**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**








**FORM
      10-QSB/A**








**(Mark
      One)**


**x**  **QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**





**For
      the quarterly period ended March 31, 2006**





 ̈  **TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT**





**For
      the transition period from** **** **to** ****





**333-64122**


**(Commission
      file number)**








**Blast
      Energy Services, Inc.**


**(Exact
      name of small business issuer as specified in its charter)**








**California**
            **22-3755993****(State
                or other jurisdiction of**
              **incorporation
                or organization)**
            **(IRS
                Employer**
              **Identification
                No.)**





**14550
      Torrey Chase Blvd, Suite 330**


**Houston,
      Texas 77014**


**(Address
      of principal executive offices)**





**(281)
      453-2888**


**(Issuer’s
      telephone number)**








**(Former
      name, former address and former fiscal year, if changed since last
      report)**








Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. **Yes** **x** **No** ** ̈**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.


**Yes** ** ̈** **No** **x** ****





The
      number of shares outstanding of each of the issuer’s classes of common equity as
      of March 31, 2005 - 43,054,507





The
      common stock of Blast Energy Services, Inc. is traded on the OTC Bulletin Board
      under the symbol “BESV”.





**Transitional
      Small Business Disclosure Format (check
      one):     Yes** ** ̈** **No** **x** ****





1


Explanatory
      Note





Blast
        Energy Services, Inc (fka Verdisys, Inc.) is filing this amended Quarterly
        Report on Form 10-QSB/A for the period ended March 31, 2006 (the “Amended
        Quarterly Report”), to amend its Quarterly Report on Form 10-QSB for the period
        ending March 31, 2006 originally filed with the Securities and Exchange
        Commission on May 15, 2006.





The
        Amended Quarterly Report amends the Company’s financial statements to reflect
        the proper classification of the cash received from the 2005 sale of the
        Landers
        license, including the associated footnotes to the financial statements and
        disclosures under Part I, Item 1, “Financial Statements.” Except for these items
        no other information in the original Report is amended
        hereby.














2


**Blast
      Energy Services, Inc.**





**Index**





**Page
                Number**PART
                I.
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements
            4Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Plan of
                Operation
            11Item
                3.
            Controls
                and Procedures
            14PART
                II.
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            14Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            14Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            15Item
                6.
            Exhibits
                and Reports on Form 8-K
            15SIGNATURES
            16





3


**Blast
      Energy Services, Inc.**





**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1. Financial Statements**





**Page
                Number**Balance
                Sheets as of March 31, 2006 and December 31, 2005
            5Statements
                of Operations, for the three months ended March 31, 2006 and
                2005
            6Statements
                of Cash Flow, for the three months ended March 31, 2006 and
                2005
            7Notes
                to Financial Statements
            8





4


**BLAST
      ENERGY SERVICES, INC.**


**BALANCE
      SHEETS**











**March
                31, 2006**
            
            **December
                31, 2005****Assets**
            
            (Unaudited)Current
                AssetsCash
            
            $
            325,871
            
            $
            835,978Accounts
                Receivable, net of allowance for doubtful accounts of $10,290 and
                $10,290
            
            
            123,333
            
            
            156,437Other
                Assets
            
            
            199,303
            
            
            231,413Current
                Assets
            
            
            648,507
            
            
            1,223,828Intangible
                assets, net of $48,750 and $27,857 accumulated
                amortization
            
            
            1,121,250
            
            
            1,142,143Equipment,
                net of $28,236 and $22,416 of accumulated depreciation
            
            
            1,039,824
            
            
            977,269Total
                Assets
            
            $
            2,809,581
            
            $
            3,343,240**Liabilities
                and Stockholder’s Deficit**Current
                LiabilitiesAccounts
                payable
            
            $
            555,676
            
            $
            622,396Accrued
                expenses
            
            
            524,201
            
            
            533,842Deferred
                revenue
            
            
            99,417
            
            
            131,425Notes
                payable-related parties, net of unamortized discount of $5,926 and
                $14,814
            
            
            194,074
            
            
            185,186Notes
                payable-other
            
            
            42,500
            
            
            395,000Total
                Current Liabilities
            
            
            1,415,868
            
            
            1,867,849Long
                Term LiabilitiesAdvances-related
                parties
            
            
            1,000,000
            
            
            1,000,000Note
                payable-other
            
            
            500,000
            
            
            500,000Deferred
                revenue, less current portion
            
            
            6,780
            
            
            6,780Total
                Liabilities
            
            
            2,922,648
            
            
            3,374,629Commitments
                and Contingencies
            
            
            -
            
            
            -Stockholders’
                DeficitCommon
                stock, $.001 par value, 100,000,000 shares authorized,
              43,054,507
                and 42,060,477 shares issued and outstanding
            
