UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549





FORM
10-Q





[X]
            Quarterly
      Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934For
      the quarterly period ended April 30, 2008[  ]
            Transition
      Report pursuant to 13 or 15(d) of the Securities Exchange Act of
      1934For
      the transition period   toComm   Commission  File
      Number: 000-53260





Best Energy Services,
Inc.


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




Nevada
            02-0789714(State
      or Other Jurisdiction of
              Incorporation
      or Organization)
            (I.R.S.
      Employer
              Identification
      No.)





1010
Lamar St., Suite 1200, Houston Texas  77002


(Address
of Principal Executive Offices)  (Zip Code)


(713)
933-2600


(Issuer’s
Telephone Number, including Area Code)




Securities
registered under Section 12(b) of the Exchange Act:None




Securities
registered under Section 12(g) of the Exchange Act:


Common
Stock, par value $0.001 per share


(Title of
Class)





Check
whether the issuer (1) 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 issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days [X] Yes [
] No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer,” “large accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act (check one):




Large
Accelerated filer  o Accelerated filer o  Non-Accelerated
filer o(Do not check if a smaller reporting company) 
Smaller Reporting Company x







State the
number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date: 20,216,366 common shares as of June 20,
2008.





Transitional
Small Business Disclosure Format (check one): Yes [ ] No [X]











BEST ENERGY SERVICES,
INC.







Table
of Contents


PagePART I.
      FINANCIAL INFORMATIONItem 1. Unaudited Consolidated Financial
      Statements
              3Unaudited
      Consolidated Balance Sheets as of April 30, 2008 and January 31,
      2007
              3Unaudited Consolidated Statements of
      Operations for the Three Months Ended April 30, 2008 and
      2007
              4Unaudited Consolidated Statements of Cash
      Flow for the Three Months Ended April 30, 2008 and 2007
              5Unaudited
      Consolidated Statement of Stockholders’ Equity for the Three Months Ended
      April 30, 2008
              6Notes to Unaudited Consolidated Financial
      Statements
              7Item 2. Management’s Discussion and Analysis of Financial
      Condition and Results of Operations
              21Item 3. Quantitative and Qualitative Disclosures About Market
      Risk
              31Item 4. Controls and
      Procedures
              31PART
      II. OTHER INFORMATIONItem 1. Legal Proceedings
              31Item
      1A. Risk Factors
              31Item 2. Unregistered Sales of Equity Securities and Use
      of Proceeds
              32Item 4. Submission of Matters to a Vote of
      Security Holders
              33Item
      5. Other Information
              33Item 6. Exhibits
              33Signatures
              34








PART I




Item
1. Financial Statements





Best
Energy Services , Inc.


Consolidated
Balance Sheets


April
30, 2008 and January 31, 2008


(Unaudited)





ASSETS
            
            April
      30, 2008
            
            
            January
      31, 2008Current
      assetsCash
            
            $
            96,264
            
            
            $
            5Accounts
      receivable, net of allowance for doubtful accounts
            
            
            3,069,032
            
            
            
            -Prepaid
      and other current assets
            
            
            242,030
            
            
            
            -Total
      current assets
            
            
            3,407,326
            
            
            
            5Property
      and equipment, net
            
            
            31,443,932
            
            
            
            -Deferred
      financing costs, net
            
            
            861,357
            
            
            
            -Goodwill
      and other intangible assets
            
            
            9,110,896
            
            
            
            -TOTAL
      ASSETS
            
            $
            44,823,511
            
            
            $
            5LIABILITIES
      AND STOCKHOLDER’S EQUITYCurrent
      liabilitiesAccounts
      payable and accrued liabilities
            
            $
            303,536
            
            
            $
            10,141Accrued
      officer compensation
            
            
            1,000,000
            
            
            
            22Due
      to related parties
            
            
            411,256
            
            
            
            -Current
      portion of loans payable
            
            
            1,397,856
            
            
            
            -Total
      current liabilities
            
            
            3,112,648
            
            
            
            10,163Loans
      payable
            
            
            20,100,470
            
            
            
            -Deferred
      income taxes
            
            
            9,305,996
            
            
            
            -Series
      A Convertible Redeemable Preferred Stock, at redemption
    value
            
            
            14,459,400
            
            
            
            -TOTAL
      LIABILITIES
            
            
            46,978,514
            
            
            
            10,163STOCKHOLDERS’
      DEFICITCommon
      stock, $0.001 par value per share; 90,000,000 shares authorized;
      20,216,366 and 9,685,000 shares issued and outstanding,
      respectively
            
            
            20,216
            
            
            
            9,685Additional
      paid-in capital
            
            
            2,348,894
            
            
            
            98,109Retained
      deficit
            
            
            (4,524,113
            )
            
            
            (117,952
            )Total
      stockholders’ deficit
            
            
            (2,155,003
            )
            
            
            (10,158
            )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            44,823,511
            
            
            $
            5


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





Best
Energy Services, Inc.


