<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

     (Mark One)
     [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

              FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

     [ ]      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.
             (Exact Name of Registrant as Specified in Its Charter)

                   DELAWARE                                     76-0697390
             (State or Other Jurisdiction                     (IRS Employer
           of Incorporation or Organization)                Identification No.)

      13111 NORTHWEST FREEWAY, SUITE 500, HOUSTON, TEXAS          77040
         (Address of Principal Executive Offices)              (Zip Code)

      (Registrant's telephone number, including area code): (713) 996-4110




      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 [ ]

      At November 5, 2002, the registrant had 10,581,669 shares of common stock
outstanding.




                                       1

<PAGE>

                                TABLE OF CONTENTS

                                    FORM 10-Q


<TABLE>
<CAPTION>
Item                                                                                           Page
----                                                                                           ----
                                     PART I


<S>                                                                                               <C>
  1.     Financial Statements.................................................................    3

              Consolidated Balance Sheets as of September 30, 2002 and
                December 31, 2001.............................................................    3
              Consolidated Statements of Operations for the Three and Nine Months Ended
                September 30, 2002 and 2001...................................................    4
              Consolidated Statements of Cash Flows for the Nine Months Ended
                September 30, 2002 and 2001...................................................    5
              Notes to Consolidated Financial Statements......................................    6

  2.     Management's Discussion and Analysis of Financial Condition
              and Results of Operations.......................................................   10

  3.     Quantitative and Qualitative Disclosures about Market Risk...........................   19

  4.     Controls and Procedures..............................................................   19


                                     PART II

  1.     Legal Proceedings....................................................................   20

  2.     Changes in Securities and Use of Proceeds ...........................................   20

  3.     Defaults Upon Senior Securities......................................................   20

  4.     Submission of Matters to a Vote of Security Holders..................................   20

  5.     Other Information ...................................................................   20

  6.     Exhibits and Reports on Form 8-K ....................................................   20
</TABLE>



                                       2
<PAGE>
                   T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                     (in thousands except for share amounts)
<TABLE>
<CAPTION>
                                                                        SEPTEMBER 30,        DECEMBER 31,
                                                                            2002                2001
                                                                            ----                ----
                                                                         (UNAUDITED)
<S>                                                                      <C>                 <C>
                                 ASSETS
Current assets:
Cash and cash equivalents.........................................       $   4,375           $   5,395
Accounts receivable - trade, net..................................          20,882              29,158
Inventories, net..................................................          19,159              19,225
Notes receivable, current portion.................................             472                 161
Deferred income taxes.............................................           3,419               4,673
Prepaids and other current assets.................................           2,422               3,892
                                                                         ---------           ---------
     Total current assets.........................................          50,729              62,504

Property and equipment, net.......................................          28,719              27,233
Notes receivable, less current portion............................           5,345               5,873
Goodwill, net.....................................................          98,279              98,498
Other intangible assets, net......................................           3,880               5,060
Other assets......................................................             550                 560
                                                                         ---------           ---------

Total assets......................................................       $ 187,502           $ 199,728
                                                                         =========           =========

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade..........................................       $  11,967           $  16,229
Accrued expenses and other........................................           8,345              12,115
Current maturities of long-term debt..............................           3,694               5,307
                                                                         ---------           ---------
     Total current liabilities....................................          24,006              33,651

Long-term debt, less current maturities...........................          28,137              43,897
Other long-term liabilities.......................................           1,231               2,455
Deferred income taxes.............................................           4,305               3,695

Commitments and contingencies

Stockholders' equity:
     Preferred stock, $.001 par value, 25,000,000 shares
        authorized, no shares issued or outstanding...............             ---                 ---
     Common stock, $.001 par value, 50,000,000 shares authorized,
        10,581,669 and 9,581,669 shares issued and outstanding at
        September 30, 2002 and December 31, 2001 .................              11                  10
     Warrants, 3,486,217 issued and outstanding  .................             938                 938
     Additional paid-in capital...................................         122,843             112,825
     Retained earnings............................................           6,031               2,257
                                                                         ---------           ---------
        Total stockholders' equity................................         129,823             116,030
                                                                         ---------           ---------

Total liabilities and stockholders' equity........................       $ 187,502           $ 199,728
                                                                         =========           =========
</Table>


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

                                       3
<PAGE>
                   T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                     (in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED          NINE MONTHS ENDED
                                                           SEPTEMBER 30,               SEPTEMBER 30,
                                                        2002          2001          2002         2001
                                                        ----          ----          ----         ----
<S>                                                   <C>           <C>          <C>           <C>
Sales:
    Products.....................................     $ 28,051      $ 20,860     $  84,750     $ 46,468
    Services.....................................        7,261         5,781        24,208       15,680
                                                      --------      --------     ---------     --------
                                                        35,312        26,641       108,958       62,148
Cost of sales:
    Products.....................................       20,003        14,345        61,031       31,176
    Services.....................................        5,136         3,960        15,991       10,504
                                                      --------      --------     ---------     --------
                                                        25,139        18,305        77,022       41,680

Gross profit.....................................       10,173         8,336        31,936       20,468

Selling, general and administrative expenses.....        7,890         5,220        23,559       12,777
                                                      --------      --------     ---------     --------

Income from operations...........................        2,283         3,116         8,377        7,691

Interest expense.................................          839         1,368         2,690        3,610

Interest income..................................          168             1           519            3

Other (income) expense, net......................          (25)            6           (65)           6
                                                      ---------     --------     ----------    --------

Income before provision for income taxes.........        1,637         1,743         6,271        4,078

Provision for income taxes.......................          572           734         2,497        1,896
                                                      --------      --------     ---------     --------

Net income.......................................     $  1,065      $  1,009     $   3,774     $  2,182
                                                      ========      ========     =========     ========

Earnings per share:
    Basic........................................     $    .10      $    .51     $     .37     $    .96
                                                      ========      ========     =========     ========
    Diluted......................................     $    .10      $    .36     $     .37     $    .90
                                                      ========      ========     =========     ========

Weighted average common shares outstanding:
    Basic........................................       10,582         1,984        10,267        2,271
                                                      ========      ========     =========     ========
    Diluted......................................       10,582         3,899        10,268        3,304
                                                      ========      ========     =========     ========
</Table>

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

                                       4
<PAGE>
                   T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                  NINE MONTHS ENDED
                                                                                     SEPTEMBER 30,
                                                                                  2002           2001
                                                                                  ----           ----
<S>                                                                             <C>           <C>
Cash flows from operating activities:
Net income.................................................................     $  3,774      $  2,182
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization.........................................        2,761         2,898
     Amortization of deferred loan costs...................................          638           119
     Deferred taxes........................................................        1,457            (8)
     Amortization of stock compensation....................................           19            24
   Changes in assets and liabilities, net of effect of purchase acquisitions:
       Accounts receivable - trade, net....................................        8,130        (3,143)
       Inventories, net....................................................         (256)       (2,311)
       Prepaids and other current assets...................................        1,580          (393)
       Notes receivable....................................................          217           ---
       Other assets........................................................           10        (1,454)
       Accounts payable - trade............................................       (4,325)          687
       Accrued expenses and other..........................................       (4,081)        2,527
                                                                                ---------     --------

