##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period ended March 31, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission file number: 000-19580
 T-3 ENERGY SERVICES, INC.
  Delaware
    
    76-0697390(State or Other Jurisdiction
of Incorporation or Organization)
    
    (IRS Employer
Identification No.)7135 Ardmore, Houston, Texas
(Address of Principal Executive Offices)
    
    77054
(Zip Code)
 (713) 996-4110
 þ o
  o o þ
 o þ




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##### 



TABLE OF CONTENTS
 FORM 10-Q
  
 Item
    
    
    
    PagePART I1.
    
    Financial StatementsCondensed Consolidated Balance Sheets as of March 31, 2006 and
December 31, 2005
    
    
    1Condensed Consolidated Statements of Operations for the Three Months Ended
March 31, 2006 and 2005
    
    
    2Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2006 and 2005
    
    
    3Condensed Consolidated Statements of Comprehensive Income for the Three
Months Ended March 31, 2006 and 2005
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    52.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    133.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    224.
    
    Controls and Procedures
    
    
    22PART II1.
    
    Legal Proceedings
    
    
    231A.
    
    Risk Factors
    
    
    232.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    293.
    
    Defaults Upon Senior Securities
    
    
    294.
    
    Submission of Matters to a Vote of Security Holders
    
    
    305.
    
    Other Information
    
    
    306.
    
    Exhibits
    
    
    30Second Amendment to First Amended and Restated Credit AgreementCertification of CEO pursuant to Rule 13a-14a/15d-14aCertification of CFO pursuant to Rule 13a-14a/15d-14aCertification Pursuant to Section 906 (CEO)Certification Pursuant to Section 906 (CFO)
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T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands except for share amounts)
 March 31,
    
    
    December 31,2006
    
    
    2005(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    818
    
    
    $
    1,162Accounts receivable  trade, net
    
    
    23,289
    
    
    
    21,527Inventories
    
    
    21,576
    
    
    
    18,268Notes receivable, current portion
    
    
    758
    
    
    
    480Deferred income taxes
    
    
    1,767
    
    
    
    1,731Prepaids and other current assets
    
    
    4,597
    
    
    
    5,887Total current assets
    
    
    52,805
    
    
    
    49,055Property and equipment, net
    
    
    20,645
    
    
    
    18,652Notes receivable, less current portion
    
    
    36
    
    
    
    327Goodwill, net
    
    
    71,055
    
    
    
    69,607Other intangible assets, net
    
    
    2,863
    
    
    
    2,325Other assets
    
    
    767
    
    
    
    822Total assets
    
    $
    148,171
    
    
    $
    140,788LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable  trade
    
    $
    14,565
    
    
    $
    12,943Accrued expenses and other
    
    
    9,380
    
    
    
    9,439Current maturities of long-term debt
    
    
    24
    
    
    
    36Total current liabilities
    
    
    23,969
    
    
    
    22,418Long-term debt, less current maturities
    
    
    7,571
    
    
    
    7,058Other long-term liabilities
    
    
    70
    
    
    
    82Deferred income taxes
    
    
    3,287
    
    
    
    2,018Commitments and contingenciesStockholders equity:Preferred stock, $.001 par value, 25,000,000
shares authorized, no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $.001 par value, 25,000,000 shares
authorized, 10,586,974 shares issued
and outstanding at March 31, 2006 and 10,581,986
shares issued and outstanding at December 31, 2005
    
    
    11
    
    
    
    11Warrants, 327,862 issued and outstanding at March
31, 2006 and 332,862 issued and outstanding at
December 31, 2005
    
    
    644
    
    
    
    644Additional paid-in capital
    
    
    123,460
    
    
    
    123,175Retained deficit
    
    
    (11,636
    )
    
    
    (15,420
    )Accumulated other comprehensive income
    
    
    795
    
    
    
    802Total stockholders equity
    
    
    113,274
    
    
    
    109,212Total liabilities and stockholders equity
    
    $
    148,171
    
    
    $
    140,788
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T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 (in thousands except per share amounts)
 Three Months EndedMarch 31,2006
    
    
    2005Revenues:Products
    
    $
    25,001
    
    
    $
    11,105Services
    
    
    10,682
    
    
    
    8,67735,683
    
    
    
    19,782Cost of revenues:Products
    
    
    16,564
    
    
    
    7,775Services
    
    
    5,995
    
    
    
    5,60122,559
    
    
    
    13,376Gross profit
    
    
    13,124
    
    
    