Consolidated
Statements of Operations


For
the three months ended April 30, 2008 and 2007


(Unaudited)





2008
            
            
            
            2007Revenues
            
            $
            4,285,728
            
            
            $
            -Costs
      and expenses:Cost
      of operations
            
            
            1,944,158
            
            
            
            -Depreciation
      and amortization
            
            
            719,521
            
            
            
            -General
      and administrative expense
            
            
            3,189,834
            
            
            
            12,146Total
      operating costs and expenses
            
            
            5,853,513
            
            
            
            12,146Net
      operating loss
            
            
            (1,567,785)
            
            
            
            (12,146
            )Other
      income (expense):Interest
      income
            
            
            19,111
            
            
            
            -Interest
      expense
            
            
            (2,857,487
            )
            
            
            -Loss
      before provision for income taxes
            
            
            (4,406,161
            )
            
            
            (12,146
            )Income
      tax
            
            
            -
            
            
            
            -Net
      loss from continuing operations
            
            
            (4,406,161
            )
            
            
            (12,146
            )Loss
      from discontinued operations
            
            
            -
            
            
            
            (4,455
            )Net
      loss
            
            $
            (4,406,161
            )
            
            $
            (16,601
            )Per
      share data:Loss
      from continuing operations – basic and diluted
            
            $
            (0.26
            )
            
            $
            (0.00
            )Discontinued
      operations – basic and diluted
            
            
            -
            
            
            
            (0.00
            )Net
      loss – basic and diluted
            
            $
            (0.26
            )
            
            $
            (0.00
            )Weighted
      average shares outstanding – basic and diluted
            
            
            16,956,702
            
            
            
            9,685,000


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





Best
Energy Services, Inc.


Consolidated
Statements of Cash Flow


For
the three months ended April 30, 2008 and 2007


(Unaudited)





2008
            
            
            2007Cash
      flow from operating activities:Net
      loss
            
            $
            (4,406,161
            )
            
            $
            (16,601
            )Adjustments
      to reconcile net loss to net cash provided (used) by operating
      activities:Depreciation
            
            
            719,521
            
            
            
            -Stock
      based compensation
            
            
            159,106
            
            
            
            -Non-cash
      interest expense
            
            
            2,677,114
            
            
            
            -Deferred
      income tax benefit
            
            
            -
            
            
            
            -Changes
      in operating assets and liabilities:Prepaid
      expenses
            
            
            (150,000
            )
            
            
            -Accounts
      receivable
            
            
            (989.132
            )
            
            
            -Accounts
      payable and accrued liabilities
            
            
            1,333,591
            
            
            
            (2,642
            )Related
      party payables
            
            
            (1,027,022
            )
            
            
            -Net
      cash used by operating activities, before discontinued
      operations
            
            
            (1,682,983
            )
            
            
            (19,243
            )Net
      cash flow from discontinued operations
            
            
            -
            
            
            
            (4,455
            )Net
      cash used by operating activities
            
            
            (1,682,983
            )
            
            
            (23,698
            )Cash
      flows from investing activities:Acquisition
      of businesses, net of cash acquired
            
            
            (29,947,643
            )
            
            
            -Capital
      expenditures, net
            
            
            (156,098
            )
            
            
            -Net
      cash used by investing activities
            
            
            (30,103,741
            )
            
            
            -Cash
      flows from financing activities:Proceeds
      from issuance of Term Loan
            
            
            5,850,000
            
            
            
            -Repayments
      of Term Loan
            
            
            (195,000
            )
            
            
            -Net
      borrowings under Revolving Advances
            
            
            15,330,122
            
            
            
            -Net
      repayments of other notes payable
            
            
            (29,153
            )
            
            
            -Proceeds
      from issuance of Units in private placement
            
            
            11,848,080
            
            
            
            -Payment
      of deferred financing costs
            
            
            (921,066
            )
            
            
            -Net
      cash provided by financing activities
            
            
            31,882,983
            
            
            
            -Increase
      (decrease) in cash cash and equivalents
            
            
            96,259
            
            
            
            (23,698
            )Cash
      and cash equivalents, beginning of period
            
            
            5
            
            
            
            108,054Cash
      and cash equivalents, end of period
            
            $
            96,264
            
            
            $
            84,356Supplemental
      disclosures of cash flow information:Cash
      paid for interest
            
            $
            179,250
            
            
            $
            -Cash
      paid for taxes
            
            $
            150,000
            
            
            $
            -Noncash
      investing and financing activities:Units
      issued in exchange for collateral agreements
            
            $
            2,500,000
            
            
            
            -Retirement
      of common shares
            
            
            6,080





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





Best
Energy Services, Inc.