Net cash provided by operating activities..................................        9,924         1,128
                                                                                --------      --------

Cash flows from investing activities:
   Purchases of property and equipment.....................................       (3,716)       (2,517)

   Proceeds from sales of property and equipment...........................          151            85
   Cash consideration paid for acquisitions, net of cash acquired..........          ---       (15,450)
                                                                                --------      ---------

Net cash used in investing activities......................................       (3,565)      (17,882)
                                                                                --------      --------

Cash flows from financing activities:

    Proceeds from long-term debt...........................................          394        15,915
    Net borrowings (repayments) under revolving credit facility............      (13,006)        3,138
    Payments on long-term debt.............................................       (4,761)       (1,017)
    Debt financing costs...................................................           (6)         (141)
    Proceeds from sales of common stock....................................       10,000           140
                                                                                --------      --------

Net cash provided by (used in) financing activities........................       (7,379)       18,035
                                                                                ---------     --------

Net increase (decrease) in cash and cash equivalents.......................       (1,020)        1,281
Cash and cash equivalents, beginning of year...............................        5,395         1,168
                                                                                --------      --------
Cash and cash equivalents, end of period...................................     $  4,375      $  2,449
                                                                                ========      ========

Supplemental disclosure of cash flow information:
   Cash paid during the period for:
      Interest...............................................................   $  1,802      $  2,070
                                                                                ========      ========
      Income taxes..........................................................    $  2,510      $    343
                                                                                ========      ========
</Table>

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

                                       5
<PAGE>

                   T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.   ORGANIZATION AND BASIS OF PRESENTATION

     T-3 Energy Services, Inc. ("T-3") was incorporated in October 1999, but did
not engage in business activities until the acquisition of Cor-Val, Inc. on
February 29, 2000. Additionally, T-3 acquired O&M Equipment, Inc. and Preferred
Industries, Inc. in April 2000, Control Products of Louisiana, Inc. in September
2000, Coastal Electric Motors, Inc. in December 2000 and A&B Bolt and Supply,
Inc. in May 2001. The results of operations for these acquisitions are included
in the operating results for T-3 from their respective dates of acquisition. On
December 17, 2001, T-3 merged into Industrial Holdings, Inc. ("IHI") with IHI
surviving the merger under the name T-3 Energy Services, Inc. ("the Company").
The merger was treated for accounting purposes as if IHI was acquired by T-3 (a
reverse acquisition) in a purchase business transaction. The purchase method of
accounting required that the Company carry forward T-3's net assets at their
historical book values and reflect IHI's net assets at their estimated fair
values at the date of the merger. Accordingly, the historical operating results
presented herein include the historical operating results of T-3 prior to its
merger with IHI. The results of operations for IHI are included in the operating
results for T-3 from the date of merger. In connection with the merger at
December 17, 2001, the Company implemented a one-for-ten reverse stock split of
its common stock and common stock underlying existing warrants. Accordingly, all
share amounts presented in this report have been restated to reflect this stock
split.

     The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for fair presentation have been included.
These financial statements include the accounts of T-3 Energy Services, Inc.,
and subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation. Operating results for the three and nine
months ended September 30, 2002, are not necessarily indicative of the results
that may be expected for the year ended December 31, 2002. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 2001. Certain amounts have been reclassified from previous periods
to conform to the current presentation.

2.   PRO FORMA INFORMATION

     If the 2001 purchase business combinations described in Note 1 had occurred
on January 1, 2001, pro forma unaudited sales, net income and basic and diluted
net income per share would have been $141.3 million, $6.5 million, and $0.69 and
$0.67 for the nine months ended September 30, 2001. The pro forma financial
information does not purport to be indicative of results of operations that
would have occurred had the purchases been made at January 1, 2001.

3.   INVENTORIES

     Inventories consist of the following (dollars in thousands):

<Table>
<Caption>
                                                                 SEPTEMBER 30,      DECEMBER 31,
                                                                     2002              2001
                                                                 -------------      ------------
<S>                                                                <C>               <C>
             Raw materials...................................      $  4,200          $  4,995
             Work in process.................................         3,986             3,029
             Finished goods and component parts..............        10,973            11,201
                                                                   --------          --------
                                                                   $ 19,159          $ 19,225
                                                                   ========          ========
</Table>


                                       6
<PAGE>
                   T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   (CONTINUED)

4.   NEWLY ISSUED ACCOUNTING STANDARDS

     On June 29, 2001, Statement of Financial Accounting Standards ("SFAS")
No.141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets" were approved by the Financial Accounting Standards Board ("FASB"). SFAS
No.141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Goodwill and certain other
intangible assets with indefinite lives will remain on the balance sheet and not
be amortized. On an annual basis, and when there is reason to suspect that their
values have been diminished or impaired, these assets must be tested for
impairment and write-downs may be necessary. The Company implemented SFAS No.141
on July 1, 2001. The adoption of this standard had no effect on the Company's
consolidated financial position or results of operations. SFAS No.142 changes
the accounting for goodwill from an amortization method to an impairment-only
approach. Amortization of goodwill, including goodwill recorded in past business
combinations, ceased upon adoption of this statement. The Company was required
to implement SFAS No.142 on January 1, 2002 and as a result, the Company will
not amortize approximately $98 million of goodwill. The Company had recorded
approximately $.04 million and $1.2 million of goodwill amortization for the
three and nine months ended September 30, 2001 for acquisitions that occurred
prior to July 1, 2001. In lieu of amortization, the Company was required to
perform an initial impairment review of goodwill pursuant to SFAS No.142 no
later than June 30, 2002 and must perform an annual impairment review
thereafter. Management completed the initial review during the second quarter of
2002 and no impairment charge was necessary as of the January 1, 2002 valuation.

     During the third quarter of 2001, the FASB issued SFAS No.143, "Accounting
for Asset Retirement Obligations". SFAS No.143 covers all legally enforceable
obligations associated with the retirement of tangible long-lived assets and
provides the accounting and reporting requirements for such obligations. SFAS
No.143 is effective for the Company beginning January 1, 2003. Management
believes that the adoption of SFAS No.143 will not have a significant impact on
the Company's consolidated financial position or results of operations.

     In August 2001, the FASB issued SFAS No.144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", which is effective for the Company beginning
January 1, 2002. SFAS No.144 supersedes SFAS No.121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
and the accounting and reporting provisions relating to the disposal of a
segment of a business of Accounting Principles Board Opinion No. 30. The Company
implemented SFAS No. 144 on January 1, 2002. The adoption of SFAS No.144 did not
have a material impact on the Company's consolidated financial position or
results of operations.

     In April 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145 rescinds SFAS No. 4, "Reporting Gains and Losses from
Extinguishment of Debt". As a result, the criteria in Accounting Principles
Board Opinion (APB) No. 30, "Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," will now be used to classify those gains and losses. Under SFAS
145, the Company will be required to reclassify any gain or loss on
extinguishment of debt that was previously classified as an extraordinary item
to normal operations for all fiscal years beginning after May 15, 2002,
including all prior period presentations. The Company expects to implement SFAS
145 no later than the first quarter of 2003, at which time the 2001 comparatives
will be restated to reclassify the extraordinary loss incurred on the early
extinguishment of debt so that it is included within earnings (loss) from
continuing operations before income taxes.