    6,406Operating expenses
    
    
    6,907
    
    
    
    4,782Income from operations
    
    
    6,217
    
    
    
    1,624Interest expense
    
    
    256
    
    
    
    396Interest income
    
    
    (6
    )
    
    
    (23
    )Other (income) expense, net
    
    
    (84
    )
    
    
    25Income from continuing operations before provision for
income taxes
    
    
    6,051
    
    
    
    1,226Provision for income taxes
    
    
    2,187
    
    
    
    528Income from continuing operations
    
    
    3,864
    
    
    
    698Income (loss) from discontinued operations, net of tax
    
    
    (80
    )
    
    
    72Net income
    
    $
    3,784
    
    
    $
    770Basic earnings (loss) per common share:Continuing operations
    
    $
    .37
    
    
    $
    .06Discontinued operations
    
    
    (.01
    )
    
    
    .01Net income (loss) per common share
    
    $
    .36
    
    
    $
    .07Diluted earnings (loss) per common share:Continuing operations
    
    $
    .36
    
    
    $
    .06Discontinued operations
    
    
    (.01
    )
    
    
    .01Net income (loss) per common share
    
    $
    .35
    
    
    $
    .07Weighted average common shares outstanding:Basic
    
    
    10,584
    
    
    
    10,582Diluted
    
    
    10,696
    
    
    
    10,634
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T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 (in thousands)
 Three Months EndedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    3,784
    
    
    $
    770Adjustments to reconcile net income to net cash provided by
operating activities:(Income) loss from discontinued operations, net of tax
    
    
    80
    
    
    
    (72
    )Bad debt expense
    
    
    (18
    )
    
    
    33Depreciation and amortization
    
    
    807
    
    
    
    814Amortization of deferred loan costs
    
    
    62
    
    
    
    90Loss on sale of assets
    
    
    10
    
    
    
    24Deferred taxes
    
    
    1,086
    
    
    
    248Employee stock-based compensation expense
    
    
    237
    
    
    
    Amortization of stock compensation
    
    
    1
    
    
    
    1Changes in assets and liabilities:Accounts receivable  trade
    
    
    (1,408
    )
    
    
    662Inventories
    
    
    (3,310
    )
    
    
    (2,199
    )Prepaids and other current assets
    
    
    1,290
    
    
    
    930Other assets
    
    
    (11
    )
    
    
    (29
    )Accounts
payable  trade
    
    
    1,529
    
    
    
    208Accrued expenses and other
    
    
    (362
    )
    
    
    826Net cash provided by operating activities
    
    
    3,777
    
    
    
    2,306Cash flows from investing activities:Purchases of property and equipment
    
    
    (2,493
    )
    
    
    (421
    )Proceeds from sales of property and equipment
    
    
    135
    
    
    
    48Cash paid for acquisitions, net of cash acquired
    
    
    (2,248
    )
    
    
    Collections on notes receivable
    
    
    13
    
    
    
    484Net cash provided by (used in) investing activities
    
    
    (4,593
    )
    
    
    111Cash flows from financing activities:Net borrowings (repayments) under revolving credit facility
    
    
    513
    
    
    
    (3,788
    )Payments on long-term debt
    
    
    (12
    )
    
    
    (11
    )Proceeds from exercise of stock options
    
    
    37
    
    
    
    Excess tax benefits from stock-based compensation
    
    
    9
    
    
    
    Net cash provided by (used in) financing activities
    
    
    547
    
    
    
    (3,799
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    5
    
    
    
    (3
    )Cash flows of discontinued operations (Revised  See note 1):Operating cash flows
    
    
    (80
    )
    
    
    1,906Investing cash flows
    
    
    
    
    
    
    (50
    )Financing cash flows
    
    
    
    
    
    
    Net cash provided by (used in) discontinued operations
    
    
    (80
    )
    
    
    1,856Net increase (decrease) in cash and cash equivalents
    
    
    (344
    )
    
    
    471Cash and cash equivalents, beginning of period
    
    
    1,162
    
    
    
    95Cash and cash equivalents, end of period
    
    $
    818
    
    
    $
    566
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T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 (in thousands)
 Three Months EndedMarch 31,2006
    
    
    2005Net income
    
    $
    3,784
    
    
    $
    770Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    (7
    )
    