Consolidated
Statement of Stockholders’ Equity


For
the three months ended April 30, 2008


(Unaudited)








Series
      A Convertible Redeemable Preferred Stock
              (included
      in liabilities)
            
            Common
      Stock
            
            Paid-in
            
            Accumulated
            
            Total
      Stockholders’Shares
            
            Amount
            
            Shares
            
            Amount
            
            Capital
            
            Deficit
            
            EquityBalance,
      January 31, 2008
            -
            
            $                -
            
            9,685,000
            
            $      9,685
            
            $        98,109
            
            $    (117,952
            )
            $       (10,158)Shares
      retired
            -
            
            -
            
            (6,080,000)
            
            (6,080)
            
            6,080
            
            -
            
            -Units
      issued for cash, net
            1,220,940
            
            12,209,400
            
            8,478,750
            
            8,478
            
            (369,798)
            
            -
            
            (361,320)Units
      issued for services, net
            225,000
            
            2,250,000
            
            1,562,500
            
            1,563
            
            (51,563)
            
            -
            
            (50,000)Shares
      issued for BWS acquisition
            -
            
            -
            
            46,744
            
            47
            
            99,953
            
            -
            
            100,000Shares
      issued for ARH acquisition
            -
            
            -
            
            6,200,000
            
            6,200
            
            2,265,300
            
            -
            
            2,271,500Shares
      issued for DSS acquisition
            -
            
            -
            
            23,372
            
            23
            
            49,977
            
            -
            
            50,000Shares
      issued for services
            -
            
            -
            
            300,000
            
            300
            
            74,700
            
            -
            
            75,000Share
      based compensation
            -
            
            -
            
            -
            
            -
            
            176,136
            
            -
            
            176,136Net loss
            -
            
            -
            
            -
            
            -
            
            -
            
            (4,406,161)
            
            (4,406,161)Balance,
      April 30, 2008
            1,445,940
            
            14,459,400
            
            20,216,366
            
            20,216
            
            2,348,894
            
            (4,524,113)
            
            (2,155,003)




















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





Best
Energy Services, Inc.


Notes
to Unaudited Consolidated Financial Statements


April
30, 2008




Note
1 - Organization and Basis of Presentation





Nature
of Business





Best
Energy Services, Inc. was incorporated in Nevada on October 31, 2006 as Hybrook
Resources Corp.  Hybrook was formed for the purpose of acquiring
exploration and development stage mineral properties.   On
February 14, 2008, Hybrook changed its name to Best Energy Services,
Inc.





We are an
energy services company engaged in well service, drilling services and related
complimentary activities.   We own a total of 25 Workover rigs
and 12 drilling rigs, and we conduct our workover, completion and drilling
services in the Rocky Mountain and Mid-Continent regions of the United
States.  We also provide housing accommodations to the oil and gas
drilling industry principally in Texas.




Since
inception on October 31, 2006 through our year end January 31, 2008, as Hybrook
Resources Corp., we were a development stage company with an option to purchase
an 85% interest in a mineral claim in British Columbia.  We did not
exercise our option and no minerals have been discovered




On
February 14, 2008, we completed the acquisition of two companies, Best Well
Service, Inc. (“BWS”), a Kansas corporation, and Bob Beeman Drilling Company
(“BBD”), a Utah corporation.  On February 27, 2008, we acquired
certain assets from American Rig Housing, Inc. (“ARH”), Robert L. Beeman d/b/a
BB Drilling Co. (“BB Drilling”), and Drill Site Services & Investments, LLC
(“DSS”).




As a
result of these acquisitions, we operate in one segment, oilfield services,
which includes well services, drilling services and the housing accommodations
sectors.




Reclassifications




Certain
prior year amounts have been reclassified to conform to the current year
presentation.





Basis
of Presentation and Principles of Consolidation




Our
unaudited consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission as they pertain to Form 10-Q.  Accordingly, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such rules and
regulations.  The unaudited financial statements reflect all adjustments
which are, in the opinion of management, necessary for a fair presentation of
the financial position and results of operations for the interim periods on a
basis consistent with the annual audited financial statements.  All such
adjustments are of a normal recurring nature.  The Company believes that
the disclosures contained herein are adequate to make the information presented
not misleading.  The consolidated balance sheet at January 31, 2008, as
presented herein, is derived from the January 31, 2008 audited consolidated
financial statements.  These interim financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company’s Annual Report on Form 10-K for the year ended
January 31, 2008.  The results of operations for interim periods are
not necessarily indicative of the results to be expected for the full
year.




These
consolidated financial statements include the accounts of Best Energy Services,
Inc. and its wholly-owned subsidiaries Best Well Service, Inc and Bob Beeman
Drilling Company.  All significant inter-company balances and
transactions have been eliminated.




Note
2-Summary of Significant Accounting Policies




Use
of Estimates




The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.




Cash
and Cash Equivalents




We
consider all highly liquid investments with maturities from date of purchase of
three months or less to be cash equivalents. Cash and cash equivalents consist
of cash on deposit with domestic banks and, at times, may exceed federally
insured limits.  As of April 30, 2008, there was no cash in excess of
federally insured limits.




Accounts
Receivable




We
provide for an allowance for doubtful accounts on trade receivables based on
historical collection experience and a specific review of each customer’s trade
receivable balance.  Based on these factors we have established an
allowance for doubtful accounts of $23,764 at April 30, 2008.  No
accounts were written off during the three months ended April 30, 2008 and 2007,
respectively.