     In July 2002, the FASB issued SFAS No.146, "Accounting for Costs Associated
with Exit or Disposal Activities". SFAS No.146 covers the recognition of
liabilities for costs associated with an exit or disposal activity and provides
the accounting and reporting requirements for such obligations. SFAS No.146 is
effective for the Company beginning January 1, 2003. Management believes that
the adoption of SFAS No.146 will not have a significant impact on the Company's
consolidated financial position or results of operations.

                                       7
<PAGE>
5.   EARNINGS PER SHARE

     Basic net income per common share is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
net income per common share is the same as basic but assumes the exercise of
convertible subordinated debt securities and includes dilutive stock options and
warrants using the treasury stock method.

     The following table reconciles the numerators and denominators of the basic
and diluted per common share computations for net income for the three and nine
months ended September 30, 2002 and 2001, as follows (in thousands except per
share data):

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                                 2002       2001
                                                               --------   --------
<S>                                                            <C>        <C>
Numerator:
   Net income ..............................................   $  1,065   $  1,009

   Interest on convertible debt, net of tax ................         --        412
                                                               --------   --------
   Net income before interest on convertible debt ..........   $  1,065   $  1,421
                                                               ========   ========

Denominator:
   Weighted average common shares outstanding -- basic .....     10,582      1,984
   Shares for convertible debt .............................         --      1,907
   Shares for dilutive stock options .......................         --          8
                                                               --------   --------
   Weighted average common shares outstanding and
     Assumed conversions -- diluted ........................     10,582      3,899
                                                               ========   ========

Basic earnings per common share ............................   $    .10   $    .51
Diluted earnings per common share ..........................   $    .10   $    .36

<CAPTION>
                                                                NINE MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                                 2002       2001
                                                               --------   --------
<S>                                                            <C>        <C>
Numerator:
   Net income ..............................................   $  3,774   $  2,182

   Interest on convertible debt, net of tax ................         --        787
                                                               --------   --------
   Net income before interest on convertible debt ..........   $  3,774   $  2,969
                                                               ========   ========

Denominator:
   Weighted average common shares outstanding -- basic .....     10,267      2,271
   Shares for convertible debt .............................         --      1,025
   Shares for dilutive stock options .......................          1          8
                                                               --------   --------
   Weighted average common shares outstanding and
     Assumed conversions -- diluted ........................     10,268      3,304
                                                               ========   ========

Basic earnings per common share ............................   $    .37   $    .96
Diluted earnings per common share ..........................   $    .37   $    .90
</Table>


     For the three months ended September 30, 2002, there were 547,679 options
and 3,486,217 warrants that were not included in the computation of diluted
earnings per share because their inclusion would have been anti-dilutive. For
the nine months ended September 30, 2002, there were 497,679 options and
3,486,217 warrants that were not included in the computation of diluted earnings
per share because their inclusion would have been anti-dilutive. For the three
and nine months ended September 30, 2001, there were 6,339 options that were not
included in the computation of diluted earnings per share because their
inclusion would have been anti-dilutive.


                                       8
<PAGE>


6.   REPORTABLE SEGMENTS:

     The Company's determination of reportable segments considers the strategic
operating units under which the Company sells various types of products and
services to various customers. Financial information for purchase transactions
is included in the segment disclosures only for periods subsequent to the dates
of acquisition.

     The accounting policies of the segments are the same as those of the
Company. The Company evaluates performance based on income from operations
excluding certain corporate costs not allocated to the segments. Inter-segment
sales are not material. Substantially all sales are from domestic sources and
all assets are held in the United States. Segment information for the three and
nine months ended September 30, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
                                                              (dollars in thousands)
                                         PRESSURE
                                         CONTROL      PRODUCTS      DISTRIBUTION  CORPORATE     CONSOLIDATED
                                         -------      --------      ------------  ---------     ------------

<S>                                      <C>          <C>            <C>          <C>            <C>
THREE MONTHS ENDED SEPTEMBER 30:
             2002
Sales ...............................    $  17,477    $   9,122      $  8,713     $     --       $  35,312
Depreciation and amortization........          467          234            88          115             904
Income (loss) from operations........        3,244           48           441       (1,450)          2,283
Capital expenditures.................          797          345            40          392           1,574
             2001
Sales ...............................    $  13,644    $   1,590      $ 11,407     $     --       $  26,641
Depreciation and amortization........          739           64           141           56           1,000
Income (loss) from operations........        2,626          129           982         (621)          3,116
Capital expenditures.................          299           34           128          201             662

NINE MONTHS ENDED SEPTEMBER 30:
             2002
Sales ...............................    $  51,711    $  30,078      $ 27,169     $     --       $ 108,958
Depreciation and amortization........        1,510          698           257          296           2,761
Income (loss) from operations........        9,918          728         1,514       (3,783)          8,377
Capital expenditures.................        1,511          850           129        1,226           3,716
             2001
Sales ...............................    $  38,112    $   4,441      $ 19,595     $     --       $  62,148
Depreciation and amortization........        2,336          195           236          131           2,898
Income (loss) from operations........        7,563          170         1,647       (1,689)          7,691
Capital expenditures.................        1,533          206           222          556           2,517
</TABLE>

7.   STOCKHOLDERS' EQUITY

     On March 27, 2002, the Company sold 1,000,000 shares of its common stock at
$10 per share to its largest stockholder, First Reserve Fund VIII. The proceeds
were used to reduce bank debt.



                                       9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

GENERAL

     The following discussion of the Company's historical results of operations
and financial condition should be read in conjunction with the consolidated
financial statements and related notes included elsewhere in this Form 10-Q.

     On May 7, 2001, simultaneous with the signing of the merger agreement with
IHI, the Company acquired A&B Bolt, a subsidiary of IHI, for $15.3 million in
cash including merger expenses in a transaction accounted for using the purchase
method of accounting. The results of operations of A&B Bolt have been included
in the Company's operating results from the date of acquisition.

     On December 17, 2001, T-3 Energy Services, Inc., a private Delaware
corporation ("Former T-3"), merged into IHI, with IHI surviving the merger. In
connection with the merger, the combined Company was reincorporated in Delaware
under the name "T-3 Energy Services, Inc." and implemented a one-for-ten reverse
stock split of its common stock, including common stock underlying existing
options and warrants. The merger was treated for accounting purposes as a
purchase of IHI by Former T-3 (a reverse acquisition) in a purchase business
transaction. The purchase method of accounting requires that the Company carry
forward Former T-3's net assets at their historical book values and reflect
IHI's net assets at their estimated fair market values, with any excess of the
fair market value of the purchase consideration in excess of the fair market
value of IHI's identifiable net assets treated as goodwill. The historical
financial data presented in this Form 10-Q includes the historical financial
condition and operating results of Former T-3 prior to its merger with IHI. The
operating results of IHI are included in the operating results of T-3 from the
date of merger.