    
    (119
    )Comprehensive income
    
    $
    3,777
    
    
    $
    651
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T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1. BASIS OF PRESENTATION
  Equity Method Investments
  Stock-Based Compensation
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New Accounting Pronouncements
  2. BUSINESS COMBINATIONS AND DISPOSITIONS
 Business Combinations
    Fair value of tangible and intangible assets, net of
cash acquired
    
    $
    1,327Goodwill recorded
    
    
    1,309Total liabilities assumed
    
    
    (388
    )Common stock issued
    
    
    Cash paid for acquisitions, net of cash acquired
    
    $
    2,248
 Dispositions
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3. INVENTORIES
  March 31,
    
    
    December 31,2006
    
    
    2005Raw materials
    
    $
    5,403
    
    
    $
    4,420Work in process
    
    
    8,601
    
    
    
    6,891Finished goods and component parts
    
    
    7,572
    
    
    
    6,957$
    21,576
    
    
    $
    18,268
 4. DEBT
  5. EARNINGS (LOSS) PER SHARE
   Three Months EndedMarch 31,2006
    
    
    2005Numerator:Income from continuing operations
    
    $
    3,864
    
    
    $
    698Income (loss) from discontinued operations
    
    
    (80
    )
    
    
    72Net income
    
    $
    3,784
    
    
    $
    770Denominator:Weighted average common shares outstanding  basic
    
    
    10,584
    
    
    
    10,582Shares for dilutive stock options
    
    
    112
    
    
    
    52Weighted average common shares outstanding and
assumed conversions  diluted
    
    
    10,696
    
    
    
    10,634Basic earnings (loss) per common share:Continuing operations
    
    $
    .37
    
    
    $
    .06Discontinued operations
    
    
    (.01
    )
    
    
    .01Net income per common share
    
    $
    .36
    
    
    $
    .07
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Three Months EndedMarch 31,2006
    
    
    2005Diluted earnings (loss) per common share:Continuing operations
    
    $
    .36
    
    
    $
    .06Discontinued operations
    
    
    (.01
    )
    
    
    .01Net income per common share
    
    $
    .35
    
    
    $
    .07
  6. SEGMENT INFORMATION
    (dollars in thousands)PressureControl
    
    Corporate
    
    ConsolidatedThree months ended March 31:2006Revenues
    
    $
    35,683
    
    
    $
    
    
    
    $
    35,683Depreciation and amortization
    
    
    580
    
    
    
    227
    
    
    
    807Income (loss) from operations
    
    
    8,807
    
    
    
    (2,590
    )
    
    
    6,217Capital expenditures
    
    
    2,374
    
    
    
    119
    
    
    
    2,4932005Revenues
    
    $
    19,782
    
    
    $
    
    
    
    $
    19,782Depreciation and amortization
    
    
    617
    
    
    
    197
    
    
    
    814Income (loss) from operations
    
    
    2,999
    
    
    
    (1,375
    )
    
    
    1,624Capital expenditures
    
    
    365
    
    
    
    56
    
    
    
    421
 7. COMMITMENTS AND CONTINGENCIES
 th
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st
      8. STOCKHOLDERS EQUITY
 Common Stock
  9




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Warrants
  Additional Paid-In Capital
  9. STOCK-BASED COMPENSATION
     Three Months EndedMarch 31,2005Net income, as reported
    
    $
    770Total stock-based employee compensation expense
determined under fair value method for all awards,
net of related tax effects
    
    
    (66
    )Net income, as adjusted
    
    $
    704
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Three Months EndedMarch 31,2005Basic EPS:As reported
    
    $
    .07As adjusted
    
    $
    .07Diluted EPS:As reported
    
    $
    .07As adjusted
    
    $
    .07
   Three Months Ended
    
    Three Months EndedMarch 31,
    
    March 31,2006
    
    2005Expected volatility
    
    
    52.79
    %
    
    
    38.91
    %Risk-free interest rate
    
    
    4.42
    %
    
    
    4.18
    %Expected term (in years)
    
    
    4
    
    
    
    4
  Weighted
    
    
    Weighted Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicExercise
    
    
    Contractual
    
    
    ValueOptions
    
    Shares
    
    
    Price
    
    
    Term
    
    
    (In Thousands)Outstanding at January 1, 2006
    
    
    536,053
    
    
    $
    8.99Granted
    
    
    402,000
    
    
    
    12.25Exercised
    
    
    (4,988
    )
    
    
    7.49Forfeited
    
    
    (17,302
    )
    
    
    7.96Outstanding at March 31, 2006
    
    
    915,763
    
    
    $
    10.45
    
    
    