Credit
Risk




We are
subject to credit risk relative to its trade receivables. However, credit risk
with respect to trade receivables is minimized due to the nature of customer
base.




Property
and Equipment




Property
and equipment are stated at cost, net of accumulated depreciation. Depreciation
and amortization is computed using the straight-line method over the estimated
useful lives of the respective assets, generally four to ten years. Leasehold
improvements are amortized on a straight-line basis over the shorter of the
assets’ useful lives or lease terms.




Classification
            Estimated
      Useful LifeWorkover
      rigs and equipment
            10
      yearsVehicles
            5
      yearsHeavy
      trucks and trailers
            7
      yearsLeasehold
      improvements
            5
      yearsOffice
      equipment
            3
      years





The cost
of asset additions and improvements that extend the useful lives of property and
equipment are capitalized.  Routine maintenance and repair items are
charged to current operations. The original cost and accumulated depreciation of
asset dispositions are removed from the accounts and any gain or loss is
reflected in the statement of operations in the period of
disposition.




Impairment
of Long-Lived Assets




Long-lived
assets, including property and equipment, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
long-lived asset may not be recoverable. The carrying amount of a long-lived
asset is not recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset. If it is
determined that an impairment loss has occurred, the loss is measured as the
amount by which the carrying amount of the long-lived asset exceeds its fair
value.





Financial
Instruments




The
carrying value of our financial instruments, consisting of cash, recoverable
advances, accounts payable and accrued liabilities and due to related party
approximate their fair value due to the short maturity of such
instruments.  Unless otherwise noted, it is management’s opinion that
Best Energy is not exposed to significant interest, exchange or credit risks
arising from these financial instruments.




Income
Taxes




We use
the asset and liability method of accounting for income taxes pursuant to FAS
No. 109 “Accounting for Income
Taxes”.  Under the asset and liability method of FAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statements carrying amounts of existing assets and liabilities and loss
carryforwards and their respective tax bases.  Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled.




Revenue
Recognition




We
recognize service revenue based on rate agreements in effect with customers as
the service is provided and realization is assured.  We recognize
equipment sales revenue when risk of loss has transferred to the purchaser and
collectability is reasonably assured.





Stock
based compensation




We
account for stock based compensation in accordance with SFAS No. 123
(R),Share—Based Payment, which
establishes accounting for stock-based payment transactions for employee
services and goods and services received from non-employees.  Under the
provisions of SFAS No. 123(R), stock-based compensation cost is measured at
the date of grant, based on the calculated fair value of the award, and is
recognized as expense over the employee’s or non-employee’s service period,
which is generally the vesting period of the equity grant.




Income
(Loss) per Share




We report
basic loss per share in accordance with FAS No. 128, “Earnings per
Share”.  Basic loss per share is computed using the weighted average
number of shares outstanding during the period.  Fully diluted
earnings (loss) per share is computed similar to basic income (loss) per share
except that the denominator is increased to include the number of common stock
equivalents (primarily outstanding options and warrants).  Common
stock equivalents represent the dilutive effect of the assumed exercise of the
outstanding stock options and warrants, using the treasury stock method, at
either the beginning of the respective period presented or the date of issuance,
whichever is later, and only if the common stock equivalents are considered
dilutive based upon Best Energy’s net income (loss) position at the calculation
date.  Diluted loss per share has not been provided as it is
antidilutive.




Recent
Accounting Pronouncements




We do not
believe that the adoption of recent accounting pronouncements will have a
material effect on our consolidated results of operations, financial position,
or cash flows.




Note
3- Business Combinations and Acquisitions





Best
Well Service, Inc.





On
February 14, 2008, we acquired BWS by purchasing all of its issued and
outstanding stock from its sole shareholder, Tony Bruce, for a total purchase
price of $20,600,000, payable as follows: (i) a note for $20,000,000 was issued
to the seller at closing which was paid off shortly thereafter through funding
provided by our Credit Facility more fully described in Note 5 below; (ii) funds
in the amount of $500,000 were delivered to an escrow agent to be held as
security for seller’s indemnification obligations under the acquisition
agreement for a period of six months; and (iii) common stock valued at $100,000
based on a 10 day volume weighted average price, commencing with the first day
of trading (46,744 shares). The Acquisition has been accounted for using the
purchase method in accordance with SFAS No. 141,Business Combinations, which
has resulted in the recognition of goodwill and other intangibles in the
Company’s consolidated financial statements.





We have
arranged to obtain additional information regarding certain asset valuations
related to this acquisition, thus, the allocation of the purchase price is
preliminary and subject  to refinement.





We have
included the operating results of BWS in our consolidated financial statements
from the date of acquisition.





As part
of this transaction, we have entered into a three year lease with Mr. Bruce for
an equipment yard located in Liberal, Kansas at $3,500 per month plus related
expenses that we anticipate will additionally cost approximately $1,500 per
month over the term of the lease.  BWS continues to operate as our
wholly-owned subsidiary.  In addition, as part of the Acquisition
Agreement, we also entered into a one year employment agreement with Mr. Bruce
under which he will serve as a Vice President of our Central Division for an
annual salary of $150,000.  Mr. Bruce has also agreed to join our
board of directors.  Prior to the execution of the foregoing
agreements with Mr. Bruce, there was no material relationship between us and Mr.
Bruce.