            
            43,054
            
            
            42,060Additional
                paid in capital
            
            
            30,741,083
            
            
            29,855,409Accumulated
                deficit
            
            
            (30,897,204
            )
            
            (29,928,859
            )Total
                Stockholders’ Deficit
            
            
            (113,067
            )
            
            (31,390
            )Total
                Liabilities and Stockholders’ Deficit
            
            $
            2,809,581
            
            $
            3,343,240





See
      accompanying notes to financial statements.





5


**BLAST
      ENERGY SERVICES, INC.**


**STATEMENTS
      OF OPERATIONS**


(Unaudited)











**For
                the Three Months Ended**
              **March
                31,****2006**
            
            **2005**(Restated)Revenue:Satellite
                Communications
            
            $
            291,961
            
            $
            272,802Down-hole
                Solutions
            
            
            -
            
            
            14,981Total
                Revenue
            
            
            249,523
            
            
            287,783Cost
                of Services Provided:Satellite
                Communications
            
            
            205,143
            
            
            173,803Down-hole
                Solutions
            
            
            132,246
            
            
            119,484Total
                Cost of Services Provided
            
            
            337,389
            
            
            293,287Gross
                Margin (Deficit)
            
            
            (45,428
            )
            
            (5,504
            )Operating
                Expenses:Selling,
                general and administrative
            
            
            712,861
            
            
            1,034,627Depreciation
                and amortization
            
            
            26,713
            
            
            29,810Bad
                debts
            
            
            -
            
            
            10,000Operating
                loss
            
            
            (785,002
            )
            
            (1,079,941
            )Other
                (Income) Expense:
            
            
            
            
            
            -Other
                income
            
            
            (42,533
            )
            
            -Interest
                expense
            
            
            43,877
            
            
            51,261Loss
                on extinguishment of debt
            
            
            182,000
            
            
            -Other
                Income
            
            
            -
            
            
            (971
            )Interest
                income
            
            
            -
            
            
            (4
            )Total
                other (income) expense
            
            
            183,344
            
            
            50,286Net
                Loss
            
            $
            (968,346
            )
            $
            (1,130,227
            )Basic
                and diluted loss per share
            
            $
            (0.02
            )
            $
            (0.03
            )Weighted
                average shares outstanding
            
            
            42,695,063
            
            
            34,404,860





See
      accompanying notes to financial statements.





6


**BLAST
      ENERGY SERVICES, INC.**


**STATEMENTS
      OF CASH FLOWS**


(Unaudited)











**For
                  the Three Months Ended March 31,****2006**
              
              **2005**(Restated)**Cash
                  Flows From Operating Activities:**Net
                  loss
              
              $
              (968,346
              )
              $
              (1,130,277
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Stock
                  issued for services or litigation
              
              
              202,500
              
              
              962,395Option
                  and warrant expense
              
              
              93,458
              
              
              25,000Amortization
                  of note discount
              
              
              8,888
              
              
              34,488Depreciation
                  and amortization
              
              
              26,713
              
              
              29,810Loss
                  on extinguishment of debt
              
              
              182,000
              
              
              (971
              )Bad
                  debts
              
              
              -
              
              
              10,000Change
                  in working capital items
              
              
              (59,155
              )
              
              (419,306
              )Net
                  Cash Used In Operating Activities
              
              
              (513,942
              )
              
              (488,811
              )**Cash
                  Flows From Investing Activities:**Construction
                  of equipment
              
              
              (46,490
              )
              
              (250,000
              )Proceeds
                  from Sale of License
              
              
              -
              
              
              400,000Purchase
                  of property and equipment
              
              
              (21,885
              )
              
              -Net
                  Cash Used In Investing Activities
              
              
              (68,375
              )
              
              150,000**Cash
                  Flows From Financing Activities:**Proceeds
                  from sale of stock
              
              
              -
              
              
              241,500Proceeds
                  from exercise of options and warrants
              
              
              74,710
              
              
              250Payments
                  on note payable
              
              
              (2,500
              )
              
              -Net
                  Cash Provided By Financing Activities
              
              
              72,210
              
              
              241,750Net
                  change in cash
              
              
              (510,107
              )
              
              (97,061
              )Cash
                  at beginning of period
              
              
              835,978
              
              
              266,917Cash
                  at end of period
              
              $
              325,871
              
              $
              169,856**Non-Cash
                  Transactions:**Conversion
                  of notes payable to common stock
              
              $
              350,000
              
              $
              -Shares
                  issued for interest
              
              $
              11,000
              
              $
              -Shares
                  issued for extinguishment of debt
              
              $
              182,000
              
              $
              -Conversion
                  of liabilities to common stock
              
              $
              -
              
              $
              192,737Exchange
                  of equipment for customer deposit
              
              $
              -
              
              $
              175,000Exchange
                  of equipment for accounts payable
              
              $
              -
              
              $
              3,883





See
      accompanying notes to financial statements.





