registrant.    (Incorporated  by
              reference to Exhibit 10.5 in Registrant's Quarterly Report on Form
              10-Q dated February 11, 1998)

            Exhibit 10.15 - Bonus  Agreement dated October 2, 1997, between Don
              H. Lawson and the Registrant.  (Incorporated by  reference to
              Exhibit 10.6 in Registrant's Quarterly Report on Form 10-Q dated
              February 11, 1998)

            Exhibit  10.16  - Bonus  Agreement  dated October  2,  1997, between
              Jeffrey D. Phillips and the Registrant.  (Incorporated by
              reference to Exhibit  10.7 in Registrant's Quarterly  Report on
              Form 10-Q dated February 11, 1998)

            Exhibit 10.17 - 1998 Stock Option Plan (Incorporated by reference
              to Exhibit 10.1 in  Registrant's Quarterly Report on  Form 10-Q
              dated November 12, 1998)

           *Exhibit 10.18 - Incentive Stock Option Agreement dated September 1,
              1998, between Don H. Lawson and the Registrant.

           *Exhibit 10.19 - Incentive Stock Option Agreement dated September 1,
              1998, between Jeffrey D. Phillips and the Registrant.

           *Exhibit 10.20 - Incentive Stock Option Agreement dated September 1,
              1998, between Patricia R. Elledge and the Registrant.

           *Exhibit 10.21 - Incentive Stock Option Agreement dated September 1,
              1998, between Joe G. Roper and the Registrant.

           *Exhibit 10.22 - Incentive Stock Option Agreement dated September 1,
              1998, between Thomas C. Brown and the Registrant.

           *Exhibit 10.23 - First Amended and Restated Nonstatutory Stock Option
              Agreement dated September 1, 1998, between Patricia R. Elledge and
              the Registrant.

           *Exhibit 10.24 - First Amended and Restated Nonstatutory Stock Option
              Agreement dated September 1, 1998, between Jeffrey D. Phillips and
              the Registrant.

           *Exhibit 10.25 - First Amended and Restated Nonstatutory Stock Option
              Agreement  dated September 1, 1998,  between Joe G.  Roper and the
              Registrant.

           *Exhibit 10.26 - First Amended and Restated Nonstatutory Stock Option
              Agreement dated September 1, 1998, between Thomas C. Brown and the
              Registrant.


                                         -58-







<PAGE> 59
            Exhibit  10.27 -  Form  of Stock  Purchase  Agreement, dated as of
              February 13, 1997, between  the  Registrant and  the stockholders
              named therein  (Incorporated  by  reference   to  Exhibit  10.1
              in the Registrant's Registration Statement on Form S-3,
              No. 333-23391)

            Exhibit 10.28 - Loan Agreement dated May 26, 1998 between Norwest
              Bank,  Texas N. A. and the Registrant.  (Incorporated by reference
              to  Exhibit 10.18 in Registrant's Annual Report on Form 10-K dated
              June 26, 1998)

           *Exhibit 23.1 - Consent of Arthur Andersen LLP

           *Exhibit 23.2 - Consent of Joe C. Neal & Associates

           *Exhibit 27 - Financial Data Schedule

     ----------------------------------
     *Filed herewith

     (b)  No  reports on Form 8-K were  filed during the last quarter  of fiscal
     1999.
































                                         -59-




<PAGE> 60
                                                                     Schedule II
                                                                     -----------



                              TMBR/SHARP DRILLING, INC.

                          Valuation and Qualifying Accounts

                      Years ended March 31, 1999, 1998 and 1997

                                    (In thousands)



                                                        Recoveries
                              Balance at   Additions    or other     Balance
                              beginning    charged to   reserve      at end
         Description          of year      operations   reductions   of year
     ---------------------    ----------   ----------   ----------   -------

     Allowance for
       doubtful accounts:

               1999            $ 1,135      $  214        $    --    $ 1,349

               1998            $ 1,135      $   --        $    --    $ 1,135

               1997            $ 1,225      $   --        $    90    $ 1,135

























                                         -60-




<PAGE> 61
                                      SIGNATURES



          Pursuant to the requirements of Section 13 or 15(d) 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.

                                             TMBR/SHARP DRILLING, INC.




     June 29, 1999                           By /s/ Thomas C. Brown
                                                --------------------------------
                                                Thomas C. Brown, Chairman
                                                of the Board of Directors



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



     June 29, 1999                               /s/ Thomas C. Brown
                                                -------------------------------
                                                Thomas C. Brown, Chairman
                                                of the Board of Directors
                                                (Principal Executive Officer)


     June 29, 1999                               /s/ Joe G. Roper
                                                -------------------------------
                                                Joe G. Roper, President and
                                                Director


     June 29, 1999                              /s/ Patricia R. Elledge
                                                --------------------------------
                                                Patricia R. Elledge, Controller/
                                                Treasurer (Principal Financial
                                                Officer)


     June 29, 1999                               /s/ David N. Fitzgerald
                                                --------------------------------
                                                David N. Fitzgerald, Director



     June 29, 1999                               /s/ Donald L. Evans
                                                --------------------------------
                                                Donald L. Evans, Director

                                         -61-


<PAGE> 62
                                  INDEX TO EXHIBITS




                                   Description                     Page No.
                                   -----------                     --------

     Exhibit 3.1    Articles of Incorporation of the Company, as
                    amended.    (Incorporated  by   reference  to
                    Exhibit 3.1 in  Registrant's Annual Report on
                    Form 10-K dated June 28, 1991)

     Exhibit 3.2    Bylaws of the Company, as amended.  (Incor-
                    porated  by  reference  to  Exhibit   3.2  in
                    Registrant's Annual Report on Form 10-K dated
                    June 27, 1994)

                    Executive Compensation Plans and Arrangements
                    (Exhibits 10.1 through and  including Exhibit
                    10.9 constitute  executive compensation plans
                    and arrangements of the Registrant)

     Exhibit 10.1   Incentive Stock Option Plan (Incorporated by
                    reference  to  Exhibit  10.3 in  Registrant's
                    Registration   Statement   on  Form   10,  as
                    amended, effective October 9, 1984)

     Exhibit 10.2   Nonqualified Stock Option Agreement dated
                    August 29, 1990, between  Thomas C. Brown and
                    the Registrant.   (Incorporated by  reference
                    to  Exhibit  10.15  in   Registrant's  Annual
                    Report on Form 10-K dated June 25, 1993)

     Exhibit 10.3   Nonqualified Stock Option Agreement dated
                    August 30, 1988, between Joe G. Roper and the
                    Registrant.    (Incorporated by  reference to
                    Exhibit 10.17 in  Registrant's Annual  Report
                    on Form 10-K dated June 25, 1993)

     Exhibit 10.4   Incentive Stock Option Agreement dated
                    November 16,  1993 between  Joe G.  Roper and
                    the Registrant.   (Incorporated by  reference
                    to Exhibit 10.5 in Registrant's Annual Report
                    on Form 10-K dated June 27, 1994)

     Exhibit 10.5   Incentive Stock Option Agreement dated
                    December 4, 1992 between Patricia  R. Elledge
                    and   the   Registrant.     (Incorporated  by
                    reference  to  Exhibit 10.20  in Registrant's
                    Annual  Report on  Form 10-K  dated June  25,
                    1993)



                                         -62-




<PAGE> 63
     Exhibit 10.6   Incentive Stock Option Agreement dated
                    December  4, 1992  between Don H.  Lawson and
                    the Registrant.   (Incorporated by  reference
                    to  Exhibit  10.21  in   Registrant's  Annual
                    Report on Form 10-K dated June 25, 1993)

     Exhibit 10.7   Incentive Stock Option Agreement dated
                    November 16,  1993 between Don H.  Lawson and
                    the Registrant.   (Incorporated by  reference
                    to  Exhibit  10.10  in   Registrant's  Annual
                    Report on Form 10-K dated June 27, 1994)

     Exhibit 10.8   1994 Stock Option Plan.  (Incorporated by
                    reference  to  Exhibit 10.10  in Registrant's
                    Annual  Report on  Form 10-K  dated June  28,
                    1995)

     Exhibit 10.9   TMBR/Sharp Drilling, Inc. Employee Retirement
                    Plan.  (Incorporated  by reference to Exhibit
                    10.11  in Registrant's Annual  Report on Form
                    10-K dated June 28, 1995)

     Exhibit 10.10  Bonus Agreement dated October 2, 1997, between
                    Joe    G.    Roper   and    the   Registrant.
                    (Incorporated by reference to Exhibit 10.1 in
                    Registrant's  Quarterly  Report on  Form 10-Q
                    dated February 11, 1998)

     Exhibit 10.11  Bonus Agreement dated October 2, 1997, between
                    Thomas   C.   Brown   and   the   Registrant.
                    (Incorporated by reference to Exhibit 10.2 in
                    Registrant's  Quarterly  Report on  Form 10-Q
                    dated February 11, 1998)

     Exhibit 10.12  Bonus Agreement dated October 2, 1997, between
                    David  N.  Fitzgerald  and   the  Registrant.
                    (Incorporated by reference to Exhibit 10.3 in
                    Registrant's  Quarterly  Report on  Form 10-Q
                    dated February 11, 1998)

     Exhibit 10.13  Bonus Agreement dated October 2, 1997, between
                    Donald   L.   Evans   and   the   Registrant.
                    (Incorporated by reference to Exhibit 10.4 in
                    Registrant's  Quarterly  Report on  Form 10-Q
                    dated February 11, 1998)

     Exhibit 10.14  Bonus Agreement dated October 2, 1997, between
                    Patricia  R.  Elledge  and   the  Registrant.
                    (Incorporated by reference to Exhibit 10.5 in
                    Registrant's  Quarterly  Report on  Form 10-Q
                    dated February 11, 1998)



                                         -63-



<PAGE> 64
     Exhibit 10.15  Bonus Agreement dated October 2, 1997, between
                    Don   H.   Lawson    and   the    Registrant.
                    (Incorporated by reference to Exhibit 10.6 in
                    Registrant's  Quarterly  Report on  Form 10-Q
                    dated February 11, 1998)

     Exhibit 10.16  Bonus Agreement dated October 2, 1997, between
                    Jeffrey  D.  Phillips  and   the  Registrant.
                    (Incorporated by reference to Exhibit 10.7 in
                    Registrant's  Quarterly  Report on  Form 10-Q
                    dated February 11, 1998)

     Exhibit 10.17  1998 Stock Option Plan (Incorporated by reference
                    to  Exhibit  10.1  in Registrant's  Quarterly
                    Report on Form 10-Q dated November 12, 1998)

     *Exhibit 10.18 Incentive Stock Option Agreement dated September 1,    65
                    1998,   between   Don  H.   Lawson   and  the
                    Registrant.