Our
acquisition of BWS brings us a strong footprint in the hydrocarbon rich Hugoton
basin. BWS operates 25 well service rigs in the Mid-Continent region of the
United States.  BWS has distinguished itself over the years in its
service to major oil companies and large independents, as well as an employee
retention history that we believe is among the best in the
industry.




Bob
Beeman Drilling Company




On
February 14, 2008, we acquired BBD by acquiring all of its issued and
outstanding stock from its sole shareholder, Robert L. Beeman, for a total
purchase price of $4,750,000, payable as follows: (i) a note for $4,050,000 was
issued to Mr. Beeman at closing which was paid off shortly thereafter through
funding provided by our Credit Facility more fully described in Note 5 below;
(ii) $200,000 in a previously paid deposit; and (iii) funds in the amount of
$500,000 were delivered to an escrow agent to be held as security for Mr.
Beeman’s indemnification obligations under the acquisition agreement for a
period of six months.   The Acquisition has been accounted for
using the purchase method in accordance with SFAS No. 141,Business Combinations, which
has resulted in the recognition of goodwill and other Intangibles in the
Company’s consolidated financial statements.





We have
included the operating results of BBD’s in our consolidated financial statements
from the date of acquisition.





As part
of this transaction, we have entered into a three year lease with Mr. Beeman for
an equipment yard located in Moab, Utah at $6,000 per month plus related
expenses that we anticipate will additionally cost approximately $1,500 per
month over the term of the lease.  BBD continues to operate as our
wholly-owned subsidiary.  Prior to the execution of the foregoing
agreements with Mr. Beeman, there was no material relationship between us and
Mr. Beeman.





Our
acquisition of BBD and the assets of its affiliates described below established
us in three separate markets, which currently are in the Rocky Mountain
region:




·  Core hole
drilling for delineating mineral deposits;




·  Water
well drilling in five states; and




·  Oil and
gas drilling capability.




BBD
operates 12 drilling and core rigs in the Rocky Mountain region of the
United States.  We believe that the BBD acquisition helps establish
our presence with these three customer bases, but we also have a large surplus
of underutilized equipment which we believe can be redeployed which would
increase utilization rates and cash flows to us.




The
following table summarizes the estimated fair values of the assets acquired and
liabilities assumed from BWS and BBD at the date of acquisition. We are in the
process of obtaining third-party valuations of certain intangible assets; thus,
the allocation of the purchase price is subject to refinement.





BWS
            BBDAccounts
      receivable
            $       500,000
            $                 -Property
      and equipment
            20,710,670
            8,098,499Goodwill
            6,692,728
            -Total
      assets acquired
            27,903,398
            8,098,499Vehicle
      notes payable
            (424,952)
            -Deferred
      income tax
            (6,251,175)
            (2,714,603)Total
      liabilities assumed
            (6,676,127)
            (2,714,603)Net
      assets acquired
            $  22,227,271
            $   5,383,896





Deferred
income tax liabilities were created in accordance with FASB Interpretation No.
4, Applicability of FASB
Statement No. 2 to Business Combinations Accounted for by the Purchase
Method.





Asset
Purchases





On
February 27, 2008, we acquired certain assets of ARH in exchange for 6,200,000
shares of our common stock.  These assets consist of oil field rig houses,
motor vehicles, rolling stock and related tools and equipment.  We assumed
no liabilities of ARH in connection with this transaction.  We have valued
this transaction at $2,271,500 based on a third-party appraisal of the
assets.  ARH is owned and controlled by Mr. Larry Hargrave, our chief
executive officer and a director.  As part of this transaction, we have
entered into a three year lease with Mr. Hargrave for an equipment yard located
in Cleveland, Texas at $6,000 per month plus related expenses that we anticipate
will additionally cost approximately $1,500 per month over the term of the
lease.  We intend to continue the operations as a division, using the name
American Rig Housing.  In addition, ARH has agreed to not compete with
us for a period of five years and to not solicit our customers, suppliers, or
employees for a period of three years.





Our
acquisition of the assets of ARH established our presence in the fabrication
and/or rental of crew quarters for the drilling sector. ARH provides living
quarters, field offices and ancillary equipment to support remote field
operations.  Our operations in this division are located near our
corporate headquarters in Houston, Texas.




Also on
February 27, 2008, we acquired certain assets of BB Drilling from its owner,
Robert L. Beeman, for a cash purchase price of $2,000,000, and certain assets of
Drill Site Services (“DSS”) from its owner, Todd Beeman, for a purchase price of
$1,000,000 paid in cash plus common stock valued at $50,000 based on a 10-day
volume weighted average price, commencing with the first day of trading (23,372
shares).  These assets consist of drilling rigs, motor vehicles, rolling
stock, pumps and related tools and equipment. We assumed no liabilities of BB
Drilling or DSS in connection with this transaction.  We contributed the
assets acquired from BB Drilling and DSS into BBD which will utilize them in its
operations.  As part of the transaction, the former owners have agreed
to restrict the disclosure of confidential information pertaining to our
business, and will not compete with our business or solicit our customers,
suppliers or employees for a period of five years.  We have entered
into an employment agreement with Todd Beeman to act as our General Manager of
Western Operations for an annual salary of $150,000.