7


**BLAST
      ENERGY SERVICES, INC.**


**NOTES
      TO FINANCIAL STATEMENTS**


(Unaudited)





**NOTE
      1 - BASIS OF PRESENTATION**





The
      accompanying unaudited interim financial statements of Blast Energy Services,
      Inc. (“Blast”) 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-QSB. Accordingly, they do
      not
      include all of the information and footnotes required by generally accepted
      accounting principles for complete financial statements and should be read
      in
      conjunction with the Management’s Discussion and Analysis and the audited
      financial statements and notes thereto contained in Blast’s 2005 Annual Report
      filed with the SEC on Form 10-KSB. In the opinion of management, all
      adjustments, consisting of normal recurring adjustments, necessary for a fair
      presentation of financial position and the results of operations for the interim
      periods presented have been reflected herein. The results of operations for
      the
      interim periods are not necessarily indicative of the results to be expected
      for
      the full year. Notes to the financial statements which would substantially
      duplicate the disclosure contained in the audited financial statements for
      2005
      as reported in the 10-KSB have been omitted.





*Reclassifications.* ** Certain
      amounts in the financial statements of the prior year have been reclassified
      to
      conform to the presentation of the current year for comparative
      purposes.





**NOTE
      2 - GOING CONCERN**





As
      shown
      in the accompanying financial statements, Blast incurred a net loss of $0.9
      million for the three months ended March 31, 2006, has an accumulated deficit
      of
      $30.9 million and a working capital deficit of $0.8 million as of March 31,
      2006
      and has several significant future financial obligations. These conditions
      create an uncertainty as to Blast’s ability to continue as a going concern.
      Management is trying to raise additional capital. The financial statements
      do
      not include any adjustments that might be necessary if Blast is unable to
      continue as a going concern.





**NOTE
      3 - STOCK OPTIONS AND WARRANTS**





On
      January 1, 2006, Blast adopted SFAS No. 123(R), “Share-Based Payment” (“SFAS
      123(R)”). This replaced SFAS No. 123 and supersedes APB Opinion No. 25. SFAS
      123(R) requires all share-based payments to employees, including grants of
      employee stock options, to be recognized in the financial statements based
      on
      their fair values. The pro forma disclosures previously permitted under SFAS
      123
      are no longer an alternative to financial statement recognition. Blast adopted
      SFAS 123(R) using the modified prospective method which requires the application
      of the accounting standard as of January 1, 2006. The consolidated financial
      statements as of and for the quarter ended March 31, 2006 reflect the impact
      of
      adopting SFAS 123(R). In accordance with the modified prospective method, the
      consolidated financial statements for prior periods have not been restated
      to
      reflect, and do not include, the impact of SFAS 123(R).





Prior
      to
      2006, compensation was recorded for stock-based compensation grants based on
      the
      excess of the estimated fair value of the common stock on the measurement date
      over the exercise price.





**For
                the Three Months Ended March 31, 2005**Net
                loss as reported
            $
                (1,130,227)Less:
                stock based compensation determinedUnder
                fair value based method
            (81,569)Pro
                forma net loss
            $
                (1,211,796)Basic
                and diluted net loss per common share:As
                reported
            $
                (.03)Pro
                forma
            $
                (.04)





The
      weighted average fair value of the stock options granted during the three months
      March 31, 2006 and 2005 was $.08 and $.42, respectively. Variables used in
      the
      Black-Scholes option-pricing model include (1) 2% risk-free interest rate,
      (2)
      expected option life is the actual remaining life of the options as of each
      period end, (3) expected volatility is 69% and 153%, respectively, and (4)
      zero
      expected dividends.


8


**NOTE
      4 - EQUIPMENT**





This
      consists primarily of one abrasive fluid jetting tractor & trailer rig that
      is currently under repair, mounted with high powered water compressors, flexible
      hose and other assorted down-hole equipment which is used to conduct casing
      cutting and lateral drilling operations with abrasive jetting technology. It
      also includes a heavy duty pick up truck and a rig support trailer as well
      as
      office furniture and computers.