     *Exhibit 10.19 Incentive Stock Option Agreement dated September 1,    69
                    1998,  between Jeffrey  D.  Phillips and  the
                    Registrant.

     *Exhibit 10.20 Incentive Stock Option Agreement dated September 1,    73
                    1998, between  Patricia  R. Elledge  and  the
                    Registrant.

     *Exhibit 10.21 Incentive Stock Option Agreement dated September 1,    77
                    1998,   between  Joe   G.   Roper   and   the
                    Registrant.

     *Exhibit 10.22 Incentive Stock Option Agreement dated September 1,    81
                    1998,  between   Thomas  C.  Brown   and  the
                    Registrant.

     *Exhibit 10.23 First Amended and Restated Nonstatutory Stock Option   85
                    Agreement  dated  September 1,  1998, between
                    Patricia R. Elledge and the Registrant.

     *Exhibit 10.24 First Amended and Restated Nonstatutory Stock Option   90
                    Agreement  dated  September 1,  1998, between
                    Jeffrey D. Phillips and the Registrant.

     *Exhibit 10.25 First Amended and Restated Nonstatutory Stock Option   95
                    Agreement  dated  September 1,  1998, between
                    Joe G. Roper and the Registrant.

     *Exhibit 10.26 First Amended and Restated Nonstatutory Stock Option  100
                    Agreement  dated  September 1,  1998, between
                    Thomas C. Brown and the Registrant.



                                         -64-




<PAGE> 65
     Exhibit 10.27  Form of Stock Purchase Agreement, dated as of
                    February 13, 1997, between the Registrant and
                    the stockholders  named therein (Incorporated
                    by   reference  to   Exhibit   10.1  in   the
                    Registrant's  Registration Statement  on Form
                    S-3, No. 333-23391)

     Exhibit 10.28  Loan Agreement dated May 26, 1998 between Norwest
                    Bank,  Texas  N.   A.  and  the   Registrant.
                    (Incorporated by reference  to Exhibit  10.18
                    in  Registrant's Annual  Report on  Form 10-K
                    dated June 26, 1998)

     *Exhibit 23.1  Consent of Arthur Andersen LLP                        105

     *Exhibit 23.2  Consent of Joe C. Neal & Associates                   106

     *Exhibit 27    Financial Data Schedule                               107

     --------------------
          *Filed herewith

































                                         -65-




<PAGE> 66
                           INCENTIVE STOCK OPTION AGREEMENT


               THIS  INCENTIVE STOCK  OPTION AGREEMENT  (this "Agreement"),
          dated  and effective  as of  the  1st day  of September, 1998, is
          between  TMBR/SHARP  DRILLING,  INC.,  a  Texas corporation  (the
          "Company"), and Don H. Lawson ("Employee").

               To carry out the purposes  of the TMBR/SHARP DRILLING,  INC.
          1994 STOCK OPTION  PLAN (the "Plan"),  by affording Employee  the
          opportunity to purchase shares  of common stock, $.10 par  value,
          of  the Company (the "Stock"), and in consideration of the mutual
          agreements  and other matters set  forth herein and  in the Plan,
          the Company and Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to Employee the right  and option (the "Option") to  purchase all
          or any  part of any aggregate  of 17,000 shares of  Stock, on the
          terms and conditions set forth herein and in the Plan, which Plan
          is  incorporated herein by reference as a part of this Agreement.
          This Option is  intended to constitute an  incentive stock option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").

               2.   Purchase  Price.    The  purchase price  of  the  Stock
          purchased pursuant to the exercise of this Option shall be $4.125
          per share, which has been determined to be the fair market  value
          of the  Stock at  the date  of  grant of  this Option.   For  all
          purposes  of this Agreement, the  fair market value  of the Stock
          shall  be determined  in accordance  with the  provisions of  the
          Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of  this Option as herein provided, this Option may be exercised,
          in whole  or in  part, by  written notice to  the Company  at its
          principal  executive office  addressed  to the  attention of  its
          President or Chief Executive  Officer, at any time and  from time
          to time after March 9, 1999.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of descent  and distribution,  and may  be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:

               (a)  If   Employee's   employment   with  the   Company
                    terminates  by  reason of  disability  (within the
                    meaning  of Section  22(e)(3) of  the  Code), this
                    Option may  be exercised  in full by  Employee (or
                    Employee's estate or the  person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution or  otherwise by reason of  the death
                    of Employee) at  any time during the period of one
                    year following such termination.


                                         -66-



<PAGE> 67
               (b)  If  Employee  dies  while  in the  employ  of  the
                    Company,  Employee's  estate,  or the  person  who
                    acquires  this  Option  by  will or  the  laws  of
                    descent and distribution or otherwise by reason of
                    the death of Employee, may exercise this Option in
                    full at  any time  during the period  of one  year
                    following the date of Employee's death.

               (c)  If   Employee's   employment   with  the   Company
                    terminates  for any reason other than as described
                    in (a) or (b) above, unless Employee is terminated
                    for  cause,   this  Option  may  be  exercised  by
                    Employee at  any time  during the period  of three
                    months   following   such   termination,   or   by
                    Employee's estate (or the person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution or otherwise  by reason of  the death
                    of Employee) during a period of one year following
                    Employee's  death if  Employee  dies  during  such
                    three-month period,  but in  each case only  as to
                    the  number of  shares  Employee  was entitled  to
                    purchase hereunder upon exercise of this Option as
                    of the  date Employee's employment  so terminates.
                    For purposes of this Agreement, "cause" shall mean
                    Employee's gross negligence or  willful misconduct
                    in  the performance  of the  duties  of Employee's
                    employment,  or Employee's  final conviction  of a
                    felony  or  of   a  misdemeanor  involving   moral
                    turpitude.

               This  Option shall not be exercisable in any event after the
          expiration of  ten years  from  the date  of grant  hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall  be  paid in  full  at the  time  of exercise  (a)  in cash
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having a  fair market value  equal to the purchase  price, or (c)
          any combination of (a) and (b).  No fraction of a  share of Stock
          shall be  issued by  the Company  upon exercise of  an Option  or
          accepted by the Company in payment of the exercise price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of a  shareholder of the Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  In  compensation  income  to
          Employee  for federal  or state  income tax  purposes,   Employee
          shall  deliver to  the Company at  the time  of such  exercise or

                                         -67-



<PAGE> 68
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may require to  meet its obligation under applicable  tax
          laws or regulations, and, if Employee fails to do so, the Company
          is authorized to  withhold from  any cash  or Stock  remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld by reason  of such resulting compensation income.   Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status of  Stock.  Employee  agrees that the  shares of
          Stock which Employee may acquire by  exercising this Option shall
          not be  sold, transferred,  assigned, pledged or  hypothecated in
          the absence of an effective registration statement for the shares
          under the Securities  Act of  1933, as amended  (the "Act"),  and
          applicable state securities laws  or an applicable exemption from
          the registration requirements of the Act and any applicable state
          securities laws.  Employee  also agrees that the shares  of Stock
          which  Employee may acquire by exercising this Option will not be
          sold  or  otherwise  disposed  of   in  any  manner  which  would
          constitute a violation of any applicable securities laws, whether
          federal  or state.   In  addition, Employee  agrees (i)  that the
          certificates representing  the shares  of  Stock purchased  under
          this  Option  may bear  such legend  or legends  as the  Board of
          Directors of  the Company  deems appropriate  in order  to assure
          compliance with applicable securities laws, (ii) that the Company
          may  refuse to  register  the transfer  of  the shares  of  Stock
          purchased  under this Option on the stock transfer records of the
          Company if such proposed transfer would in the opinion of counsel
          satisfactory  to  the  Company  constitute  a  violation  of  any
          applicable securities  law and (iii)  that the  Company may  give
          related instructions  to  its transfer  agent,  if any,  to  stop
          registration  of the transfer of  shares of Stock purchased under
          this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement, Employee shall be  considered to be in the  employment
          of the  Company as long as Employee remains an employee of either
          the Company, a  parent or subsidiary  corporation (as defined  in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a new option  for this Option.   Any question  as to whether  and
          when there has  been a  termination of such  employment, and  the
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          persons lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.


                                         -68-



<PAGE> 69


               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly  executed by its  officer thereunto duly  authorized, and
          Employee has executed this Agreement, all as  of the day and year
          first above written.


                                        TMBR/SHARP DRILLING, INC.



                                        By:
                                             ----------------------------
                                             Joe G. Roper, President



                                             ---------------------------
                                             Don H. Lawson



































                                         -69-



<PAGE> 70
                           INCENTIVE STOCK OPTION AGREEMENT


               THIS  INCENTIVE STOCK  OPTION AGREEMENT  (this "Agreement"),
          dated  and effective  as of the  1st day  of September,  1998, is
          between  TMBR/SHARP  DRILLING,  INC.,  a  Texas corporation  (the
          "Company"), and Jeffrey D. Phillips ("Employee").

               To carry out the purposes  of the TMBR/SHARP DRILLING,  INC.
          1994 STOCK OPTION  PLAN (the "Plan"),  by affording Employee  the
          opportunity to purchase shares  of common stock, $.10 par  value,
          of  the Company (the "Stock"), and in consideration of the mutual
          agreements  and other matters set  forth herein and  in the Plan,
          the Company and Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to Employee the right  and option (the "Option") to  purchase all
          or any  part of any aggregate  of 22,000 shares of  Stock, on the
          terms and conditions set forth herein and in the Plan, which Plan
          is  incorporated herein by reference as a part of this Agreement.
          This Option is  intended to constitute an  incentive stock option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").

               2.   Purchase  Price.    The  purchase price  of  the  Stock
          purchased pursuant to the exercise of this Option shall be $4.125
          per share, which has been determined to be the fair market  value
          of the  Stock at  the date  of  grant of  this Option.   For  all
          purposes  of this Agreement, the  fair market value  of the Stock
          shall  be determined  in accordance  with the  provisions of  the
          Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of  this Option as herein provided, this Option may be exercised,
          in whole  or in  part, by  written notice to  the Company  at its
          principal  executive office  addressed  to the  attention of  its
          President or Chief Executive  Officer, at any time and  from time
          to time after March 9, 1999.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of descent  and distribution,  and may  be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:

               (a)  If   Employee's   employment   with  the   Company
                    terminates  by  reason of  disability  (within the
                    meaning  of Section  22(e)(3) of  the  Code), this
                    Option may  be exercised  in full by  Employee (or
                    Employee's estate or the  person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution or  otherwise by reason of  the death
                    of Employee) at  any time during the period of one
                    year following such termination.