     The Company operates in three segments. The Pressure Control segment
manufactures, remanufactures and repairs high pressure, severe service products,
including valves, chokes, actuators, blowout preventers, manifolds and wellhead
equipment. The Products segment manufactures and repairs pumps, electric motors
and generators, manufactures specialty bolts and fasteners, fabricates equipment
and components for use in the exploration and production of oil and gas and
provides specialty machining for the repair and remanufacture of natural gas and
diesel engines. The Distribution segment engages in the specialty distribution
of pipes, valves, stud bolts, gaskets and other ancillary products. The
Company's products and services are sold primarily to customers in the upstream
and downstream oil and gas industry located in the Texas and Louisiana Gulf
Coast region.

     Demand for the Company's products and services is dependent upon the oil
and gas industry and the level of oil and gas exploration and production. The
level of exploration and production is dependent on current and projected oil
and natural gas prices. During the first half of 2001, oil and natural gas
prices increased over 2000 levels and the rig count increased both in the United
States and worldwide. However, in the second half of 2001 and continuing through
the first quarter of 2002, natural gas prices declined and United States and
worldwide rig counts decreased while oil prices were volatile throughout that
same time period. Natural gas prices began to rise somewhat late in the second
quarter of 2002 and remained relatively stable throughout the third quarter. In
addition, the North American drilling rig count stabilized in the second
quarter, increased slightly, and then stabilized again in the third quarter of
2002. Because of these factors, the Company has experienced sales declines in
the second half of 2001 that continued through the first quarter of 2002, with
sales remaining relatively constant during the second quarter of 2002. The
relatively low, yet stable, North American drilling activity, coupled with
adverse weather conditions in the Gulf of Mexico and general economic
uncertainty, resulted in slightly lower sales and profit margins in the third
quarter than in the first two quarters of 2002. Management believes that
continuing price and general economic uncertainty will impact near-term activity
levels in the fourth quarter and throughout the first half of 2003.


                                       10
<PAGE>
RESULTS OF OPERATIONS OF T-3

     The following table sets forth certain operating statement data for each of
the Company's segments for each of the periods presented (in thousands):
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED            NINE MONTHS ENDED
                                                          SEPTEMBER 30,                 SEPTEMBER 30,
                                                       2002           2001           2002           2001
                                                     --------       --------       --------       --------
<S>                                                  <C>            <C>            <C>            <C>
Sales:
     Pressure Control .........................      $ 17,477       $ 13,644       $ 51,711       $ 38,112
     Products .................................         9,122          1,590         30,078          4,441
     Distribution .............................         8,713         11,407         27,169         19,595
                                                     --------       --------       --------       --------

                                                       35,312         26,641        108,958         62,148
                                                     --------       --------       --------       --------
Cost of sales:
     Pressure Control .........................        11,482          8,893         33,260         24,077
     Products .................................         7,435          1,226         24,318          3,436
     Distribution .............................         6,222          8,186         19,444         14,167
                                                     --------       --------       --------       --------

                                                       25,139         18,305         77,022         41,680
                                                     --------       --------       --------       --------
Gross profit:
     Pressure Control .........................         5,995          4,751         18,451         14,035
     Products .................................         1,687            364          5,760          1,005
     Distribution .............................         2,491          3,221          7,725          5,428
                                                     --------       --------       --------       --------

                                                       10,173          8,336         31,936         20,468
                                                     --------       --------       --------       --------
Selling, general and administrative expenses:
     Pressure Control .........................         2,751          2,125          8,533          6,472
     Products .................................         1,639            235          5,032            835
     Distribution .............................         2,050          2,239          6,211          3,781
     Corporate ................................         1,450            621          3,783          1,689
                                                     --------       --------       --------       --------

                                                        7,890          5,220         23,559         12,777
                                                     --------       --------       --------       --------
Income (loss) from operations:
     Pressure Control .........................         3,244          2,626          9,918          7,563
     Products .................................            48            129            728            170
     Distribution .............................           441            982          1,514          1,647
     Corporate ................................        (1,450)          (621)        (3,783)        (1,689)
                                                     --------       --------       --------       --------

                                                     $  2,283       $  3,116       $  8,377       $  7,691
                                                     ========       ========       ========       ========
</Table>

Three Months ended September 30, 2002 Compared with Three Months ended September
30, 2001

     Sales. On a consolidated basis, sales increased $8.7 million, or 33%, in
2002 compared to 2001. Sales increased across all segments except Distribution
as a result of the merger with IHI in December 2001. However, as a result of
lower North American drilling rig activity and continued general economic
uncertainty, on a pro forma basis as if the merger with IHI had occurred as of
January 1, 2001, sales decreased for the three months ended September 30, 2002,
compared to the three months ended September 30, 2001.

     Sales for the Pressure Control segment increased $3.8 million, or 28%, in
2002 compared to 2001. The sales increase in 2002 over 2001 was attributable to
the merger with IHI in December 2001. However, on a pro forma basis as if the
merger with IHI had occurred as of January 1, 2001, sales for this segment
decreased $3.9 million for the three months ended September 30, 2002 compared to
2001, primarily due to lower levels of North American drilling rig activity and
continued general economic uncertainty and its associated lack of spending
within the oil and gas industry. This decrease was partially offset by increased
international sales.

                                       11
<PAGE>


     Sales for the Products segment increased $7.5 million, or 474%, in 2002
compared to 2001. This sales increase was attributable to the merger with IHI in
December 2001. However, on a pro forma basis as if the merger with IHI had
occurred as of January 1, 2001, sales for this segment decreased $5.7 million
for the three months ended September 30, 2002 compared to 2001. This decrease in
sales was attributable to lower levels of North American drilling rig activity
and continued general economic uncertainty.

     Sales for the Distribution segment decreased $2.7 million, or 24%, in 2002
compared to 2001. The decrease in sales from the third quarter of 2001 is
primarily due to the decline in North American drilling rig activity.
Additionally, adverse weather conditions in the Gulf of Mexico in late September
2002 further contributed to the decrease in third quarter 2002 sales.

     Cost of Sales. On a consolidated basis, cost of sales increased $6.8
million, or 37%, in 2002 compared to 2001. Gross profit margin was 29% in 2002
compared to 31% in 2001. Gross profit margin was lower on a consolidated basis
in 2002 compared to 2001 because of a change in the mix of products and services
sales and, as sales decreased, fixed costs did not decrease proportionally.

     Cost of sales for the Pressure Control segment increased $2.6 million, or
29%, in 2002 compared to 2001, primarily as a result of the increase in sales
described above. Gross profit margin was 34% in 2002 compared to 35% in 2001.
This slight decrease was attributable to fixed costs that did not decrease
proportionally with pro forma sales, partially offset by improved margins
because of increased operational efficiencies.

     Cost of sales for the Products segment increased $6.2 million in 2002 from
$1.2 million in 2001, primarily as a result of the merger with IHI in December
2001. Gross profit margin was 18% in 2002 compared to 23% in 2001. Gross profit
margin decreased primarily as a result of a change in the mix of products and
services sales within the segment, and because fixed costs did not decrease
proportionally with the decrease in pro forma sales.