**NOTE
      5 - INTELLECTUAL PROPERTY (“IP”)**





In
      April
      2003, Blast entered into a license agreement for the exclusive use of the
      Landers lateral drilling process. On March 8, 2005, Blast assigned its rights
      in
      that license to Maxim TEP, Inc. (“Maxim”) along with all current and future
      assignments, sublicenses or territorial royalty pertaining to the license.
      The
      President and CEO of Maxim is Dan Williams, a former President and CEO of Blast.
      As consideration, Maxim paid $1,300,000 in principal payments and $500,000
      in
      penalties for extending the payment deadlines and released a $270,000 credit
      obligation we owed to Maxim. Blast will retain a non-exclusive sublicense
      interest in the Landers license, as long as we pay all required royalties on
      which the Landers Horizontal Technology is utilized. The carrying value of
      the
      IP was impaired by $3,175,000 at December 31, 2004 to recognize the sale of
      the
      license.





On
        July
        15, 2005, Blast entered into an agreement to develop its initial abrasive
        jetting rig with Berg McAfee Companies, LLC (“BMC”), a major shareholder. The
        arrangement involves two loans for a total of $1 million to fund the completion
        of the initial rig and sharing in the expected rig revenues for a ten-year
        period. As of December 31, 2005, Blast received $1 million in funding under
        this
        agreement. Under the terms of the loan agreement with BMC, cash revenues
        will be
        shared on the basis of allocating 90% to Blast and 10% to BMC for a ten-year
        period following repayment. After ten years, Blast will receive all of the
        revenue from the rig. The loan, secured by the value of the rig, which carries
        an average interest rate of 7.4%, has a senior and subordinated structure
        due
        September 15, 2006 and September 30, 2006, respectively. In February 2006,
        Blast
        and Berg McAfee Companies, our major shareholder, mutually agreed to extend
        the
        Maturity Date of the AFJ Rig Loans from September 2006 to March 31, 2007.
        No
        consideration was paid to BMC for this extension. However, BMC will earn
        additional interest which accrues during the extended loan period. BMC also
        has
        the option to fund an additional three rigs under these commercial
        terms.





On
      March
      17, 2006 Blast replaced in their entirety both its August 25, 2005 purchase
      agreement and October 2004 licensing agreement with a revised Technology
      Purchase Agreement with Alberta Energy Partners (“Alberta”) to purchase a
      one-half interest in Alberta’s Abrasive Fluid Jet (“AFJ”) cutting technology.
      Blast issued to Alberta 3,000,000 restricted shares of its common stock and
      750,000 warrants exercisable at $.45 per share for the purchase of Blast common
      shares. The warrants are exercisable at such time as a minimum of $225,000
      in
      revenue has been received by operation of Blast Rig # 1, and expire three years
      from date of issuance. The fair value of the award will be measured and
      recognized at which time Blast achieves the $225,000 revenue mark. In addition,
      one half of Blast’s 50% share of the revenue stream from licensing of the
      technology shall be paid to Alberta, in addition to Alberta’s own one-half,
      until Alberta has received $2 million. Thereafter, Blast and Alberta will share
      licensing revenue equally. Blast and Alberta will share licensing revenue
      equally. Royalties are payable to Alberta at the rate of $2,000 per well or
      2%
      of gross revenues received, whichever is greater, for each well bore in which
      Blast uses the technology. The agreement shall remain in effect for the
      commercial life of the technology.





At
      March
      31, 2006 the total cost of the Intellectual Property was $1,170,000 with $48,750
      of accumulated amortization. The IP, composed of the 50% ownership in the
      Alberta technology, is being amortized on a straight-line method over the life
      of the patent, which is 14 years. Effective December 31, 2005, the Company
      commissioned an independent evaluation of the Intellectual Property, which
      exceeds the carrying value. Therefore, on that basis, no asset impairment is
      required.





**NOTE
      6 - STOCKHOLDERS EQUITY**





In
      the
      first quarter of 2006, Blast issued a total of 994,030 shares of common stock
      as
      follows:


-  135,000
      shares valued at $202,500 were issued to a consultant.


-  377,100
      shares were issued pursuant to warrants exercised for $74,710 cash.


-  13,783
      shares were issued for the payment of 4 th qtr.
      2005 accrued interest


-  175,000
      shares were issued for the payment of $350,000 of notes payable that matured
      on
      12/31/05


-  233,333
      shares were issued as premium on the conversion of notes payable that matured
      on
      12/31/05.