                                         -70-



<PAGE> 71
               (b)  If  Employee  dies  while  in the  employ  of  the
                    Company,  Employee's  estate,  or the  person  who
                    acquires  this  Option  by  will or  the  laws  of
                    descent and distribution or otherwise by reason of
                    the death of Employee, may exercise this Option in
                    full at  any time  during the period  of one  year
                    following the date of Employee's death.

               (c)  If   Employee's   employment   with  the   Company
                    terminates  for any reason other than as described
                    in (a) or (b) above, unless Employee is terminated
                    for  cause,   this  Option  may  be  exercised  by
                    Employee at  any time  during the period  of three
                    months   following   such   termination,   or   by
                    Employee's estate (or the person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution or otherwise  by reason of  the death
                    of Employee) during a period of one year following
                    Employee's  death if  Employee  dies  during  such
                    three-month period,  but in  each case only  as to
                    the  number of  shares  Employee  was entitled  to
                    purchase hereunder upon exercise of this Option as
                    of the  date Employee's employment  so terminates.
                    For purposes of this Agreement, "cause" shall mean
                    Employee's gross negligence or  willful misconduct
                    in  the performance  of the  duties  of Employee's
                    employment,  or Employee's  final conviction  of a
                    felony  or  of   a  misdemeanor  involving   moral
                    turpitude.

               This  Option shall not be exercisable in any event after the
          expiration of  ten years  from  the date  of grant  hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall  be  paid in  full  at the  time  of exercise  (a)  in cash
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having a  fair market value  equal to the purchase  price, or (c)
          any combination of (a) and (b).  No fraction of a  share of Stock
          shall be  issued by  the Company  upon exercise of  an Option  or
          accepted by the Company in payment of the exercise price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of a  shareholder of the Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  In  compensation  income  to
          Employee  for federal  or state  income tax  purposes,   Employee
          shall  deliver to  the Company at  the time  of such  exercise or

                                         -71-



<PAGE> 72
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may require to  meet its obligation under applicable  tax
          laws or regulations, and, if Employee fails to do so, the Company
          is authorized to  withhold from  any cash  or Stock  remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld by reason  of such resulting compensation income.   Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status of  Stock.  Employee  agrees that the  shares of
          Stock which Employee may acquire by  exercising this Option shall
          not be  sold, transferred,  assigned, pledged or  hypothecated in
          the absence of an effective registration statement for the shares
          under the Securities  Act of  1933, as amended  (the "Act"),  and
          applicable state securities laws  or an applicable exemption from
          the registration requirements of the Act and any applicable state
          securities laws.  Employee  also agrees that the shares  of Stock
          which  Employee may acquire by exercising this Option will not be
          sold  or  otherwise  disposed  of   in  any  manner  which  would
          constitute a violation of any applicable securities laws, whether
          federal  or state.   In  addition, Employee  agrees (i)  that the
          certificates representing  the shares  of  Stock purchased  under
          this  Option  may bear  such legend  or legends  as the  Board of
          Directors of  the Company  deems appropriate  in order  to assure
          compliance with applicable securities laws, (ii) that the Company
          may  refuse to  register  the transfer  of  the shares  of  Stock
          purchased  under this Option on the stock transfer records of the
          Company if such proposed transfer would in the opinion of counsel
          satisfactory  to  the  Company  constitute  a  violation  of  any
          applicable securities  law and (iii)  that the  Company may  give
          related instructions  to  its transfer  agent,  if any,  to  stop
          registration  of the transfer of  shares of Stock purchased under
          this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement, Employee shall be  considered to be in the  employment
          of the  Company as long as Employee remains an employee of either
          the Company, a  parent or subsidiary  corporation (as defined  in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a new option  for this Option.   Any question  as to whether  and
          when there has  been a  termination of such  employment, and  the
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          persons lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.


                                         -72-



<PAGE> 73

               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly  executed by its  officer thereunto duly  authorized, and
          Employee has executed this Agreement, all as  of the day and year
          first above written.


                                        TMBR/SHARP DRILLING, INC.



                                        By:  --------------------------
                                             Joe G. Roper, President



                                             --------------------------
                                             Jeffrey D. Phillips


































                                         -73-






<PAGE> 74
                           INCENTIVE STOCK OPTION AGREEMENT


               THIS  INCENTIVE STOCK  OPTION AGREEMENT  (this "Agreement"),
          dated  and effective  as of the  1st day  of September,  1998, is
          between  TMBR/SHARP  DRILLING,  INC.,  a  Texas corporation  (the
          "Company"), and Patricia R. Elledge ("Employee").

               To carry out the purposes  of the TMBR/SHARP DRILLING,  INC.
          1994 STOCK OPTION  PLAN (the "Plan"),  by affording Employee  the
          opportunity to purchase shares  of common stock, $.10 par  value,
          of  the Company (the "Stock"), and in consideration of the mutual
          agreements  and other matters set  forth herein and  in the Plan,
          the Company and Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to Employee the right  and option (the "Option") to  purchase all
          or any  part of any aggregate  of 22,000 shares of  Stock, on the
          terms and conditions set forth herein and in the Plan, which Plan
          is  incorporated herein by reference as a part of this Agreement.
          This Option is  intended to constitute an  incentive stock option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").

               2.   Purchase  Price.    The  purchase price  of  the  Stock
          purchased pursuant to the exercise of this Option shall be $4.125
          per share, which has been determined to be the fair market  value
          of the  Stock at  the date  of  grant of  this Option.   For  all
          purposes  of this Agreement, the  fair market value  of the Stock
          shall  be determined  in accordance  with the  provisions of  the
          Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of  this Option as herein provided, this Option may be exercised,
          in whole  or in  part, by  written notice to  the Company  at its
          principal  executive office  addressed  to the  attention of  its
          President or Chief Executive  Officer, at any time and  from time
          to time after March 9, 1999.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of descent  and distribution,  and may  be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:

               (a)  If   Employee's   employment   with  the   Company
                    terminates  by  reason of  disability  (within the
                    meaning  of Section  22(e)(3) of  the  Code), this
                    Option may  be exercised  in full by  Employee (or
                    Employee's estate or the  person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution or  otherwise by reason of  the death
                    of Employee) at  any time during the period of one
                    year following such termination.


                                         -74-



<PAGE> 75
               (b)  If  Employee  dies  while  in the  employ  of  the
                    Company,  Employee's  estate,  or the  person  who
                    acquires  this  Option  by  will or  the  laws  of
                    descent and distribution or otherwise by reason of
                    the death of Employee, may exercise this Option in
                    full at  any time  during the period  of one  year
                    following the date of Employee's death.

               (c)  If   Employee's   employment   with  the   Company
                    terminates  for any reason other than as described
                    in (a) or (b) above, unless Employee is terminated
                    for  cause,   this  Option  may  be  exercised  by
                    Employee at  any time  during the period  of three
                    months   following   such   termination,   or   by
                    Employee's estate (or the person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution or otherwise  by reason of  the death
                    of Employee) during a period of one year following
                    Employee's  death if  Employee  dies  during  such
                    three-month period,  but in  each case only  as to
                    the  number of  shares  Employee  was entitled  to
                    purchase hereunder upon exercise of this Option as
                    of the  date Employee's employment  so terminates.
                    For purposes of this Agreement, "cause" shall mean
                    Employee's gross negligence or  willful misconduct
                    in  the performance  of the  duties  of Employee's
                    employment,  or Employee's  final conviction  of a
                    felony  or  of   a  misdemeanor  involving   moral
                    turpitude.

               This  Option shall not be exercisable in any event after the
          expiration of  ten years  from  the date  of grant  hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall  be  paid in  full  at the  time  of exercise  (a)  in cash
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having a  fair market value  equal to the purchase  price, or (c)
          any combination of (a) and (b).  No fraction of a  share of Stock
          shall be  issued by  the Company  upon exercise of  an Option  or
          accepted by the Company in payment of the exercise price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of a  shareholder of the Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  In  compensation  income  to
          Employee  for federal  or state  income tax  purposes,   Employee
          shall  deliver to  the Company at  the time  of such  exercise or

                                         -75-



<PAGE> 76
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may require to  meet its obligation under applicable  tax
          laws or regulations, and, if Employee fails to do so, the Company
          is authorized to  withhold from  any cash  or Stock  remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld by reason  of such resulting compensation income.   Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status of  Stock.  Employee  agrees that the  shares of
          Stock which Employee may acquire by  exercising this Option shall
          not be  sold, transferred,  assigned, pledged or  hypothecated in
          the absence of an effective registration statement for the shares
          under the Securities  Act of  1933, as amended  (the "Act"),  and
          applicable state securities laws  or an applicable exemption from
          the registration requirements of the Act and any applicable state
          securities laws.  Employee  also agrees that the shares  of Stock
          which  Employee may acquire by exercising this Option will not be
          sold  or  otherwise  disposed  of   in  any  manner  which  would
          constitute a violation of any applicable securities laws, whether
          federal  or state.   In  addition, Employee  agrees (i)  that the
          certificates representing  the shares  of  Stock purchased  under
          this  Option  may bear  such legend  or legends  as the  Board of
          Directors of  the Company  deems appropriate  in order  to assure
          compliance with applicable securities laws, (ii) that the Company
          may  refuse to  register  the transfer  of  the shares  of  Stock
          purchased  under this Option on the stock transfer records of the
          Company if such proposed transfer would in the opinion of counsel
          satisfactory  to  the  Company  constitute  a  violation  of  any
          applicable securities  law and (iii)  that the  Company may  give
          related instructions  to  its transfer  agent,  if any,  to  stop
          registration  of the transfer of  shares of Stock purchased under
          this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement, Employee shall be  considered to be in the  employment
          of the  Company as long as Employee remains an employee of either
          the Company, a  parent or subsidiary  corporation (as defined  in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a new option  for this Option.   Any question  as to whether  and
          when there has  been a  termination of such  employment, and  the
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          persons lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.


                                         -76-



<PAGE> 77
               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly  executed by its  officer thereunto duly  authorized, and
          Employee has executed this Agreement, all as  of the day and year
          first above written.


                                        TMBR/SHARP DRILLING, INC.