     Cost of sales for the Distribution segment decreased $2.0 million in 2002
from $8.2 million in 2001, primarily due to the decrease in sales in 2002. Gross
profit margin was 29% in 2002 compared to 28% in 2001.

     Selling, General and Administrative Expenses. On a consolidated basis,
selling, general and administrative expenses increased $2.7 million, or 51%, in
2002 compared to 2001, primarily as a result of the merger with IHI in December
2001 and the costs associated with being a publicly traded company. The increase
was net of a decrease in the amortization of goodwill of $0.3 million. Selling,
general and administrative expenses as a percentage of sales were 22% and 20%
for 2002 and 2001, respectively.

     Selling, general and administrative expenses for the Pressure Control
segment increased $0.6 million, or 29%, in 2002 compared to 2001, primarily as a
result of the merger with IHI in December 2001. The increase was net of a
decrease in the amortization of goodwill of $0.3 million. As a percentage of
sales, selling, general and administrative expenses remained comparable at 16%
in both 2002 and 2001.

     Selling, general and administrative expenses for the Products segment
increased $1.4 million, or 597%, in 2002 compared to 2001, primarily as a result
of the merger with IHI in December 2001. As a percentage of sales, selling,
general and administrative expenses increased from 15% in 2001 to 18% in 2002,
primarily because as pro forma sales decreased, fixed selling, general and
administrative expenses did not decrease proportionally.

     Selling, general and administrative expenses for the Distribution segment
decreased $0.2 million, or 8%, in 2002 compared to 2001. As a percentage of
sales, selling, general and administrative expenses increased from 20% in 2001
to 24% in 2002, primarily because fixed selling, general and administrative
expenses did not decrease proportionally with the decrease in sales.

     Selling, general and administrative expenses for the Corporate operations
increased $0.8 million, or 134%, in 2002 compared to 2001. This increase was
primarily attributable to the merger with IHI in December 2001 and the addition
of corporate staff and related expenses resulting from the Company's growth and
the costs associated with being a publicly traded company.

                                       12
<PAGE>
     Interest Expense. On a consolidated basis, interest expense decreased $0.5
million or 39%, in 2002 compared to 2001. In connection with the merger with IHI
in December 2001, First Reserve Fund VIII converted $25 million in 12%
convertible notes to equity. Additionally, the Company completed a comprehensive
debt refinancing, lowering the Company's effective borrowing rate. On March 27,
2002, the Company sold 1,000,000 shares of its common stock at $10 per share to
its largest stockholder, First Reserve Fund VIII. The proceeds from this sale
were used to pay down debt.

     Interest Income. Interest income in 2002 was generated from seller notes
receivable that arose in conjunction with the disposal by IHI of several
business units prior to the completion of the merger. Interest income in 2001
was not material.

     Income Taxes. Income tax expense for 2002 was $0.6 million as compared to
$0.7 million in 2001. The effective tax rate for 2002 was 35% compared to 42% in
2001. For 2001, the tax rate in excess of statutory rates was primarily
attributable to nondeductible goodwill associated with the acquisitions made
before July 1, 2001. However, as a result of the implementation of SFAS No. 142,
beginning January 1, 2002, the Company no longer amortizes goodwill. In
addition, tax expense was reduced in the third quarter of 2002 primarily due to
a reduction in state tax liabilities. As a result, the Company's effective tax
rate decreased in 2002.

     Net Income. On a consolidated basis, net income was $1.1 million in 2002
compared with $1.0 million in 2001 as a result of the foregoing factors.

Nine Months ended September 30, 2002 Compared with Nine Months ended September
30, 2001

     Sales. On a consolidated basis, sales increased $46.8 million, or 75%, in
2002 compared to 2001. Sales increased across all segments as a result of the
merger with IHI in December 2001. However, as a result of lower North American
drilling rig activity, continued general economic uncertainty and adverse
weather conditions in late September 2002, on a pro forma basis as if the merger
with IHI had occurred as of January 1, 2001, sales decreased for the nine months
ended September 30, 2002, compared to the nine months ended September 30, 2001.

     Sales for the Pressure Control segment increased $13.6 million, or 36%, in
2002 compared to 2001. The sales increase in 2002 over 2001 was attributable to
the merger with IHI in December 2001. However, on a pro forma basis as if the
merger with IHI had occurred as of January 1, 2001, sales for this segment
decreased $8.8 million due to lower levels of North American drilling rig
activity and general economic uncertainty, partially offset by increased
international sales.

     Sales for the Products segment increased $25.6 million, or 577%, in 2002
compared to 2001. This sales increase was attributable to the merger with IHI in
December 2001. However, on a pro forma basis as if the merger with IHI had
occurred as of January 1, 2001, sales for this segment decreased $18.2 million
due to lower levels of North American drilling rig activity and general economic
uncertainty.

     Sales for the Distribution segment were $27.2 million for 2002. The
Distribution segment was formed in May 2001 with the acquisition of A&B Bolt.
Pro forma sales for A&B Bolt were $33.8 million for the same nine-month period
in 2001. The 20% decrease in pro forma sales is primarily due to lower levels of
North American drilling rig activity and general economic uncertainty. In
addition, adverse weather conditions in the Gulf of Mexico in late September
2002 partially contributed to the decline in sales.

     Cost of Sales. On a consolidated basis, cost of sales increased $35.3
million, or 85%, in 2002 compared to 2001. Gross profit margin was 29% in 2002
compared to 33% in 2001. Gross profit margin was lower on a consolidated basis
because of a change in the mix of products and services sales and, as sales
decreased, fixed costs did not decrease proportionally. The Pressure Control
segment, which typically has the highest margins of all of our segments,
represented a smaller percentage of total sales (47% in 2002 compared to 61% in
2001). The Products and Distribution segments, which typically have lower
margins than the Pressure Control segment, represented a larger percentage of
total sales (53% in 2002 compared to 39% in 2001).

                                       13
<PAGE>
     Cost of sales for the Pressure Control segment increased $9.2 million, or
38%, in 2002 compared to 2001, primarily as a result of the increase in sales
described above. Gross profit margin was 36% in 2002 compared to 37% in 2001.
This slight decrease was attributable to fixed costs that did not decrease
proportionally with pro forma sales partially offset by improved margins because
of increased operational efficiencies.

     Cost of sales for the Products segment increased $20.9 million in 2002 from
$3.4 million in 2001, primarily as a result of the merger with IHI in December
2001. Gross profit margin was 19% in 2002 compared to 23% in 2001. Gross profit
margin decreased primarily as a result of a change in the mix of products and
services sales within the segment, and because fixed costs did not decrease
proportionally with the decrease in pro forma sales.

     Cost of sales for the Distribution segment was $19.4 million and $14.2
million in 2002 and 2001, respectively. Gross profit margin was 28% in both 2002
and 2001.