-  59,814
      shares of common stock were reinstated to an existing shareholder.





9








**NOTE
      7 -NOTES PAYABLE**





In
      January 2006, Blast issued (in lieu of cash) 13,784 shares of common stock
      for
      the payment of 4 th quarter,
      2005 interest on Convertible Promissory Notes at $.80 per share (the average
      five-day closing price at year end).





In
      January 2006, holders of four Convertible Promissory Note Agreements dated
      July
      23, 2004 totaling $350,000 converted their Note principal amounts which were
      due
      on December 31, 2005, into shares of Company stock in lieu of cash payment.
      The
      original conversion terms including warrants, but excluding 8% interest, would
      equate to a $1.00 per share investment value. The conversion includes a premium
      in the number of shares converted in order to lower the value of the holder’s
      investment to $.60 per share. This conversion value was based upon the same
      value of a private placement closed during December 2005.Blast issued 175,000
      shares of common stock at a conversion price of $2.00 per share and 233,333
      shares of common stock related to the premium on the conversion.





**NOTE
      8 - BUSINESS SEGMENTS**





Blast
      has
      two reportable segments: (1) satellite communications and (2) down-hole
      services. A reportable segment is a business unit that has a distinct type
      of
      business based upon the type and nature of services and products offered. Blast
      evaluates performance and allocates resources based on profit or loss from
      operations before other income or expense and income taxes. The table below
      reports certain financial information by reportable segment:





**For
                the Three Months Ended March 31,****2006**
            **2005**Revenues
                from external customersSatellite
                communications
            $
                291,962
            $
                272,802Down-hole
                services
            -
            14,981$
                291,962
            $
                287,783Operating
                profit (loss) 1Satellite
                communications
            $
                80,743
            $
                48,217Down-hole
                services
            (180,319)
            (233,512)Corporate
            (685,426)
            (894,646)$
                (785,002)
            $
                (1,079,941)





1-
      Operating loss is total operating revenue less operating expenses, selling
      general and administrative expenses, depreciation and amortization, bad debts
      and does not include other income and expense or income taxes.





**NOTE
      9 - RESTATEMENT**





On
          March
          23, 2006, the Board of Directors determined that Blast should restate the
          financial statements for the year ended December 31, 2004 included in its
          2004
          Annual Report on Form 10-KSB and the 2005 financial statements included
          in its
          three 2005 Quarterly Reports on Form 10-QSB. The restated financial statements
          were filed with the SEC on March 30, 2006. These financial statements originally
          included the value of the Intellectual Property asset as cost because the
          independent valuation of the net present value of the future cash flows
          exceeded
          the acquisition cost. During 2005, Blast agreed to sell its lateral drilling
          license for $1.3 million in cash over a period of time. Subsequently, it
          was
          determined that the asset valuation conclusions were incorrect and that
          the
          license sales agreement thereby established the asset value of the intellectual
          property. Consequently, the value of the lateral drilling license was written
          down with a non-cash impairment charge of $3.2 million as of December 31,
          2004
          and the financial statements were restated.


10




During
          2005, Blast agreed to sell our lateral drilling license for $1.3 million
          in cash
          over a period of time, including $400,000 received during the first quarter
          of
          2005. Subsequently, we determined that these proceeds should have been
          classified as “Cash from Investing Activities” rather than included in “Cash
          from Operations”. Consequently, the statement of cash flows for 2005 was
          restated for the line items shown below. The net decrease in cash during
          the
          period of $ 97,061 remained unchanged.
   **For
                    the Three Months**
                  **Ended
                    March 31,****2005**
                **2005**(as
                    Originally Filed)
                (Restated)**Cash
                    Flows From Operating Activities:**Change
                    in working capital items
                (19,306)
                (419,306)Net
                    Cash Used In Operating Activities
                (88,811)
                (488,811)**Cash
                    Flows From Investing Activities:**Proceeds
                    from sale of license
                -
                400,000Net
                    Cash Used In Investing Activities
                (250,000)
                150,000






**NOTE
      10 - SUBSEQUENT EVENTS**





Blast’s
      prototype abrasive fluid jetting (AFJ) rig, the Blast Rig #1, was deployed
      on
      its first commercial job in Many, Louisiana for Oracle Operating LLC in April,
      2006. Blast believed that it successfully cut through the well casing at
      approximately 3,000 feet but was unable to laterally jet into the formation
      rock
      due to mechanical problems with the coil tubing delivery system. The rig has
      been taken to a coil tubing refurbishing yard to repair the injector head and
      hydraulic control system and to obtain an independent evaluation of the rig’s
      major systems. Based upon this evaluation, Blast is estimating repairs to cost
      approximately $75,000 over the next eight to ten weeks. Upon completion of
      these
      repairs, the rig will return to a test well location to further shakedown the
      rig and test its lateral drilling capabilities.