    8.17
    
    
    $
    5,483Vested or expected to vest at March 31, 2006
    
    
    877,978
    
    
    $
    10.49
    
    
    
    8.14
    
    
    $
    5,249Exercisable at March 31, 2006
    
    
    360,096
    
    
    $
    9.85
    
    
    
    6.51
    
    
    $
    2,700
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10. SUBSEQUENT EVENTS
    12




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 General
    Recent Developments
     13




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Strategy and Capital Requirements
  
    
    Expand our manufacturing capacity through facility expansions and improvements. We plan
to expand our manufacturing capacity to increase the volume and number of products we
manufacture, with an emphasis on our pressure and flow control product line. We expect to
invest approximately $5 million to $10 million over 2006 and 2007 on this expansion effort.
Our expansion plans include:
 
    
    increasing our existing BOP manufacturing capacity from ten to 25 units per month by
upgrading and expanding our machining capabilities at our existing facilities;
    
    establishing manufacturing capacity for 12 multi-bowl wellhead units per month;
    
    opening two facilities for our wellhead product line;
    
    opening five facilities for our pipeline product line; and
    
    expanding our elastomer producing capacity in North America.
 For example, in the first quarter of 2006, we expanded into the East Texas region by opening
two facilities to provide wellhead and pipeline products, repairs and field services for
companies whose operations are actively involved in the Cotton Valley, Barnett Shale and
Austin Chalk fields.
    
    Continue new product development. In the past three years, we have introduced 18 new
products, and we will continue to focus on new product development across all of our
product lines, with a particular focus on pressure and flow control. We plan to introduce a
comparable number of new products during the next two years.
    
    Expand our geographic areas of operation. We intend to expand our geographic areas of
operation, with particular focus on field services for our wellhead and pipeline product
lines. We are expanding our wellhead and pipeline repair and remanufacturing services by
establishing facilities in areas we believe will have high drilling activity, such as the
Barnett Shale in North Texas, the Cotton Valley trend in the East Texas Basin and the
Fayetteville Shale in the Arkoma Basin and the Appalachian regions. For example, in January
2006, we completed the purchase of KC Machine LLC, located in Rock Springs, Wyoming, to
continue our expansion of our pressure and flow control, wellhead and pipeline products and
services to those existing and new customers who are located in the Rocky Mountain region.
In addition, during the first quarter of 2006, we expanded into the East Texas Region by
opening two facilities to provide products and services for companies whose operations are
actively involved in the Cotton Valley, Barnett Shale and Austin Chalk field.
    
    Pursue strategic acquisitions and alliances. Our acquisition strategy will focus on
broadening our markets and existing product offerings. For example, in January 2006, we
completed the purchase of KC Machine LLC, located in Rock Springs, Wyoming, to continue our
expansion of our pressure and flow control, wellhead and pipeline products and services to
the Rocky Mountain region. In addition, in July 2005, we entered into a joint
participation agreement with SYMMSA, a subsidiary of GRUPO R, a conglomerate of companies
that provides services to the energy and industrial sectors in Mexico. We will continue to
seek similar strategic acquisition and alliance opportunities in the future.
 How We Generate Our Revenue
  14




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How We Evaluate Our Operations
  
    
    revenue and facility output;
    
    material and labor expenses as a percentage of revenue;
    
    selling, general and administrative expenses as a percentage of revenue;
    
    EBITDA; and
    
    financial and operational models.
 Revenue and Facility Output
  Material and Labor Expenses as a Percentage of Revenue
    Selling, General and Administrative Expenses as a Percentage of Revenue
  15




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EBITDA
  
    
    as a measure of operating performance that assists us in comparing our performance on a
consistent basis because it removes the impact of our capital structure and asset base
from our operating results;
    
    as a measure for budgeting and for evaluating actual results against our budgets;
    
    to assess compliance with financial ratios and covenants included in our senior credit facility;
    
    in communications with lenders concerning our financial performance; and
    
    to evaluate the viability of potential acquisitions and overall rates of return.
 Financial and Operational Models
  Loss Management
 Customer Satisfaction.
 Employee Productivity
 Management System Compliance
 How We Manage Our Operations
  
    
    safety and environmental management systems;
    
    quality management systems;
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
    
    statistical tracking systems; and
    
    inventory turnover rates.
 Safety and Environmental Management Systems
    Quality Management Systems
  Statistical Tracking Systems
  Inventory Turnover Rates
  Critical Accounting Policies and Estimates
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New Accounting Pronouncements
  Outlook
  WTI
    