     Selling, General and Administrative Expenses. On a consolidated basis,
selling, general and administrative expenses increased $10.8 million, or 84%, in
2002 compared to 2001, primarily as a result of the merger with IHI in December
2001 and the costs associated with being a publicly traded company. The increase
was net of a decrease in the amortization of goodwill of $1.2 million. Selling,
general and administrative expenses as a percentage of sales were 22% and 21%
for 2002 and 2001, respectively.

     Selling, general and administrative expenses for the Pressure Control
segment increased $2.1 million, or 32%, in 2002 compared to 2001 primarily as a
result of the merger with IHI in December 2001. The increase was net of a
decrease in the amortization of goodwill of $1.0 million. As a percentage of
sales, selling, general and administrative expenses remained comparable at 17%
in both 2002 and 2001.

     Selling, general and administrative expenses for the Products segment
increased $4.2 million, or 503%, in 2002 compared to 2001, primarily as a result
of the merger with IHI in December 2001. The increase was net of a decrease in
the amortization of goodwill of $0.1 million. As a percentage of sales, selling,
general and administrative expenses decreased from 19% in 2001 to 17% in 2002.
In 2002, this segment has general and administrative cost structures than in
2001. However, this was partially offset because fixed costs did not decrease
proportionally with the decrease in pro forma sales.

     Selling, general and administrative expenses in the Distribution segment
were $6.2 million in 2002. Selling, general and administrative expenses, on a
pro forma basis, were $6.8 million for A&B Bolt in 2001. However, as a
percentage of sales, selling, general and administrative expenses were 23% in
2002 compared to 19% in 2001. This increase is attributable to a decline in
sales due to market conditions while fixed costs remained relatively constant.

     Selling, general and administrative expenses for the Corporate operations
increased $2.1 million, or 124%, in 2002 compared to 2001. This increase was
primarily attributable to the merger with IHI in December 2001 and the addition
of corporate staff and related expenses resulting from the Company's growth and
the costs associated with being a publicly traded company.

     Interest Expense. On a consolidated basis, interest expense decreased $0.9
million or 25% in 2002 compared to 2001. In connection with the merger with IHI
in December 2001, First Reserve Fund VIII converted $25 million in 12%
convertible notes to equity. Additionally, the Company completed a comprehensive
debt refinancing, lowering the Company's effective borrowing rate. On March 27,
2002, the Company sold 1,000,000 shares of its common stock at $10 per share to
its largest stockholder, First Reserve Fund VIII. The proceeds from this sale
and positive operating cash flows were used to pay down debt.

     Interest Income. Interest income in 2002 was generated from seller notes
receivable that arose in conjunction with the disposal by IHI of several
business units just prior to the completion of the merger. Interest income in
2001 was not material.

                                       14
<PAGE>
     Income Taxes. Income tax expense for 2002 was $2.5 million as compared to
$1.9 million in 2001. The effective tax rate for 2002 was 40% compared to 46% in
2001. For 2001, the tax rate in excess of statutory rates was primarily
attributable to nondeductible goodwill associated with the acquisitions made
before July 1, 2001. However, as a result of the implementation of SFAS No. 142,
beginning January 1, 2002, the Company no longer amortizes goodwill. In
addition, tax expense was reduced in the third quarter of 2002 primarily due to
a reduction in state tax liabilities. As a result, the Company's effective tax
rate decreased in 2002.

     Net Income. On a consolidated basis, net income was $3.8 million in 2002
compared with $2.2 million in 2001 as a result of the foregoing factors.

LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 2002, the Company had working capital of $26.7 million,
current maturities of long-term debt of $3.7 million, long-term debt of $28.1
million and stockholders' equity of $129.8 million. Historically, its principal
liquidity requirements and uses of cash have been for debt service, capital
expenditures, working capital and acquisition financing, and its principal
sources of liquidity and cash have been from cash flows from operations,
borrowings under long-term debt arrangements and issuances of equity securities.
The Company has financed acquisitions through bank borrowings, sales of equity
(primarily to First Reserve) and internally generated funds.

     Net Cash Provided by Operating Activities. For the nine months ended
September 30, 2002, net cash provided by operating activities was $9.9 million
compared to $1.1 million provided by operating activities in the same period in
2001. Cash provided by operations increased in 2002 as compared to 2001 because
of an increase in positive adjustments to net income for non-cash expenses,
primarily deferred taxes and amortization of deferred loan costs, and a net
increase in cash provided by working capital accounts, primarily due to a
reduction in accounts receivable and other current assets partially offset by
reductions in accounts payable and accrued expenses.

     Net Cash Used in Investing Activities. Principal uses of cash are for
capital expenditures and acquisitions. Investing activities used cash of $3.6
million in the nine months ended September 30, 2002 compared to $17.9 million in
the same period in 2001. For the nine months ended September 30, 2002 and 2001,
the Company made capital expenditures of approximately $3.7 million and $2.5
million, respectively.

     Net Cash Provided by (Used in) Financing Activities. Sources of cash from
financing activities include borrowings under the credit facilities and sales of
equity securities. Financing activities used net cash of $7.4 million in the
nine months ended September 30, 2002 and provided net cash of $18.0 million in
the same period in 2001. During 2002, the Company had borrowings of $0.4 million
under its credit facilities compared to $15.9 million during 2001. During 2002,
the Company had principal payments of $4.8 million on its long-term debt,
exclusive of its revolving credit facility, compared to $1.0 million in 2001.
During 2002, the Company had net repayments of $13.0 million on its revolving
credit facility compared to net borrowings of $3.1 million in 2001. During 2002,
the Company had proceeds of $10.0 million from the sale of equity securities to
its largest stockholder, First Reserve Fund VIII. These proceeds were used to
reduce debt.

     Principal Debt Instruments. As of September 30, 2002, the Company had an
aggregate of $31.8 million borrowed under its principal bank credit facility and
debt instruments entered into or assumed in connection with acquisitions as well
as other bank financings. As of September 30, 2002, the Company had $18.6
million in borrowing capacity under its revolving credit facility; however, as a
result of the funded debt-to-EBITDA ratio covenant, the Company's availability
was limited to $5.3 million.

     The Company has a senior credit facility with Wells Fargo, N.A. and General
Electric Capital Corporation maturing December 17, 2004. The Company also has a
$12.0 million subordinated term loan with Wells Fargo Energy Capital, Inc.
maturing December 17, 2005. The senior credit facility includes a revolving
credit facility of the lesser of a defined borrowing base (based upon 85% of
eligible accounts receivable and 50% of eligible inventory) or $41.5 million, a
term loan of $16.5 million and an optional facility for up to an additional
$20.0 million in the form of a revolving credit commitment for future
acquisitions based upon specific criteria. The

                                       15

<PAGE>
term loan is payable in equal quarterly installments of $0.8 million commencing
March 31, 2002. The applicable interest rate of the senior credit facility is
governed by the Company's trailing-twelve-month funded debt-to-EBITDA ratio and
ranges from prime plus 1.25% or LIBOR plus 2.25% to prime plus 2.00% or LIBOR
plus 3.00%. At September 30, 2002, the senior credit facility bore interest at
libor plus 2.75%, with interest payable quarterly. The Company is required to
prepay the senior credit facility under certain circumstances with the net cash
proceeds of asset sales, insurance proceeds, equity issuances and institutional
debt, and commencing April 2003, if, and for so long as, its funded
debt-to-EBITDA ratio is 2.25 to 1 or greater, with 50% of excess cash flow as
determined under the senior credit agreement. The senior credit facility
provides, among other covenants and restrictions, that the Company comply with
certain financial covenants, including a limitation on capital expenditures, a
minimum fixed charge coverage ratio, minimum consolidated tangible net worth and
a maximum funded debt-to-EBITDA ratio. As of September 30, 2002, the Company was
in compliance with the covenants under the senior credit facility. The senior
credit facility is collateralized by substantially all of the Company's assets.