**Item
      2. Management’s Discussion and Analysis of Financial Condition and Plan of
      Operations**





**Forward-Looking
      Statements**





All
      statements that are included in this Quarterly Report, other than statements
      of
      historical fact, are forward-looking statements. You can identify
      forward-looking statements by words such as “anticipate”, “believe” and similar
      expressions and statements regarding our business strategy, plans and objectives
      for future operations. Although management believes that the expectations
      reflected in these forward-looking statements are reasonable, it can give no
      assurance that such expectations will prove to have been correct. The
      forward-looking statements in this filing involve known risks and uncertainties,
      which may cause our actual results in future periods to be materially different
      from any future performance suggested in this report. Such factors may include,
      but are not limited to, such risk factors as: changes in technology, reservoir
      or sub-surface conditions, the introduction of new services, commercial
      acceptance and viability of new services, fluctuations in customer demand and
      commitments, pricing and competition, reliance upon subcontractors, the ability
      of our customers to pay for our services, together with such other risk factors
      as may be included in our Annual Report on Form 10-KSB.





**Three
      Months Ended March 31, 2006 Compared to Three Months Ended March 31,
      2005**





*Satellite
      Communications Services*





Satellite
      Communication Services’ revenues increased by $19,000 to $292,000 for the
      quarter ended March 31, 2006 compared to $273,000 for the quarter ended March
      31, 2005. The increase in revenue can be attributed to an increase in service
      provided to existing customers. The operating margin from Satellite
      Communication Services decreased by $12,000 to a margin of $87,000 for the
      quarter ended March 31, 2006 compared to a margin of $99,000 for the quarter
      ended March 31, 2005. Increased expenses more than offset the increase in
      revenue.


11





As
      hardware is sold, we recognize the revenue in the period it is delivered to
      the
      customer. There were no significant hardware sales during the quarters ended
      March 31, 2006 and 2005. We bill some of our bandwidth contracts in advance,
      but
      recognize the revenue over the period benefited.





*Down-hole
      Solutions*





We
      have
      been striving to develop a commercially viable lateral drilling technology
      with
      the potential to penetrate through well casing and into reservoir formations
      to
      stimulate oil and gas production. In 2003, with the acquisition of exclusive
      rights to a proprietary horizontal drilling process we began to deploy lateral
      drilling services in the field. In mid 2004, it became apparent that this
      process was limited in its application to a wide variety of oil and gas
      formations. After redesigning and improving the existing process and designing
      and testing some new capabilities, we now believe that we can deliver a valuable
      and cost effective production enhancement service to onshore oil and gas
      producers, particularly operators of marginal wells. The goal is to make this
      new service reliably predictable and consistently dependable for our customers.
      We are currently repairing our first new generation lateral drilling rig with
      the capability of abrasive fluid jetting by use of much higher hydraulic
      horsepower. Following favorable results and customer acceptance of this initial
      rig’s capabilities, we plan to order the construction of additional rigs and
      significantly grow the deployment of our abrasive jetting service.





Blast’s
        prototype abrasive fluid jetting (AFJ) rig, the Blast Rig #1, was deployed
        on
        its first commercial job in Many, Louisiana for Oracle Operating LLC in April,
        2006. Blast believed that it successfully cut through the well casing at
        approximately 3,000 feet but was unable to laterally jet into the formation
        rock
        due to mechanical problems with the coil tubing delivery system. The rig
        has
        been taken to a coil tubing refurbishing yard to repair the injector head
        and
        hydraulic control system and to obtain an independent evaluation of the rig’s
        major systems. Based upon this evaluation, Blast is estimating repairs to
        cost
        approximately $75,000 over the next eight to ten weeks. Upon completion of
        these
        repairs, the rig will return to a test well location to further shakedown
        the
        rig and test its lateral drilling capabilities.





Funding
      for developing this abrasive cutting capability into commercial operation is
      expected to come from current and future capital commitments. No assurances
      can
      be given that the capital from these sources will be adequate. If this is the
      case, we will be required to obtain additional capital from equity markets.
      No
      assurances can be given that such capital will be available or that the terms
      will be acceptable.