    Henry Hub
    
    United States
    
    Canada
    
    InternationalQuarter Ended:
    
    Oil
    
    Gas
    
    Rig Count
    
    Rig Count
    
    Rig CountMarch 31, 2005
    
    $
    49.73
    
    
    $
    6.47
    
    
    
    1,279
    
    
    
    521
    
    
    
    876June 30, 2005
    
    $
    53.05
    
    
    $
    6.95
    
    
    
    1,336
    
    
    
    241
    
    
    
    916September 30, 2005
    
    $
    63.19
    
    
    $
    9.64
    
    
    
    1,428
    
    
    
    497
    
    
    
    911December 31, 2005
    
    $
    60.00
    
    
    $
    12.80
    
    
    
    1,478
    
    
    
    572
    
    
    
    929March 31, 2006
    
    $
    63.27
    
    
    $
    7.91
    
    
    
    1,519
    
    
    
    665
    
    
    
    896
 
 Source: Rig count: Baker Hughes, Inc.
(www.bakerhughes.com); West Texas Intermediate Crude Spot
Price: Department of Energy, Energy Information Administration
(www.eia.doe.gov); NYMEX Henry Hub
Natural Gas Spot Price: (www.oilnergy.com).    18




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Results of Operations
 Three Months ended March 31, 2006 Compared with Three Months ended March 31, 2005
 Revenues.
 Cost of Revenues.
 Operating Expenses.
 Interest Expense.
 Income Taxes.
 Income from Continuing Operations.
 Discontinued Operations.
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Liquidity and Capital Resources
  Net Cash Provided by Operating Activities.
 Net Cash Provided by (Used in) Investing Activities.
 Net Cash Provided by (Used in) Financing Activities.
 Net Cash Provided by (Used In) Discontinued Operations.
 Principal Debt Instruments.
  20




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Payments Due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    After 5Contractual Obligations
    
    Total
    
    
    Year
    
    
    2-3 Years
    
    
    4-5 Years
    
    
    YearsLong-term debt
    
    $
    7,595
    
    
    $
    24
    
    
    $
    7,571
    
    
    $
    
    
    
    $
    Letters of credit
    
    
    55
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    4,675
    
    
    
    1,526
    
    
    
    2,322
    
    
    
    826
    
    
    
    1Total contractual obligations
    
    $
    12,325
    
    
    $
    1,605
    
    
    $
    9,893
    
    
    $
    826
    
    
    $
    1
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  22




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PART II
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   If we are unable to successfully manage our growth and implement our business plan, our results of
operations will be adversely affected.
  
    
    inability to integrate operations between existing and new or expanded facilities;
    
    shortage of operating equipment and raw materials necessary to operate our expanded business;
    
    lack of a sufficient number of qualified technical and operating personnel; and
    
    managing the increased costs associated with our expansion.
 Our business depends on spending by the oil and gas industry, and this spending and our
business may be adversely affected by industry conditions that are beyond our control.
  
    
    the level of drilling activity;
 23




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
    
    the level of oil and gas production;
    
    the demand for oil and gas related products;
    
    domestic and worldwide economic conditions;
    
    political instability in the Middle East and other oil producing regions;
    
    the actions of the Organization of Petroleum Exporting Countries;
    
    the price of foreign imports of oil and gas, including liquefied natural gas;
    
    natural disasters or weather conditions, such as hurricanes;
    
    technological advances affecting energy consumption;
    
    the level of oil and gas inventories;
    
    the cost of producing oil and gas;
    
    the price and availability of alternative fuels;
    
    merger and divestiture activity among oil and gas producers; and
    
    governmental regulation.
  A decline in or substantial volatility of oil and gas prices could adversely affect the demand
and prices for our products and services.
   We rely on a few key employees whose absence or loss could disrupt our operations or be
adverse to our business.
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Shortages of raw materials may restrict our operations.
  Our industry has recently experienced shortages in the availability of qualified personnel.
Any difficulty we experience replacing or adding qualified personnel could adversely affect our
business.
  We intend to expand our business through strategic acquisitions. Our acquisition
strategy exposes us to various risks, including those relating to difficulties in identifying
suitable acquisition opportunities and integrating businesses and the potential for increased
leverage or debt service requirements.
  