Note
4 - Property and equipment, net





Property
and equipment consists of the following at April 30, 2008:





Rigs,
      pumps, compressors, rig houses and related equipment
            $  28,788,614Heavy
      trucks, trailers, dirt equipment
            1,805,837Vehicles
      and other equipment
            1,423,501Office
      and computer equipment
            47,914Leasehold
      improvements
            97,587Total
      property and equipment
            32,163,453Less:
      accumulated depreciation
            (719,521)Property
      and equipment, net
            $  31,443,932





Depreciation
expense was $719,521 for the three months ended April 30, 2008.  No
depreciation expense was recognized during the three months ended April 30,
2007.





Note
5 – Loans payable





The
following table summarizes loans payable as of April 30,
2008:





Revolving
      advances
            
            $    15,447,527Term
      loan
            
            5,655,000Vehicle
      notes payable
            
            395,799Total
      loans payable
            
            21,498,326Current
      portion of loans payable
            
            1,397,856Loans
      payable, net of current portion
            
            $   20,100,470




On
February 14, 2008, we entered into a Revolving Credit, Term Loan and Security
Agreement with PNC Bank, N.A. (“Credit Facility”) to borrow up to $25,000,000 at
approximately prime plus one percent. The revolving credit portion of the debt,
equal to $19,150,000, may be borrowed and re-borrowed until maturity on February
14, 2012. Monies borrowed against the term loan portion of the total debt
agreement, equal to $5,850,000, are amortized and must be repaid on a 60 month
amortization schedule, with an annual 25% recapture of excess cash flow applied
to the principal balance.  The Credit Facility is secured by all of
the assets and equipment of BWS and BBD and is due on February 14,
2012.





In order
to fund our acquisition of BWS and BBD we drew $15,114,627 on the Revolving
Advances and $2,850,000 on the Term Loan.  We drew and additional
$3,000,000 in order to close the acquisition of BB Drilling and
DSS.  We drew on the Revolving Advances as necessary for working
capital purposes and repaid principal on the note will collections on accounts
receivable.





We have
entered into various note agreements for the purchase of vehicles used in our
business.  The notes bear interest at rates between 1.90% and 9.10%,
require monthly payments of principal and interest and are generally secured by
the specific vehicle being financed.  The notes typically have
original terms of three to four years.  The majority of these notes
were assumed by us in the acquisition of BWS.





Future
minimum payments under existing notes payable are as follows:





For
      the twelve months ending April 30,2009
            $ 1,397,8562010
            1,303,4362011
            1,204,5072012
            16,617,5272013
            975,000








Note 6 - Stock Options and
Warrants





Stock
Options




Incentive
and non-qualified stock options issued to directors, officers, employees and
consultants are issued at an exercise price equal to or greater than the fair
market value of the stock at the date of grant.  The stock options vest
over a period from zero to one year, and expire five years from the date of
grant.  Compensation cost related to stock options is recognized on a
straight-line basis over the vesting or service period and is net of
forfeitures.




The fair
value of each stock option granted is estimated on the date of grant using a
Black-Scholes option pricing model.  The following table presents the
assumptions used in the option pricing model for options granted during the
three months ended April 30, 2008.  The expected life of the options
represents the period of time the options are expected to be outstanding. 
The expected term of options granted was derived based on a weighting
between the average midpoint between vesting and the contractual
term.  Our expected volatility is based on the historical volatility of
comparable companies for a period approximating the expected life, due to the
limited trading history of our common stock.  The risk-free interest rate
is based on the observed U.S.  Treasury yield curve in effect at the time
the options were granted.  The dividend yield is based on the fact the
Company does not anticipate paying any dividends on common stock in the near
term.




Expected
      life (years)
            
            2.5
      - 3.0
            
            -Risk-free
      interest rate
            
            2.23
      - 2.81
            %Volatility
            
            120
            %Dividend
      yield
            
            0
            %





A summary
of our stock option activity and related information is presented
below:




Weighted—AverageNumber of
            
            Exercise PriceOptions
            
            Per OptionOptions
      outstanding at January 31, 2008
            
            —
            
            
            —Granted
            
            1,350,000
            
            $
            0.39Exercised
            
            —
            
            
            —Forfeited
            
            —
            
            
            —Options
      outstanding at April 30, 2008
            
            1,350,000
            
            $
            0.39Options
      vested and exercisable at April 30, 2008
            
            450,000
            
            $
            0.16





During
the three months ended April 30, 2008, 1,350,000 options were granted with a
weighted average grant date fair value of $0.20.  During the three months
ended April 30, 2008 no options were exercised, forfeited or expired.  As
of April 30, 2008, there was approximately $124,000 of total unrecognized
compensation cost related to non-vested stock options which is expected to be
recognized over a weighted-average period of approximately 10
months.