Down-hole
      Solutions’ revenues were zero for the quarter ended March 31, 2006 compared to
      $15,000 for the quarter ended March 31, 2005. The revenue in 2005 was generated
      from the direct financing lease of one of our Lander’s rigs. Drilling operations
      have ceased until such time as our new generation abrasive jetting rig is
      deployed, currently projected to occur in the third quarter of
      2006.





The
      operating loss from Down-hole Solutions decreased by $54,000 to a loss of
      $180,000 for the quarter ended March 31, 2006 compared to a loss of $234,000
      for
      the quarter ended March 31, 2005. The expenses for both periods were primarily
      labor related associated with designing and testing the new abrasive fluid
      jetting process.





12


*Selling,
      General and Administrative*





Selling,
      general and administrative expenses decreased by $322,000 to $713,000 for the
      quarter ended March 31, 2006 compared to $1,035,000 for the quarter ended March
      31, 2005. The following table details major components of expense over the
      periods.





**For
                the Three Months Ended March 31,**
            **Increase**
              **(Decrease)****2006**
            **2005**Payroll
                and related costs
            $
                106
            $
                284
            $
                (178)Option
                and warrant expense
            93
            25
            68Legal
                & settlement costs
            70
            561
            (491)External
                services
            315
            101
            214Insurance
            54
            42
            12Travel
                & entertainment
            47
            6
            40Office
                rent, Communications etc.
            28
            16
            12$
                713
            $
                1,035
            $
                (322)





Due
      to
      the lack of drilling activity during the first quarter of 2006, we focused
      on
      technology development and lowering our controllable overhead, which has
      resulted in a decrease in payroll, and option and warrant expense. Conversely,
      external services, travel and entertainment, office rent and communications
      all
      increased. Legal and settlement expenses decreased significantly as the prior
      year’s quarter included $503,000 for the value of the 1,150,000 shares of our
      common stock to be issued to settle the class action lawsuit and $55,000 of
      associated expenses.





*Net
      Loss*





The
      net
      loss for the first quarter of 2006 decreased to $968,000 from a loss of
      $1,130,000 for the corresponding period in 2005. The decrease is attributable
      to
      the major items explained in the paragraphs above. The tax benefit associated
      with our loss has been fully reserved as we have recurring net losses and it
      is
      more likely than not that the tax benefits will not be realized.





**Liquidity
      and Capital Resources**





As
      of
      March 31, 2006, our cash balance was $326,000 compared to a cash balance of
      $836,000 at December 31, 2005 and $170,000 for the period ended March 31, 2005.
      The cash balances were impacted by the sale of the Landers license for a total
      of $1.8 million and 2005 stock sales of $780,000 that were utilized to pay
      debt
      and fund operations. We continue to utilize cash, stock, and notes to fund
      operations. We have used these proceeds to fund the construction of our new
      generation drilling rig. As of March 31, 2006, we had expended approximately
      $1.2 million to construct and outfit the AFJ tractor/trailer rig as well as
      support truck and trailers. As of May 1, 2006 our cash balance is approximately
      $170,000. We continue to utilize our cash to fund the repair for the rig and
      to
      fund payables.





We
      have a
      $42,500 note that is due on demand. In addition, we have $200,000 of convertible
      notes with related parties that mature on May 31, 2006. The convertible notes
      are convertible into common stock at the rate of one share for each $2.00 of
      principal and interest outstanding.





Our
      continued operating losses raise substantial doubt as to our ability to continue
      as a going concern. We are in an early stage of development and are rapidly
      depleting our cash resources, therefore we have determined that we will need
      to
      raise additional financing in the short term to continue in operation and fund
      future growth. We currently plan to raise additional financing. The use of
      stock
      for currency in financing or making acquisitions has been negatively impacted
      while we have been under SEC investigation (see Financial Note 16 to the
      December 31, 2005 Financial Statements). If we are unable to arrange new
      financing or generate sufficient revenue from new business arrangements, we
      will
      be unable to continue in our current form and will be forced to restructure
      or
      seek creditor protection.


13





For
        the
        quarter ended March 31, 2006, we had capital expenditures of $61,000 as compared
        to $250,000 in capital expenditures for the quarter ended March 31, 2005.
        We
        expect to have approximately $75,000 of AFJ rig repair costs for the second
        quarter of 2006 (see Note 8 and subsequent event).