                                        By:
                                             --------------------------
                                             Joe G. Roper, President



                                             --------------------------
                                             Patricia R. Elledge



































                                         -77-





<PAGE> 78
                           INCENTIVE STOCK OPTION AGREEMENT


               THIS  INCENTIVE STOCK  OPTION AGREEMENT  (this "Agreement"),
          dated and effective  as of  the  1st day  of September,  1998, is
          between  TMBR/SHARP  DRILLING,  INC.,  a  Texas corporation  (the
          "Company"), and Joe G. Roper ("Employee").

               To carry out the purposes  of the TMBR/SHARP DRILLING,  INC.
          1994 STOCK OPTION  PLAN (the "Plan"),  by affording Employee  the
          opportunity to purchase shares  of common stock, $.10 par  value,
          of  the Company (the "Stock"), and in consideration of the mutual
          agreements  and other matters set  forth herein and  in the Plan,
          the Company and Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to Employee the right  and option (the "Option") to  purchase all
          or any  part of any aggregate  of 72,000 shares of  Stock, on the
          terms and conditions set forth herein and in the Plan, which Plan
          is  incorporated herein by reference as a part of this Agreement.
          This Option is  intended to constitute an  incentive stock option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").

               2.   Purchase  Price.    The  purchase price  of  the  Stock
          purchased  pursuant  to the  exercise  of  this Option  shall  be
          $4.5375  per  share, which  has been  determined  to be  the fair
          market value  of the Stock at  the date of grant  of this Option.
          For  all purposes  of this  Agreement, fair  market value  of the
          Stock shall  be determined in  accordance with the  provisions of
          the Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of this Option  as herein  provided, and subject  further to  the
          right  of accumulation, this Option may be exercised as to 22,000
          shares  on March 9,  1999; as much  as 44,000 shares  on March 9,
          2000; as much  as 66,000 shares on  March 9, 2001; and  as to the
          remaining 6,000 shares, on March 9, 2002.  To the extent Employee
          does not in  any period purchase all or any part of the shares to
          which Employee  is entitled, Employee has  the right cumulatively
          thereafter to purchase any shares not so purchased and such right
          shall continue until this Option terminates or expires, but in no
          event may the aggregate  fair market value (determined as  of the
          time this Option is  granted) of the Stock with  respect to which
          this Option is  exercisable for the first time under the terms of
          the Plan exceed $100,000 during any calendar year.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of  descent and  distribution, and  may be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:




                                         -78-



<PAGE> 79
               (a)  If   Employee's   employment   with  the   Company
                    terminates  by reason  of  disability (within  the
                    meaning of  Section 22(e)(3)  of  the Code),  this
                    Option may  be exercised  in full by  Employee (or
                    Employee's estate  or the person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution or  otherwise by reason of  the death
                    of Employee) at any time  during the period of one
                    year following such termination.

               (b)  If  Employee  dies  while  in the  employ  of  the
                    Company,  Employee's  estate,  or  the  person who
                    acquires  this  Option  by  will or  the  laws  of
                    descent and distribution or otherwise by reason of
                    the death of Employee, may exercise this Option in
                    full at  any time  during the  period of one  year
                    following the date of Employee's death.

               (c)  If   Employee's   employment   with  the   Company
                    terminates for any reason other than  as described
                    in (a) or (b) above, unless Employee is terminated
                    for  cause,  this  Option  may  be  exercised   by
                    Employee at  any time  during the period  of three
                    months   following   such   termination,   or   by
                    Employee's estate (or the person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution  or otherwise by  reason of the death
                    of Employee) during a period of one year following
                    Employee's  death  if  Employee dies  during  such
                    three-month period,  but in  each case only  as to
                    the  number  of shares  Employee  was entitled  to
                    purchase hereunder upon exercise of this Option as
                    of  the date Employee's  employment so terminates.
                    For purposes of this Agreement, "cause" shall mean
                    Employee's gross negligence or  willful misconduct
                    in  the performance  of  the duties  of Employee's
                    employment,  or Employee's  final conviction  of a
                    felony  or   of  a  misdemeanor   involving  moral
                    turpitude.

               This  Option shall not be exercisable in any event after the
          expiration  of five years  from the  date of  grant hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall  be paid  in  full at  the  time of  exercise  (a) in  cash
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having a fair  market value equal to  the purchase price, or  (c)
          any combination of (a) and (b).  No fraction  of a share of Stock
          shall be  issued by  the Company upon  exercise of  an Option  or
          accepted by the Company in payment of the exercise price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to

                                         -79-



<PAGE> 80
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of a  shareholder of the Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  In  compensation  income  to
          Employee for  federal  or state  income tax  purposes,   Employee
          shall  deliver to  the Company at  the time  of such  exercise or
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may require  to meet its obligation  under applicable tax
          laws or regulations, and, if Employee fails to do so, the Company
          is authorized  to withhold from  any cash  or Stock  remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld  by reason of such  resulting compensation income.  Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status of Stock.   Employee agrees  that the shares  of
          Stock which Employee may acquire by exercising this  Option shall
          not be  sold, transferred,  assigned, pledged or  hypothecated in
          the absence of an effective registration statement for the shares
          under the Securities  Act of  1933, as amended  (the "Act"),  and
          applicable state securities laws  or an applicable exemption from
          the registration requirements of the Act and any applicable state
          securities laws.  Employee  also agrees that the shares  of Stock
          which  Employee may acquire by exercising this Option will not be
          sold  or  otherwise  disposed  of  in   any  manner  which  would
          constitute a violation of any applicable securities laws, whether
          federal  or state.   In  addition, Employee  agrees (i)  that the
          certificates representing  the  shares of  Stock purchased  under
          this  Option may  bear such  legend or  legends as  the Board  of
          Directors  of the Company  deems appropriate  in order  to assure
          compliance with applicable securities laws, (ii) that the Company
          may  refuse to  register  the transfer  of  the shares  of  Stock
          purchased  under this Option on the stock transfer records of the
          Company if such proposed transfer would in the opinion of counsel
          satisfactory  to  the  Company  constitute  a  violation  of  any
          applicable securities  law and  (iii) that the  Company may  give
          related  instructions  to its  transfer  agent, if  any,  to stop
          registration of the  transfer of shares of  Stock purchased under
          this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement, Employee shall  be considered to be  in the employment
          of the Company as long as Employee remains an employee of  either
          the Company,  a parent or  subsidiary corporation (as  defined in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a new  option for this  Option.  Any  question as to  whether and
          when there has  been a  termination of such  employment, and  the

                                         -80-



<PAGE> 81
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          persons lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.

               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly  executed by its  officer thereunto duly  authorized, and
          Employee has executed this Agreement, all  as of the day and year
          first above written.


                                        TMBR/SHARP DRILLING, INC.



                                        By:
                                             ----------------------------
                                             Thomas C. Brown, Chairman of
                                             the Board of Directors



                                             ----------------------------
                                             Joe G. Roper

























                                         -81-



<PAGE> 82
                           INCENTIVE STOCK OPTION AGREEMENT


               THIS  INCENTIVE STOCK  OPTION AGREEMENT  (this "Agreement"),
          dated  and effective  as of the  1st day  of September,  1998, is
          between  TMBR/SHARP  DRILLING,  INC.,  a  Texas corporation  (the
          "Company"), and Thomas C. Brown ("Employee").

               To carry out the purposes  of the TMBR/SHARP DRILLING,  INC.
          1994 STOCK OPTION  PLAN (the "Plan"),  by affording Employee  the
          opportunity to purchase shares  of common stock, $.10 par  value,
          of  the Company (the "Stock"), and in consideration of the mutual
          agreements  and other matters set  forth herein and  in the Plan,
          the Company and Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to Employee the right  and option (the "Option") to  purchase all
          or any  part of any aggregate  of 72,000 shares of  Stock, on the
          terms and conditions set forth herein and in the Plan, which Plan
          is  incorporated herein by reference as a part of this Agreement.
          This Option is  intended to constitute an  incentive stock option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").

               2.   Purchase  Price.    The  purchase price  of  the  Stock
          purchased  pursuant  to the  exercise  of  this Option  shall  be
          $4.5375  per  share, which  has been  determined  to be  the fair
          market value  of the Stock at  the date of grant  of this Option.
          For  all purposes  of this  Agreement, fair  market value  of the
          Stock shall  be determined in  accordance with the  provisions of
          the Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of this Option  as herein  provided, and subject  further to  the
          right  of accumulation, this Option may be exercised as to 22,000
          shares  on March 9,  1999; as much  as 44,000 shares  on March 9,
          2000; as much  as 66,000 shares on  March 9, 2001; and  as to the
          remaining 6,000 shares, on March 9, 2002.  To the extent Employee
          does not in  any period purchase all or any part of the shares to
          which Employee  is entitled, Employee has  the right cumulatively
          thereafter to purchase any shares not so purchased and such right
          shall continue until this Option terminates or expires, but in no
          event may the aggregate  fair market value (determined as  of the
          time this Option is  granted) of the Stock with  respect to which
          this Option is  exercisable for the first time under the terms of
          the Plan exceed $100,000 during any calendar year.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of  descent and  distribution, and  may be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:




                                         -82-




<PAGE> 83
               (a)  If   Employee's   employment   with  the   Company
                    terminates  by reason  of  disability (within  the
                    meaning of  Section 22(e)(3)  of  the Code),  this
                    Option may  be exercised  in full by  Employee (or
                    Employee's estate  or the person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution or  otherwise by reason of  the death
                    of Employee) at any time  during the period of one
                    year following such termination.

               (b)  If  Employee  dies  while  in the  employ  of  the
                    Company,  Employee's  estate,  or  the  person who
                    acquires  this  Option  by  will or  the  laws  of
                    descent and distribution or otherwise by reason of
                    the death of Employee, may exercise this Option in
                    full at  any time  during the  period of one  year
                    following the date of Employee's death.

               (c)  If   Employee's   employment   with  the   Company
                    terminates for any reason other than  as described
                    in (a) or (b) above, unless Employee is terminated
                    for  cause,  this  Option  may  be  exercised   by
                    Employee at  any time  during the period  of three
                    months   following   such   termination,   or   by
                    Employee's estate (or the person who acquires this
                    Option  by  will  or   the  laws  of  descent  and
                    distribution  or otherwise by  reason of the death
                    of Employee) during a period of one year following
                    Employee's  death  if  Employee dies  during  such
                    three-month period,  but in  each case only  as to
                    the  number  of shares  Employee  was entitled  to
                    purchase hereunder upon exercise of this Option as
                    of  the date Employee's  employment so terminates.
                    For purposes of this Agreement, "cause" shall mean
                    Employee's gross negligence or  willful misconduct
                    in  the performance  of  the duties  of Employee's
                    employment,  or Employee's  final conviction  of a
                    felony  or   of  a  misdemeanor   involving  moral
                    turpitude.