     The subordinated term loan bears interest at a fixed rate of 9.5% with
interest payable quarterly. The principal balance is due in full on December 17,
2005. The effective interest rate, including amortization of loan costs, is
10.6%. The subordinated term loan provides, among other restrictions, that the
Company maintain a minimum fixed charge coverage ratio and a maximum funded
debt-to-EBITDA ratio. Under the terms of its senior credit facility, the Company
is not currently permitted to make principal payments on the subordinated term
loan. As of September 30, 2002, the Company was in compliance with the covenants
under the subordinated term loan. The subordinated term loan is collateralized
by a second lien on substantially all of the Company's assets.

     Management believes that cash generated from operations and amounts
available under its senior credit facility and from other sources of debt will
be sufficient to fund existing operations, working capital needs, capital
expenditure requirements and financing obligations. Management also believes any
significant increase in capital expenditures caused by any need to increase
manufacturing capacity can be funded from operations or through debt financing.

     The Company intends to pursue additional acquisition candidates, but the
timing, size or success of any acquisition effort and the related potential
capital commitments cannot be predicted. The Company expects to fund future cash
acquisitions primarily with cash flow from operations and borrowings, including
the unborrowed portion of its senior credit facility or new debt issuances, but
may also issue additional equity either directly or in connection with an
acquisition. However, acquisition funds may not be available at terms acceptable
to the Company.

FORWARD-LOOKING INFORMATION AND RISK FACTORS

     Certain information in this Annual Report on Form 10-Q includes
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. You can
identify these forward-looking statements by the words "expects," "projects,"
"believes," "anticipates," "intends," "plans," "budgets," "predicts,"
"estimates" and similar expressions.

     The Company has based the forward-looking statements relating to its
operations on its current expectations, and estimates and projections about the
Company and about the industries in which it operates in general. These
statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that the Company cannot predict. In addition, many
of these forward-looking statements are based on assumptions about future events
that may prove to be inaccurate. Actual outcomes and results may differ
materially from what the Company has expressed or forecast in the
forward-looking statements.

THE COMPANY WILL FACE SIGNIFICANT CHALLENGES IN INTEGRATING ITS OPERATIONS, AND,
AS A RESULT, MAY NOT REALIZE THE BENEFITS OF CONSOLIDATION, SUCH AS REVENUE
ENHANCEMENT THROUGH CROSS-SELLING OPPORTUNITIES, IMPROVED MARGINS AND CORPORATE
COST REDUCTIONS.

     Integrating operations and personnel combined as part of the merger with
IHI will be a complex process,

                                       16

<PAGE>
and management cannot be certain that the integration will be completed in a
timely manner or that the anticipated benefits of the merger will be achieved.
Successful integration will require, among other things, the integration of
finance, human resources, operations and marketing groups and the coordination
of the Company's information systems. The diversion of management's attention
and any difficulties encountered in this integration process could cause the
disruption of, or a loss of momentum in, the activities of the Company's
business.

BECAUSE THE COMPANY DEPENDS ON THE OIL AND GAS INDUSTRY, A DECLINE IN OIL AND
GAS PRICES OR A DECREASE IN INDUSTRY ACTIVITY WILL NEGATIVELY IMPACT ITS
PROFITS.

     The Company is, and will continue to be, dependent upon the oil and gas
industry and the level of oil and gas exploration and production. The level of
exploration and production depends upon the prevailing view of future product
prices. Many factors affect the supply and demand for oil and gas and therefore
influence product prices, including:

     o the level of production from known reserves;

     o the level of oil and gas inventories;

     o the cost of producing oil and gas;

     o the level of drilling activity;

     o worldwide economic activity; and

     o environmental regulation.

     If there is a significant reduction in demand for drilling services, in
cash flows of drilling contractors or production companies or in drilling or
well servicing rig utilization rates, then demand for the Company's products
will decline.

THE OILFIELD SERVICE INDUSTRY IN WHICH THE COMPANY OPERATES IS HIGHLY
COMPETITIVE, WHICH MAY RESULT IN A LOSS OF MARKET SHARE OR A DECREASE IN REVENUE
OR PROFIT MARGINS.

     The oilfield service industry in which the Company operates is highly
competitive. Many of its competitors have greater financial and other resources
than it does. Each of its operating units is subject to competition from a
number of similarly sized or larger businesses. Factors that affect competition
include price, quality and customer service. Strong competition may result in a
loss of market share and a decrease in revenue and profit margins.

THE COMPANY'S INSURANCE COVERAGE MAY BE INADEQUATE TO COVER CERTAIN CONTINGENT
LIABILITIES.

     The Company's business exposes it to possible claims for personal injury or
death resulting from the use of its products. The Company carries comprehensive
insurance, subject to deductibles, at levels it believes are sufficient to cover
existing and future claims. However, the Company could be subject to a claim or
liability that exceeds its insurance coverage. In addition, the Company may not
be able to maintain adequate insurance coverage at rates it believes are
reasonable.

THE COMPANY'S OPERATIONS ARE SUBJECT TO REGULATION BY FEDERAL, STATE AND LOCAL
GOVERNMENTAL AUTHORITIES THAT MAY LIMIT OUR ABILITY TO OPERATE OUR BUSINESS.

     The Company's business is affected by governmental regulations relating to
its industry segments in general, as well as environmental and safety
regulations that have specific application to its business. While management is
not aware of any proposed or pending legislation, future legislation may have an
adverse effect on its business, financial condition, results of operations or
prospects.

                                       17
<PAGE>
     The Company is subject to various federal, state and local environmental
laws, including those governing air emissions, water discharges and the storage,
handling, disposal and remediation of petroleum and hazardous substances. The
Company has in the past and will likely in the future incur expenditures to
ensure compliance with environmental laws. Due to the possibility of
unanticipated factual or regulatory developments, the amount and timing of
future environmental expenditures could vary substantially from those currently
anticipated. Moreover, certain of our facilities have been in operation for many
years and, over that time, the Company and other predecessor operators have
generated and disposed of wastes that are or may be considered hazardous.
Accordingly, although the Company has undertaken considerable efforts to comply
with applicable laws, it is possible that environmental requirements or facts
not currently known to management will require unanticipated efforts and
expenditures that cannot be currently quantified.

THREE OF THE COMPANY'S 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 THE COMPANY'S OR ITS SHAREHOLDERS' BEST
INTERESTS.