The
aggregate intrinsic value of stock options outstanding at April 30, 2008
was approximately $2,178,000, of which approximately $828,000 relates to awards
vested and exercisable.  The intrinsic value for stock options outstanding
is calculated as the amount by which the quoted price of our common stock as of
April 30, 2008 exceeds the exercise price of the option.




Warrants




On March
5, 2008, we issued warrants to purchase 200,000 shares of common stock to Elite
Financial Communications Group, LLC, in partial payment for services to be
provided under a one-year services agreement.  The warrants expire two
years after registration of the underlying shares of common stock and are
exercisable in four tranches of 50,000 shares each at prices of $0.20, $0.24,
$0.28, and $0.32 per share, subject to certain adjustments.  We valued
these warrants using the Black-Scholes option pricing model with the following
assumptions: stock price on the grant date of $0.25, expected life of two years,
expected volatility of 120%, risk-free interest rate of 2.59%, and expected
dividend rate of 0.00.  The total value of the options of $30,436 is
being recognized over the vesting period of nine months.





Note
7 - Stockholders’ Equity





Share
retirement





Prior to
the closing of the acquisition of BWS and BBD, certain stockholders returned a
total of 6,080,000 shares common stock to the Company which were
retired.





Private
placement





During
the three months ended April 30, 2008, we completed a private placement of
13,566 Units at a price of $1,000 per unit.  Each Unit consists of 90
shares of Series A Convertible Redeemable Preferred Stock and 625 shares of
common stock.  As a part of the private placement, we have agreed to
use our best efforts to file a registration statement for the underlying shares
of common stock with liquidated damages if we did not file within 90 days of the
closing of the offering, or June 29, 2008.  We filed the required
registration statement on June 11, 2008.





The
Series A Preferred Stock has a stated face value of $10 per share, which shall
be redeemed by the Company using not less than 25% of its net income after tax
each year. The unredeemed portion of the face value of the Series A Preferred
Stock will receive dividends at an annual rate of 7%, payable quarterly in kind
at the then-current market price or in cash at the Company’s option. The
unredeemed face value of the Series A Preferred may be converted into common
stock (i) by the holder at a conversion price of $4.00 per share or (ii) by the
Company at a conversion price of $4.00 per share in the event the Company’s
common stock closes at a market price of $9.60 per share or higher for more than
twenty consecutive trading days.  Because the Series A Preferred Stock
is mandatorily redeemable it has been included in liabilities on the balance and
has been recorded at its redemption value at April 30, 2008. We evaluated the
terms of the Series A Preferred Stock and determined that it is not a derivative
in accordance with EITF 00-19.





In
addition, we issued 2,500 Units in exchange for an investor posting cash
collateral in the amount of $2,500,000 with our lender to ensure that we had
adequate available credit to complete the acquisitions of BWS, BBD and the
acquisition of assets from ARH, BB Drilling and DSS.  The value of
these Units was included in deferred financing costs and amortized over the
period in which the additional collateral was available.  As of April
30, 2008, the collateral has been released and returned to the investor or is
unused, pending release.




In
connection with the private placement, we paid cash commissions of 12% and
issued warrants to purchase a total of 1,507 Units, each consisting of 90 shares
of Series A Preferred Stock and 625 shares of common stock. The warrants
expire on December 24, 2013 and are exercisable at a price of $1,000 per unit,
subject to certain adjustments.




Our
common stock was first quoted under the symbol “HYBK” on the OTC Bulletin Board
sponsored by the NASD during 2007, but there had initially been no trades made
in our common stock.  On February 27, 2008, our symbol became
“BEYS.”  The first trade of our common stock on the OTC Bulletin Board
occurred on March 18, 2008.





We have
not paid or declared any dividends on our common stock and currently intend to
retain earnings to fund our working capital needs and growth opportunities. Any
future dividends on common stock will be at the discretion of our board of
directors after taking into account various factors it deems relevant, including
our financial condition and performance, cash needs, income tax consequences and
the restrictions Nevada and other applicable laws and our credit facilities then
impose. Our debt arrangements include provisions that generally prohibit us from
paying dividends, other than dividends in kind, on our preferred
stock.





Shares
issued to employees





On
February 22, 2008, we issued 150,000 shares of common stock to each of James
Carroll and Charles Daniels in accordance with their employment
agreements.  These shares were valued at a total of $75,000 based on
the market value of the stock on the date of issuance.  This amount
was recorded in prepaid expenses and is being amortized over the one year term
of each of the agreements.





Note
8 - Income Tax





We have
recorded a deferred tax liability in the amount of $9,305,996 which represents
the difference in the tax basis and book basis of property and equipment
acquired in the BWS and BBD acquisitions.





As of
April 30, 2008, we have net operating losses in the amount of approximately
$4,000,000 which will begin to expire in the year 2028.  We have a
deferred tax asset related to the net operating losses which has been reduced to
zero by a valuation allowance due to our uncertainty of our ability to realize
that asset.