    
    unanticipated costs and exposure to unforeseen liabilities;
    
    difficulty in integrating the operations and assets of the acquired businesses;
    
    our ability to properly maintain effective internal controls over an acquired company; and
    
    risk of entering markets in which we have limited prior experience.
   The oilfield service industry in which we operate is highly competitive, which may result in a
loss of market share or a decrease in revenue or profit margins.
  If we do not develop and commercialize new competitive products, our revenue may decline.
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
    
    design and commercially produce products that meet the needs of our customers;
    
    successfully market new products; and
    
    protect our proprietary designs from our competitors.
   The cyclical nature of or a prolonged downturn in our industry could affect the carrying value of
our goodwill.
  We may be faced with product liability claims.
  Liability to customers under warranties may materially and adversely affect our earnings.
  Uninsured or underinsured claims or litigation or an increase in our insurance premiums could
adversely impact our results.
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Our operations are subject to stringent environmental laws and regulations that may expose us
to significant costs and liabilities.
   We will be subject to political, economic and other uncertainties as we expand our
international operations.
  
    
    political, social and economic instability;
    
    currency fluctuations; and
    
    government regulation that is beyond our control.
  If we are unable to complete our assessment of the adequacy of our internal control over
financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, investors could
lose confidence in the reliability of our financial statements, which could result in a decrease in
the value of our common stock.
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Risks Related to Our Common Stock
 The market price of our common stock may be volatile or may decline regardless of our
operating performance.
  
    
    actual or anticipated variations in quarterly operating results;
    
    announcements of technological advances by us or our competitors;
    
    current events affecting the political and economic environment in the United States;
    
    conditions or trends in our industry, including demand for our products and services,
technological advances and governmental regulations;
    
    litigation involving or affecting us;
    
    changes in financial estimates by us or by any securities analysts who might cover our stock; and
    
    additions or departures of our key personnel.
  Two of our directors may have conflicts of interest because they are also directors or officers of
First Reserve Corporation. The resolution of these conflicts of interest may not be in our or our
stockholders best interests.
  We will renounce any interest in specified business opportunities, and First Reserve Fund VIII and
its director designees on our board of directors generally will have no obligation to offer us
those opportunities.
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
    
    no member of the First Reserve group or any of those individuals will have any
obligation to communicate or offer the opportunity to us; and
    
    such entity or individual may pursue the opportunity as that entity or
individual sees fit,
  
    
    it was presented to a member of the First Reserve group in that persons
capacity as a director or officer of T-3; or
    
    the opportunity was identified solely through the disclosure of information by
or on behalf of T-3.
  Our ability to issue preferred stock could adversely affect the rights of holders of our
common stock.
  Certain provisions in our charter documents have anti-takeover effects.
  Because we have no plans to pay any dividends for the foreseeable future, investors must look
solely to stock appreciation for a return on their investment in us.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
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Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibit Number
    
    Identification of Exhibit10.1
    
    Second Amendment to First Amended and Restated Credit Agreement dated
March 17, 2006, among T-3 Energy Services, Inc., T-3 Oilco Energy
Services Partnership, the Banks signatory thereto, Wells Fargo Bank,
National Association, as agent for the Banks, and Comerica Bank31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
or Rule 15d-14(a), promulgated under the Securities Exchange Act of
1934, as amended31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
or Rule 15d-14(a), promulgated under the Securities Exchange Act of
1934, as amended32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
To Section 906 Of The Sarbanes-Oxley Act Of 2002 (Chief Executive
Officer)32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
To Section 906 Of The Sarbanes-Oxley Act Of 2002 (Chief Financial
Officer)
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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, on the 12th day of May 2006.
 T-3 ENERGY SERVICES, INC.By:
    
    /s/ MICHAEL T. MINOMichael T. Mino (Chief Financial
Officer and Vice President)
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INDEX TO EXHIBITS
 ExhibitNumber
    
    Identification of Exhibit10.1*
    
    Second Amendment to First Amended and Restated Credit Agreement
dated March 17, 2006, among T-3 Energy Services, Inc., T-3 Oilco
Energy Services Partnership, the Banks signatory thereto, Wells
Fargo Bank, National Association, as agent for the Banks, and
Comerica Bank31.1*
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) or Rule 15d-14(a), promulgated under the Securities
Exchange Act of 1934, as amended31.2*
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) or Rule 15d-14(a), promulgated under the Securities
Exchange Act of 1934, as amended32.1*
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 (Chief
Executive Officer)32.2*
    
    Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 (Chief
Financial Officer)
 
 *
    
    Filed herewith.