               This  Option shall not be exercisable in any event after the
          expiration  of five years  from the  date of  grant hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall  be paid  in  full at  the  time of  exercise  (a) in  cash
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having a fair  market value equal to  the purchase price, or  (c)
          any combination of (a) and (b).  No fraction  of a share of Stock
          shall be  issued by  the Company upon  exercise of  an Option  or
          accepted by the Company in payment of the exercise price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to

                                         -83-



<PAGE> 84
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of a  shareholder of the Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  In  compensation  income  to
          Employee for  federal  or state  income tax  purposes,   Employee
          shall  deliver to  the Company at  the time  of such  exercise or
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may require  to meet its obligation  under applicable tax
          laws or regulations, and, if Employee fails to do so, the Company
          is authorized  to withhold from  any cash  or Stock  remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld  by reason of such  resulting compensation income.  Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status  of Stock.  Employee agrees  that the  shares of
          Stock which Employee may acquire by exercising this  Option shall
          not be  sold, transferred,  assigned, pledged or  hypothecated in
          the absence of an effective registration statement for the shares
          under the Securities  Act of  1933, as amended  (the "Act"),  and
          applicable state securities laws  or an applicable exemption from
          the registration requirements of the Act and any applicable state
          securities laws.  Employee  also agrees that the shares  of Stock
          which  Employee may acquire by exercising this Option will not be
          sold  or  otherwise  disposed  of  in   any  manner  which  would
          constitute a violation of any applicable securities laws, whether
          federal  or state.   In  addition, Employee  agrees (i)  that the
          certificates representing  the  shares of  Stock purchased  under
          this  Option may  bear such  legend or  legends as  the Board  of
          Directors  of the Company  deems appropriate  in order  to assure
          compliance with applicable securities laws, (ii) that the Company
          may  refuse to  register  the transfer  of  the shares  of  Stock
          purchased  under this Option on the stock transfer records of the
          Company if such proposed transfer would in the opinion of counsel
          satisfactory  to  the  Company  constitute  a  violation  of  any
          applicable securities  law and  (iii) that the  Company may  give
          related  instructions  to its  transfer  agent, if  any,  to stop
          registration of the  transfer of shares of  Stock purchased under
          this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement, Employee shall  be considered to be  in the employment
          of the Company as long as Employee remains an employee of  either
          the Company,  a parent or  subsidiary corporation (as  defined in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a new  option for this  Option.  Any  question as to  whether and
          when there has  been a  termination of such  employment, and  the

                                         -84-



<PAGE> 85
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          persons lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.

               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly  executed by its  officer thereunto duly  authorized, and
          Employee has executed this Agreement, all  as of the day and year
          first above written.


                                   TMBR/SHARP DRILLING, INC.



                                   By:
                                        --------------------------
                                        Joe G. Roper, President



                                        --------------------------
                                        Thomas C. Brown


























                                         -85-




<PAGE> 86
                              FIRST AMENDED AND RESTATED
                         NONSTATUTORY STOCK OPTION AGREEMENT


               THIS FIRST  AMENDED AND  RESTATED NONSTATUTORY STOCK  OPTION
          AGREEMENT  (this "Agreement"), dated  and effective as  of the 1st
          day  of September, 1998, is  between TMBR/SHARP DRILLING, INC., a
          Texas  corporation  (the  "Company"),  and  Patricia  R.  Elledge
          ("Employee").

               WHEREAS, on  the 3rd  day of  September,  1996, Employee  was
          granted a nonstatutory stock option  to purchase 20,000 shares of
          the  Company's  common stock,  $.10 par  value  per share,  at an
          exercise price of $7.75 per share;

               WHEREAS,  Employee has  exercised the  above-described stock
          option to the extent of 10,000 shares of common stock, and 10,000
          shares remain available to be purchased under such option;

               WHEREAS, the Board of  Directors of the Company has  reduced
          the  exercise price of the Employee's option from $7.75 per share
          to $4.125 per share, subject to Employee's approval;

               WHEREAS, the Company  and the Employee desire to  enter into
          this  First  Amended  and  Restated   Nonstatutory  Stock  Option
          Agreement for the purpose  of amending the exercise price  of the
          nonstatutory  stock option  granted to  Employee on  September 3,
          1996;

               NOW, THEREFORE,  the Company  and the Employee  hereby amend
          and restate the  Nonstatutory Stock Option  Agreement to read  in
          its entirety as follows:

               To  carry out the purposes  of the TMBR/SHARP DRILLING, INC.
          1994 STOCK  OPTION PLAN (the  "Plan"), by affording  Employee the
          opportunity  to purchase shares  of common  stock of  the Company
          ("Stock"),  and in  consideration  of the  mutual agreements  and
          other matters set  forth herein and in the  Plan, the Company and
          Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to  Employee the right and  option ("Option") to  purchase all or
          any part of an aggregate of 10,000 shares of Stock,  on the terms
          and  conditions set forth herein  and in the  Plan, which Plan is
          incorporated  herein by reference  as a  part of  this Agreement.
          This Option shall  not be  treated as an  incentive stock  option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").







                                         -86-



<PAGE> 87
               2.   Purchase Price.  The  purchase price of Stock purchased
          pursuant  to  the exercise  of this  Option  shall be  $4.125 per
          share, which has been  determined to be the fair market  value of
          the Stock at the date of gant  of this Option.  For all  purposes
          of this Agreement, fair market value of Stock shall be determined
          in accordance with the provisions of the Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of  this Option as herein provided, this Option may be exercised,
          by  written  notice to  the  Company at  its  principal executive
          office  addressed to  the  attention of  its  President or  Chief
          Executive Officer, at any time and from time to time after May 1,
          1997.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of  descent and  distribution, and  may be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:

               (a)  If Employee's employment with the Company terminates by
                    reason  of disability  (within the  meaning of  Section
                    22(e)(3) of the Code), this Option  may be exercised in
                    full by  Employee (or  Employee's estate or  the person
                    who acquires this Option by will or the laws of descent
                    and distribution or otherwise by reason of the death of
                    Employee) at  any time  during the  period of  one year
                    following such termination.

               (b)  If Employee  dies while in  the employ of  the company,
                    Employee's  estate, or  the  person  who acquires  this
                    Option by will or the laws  of descent and distribution
                    or otherwise  by reason of  the death of  Employee, may
                    exercise this  Option in  full at any  time during  the
                    period  of one  year following  the date  of Employee's
                    death.

               (c)  If  Employee's employment  with the  Company terminates
                    for  any reason other than  as described in  (a) or (b)
                    above, unless Employee  is terminated  for cause,  this
                    Option may be exercised by Employee  at any time during
                    the period of three months following  such termination,
                    or  by Employee's  estate (or  the person  who acquires
                    this  Option  by  will  or  the  laws  of  descent  and
                    distribution  or otherwise  by reason  of the  death of
                    Employee)   during  a  period  of  one  year  following
                    Employee's death if  Employee dies  during such  three-
                    month period, but in each case only as to the number of
                    shares Employee was entitled to purchase hereunder upon
                    exercise  of  this Option  as  of  the date  Employee's
                    employment  so  terminates.    For  purposes  of   this
                    Agreement,   "cause"   shall   mean  Employee's   gross
                    negligence  or willful misconduct in performance of the
                    duties  of Employee's  employment, or  Employee's final
                    conviction of  a felony  or of a  misdemeanor involving

                                         -87-



<PAGE> 88
                    moral turpitude.

          This  Option  shall not  be exercisable  in  any event  after the
          expiration  of ten  years  from the  date of  grant hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall be  paid  in full  at  the time  of  exercise (a)  in  case
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having  a fair market  value equal to the  purchase price, or (c)
          any combination of (a)  or (b).  No fraction of a  share of Stock
          shall  by issued  by the  Company upon exercise  of an  Option or
          accepted by the Company in payment of the purchase price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of  a shareholder of the Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  in  compensation  income  to
          Employee for federal or state income tax purposes, Employee shall
          deliver   to  the  Company  at  the  time  of  such  exercise  or
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may  require to meet its obligation  under applicable tax
          laws or regulations and,  if Employee fails to do so, the Company
          is authorized  to withhold  from any  cash or  Stock remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld  by reason of such resulting  compensation income.  Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status of Stock.  Employee understands that at the time
          of the  execution of  this Agreement  the shares of  Stock to  be
          issued  upon  exercise of  this Option  have not  been registered
          under the Securities Act of 1933,  as amended (the "Act"), or any
          state securities law.  The Company may effect such a registration
          in the future; however, until the shares of Stock acquirable upon
          the exercise of the  Option have been registered for  issue under
          the Act, the Company will not issue such shares unless the holder
          of  the Option  provides the  Company with  a written  opinion of
          legal  counsel,  who  shall   be  satisfactory  to  the  Company,
          addressed to the  Company and satisfactory in  form and substance
          to  the  Company's  counsel,  to  the effect  that  the  proposed
          issuance of such shares to such Option holder may be made without
          registration  under  the  Act.    In  the  event  exemption  from
          registration  under the Act is available upon an exercise of this
          Option, Employee (or the person permitted to exercise this Option
          in the event of Employee's death), if requested by the Company to

                                         -88-



<PAGE> 89
          do  so, will  execute and  deliver to  the Company in  writing an
          agreement containing  such provisions as the  Company may require
          to assure compliance with applicable securities laws.

               Employee agrees that the shares of Stock which  Employee may
          acquire  by   exercising  this  Option  shall   be  acquired  for
          investment without a  view to distribution, within the meaning of
          the Act, and shall not be sold, transferred, assigned, pledged or
          hypothecated  in   the  absence  of  an   effective  registration
          statement  for  the shares  under  the Act  and  applicable state
          securities laws or an  applicable exemption from the registration
          requirements of the Act and any applicable state securities laws.
          Employee  also agrees that the shares of Stock which Employee may
          acquire by exercising this  Option will not be sold  or otherwise
          disposed of in any  manner which would constitute a  violation of
          any applicable securities laws, whether federal or state.