     Three of the Company's directors, Thomas A. Denison, Joseph R. Edwards and
Ben A. Guill, are also current directors or officers of First Reserve
Corporation, which controls the general partner of First Reserve Fund VIII, L.P.
This may create conflicts of interest because these directors have
responsibilities to First Reserve Fund VIII and its owners. Their duties as
directors or officers of First Reserve Corporation may conflict with their
duties as directors of the Company regarding business dealings between First
Reserve Corporation and the Company and other matters. The resolution of these
conflicts may not always be in the Company's or its shareholders' best
interests.

THE COMPANY WILL RENOUNCE ANY INTEREST IN SPECIFIED BUSINESS OPPORTUNITIES, AND
FIRST RESERVE FUND VIII AND ITS DIRECTOR DESIGNEES ON THE COMPANY'S BOARD OF
DIRECTORS GENERALLY WILL HAVE NO OBLIGATION TO OFFER THE COMPANY THOSE
OPPORTUNITIES.

     First Reserve Fund VIII has investments in other oilfield service companies
that compete with the Company, and First Reserve Corporation and its affiliates,
other than T-3, may invest in other such companies in the future. The Company
refers to First Reserve Corporation, its other affiliates and its portfolio
companies as the First Reserve group. The Company's certificate of incorporation
provides that, so long as First Reserve Corporation and its affiliates continue
to own at least 20% of the Company's common stock, the Company renounces any
interest in specified business opportunities. The Company's certificate of
incorporation also provides that if an opportunity in the oilfield services
industry is presented to a person who is a member of the First Reserve group,
including any individual who also serves as First Reserve Fund VIII's director
designee of the Company:

     o    no member of the First Reserve group or any of those individuals will
          have any obligation to communicate or offer the opportunity to the
          Company; and

     o    such entity or individual may pursue the opportunity as that entity
          or individual sees fit,

unless:

     o    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

     o    the opportunity was identified solely through the disclosure of
          information by or on behalf of T-3.

These provisions of the Company's certificate of incorporation may be amended
only by an affirmative vote of holders of at least 80% of its outstanding common
stock. As a result of these charter provisions, the Company's future competitive
position and growth potential could be adversely affected.

                                       18
<PAGE>
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

       Market risk generally represents the risk that losses may occur in the
value of financial instruments as a result of movements in interest rates,
foreign currency exchange rates and commodity prices.

     The Company is exposed to some market risk due to the floating interest
rate under its revolving credit facility and certain of its term debt. As of
September 30, 2002, the revolving credit facility had a principal balance of
$2.8 million and the variable long-term debt had a principal balance of $14.0
million, all with interest rates that float with prime or LIBOR. A 1.0% increase
in interest rates could result in a $0.2 million annual increase in interest
expense on the existing principal balances.

ITEM 4.  CONTROLS AND PROCEDURES

     The Company's management team continues to review the Company's internal
controls and procedures and the effectiveness of those controls. Within the 90
days prior to the date of this report, the Company conducted an evaluation,
under the supervision of and with the participation of the Company's management,
including the President and Chief Executive Officer and Vice President and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934. Based upon that evaluation, the President and
Chief Executive Officer and Vice President and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's periodic SEC
filings.

     There were no significant changes in the Company's internal controls or in
other factors that could significantly affect the Company's disclosure
procedures subsequent to the date of their evaluation, nor were there any
significant deficiencies or material weaknesses in the Company's internal
controls. As a result, no corrective actions were required or taken.





                                       19
<PAGE>
                                     PART II

ITEM 1.   LEGAL PROCEEDINGS

       The Company is involved in various claims and litigation arising in the
ordinary course of business. While there are uncertainties inherent in the
ultimate outcome of such matters and it is impossible to currently determine the
ultimate costs that may be incurred, the Company believes the resolution of such
uncertainties and the incurrence of such costs should not have a material
adverse effect on its consolidated financial condition or results of operations.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

      None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

      None

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

      None

ITEM 5.  OTHER INFORMATION

      None

ITEM 6.  EXHIBITS

     a.  Exhibits

         Exhibit Number     Identification of Exhibit
         --------------     -------------------------

         99.1               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)

         99.2               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)

     b.  Reports on Form 8-K

         None



                                       20

<PAGE>
                                   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 5TH DAY OF
NOVEMBER, 2002.

                                           T-3 ENERGY SERVICES, INC.

                                       By: /s/ STEVEN J. BRADING
                                           -------------------------------------
                                           STEVEN J. BRADING (CHIEF FINANCIAL
                                              OFFICER AND VICE PRESIDENT)

                                       By: /s/ MICHAEL T. MINO
                                           -------------------------------------
                                            MICHAEL T. MINO (CORPORATE
                                              CONTROLLER AND VICE PRESIDENT)




                                       21
<PAGE>
                                 CERTIFICATIONS


I, Michael L. Stansberry, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of T-3 Energy
          Services, Inc.;

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

               a)   designed such disclosure controls and procedures to ensure
                    that material information relating to the registrant,
                    including its consolidated subsidiaries, is made known to us
                    by others within those entities, particularly during the
                    period in which this quarterly report is being prepared;

               b)   evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the filing date of this quarterly report (the "Evaluation
                    Date"); and

               c)   presented in this quarterly report our conclusions about the
                    effectiveness of the disclosure controls and procedures
                    based on our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

               a)   all significant deficiencies in the design or operation of
                    internal controls which could adversely affect the
                    registrant's ability to record, process, summarize and
                    report financial data and have identified for the
                    registrant's auditors any material weaknesses in internal
                    controls; and

               b)   any fraud, whether or not material, that involves management
                    or other employees who have a significant role in the
                    registrant's internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this quarterly report whether there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.


                                                /s/ MICHAEL L. STANSBERRY
                                                --------------------------------
                                                Michael L. Stansberry
                                                Chief Executive Officer
                                                November 5, 2002


                                       22

<PAGE>
                                 CERTIFICATIONS


I, Steven J. Brading, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of T-3 Energy
          Services, Inc.;

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

               a)   designed such disclosure controls and procedures to ensure
                    that material information relating to the registrant,
                    including its consolidated subsidiaries, is made known to us
                    by others within those entities, particularly during the
                    period in which this quarterly report is being prepared;

               b)   evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the filing date of this quarterly report (the "Evaluation
                    Date"); and

               c)   presented in this quarterly report our conclusions about the
                    effectiveness of the disclosure controls and procedures
                    based on our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

               d)   all significant deficiencies in the design or operation of
                    internal controls which could adversely affect the
                    registrant's ability to record, process, summarize and
                    report financial data and have identified for the
                    registrant's auditors any material weaknesses in internal
                    controls; and

               e)   any fraud, whether or not material, that involves management
                    or other employees who have a significant role in the
                    registrant's internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this quarterly report whether there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.


                                                  /s/ STEVEN J. BRADING
                                                  ------------------------------
                                                  Steven J. Brading
                                                  Chief Financial Officer
                                                  November 5, 2002


                                       23
<PAGE>
                                INDEX TO EXHIBIT


Exhibit Number     Identification of Exhibit
--------------     -------------------------

99.1               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)

99.2               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)







                                       24