**Subsequent
      Event**





We
      deployed our prototype abrasive fluid jetting (AFJ) rig, the Blast Rig #1 on
      its
      first commercial job in Many, Louisiana for Oracle Operating LLC in April,
      2006.
      We believe that it successfully cut through the well casing at approximately
      3,000 feet but was unable to laterally jet into the formation rock due to
      mechanical problems with the coil tubing delivery system. The rig has been
      taken
      to a coil tubing refurbishing yard to repair the injector head and hydraulic
      control system and to obtain an independent evaluation of the rig’s major
      systems. Based upon this evaluation, the Company is estimating repairs to cost
      less than $100,000 over the next eight to ten weeks. Upon completion of these
      repairs, the rig will return to a test well location to further shakedown the
      rig and test its lateral drilling capabilities.





**Item
      3. Controls and Procedures**





Based
      on
      management’s evaluation as of the end of the period covered by this report, our
      Principal Executive Officer and Principal Financial Officer have participated
      in
      the evaluation and concluded that our disclosure controls and procedures were
      effective to ensure that information we are required to disclose in reports
      filed or submitted under the Securities Exchange Act of 1934, as amended, is
      recorded, processed, summarized, and reported within the periods specified
      and
      in accordance with the SEC’s rules and forms.




There
      have been no changes in our internal control over financial reporting during
      the
      period covered by this report that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial reporting.





**Part
      II. OTHER INFORMATION**





**Item
      1. Legal Proceedings**





Full
      disclosure of prior or other legal activities may be found in the audited
      financial statements and notes thereto contained in our 2005 Annual Report
      filed
      with the SEC on Form 10-KSB.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**





In
      the
      first quarter of 2006, Blast issued a total of 994,030 shares of common stock
      as
      follows:





In
      January


-  135,000
      shares valued at $202,500 were issued to a consultant.


-  28,000
      shares were issued pursuant to warrants exercised for $2,800 cash.


-  13,783
      shares were issued for the payment of 4 th qtr.
      2005 accrued interest.


-  175,000
      shares were issued for the payment of $350,000 of notes payable that matured
      on
      12/31/05.


-  233,333
      shares were issued as premium on the conversion of notes payable that matured
      on
      12/31/05.


-  59,814
      shares of common stock were reinstated to an existing shareholder.





In
      February


-  249,100
      shares were issued pursuant to warrants exercised for $61,910 cash.





In
      March


-  100,000
      shares were issued pursuant to warrants exercised for $10,000 cash.





**Each
      of the above shares were issued pursuant to the exemption from registration
      under the Securities Act of 1933 under the exemption afforded by Section 4(2)
      thereunder.**





14


**Item
      4. Submission of Matters to a Vote of Security Holders**





We
      conducted our Annual Meeting of Shareholders on May 11, 2006 and disclose herein
      the final voting results:





**YES**
            **WITHELD
                AUTHORITY***Proposal
                One*-
                Election of Directors (voted upon as a block):John
                R. Block,
            29,219,562
            32,460Roger
                P. (Pat) Herbert,
            29,219,562
            32,460Scott
                W. Johnson,
            29,219,562
            32,460Joseph
                J. Penbera, Ph.D.,
            29,219,562
            32,460Jeffrey
                R. Pendergraft,
            29,219,562
            32,460Frederick
                R. Ruiz,
            29,219,562
            32,460O.
                James Woodward III
            29,219,562
            32,460**YES**
            **NO**
            **ABSTAIN***Proposal
                Two*-
                Approval of Independent Public Accountant (Malone & Bailey,
                PC):
            28,344,834
            874,353
            32,834








**Item
      6. Exhibits and Reports on Form 8-K**





Reports
      on Form 8-K





During
      the period ending March 31, 2006 and through the date of the filing of this
      Quarterly Report on Form 10-QSB; Blast filed the following Reports on Form
      8-K
      with the Securities and Exchange Commission on the dates indicated:





April
                26, 2006
            Blast
                Energy Services press release, dated April 20,
                2006.





Exhibits





31.1
            Certification
                of Principal Executive Officer pursuant to Section 30231.2
            Certification
                of Principal Accounting Officer pursuant to Section 30232.1
            Certification
                of Principal Executive Officer pursuant to Section 135032.2
            Certification
                of Principal Accounting Officer pursuant to Section
                1350





15


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.








**Blast
                Energy Services, Inc.**By:
            /s/
                David M. Adams, COODavid
                M. AdamsChief
                Operating OfficerPrincipal
                Executive OfficerDate:
            June
                2, 2006By:
            /s/
                John O’Keefe, CFOJohn
                O’KeefeChief
                Financial OfficerPrincipal
                Accounting OfficerDate:
            June
                2, 2006