               In  addition,  Employee  agrees  (i) that  the  certificates
          representing the shares of Stock purchased under this Option  may
          bear  such legend or  legends as  the Board  of Directors  of the
          Company  deems appropriate  in  order to  assure compliance  with
          applicable securities laws, (ii)  that the Company may  refuse to
          register the transfer of the shares of Stock purchased under this
          Option  on  the stock  transfer records  of  the Company  if such
          proposed transfer would in the opinion of counsel satisfactory to
          the Company  constitute a violation of  any applicable securities
          law and (iii) that  the Company may give related  instructions to
          its  transfer agent, if any, to stop registration of the transfer
          of the shares of Stock purchased under this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement,  Employee shall be considered to  be in the employment
          of  the Company as long as Employee remains an employee of either
          the Company, a  parent or subsidiary  corporation (as defined  in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a new option  for this Option.   Any question  as to whether  and
          when there has  been a  termination of such  employment, and  the
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          person s lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.

               9.   Amendment and  Restatement.  This Agreement  amends and
          restates in  its entirety that certain  Nonstatutory Stock Option
          Agreement, dated as of September 3, 1996 (the "Prior Agreement"),
          between  the  Company  and  Employee.   By  Employee's  execution
          hereof, Employee acknowledges and agrees that the Prior Agreement
          is cancelled  and is of no further force and effect and that this

                                         -89-



<PAGE> 90
          Agreement  supersedes  in  all  respects  the  Prior   Agreement.
          Employee further  agrees to deliver and return the original Prior
          Agreement to  the Company promptly after  Employee's execution of
          this Agreement.

               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly executed  by its officer  thereunto duly authorized,  and
          Employee has executed this Agreement, all  as of the day and year
          first above written.


                                        TMBR/SHARP DRILLING, INC.


                                        By:
                                             --------------------------
                                             Joe G. Roper, President




                                             --------------------------
                                             Patricia R. Elledge































                                         -90-




<PAGE> 91
                              FIRST AMENDED AND RESTATED
                         NONSTATUTORY STOCK OPTION AGREEMENT


               THIS FIRST  AMENDED AND  RESTATED NONSTATUTORY STOCK  OPTION
          AGREEMENT  (this "Agreement"), dated  and effective as  of the 1st
          day  of September, 1998, is  between TMBR/SHARP DRILLING, INC., a
          Texas  corporation  (the  "Company"),  and  Jeffrey  D.  Phillips
          ("Employee").

               WHEREAS, on  the 3rd  day of  September,  1996, Employee  was
          granted a nonstatutory stock option  to purchase 20,000 shares of
          the  Company's  common stock,  $.10 par  value  per share,  at an
          exercise price of $7.75 per share;

               WHEREAS,  Employee has  exercised the  above-described stock
          option to the extent of 10,000 shares of common stock, and 10,000
          shares remain available to be purchased under such option;

               WHEREAS, the Board of  Directors of the Company has  reduced
          the  exercise price of the Employee's option from $7.75 per share
          to $4.125 per share, subject to Employee's approval;

               WHEREAS, the Company  and the Employee desire to  enter into
          this  First  Amended  and  Restated   Nonstatutory  Stock  Option
          Agreement for the purpose  of amending the exercise price  of the
          nonstatutory  stock option  granted to  Employee on  September 3,
          1996;

               NOW, THEREFORE,  the Company  and the Employee  hereby amend
          and restate the  Nonstatutory Stock Option  Agreement to read  in
          its entirety as follows:

               To  carry out the purposes  of the TMBR/SHARP DRILLING, INC.
          1994 STOCK  OPTION PLAN (the  "Plan"), by affording  Employee the
          opportunity  to purchase shares  of common  stock of  the Company
          ("Stock"),  and in  consideration  of the  mutual agreements  and
          other matters set  forth herein and in the  Plan, the Company and
          Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to  Employee the right and  option ("Option") to  purchase all or
          any part of an aggregate of 10,000 shares of Stock,  on the terms
          and  conditions set forth herein  and in the  Plan, which Plan is
          incorporated  herein by reference  as a  part of  this Agreement.
          This Option shall  not be  treated as an  incentive stock  option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").







                                        -91-



<PAGE> 92
               2.   Purchase Price.  The  purchase price of Stock purchased
          pursuant  to  the exercise  of this  Option  shall be  $4.125 per
          share, which has been  determined to be the fair market  value of
          the Stock at the date of gant  of this Option.  For all  purposes
          of this Agreement, fair market value of Stock shall be determined
          in accordance with the provisions of the Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of  this Option as herein provided, this Option may be exercised,
          by  written  notice to  the  Company at  its  principal executive
          office  addressed to  the  attention of  its  President or  Chief
          Executive Officer, at any time and from time to time after May 1,
          1997.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of  descent and  distribution, and  may be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:

               (a)  If Employee's employment with the Company terminates by
                    reason  of disability  (within the  meaning of  Section
                    22(e)(3) of the Code), this Option  may be exercised in
                    full by  Employee (or  Employee's estate or  the person
                    who acquires this Option by will or the laws of descent
                    and distribution or otherwise by reason of the death of
                    Employee) at  any time  during the  period of  one year
                    following such termination.

               (b)  If Employee  dies while in  the employ of  the company,
                    Employee's  estate, or  the  person  who acquires  this
                    Option by will or the laws  of descent and distribution
                    or otherwise  by reason of  the death of  Employee, may
                    exercise this  Option in  full at any  time during  the
                    period  of one  year following  the date  of Employee's
                    death.

               (c)  If  Employee's employment  with the  Company terminates
                    for  any reason other than  as described in  (a) or (b)
                    above, unless Employee  is terminated  for cause,  this
                    Option may be exercised by Employee  at any time during
                    the period of three months following  such termination,
                    or  by Employee's  estate (or  the person  who acquires
                    this  Option  by  will  or  the  laws  of  descent  and
                    distribution  or otherwise  by reason  of the  death of
                    Employee)   during  a  period  of  one  year  following
                    Employee's death if  Employee dies  during such  three-
                    month period, but in each case only as to the number of
                    shares Employee was entitled to purchase hereunder upon
                    exercise  of  this Option  as  of  the date  Employee's
                    employment  so  terminates.    For  purposes  of   this
                    Agreement,   "cause"   shall   mean  Employee's   gross
                    negligence  or willful misconduct in performance of the
                    duties  of Employee's  employment, or  Employee's final
                    conviction of  a felony  or of a  misdemeanor involving

                                        -92-



<PAGE> 93
                    moral turpitude.

          This  Option  shall not  be exercisable  in  any event  after the
          expiration  of ten  years  from the  date of  grant hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall be  paid  in full  at  the time  of  exercise (a)  in  case
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having  a fair market  value equal to the  purchase price, or (c)
          any combination of (a)  or (b).  No fraction of a  share of Stock
          shall  by issued  by the  Company upon exercise  of an  Option or
          accepted by the Company in payment of the purchase price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of  a shareholder of the Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  in  compensation  income  to
          Employee for federal or state income tax purposes, Employee shall
          deliver   to  the  Company  at  the  time  of  such  exercise  or
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may  require to meet its obligation  under applicable tax
          laws or regulations and,  if Employee fails to do so, the Company
          is authorized  to withhold  from any  cash or  Stock remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld  by reason of such resulting  compensation income.  Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status of Stock.  Employee understands that at the time
          of the  execution of  this Agreement  the shares of  Stock to  be
          issued  upon  exercise of  this Option  have not  been registered
          under the Securities Act of 1933,  as amended (the "Act"), or any
          state securities law.  The Company may effect such a registration
          in the future; however, until the shares of Stock acquirable upon
          the exercise of the  Option have been registered for  issue under
          the Act, the Company will not issue such shares unless the holder
          of  the Option  provides the  Company with  a written  opinion of
          legal  counsel,  who  shall   be  satisfactory  to  the  Company,
          addressed to the  Company and satisfactory in  form and substance
          to  the  Company's  counsel,  to  the effect  that  the  proposed
          issuance of such shares to such Option holder may be made without
          registration  under  the  Act.    In  the  event  exemption  from
          registration  under the Act is available upon an exercise of this
          Option, Employee (or the person permitted to exercise this Option
          in the event of Employee's death), if requested by the Company to

                                        -93-



<PAGE> 94
          do  so, will  execute and  deliver to  the Company in  writing an
          agreement containing  such provisions as the  Company may require
          to assure compliance with applicable securities laws.

               Employee agrees that the shares of Stock which  Employee may
          acquire  by   exercising  this  Option  shall   be  acquired  for
          investment without a  view to distribution, within the meaning of
          the Act, and shall not be sold, transferred, assigned, pledged or
          hypothecated  in   the  absence  of  an   effective  registration
          statement  for  the shares  under  the Act  and  applicable state
          securities laws or an  applicable exemption from the registration
          requirements of the Act and any applicable state securities laws.
          Employee  also agrees that the shares of Stock which Employee may
          acquire by exercising this  Option will not be sold  or otherwise
          disposed of in any  manner which would constitute a  violation of
          any applicable securities laws, whether federal or state.

               In  addition,  Employee  agrees  (i) that  the  certificates
          representing the shares of Stock purchased under this Option  may
          bear  such legend or  legends as  the Board  of Directors  of the
          Company  deems appropriate  in  order to  assure compliance  with
          applicable securities laws, (ii)  that the Company may  refuse to
          register the transfer of the shares of Stock purchased under this
          Option  on  the stock  transfer records  of  the Company  if such
          proposed transfer would in the opinion of counsel satisfactory to
          the Company  constitute a violation of  any applicable securities
          law and (iii) that  the Company may give related  instructions to
          its  transfer agent, if any, to stop registration of the transfer
          of the shares of Stock purchased under this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement,  Employee shall be considered to  be in the employment
          of  the Company as long as Employee remains an employee of either
          the Company, a  parent or subsidiary  corporation (as defined  in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a new option  for this Option.   Any question  as to whether  and
          when there has  been a  termination of such  employment, and  the
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          person s lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.

               9.   Amendment and  Restatement.  This Agreement  amends and
          restates in  its entirety that certain  Nonstatutory Stock Option
          Agreement, dated as of September 3, 1996 (the "Prior Agreement"),
          between  the  Company  and  Employee.   By  Employee's  execution
          hereof, Employee acknowledges and agrees that the Prior Agreement
          is cancelled  and is of no further force and effect and that this

                                        -94-



<PAGE> 95
          Agreement  supersedes  in  all  respects  the  Prior   Agreement.
          Employee further  agrees to deliver and return the original Prior
          Agreement to  the Company promptly after  Employee's execution of
          this Agreement.

               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly executed  by its officer  thereunto duly authorized,  and
          Employee has executed this Agreement, all  as of the day and year
          first above written.


                                        TMBR/SHARP DRILLING, INC.


                                        By:
                                             --------------------------
                                             Joe G. Roper, President




                                             --------------------------
                                             Jeffrey D. Phillips






























                                        -95-





<PAGE> 96
                              FIRST AMENDED AND RESTATED
                         NONSTATUTORY STOCK OPTION AGREEMENT


               THIS FIRST  AMENDED AND  RESTATED NONSTATUTORY STOCK  OPTION
          AGREEMENT  (this "Agreement"), dated  and effective as  of the 1st
          day  of September, 1998, is  between TMBR/SHARP DRILLING, INC., a
          Texas corporation (the "Company"), and Joe G. Roper ("Employee").

               WHEREAS, on  the 3rd  day  of September,  1996, Employee  was
          granted a nonstatutory stock option to purchase 100,000 shares of
          the  Company's  common stock,  $.10 par  value  per share,  at an
          exercise price of $7.75 per share;

               WHEREAS, the Board  of Directors of the Company  has reduced
          the  exercise price of the Employee's option from $7.75 per share
          to $4.125 per share, subject to Employee's approval;

               WHEREAS, the  Company and the Employee desire  to enter into
          this  First  Amended  and  Restated  Nonstatutory   Stock  Option
          Agreement for the purpose  of amending the exercise price  of the
          nonstatutory  stock option  granted to  Employee on  September 3,
          1996;

               NOW, THEREFORE,  the Company  and the Employee  hereby amend
          and restate  the Nonstatutory Stock  Option Agreement to  read in
          its entirety as follows:

               To carry out the  purposes of the TMBR/SHARP DRILLING,  INC.
          1994 STOCK  OPTION PLAN (the  "Plan"), by affording  Employee the
          opportunity to purchase  shares of  common stock  of the  Company
          ("Stock"),  and in  consideration  of the  mutual agreements  and
          other matters set forth  herein and in the Plan,  the Company and
          Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to  Employee the right and  option ("Option") to  purchase all or
          any part of an aggregate of 100,000 shares of Stock, on the terms
          and conditions  set forth herein and  in the Plan,  which Plan is
          incorporated herein by  reference as  a part  of this  Agreement.
          This Option shall  not be  treated as an  incentive stock  option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").

               2.   Purchase Price.  The  purchase price of Stock purchased
          pursuant  to  the exercise  of this  Option  shall be  $4.125 per
          share, which has been  determined to be the fair market  value of
          the Stock at the date of  gant of this Option.  For  all purposes
          of this Agreement, fair market value of Stock shall be determined
          in accordance with the provisions of the Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of  this Option as herein provided, this Option may be exercised,
          by written  notice  to the  Company  at its  principal  executive

                                        -96-



<PAGE> 97
          office  addressed  to the  attention  of its  President  or Chief
          Executive Officer, at any time and from time to time after May 1,
          1997.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of descent  and  distribution, and  may be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:

               (a)  If Employee's employment with the Company terminates by
                    reason  of  disability (within  the meaning  of Section
                    22(e)(3) of the Code), this  Option may be exercised in
                    full by  Employee (or  Employee's estate or  the person
                    who acquires this Option by will or the laws of descent
                    and distribution or otherwise by reason of the death of
                    Employee) at  any time  during the  period of one  year
                    following such termination.

               (b)  If Employee dies  while in the  employ of the  company,
                    Employee's estate,  or  the person  who  acquires  this
                    Option by will or the  laws of descent and distribution
                    or otherwise by  reason of the  death of Employee,  may
                    exercise this  Option in full  at any  time during  the
                    period  of one  year following  the date  of Employee's
                    death.

               (c)  If  Employee's employment  with the  Company terminates
                    for  any reason other than  as described in  (a) or (b)
                    above, unless  Employee is terminated  for cause,  this
                    Option may be exercised by  Employee at any time during
                    the  period of three months following such termination,
                    or  by Employee's  estate (or  the person  who acquires
                    this  Option  by  will  or  the  laws  of  descent  and
                    distribution  or otherwise  by reason  of the  death of
                    Employee)  during  a  period   of  one  year  following
                    Employee's death  if Employee dies  during such  three-
                    month period, but in each case only as to the number of
                    shares Employee was entitled to purchase hereunder upon
                    exercise  of  this Option  as  of  the date  Employee's
                    employment  so   terminates.    For  purposes  of  this
                    Agreement,   "cause"   shall   mean  Employee's   gross
                    negligence or willful misconduct  in performance of the
                    duties  of Employee's  employment, or  Employee's final
                    conviction of  a felony  or of a  misdemeanor involving
                    moral turpitude.

          This  Option  shall not  be exercisable  in  any event  after the
          expiration  of ten  years  from the  date of  grant hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall  be paid  in  full at  the  time of  exercise  (a) in  case
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having  a fair market  value equal to the  purchase price, or (c)
          any combination of  (a) or (b).  No fraction of  a share of Stock

                                        -97-



<PAGE> 98
          shall  by issued  by the  Company upon  exercise of an  Option or
          accepted by the Company in payment of the purchase price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of a shareholder  of the Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  in  compensation  income  to
          Employee for federal or state income tax purposes, Employee shall
          deliver   to  the  Company  at  the  time  of  such  exercise  or
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may require to meet  its obligation under applicable  tax
          laws or regulations and, if Employee  fails to do so, the Company
          is  authorized to  withhold from  any cash or  Stock remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld by reason of  such resulting compensation income.   Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status of Stock.  Employee understands that at the time
          of the  execution of  this Agreement  the shares  of Stock to  be
          issued  upon exercise  of this  Option have  not been  registered
          under the Securities Act of 1933, as amended  (the "Act"), or any
          state securities law.  The Company may effect such a registration
          in the future; however, until the shares of Stock acquirable upon
          the exercise of the  Option have been registered for  issue under
          the Act, the Company will not issue such shares unless the holder
          of  the Option  provides the  Company with  a written  opinion of
          legal  counsel,  who  shall   be  satisfactory  to  the  Company,
          addressed to the Company  and satisfactory in form and  substance
          to  the  Company's  counsel,  to the  effect  that  the  proposed
          issuance of such shares to such Option holder may be made without
          registration  under  the  Act.    In  the  event  exemption  from
          registration  under the Act is available upon an exercise of this
          Option, Employee (or the person permitted to exercise this Option
          in the event of Employee's death), if requested by the Company to
          do  so, will  execute and  deliver to  the Company in  writing an
          agreement containing  such provisions as the  Company may require
          to assure compliance with applicable securities laws.

               Employee agrees that the shares of  Stock which Employee may
          acquire  by   exercising  this  Option  shall   be  acquired  for
          investment  without a view to distribution, within the meaning of
          the Act, and shall not be sold, transferred, assigned, pledged or
          hypothecated  in  the   absence  of  an  effective   registration
          statement for  the  shares under  the  Act and  applicable  state

                                        -98-



<PAGE> 99
          securities laws or an  applicable exemption from the registration
          requirements of the Act and any applicable state securities laws.
          Employee  also agrees that the shares of Stock which Employee may
          acquire by exercising this  Option will not be sold  or otherwise
          disposed of in any  manner which would constitute a  violation of
          any applicable securities laws, whether federal or state.

               In  addition,  Employee  agrees  (i)  that  the certificates
          representing the shares of Stock purchased under  this Option may
          bear  such legend  or legends as  the Board  of Directors  of the
          Company  deems appropriate  in  order to  assure compliance  with
          applicable securities laws,  (ii) that the Company  may refuse to
          register the transfer of the shares of Stock purchased under this
          Option  on  the stock  transfer records  of  the Company  if such
          proposed transfer would in the opinion of counsel satisfactory to
          the Company  constitute a violation of  any applicable securities
          law and (iii) that  the Company may give related  instructions to
          its  transfer agent, if any, to stop registration of the transfer
          of the shares of Stock purchased under this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement, Employee shall be  considered to be in  the employment
          of the Company  as long as Employee remains an employee of either
          the  Company, a parent  or subsidiary corporation  (as defined in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a  new option for  this Option.   Any question as  to whether and
          when there has  been a  termination of such  employment, and  the
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          person s lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.

               9.   Amendment and Restatement.   This Agreement amends  and
          restates in  its entirety that certain  Nonstatutory Stock Option
          Agreement, dated as of September 3, 1996 (the "Prior Agreement"),
          between  the  Company  and  Employee.   By  Employee's  execution
          hereof, Employee acknowledges and agrees that the Prior Agreement
          is cancelled and is of no  further force and effect and that this
          Agreement   supersedes  in  all  respects  the  Prior  Agreement.
          Employee further agrees to deliver and return the original  Prior
          Agreement to  the Company promptly after  Employee's execution of
          this Agreement.







                                        -99-


<PAGE> 100
               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly  executed by its  officer thereunto duly  authorized, and
          Employee has executed this Agreement, all as  of the day and year
          first above written.


                                        TMBR/SHARP DRILLING, INC.


                                        By:
                                             ------------------------------
                                             Thomas  C. Brown,  Chairman of
                                             the Board of Directors




                                             ------------------------------
                                             Joe G. Roper






































                                        -100-


<PAGE> 101
                              FIRST AMENDED AND RESTATED
                         NONSTATUTORY STOCK OPTION AGREEMENT


               THIS FIRST  AMENDED AND  RESTATED NONSTATUTORY STOCK  OPTION
          AGREEMENT  (this "Agreement"), dated  and effective as  of the 1st
          day  of September, 1998, is  between TMBR/SHARP DRILLING, INC., a
          Texas   corporation  (the   "Company"),   and  Thomas   C.  Brown
          ("Employee").

               WHEREAS, on  the 3rd  day of  September,  1996, Employee  was
          granted a nonstatutory stock option to purchase 195,000 shares of
          the  Company's  common stock,  $.10 par  value  per share,  at an
          exercise price of $7.75 per share;

               WHEREAS,  the Board of Directors  of the Company has reduced
          the  exercise price of the Employee's option from $7.75 per share
          to $4.125 per share, subject to Employee's approval;

               WHEREAS, the Company and  the Employee desire to enter  into
          this  First  Amended  and   Restated  Nonstatutory  Stock  Option
          Agreement for the purpose  of amending the exercise price  of the
          nonstatutory  stock option  granted to  Employee on  September 3,
          1996;

               NOW, THEREFORE,  the Company  and the Employee  hereby amend
          and  restate the Nonstatutory  Stock Option Agreement  to read in
          its entirety as follows:

               To carry out  the purposes of the  TMBR/SHARP DRILLING, INC.
          1994 STOCK OPTION  PLAN (the "Plan"),  by affording Employee  the
          opportunity to  purchase shares of  common stock  of the  Company
          ("Stock"),  and in  consideration  of the  mutual agreements  and
          other matters set forth herein and  in the Plan, the Company  and
          Employee hereby agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants
          to  Employee the right and  option ("Option") to  purchase all or
          any part of an aggregate of 195,000 shares of Stock, on the terms
          and conditions set forth  herein and in the  Plan, which Plan  is
          incorporated herein  by reference as  a part  of this  Agreement.
          This Option shall  not be  treated as an  incentive stock  option
          within the meaning of Section 422 of the Internal Revenue Code of
          1986, as amended (the "Code").

               2.   Purchase Price.  The  purchase price of Stock purchased
          pursuant  to  the exercise  of this  Option  shall be  $4.125 per
          share,  which has been determined to  be the fair market value of
          the Stock at the  date of gant of this Option.   For all purposes
          of this Agreement, fair market value of Stock shall be determined
          in accordance with the provisions of the Plan.

               3.   Exercise of Option.   Subject to the earlier expiration
          of  this Option as herein provided, this Option may be exercised,

                                        -101-



<PAGE> 102
          by  written  notice to  the  Company at  its  principal executive
          office  addressed to  the  attention of  its  President or  Chief
          Executive Officer, at any time and from time to time after May 1,
          1997.

               This Option  is not transferable by  Employee otherwise than
          by  will or  the laws  of descent  and distribution,  and  may be
          exercised only  by Employee during Employee's  lifetime and while
          Employee remains an employee of the Company, except that:

               (a)  If Employee's employment with the Company terminates by
                    reason  of disability  (within the  meaning  of Section
                    22(e)(3) of the Code), this Option  may be exercised in
                    full by  Employee (or  Employee's estate or  the person
                    who acquires this Option by will or the laws of descent
                    and distribution or otherwise by reason of the death of
                    Employee) at  any time  during the  period of  one year
                    following such termination.

               (b)  If Employee  dies while in  the employ of  the company,
                    Employee's  estate, or  the  person  who acquires  this
                    Option by will or the laws  of descent and distribution
                    or otherwise  by reason of  the death of  Employee, may
                    exercise this  Option in  full at any  time during  the
                    period  of one  year following  the date  of Employee's
                    death.

               (c)  If  Employee's employment  with the  Company terminates
                    for  any reason other than  as described in  (a) or (b)
                    above, unless  Employee is  terminated for  cause, this
                    Option may be exercised by Employee  at any time during
                    the period of three months  following such termination,
                    or  by Employee's  estate (or  the person  who acquires
                    this  Option  by  will  or  the  laws  of  descent  and
                    distribution  or otherwise  by reason  of the  death of
                    Employee)  during  a  period  of  one  year   following
                    Employee's death  if Employee  dies during  such three-
                    month period, but in each case only as to the number of
                    shares Employee was entitled to purchase hereunder upon
                    exercise  of  this Option  as  of  the date  Employee's
                    employment  so  terminates.    For  purposes   of  this
                    Agreement,   "cause"   shall   mean  Employee's   gross
                    negligence or willful misconduct in performance of  the
                    duties  of Employee's  employment, or  Employee's final
                    conviction of  a felony  or of a  misdemeanor involving
                    moral turpitude.

          This  Option  shall not  be exercisable  in  any event  after the
          expiration  of ten  years from  the  date of  grant hereof.   The
          purchase price of  shares as  to which this  Option is  exercised
          shall be  paid  in full  at  the time  of  exercise (a)  in  case
          (including  check, bank draft or money order payable to the order
          of the Company), (b) by delivering to the Company shares of Stock
          having a fair  market value equal  to the purchase price,  or (c)

                                        -102-



<PAGE> 103
          any combination of (a) or  (b).  No fraction of a  share of Stock
          shall by  issued by  the Company  upon exercise  of an  Option or
          accepted by the Company in payment of the purchase price thereof;
          rather,  Employee shall provide a cash payment for such amount as
          is  necessary to effect the issuance and acceptance of only whole
          shares  of Stock.  Unless and until a certificate or certificates
          representing such shares shall have been issued by the Company to
          Employee,  Employee (or  the  person permitted  to exercise  this
          Option in the event of Employee's death) shall not be or have any
          of the rights or privileges of a shareholder of the  Company with
          respect to shares acquirable upon an exercise of this Option.

               4.   Withholding of Tax.  To the extent that the exercise of
          this Option or  the disposition  of shares of  Stock acquired  by
          exercise  of  this  Option  results  in  compensation  income  to
          Employee for federal or state income tax purposes, Employee shall
          deliver   to  the  Company  at  the  time  of  such  exercise  or
          disposition  such amount  of  money or  shares  of Stock  as  the
          Company may  require to meet its obligation  under applicable tax
          laws or regulations and, if Employee fails to  do so, the Company
          is authorized  to withhold  from any  cash or  Stock remuneration
          then or thereafter  payable to  Employee any tax  required to  be
          withheld  by reason of such resulting  compensation income.  Upon
          an  exercise of this Option, the Company is further authorized in
          its discretion to satisfy any such withholding requirement out of
          any cash or shares  of Stock distributable to Employee  upon such
          exercise.

               5.   Status of Stock.  Employee understands that at the time
          of the  execution of  this Agreement  the shares  of Stock  to be
          issued  upon  exercise of  this Option  have not  been registered
          under the Securities Act of 1933, as amended (the "Act"),  or any
          state securities law.  The Company may effect such a registration
          in the future; however, until the shares of Stock acquirable upon
          the exercise of the  Option have been registered for  issue under
          the Act, the Company will not issue such shares unless the holder
          of  the Option  provides the  Company with  a written  opinion of
          legal  counsel,  who  shall   be  satisfactory  to  the  Company,
          addressed to the  Company and satisfactory in  form and substance
          to  the  Company's  counsel,  to  the effect  that  the  proposed
          issuance of such shares to such Option holder may be made without
          registration  under  the  Act.    In  the  event  exemption  from
          registration  under the Act is available upon an exercise of this
          Option, Employee (or the person permitted to exercise this Option
          in the event of Employee's death), if requested by the Company to
          do so,  will execute  and deliver  to the  Company in  writing an
          agreement containing  such provisions as the  Company may require
          to assure compliance with applicable securities laws.

               Employee agrees that the shares of Stock which  Employee may
          acquire  by   exercising  this  Option  shall   be  acquired  for
          investment without a  view to distribution, within the meaning of
          the Act, and shall not be sold, transferred, assigned, pledged or
          hypothecated  in  the  absence   of  an  effective   registration

                                        -103-



<PAGE> 104
          statement  for  the shares  under  the Act  and  applicable state
          securities laws or an  applicable exemption from the registration
          requirements of the Act and any applicable state securities laws.
          Employee  also agrees that the shares of Stock which Employee may
          acquire by exercising this  Option will not be sold  or otherwise
          disposed of in any  manner which would constitute a  violation of
          any applicable securities laws, whether federal or state.

               In  addition,  Employee  agrees (i)  that  the  certificates
          representing the shares of Stock purchased under this Option  may
          bear  such legend  or legends  as the Board  of Directors  of the
          Company  deems appropriate  in  order to  assure compliance  with
          applicable securities laws, (ii)  that the Company may  refuse to
          register the transfer of the shares of Stock purchased under this
          Option  on  the stock  transfer records  of  the Company  if such
          proposed transfer would in the opinion of counsel satisfactory to
          the Company  constitute a violation of  any applicable securities
          law and (iii) that  the Company may give related  instructions to
          its  transfer agent, if any, to stop registration of the transfer
          of the shares of Stock purchased under this Option.

               6.   Employment   Relationship.     For  purposes   of  this
          Agreement,  Employee shall be considered to  be in the employment
          of the Company as long as  Employee remains an employee of either
          the Company, a  parent or subsidiary  corporation (as defined  in
          Section 424  of the Code) of  the Company, or a  corporation or a
          parent or subsidiary of such corporation assuming or substituting
          a new option  for this Option.   Any question  as to whether  and
          when there has  been a  termination of such  employment, and  the
          cause  of such termination, shall  be determined by  the Board of
          Directors of the Company, and its determination shall be final.

               7.   Binding Effect.   This Agreement shall  be binding upon
          and inure to the benefit of any successors to the Company and all
          person s lawfully claiming under Employee.

               8.   Governing Law.   This  Agreement shall be  governed by,
          and construed in accordance with, the laws of the State of Texas.

               9.   Amendment and Restatement.   This Agreement amends  and
          restates in  its entirety that certain  Nonstatutory Stock Option
          Agreement, dated as of September 3, 1996 (the "Prior Agreement"),
          between  the  Company  and  Employee.   By  Employee's  execution
          hereof, Employee acknowledges and agrees that the Prior Agreement
          is cancelled  and is of no further force and effect and that this
          Agreement  supersedes  in  all  respects   the  Prior  Agreement.
          Employee further  agrees to deliver and return the original Prior
          Agreement to  the Company promptly after  Employee's execution of
          this Agreement.






                                        -104-



<PAGE> 105
               IN WITNESS WHEREOF, the Company has caused this Agreement to
          be duly  executed by its  officer thereunto duly  authorized, and
          Employee has executed this Agreement, all as  of the day and year
          first above written.


                                        TMBR/SHARP DRILLING, INC.


                                        By:
                                             --------------------------
                                             Joe G. Roper, President



                                             --------------------------
                                             Thomas C. Brown




































                                        -105-





<PAGE> 106
                                                               Exhibit 23.1


                      CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS



               As independent public accountants,  we hereby consent to the
          incorporation  by reference of  our report included  in this Form
          10-K  into the Company's previously filed Registration Statements
          on  Form S-8 (registration no. 33-46699 and no. 33-89878) and the
          Company's previously  filed registration  statement on Form  S-3,
          No. 333-23391.




                                       /s/  ARTHUR ANDERSEN LLP

          Dallas, Texas,
            June 29, 1999


































                                        -106-



<PAGE> 107
                                                               Exhibit 23.2


                      CONSENT OF INDEPENDENT PETROLEUM ENGINEERS



               As independent petroleum engineers, we hereby consent to the
          incorporation  by reference of  our report included  in this Form
          10-K  into the Company's previously filed Registration Statements
          on Form S-8 (registration no. 33-46699 and no. 33-898878) and the
          Company's previously  filed registration  statement on Form  S-3,
          No. 333-23391.





                                              /s/  JOE C. NEAL & ASSOCIATES


          Midland, Texas
            June 29, 1999
































                                        -107-