Note
9 - Related Party Transactions





On
February 14, 2008, we purchased all of the issued and outstanding stock of BWS
from Mr. Tony Bruce for $20,600,000.  Simultaneously, we further
agreed to lease real property necessary to run BWS’ operations from Mr. Bruce
for a period of three years for $3,500 per month in base rent. Immediately after
the share purchase and lease transactions closed, we entered into a one year
employment agreement with Mr. Bruce at an annual salary of $150,000 and Mr.
Bruce joined our board of directors.




On
February 27, 2008, we acquired all of the equipment, assets and operations of
ARH and issued 6,200,000 shares of our common stock.  Mr. Hargrave was
the sole beneficial owner of ARH and is our CEO and
President.  Simultaneously, we further agreed to lease real property
necessary to run our rig housing operations from Mr. Hargrave for a period of
three years for $6,000 per month in base rent.  On March 5, 2008, we
entered into an employment agreement Mr. Hargrave at an initial base salary of
$150,000.




On
February 14, 2008, we issued 1,562,500 shares of common stock and 225,000 shares
of Series A Preferred Stock to Morris Gad in conjunction with his pledge of
assets made pursuant to a cash collateral agreement between Morris Gad, the
Company and PNC Bank.  In addition, Morris Gad purchased 600 Units for
cash.  David Gad, our director, is the son of Morris Gad.




One of
our directors, Mark Harrington, was formerly affiliated with Andrew Garrett,
Inc. which acted as our placement agent in the private placement completed in
March 2008.  Mr. Harrington acted as a consultant to Andrew Garrett in
the transaction.  In addition, Joel Gold, one of our directors, is
Director of Investment Banking at Andrew Garrett.  We paid Andrew
Garrett as placement agent a total of $2,330,420 in commissions, management
fees, and unaccountable expenses for all financings, both equity and debt,
related to our acquisitions.  We also issued 112,500 common shares as
placement agent shares and 1,507 Unit Warrants.







Note
10 - Subsequent Event





On May
30, 2008, our Board of Directors declared a dividend in an aggregate amount
equal to 0.0875 per share to be paid in kind, except that fractional shares to
be issued in payment shall instead be paid in cash at the rate of $10.00 per
share to the holders of all Series A Preferred Stock of the Company unless
prohibited by PNC Bank under the terms of our credit facility, in which case
fractional shares shall be rounded up or down to the next whole
number.  The record date for the Dividend shall be April 1, 2008 and
the payment date for the dividend shall be June 30, 2008





Note
11 – Segment information




Our
operations are both product and Services based, and the reportable operating
segments presented below include our well services operations, drilling services
operations and construction of  portable Rig Housing for rig sites
..
 
  Our
reportable segment information is as follows:
 ReportableWell
      Services Division
              Drilling
      Services
              
              Portable
      Rig Housing
                Construction
              segmentsRevenues
      from external customers:Three
      months ended April 30,2008
              $
              3,873,798
              $
              301,087
              
              
              $
              110,842
              
              $
              4,285,727Gross
      profit (Loss):Three
      months ended April 30,2008
              $
              2,407,996
              $
              (101,934)
              
              
              $
              35,508
              
              $
              2,341,570
 
 *Segment
Information is not shown for 2007; Business were not owned before
2008.
 
 The
following table reconciles gross profit from reportable segments to
our
 consolidated
income from continuing operations before income taxes:
 2008Gross
      profit from reportable segments
              2,341,570General
      and administrative expenses
              (3,080,626
              )Other
      operating expense
              (719,521)
              )Operating
      Loss
              (1,458,577)Interest
      expense
              (2,838,376)
              )Net
      Loss from continuing operations before income taxes
              (4,296,953)


SELECTED
UNAUDITED PRO FORMA CONDENSED


CONSOLIDATED
FINANCIAL INFORMATION





The
following unaudited pro forma condensed consolidated statements of operations
and related notes are presented to show the pro forma effects of the acquisition
of BWS and BBD.  The pro forma condensed consolidated statement of
operations for the three months ended April 30, 2008 and 2007 is presented to
show income from continuing operations as if the BWS and BBD acquisitions
occurred as of the beginning of the period.





Pro forma
data are based on assumptions and include adjustments as explained in the notes
to the unaudited pro forma condensed consolidated financial statements. The pro
forma data are not necessarily indicative of the financial results that would
have been attained had the acquisition of BWS and BBD occurred on the dates
referenced above and should not be viewed as indicative of operations in future
periods. The unaudited pro forma condensed consolidated statements of operations
should be read in conjunction with notes thereto, the financial statements as of
and for the three months ended April 30, 2008 for Best Energy Services, Inc.
included in this Form 10-Q, the financial statements as of and for the year
ended January 31, 2008 for Best Energy Services, Inc. as filed on Form 10-K on
May 2, 2008 and the financial statements as of and for the year ended December
31, 2007 for BWS and BBD included in Form 8-K/A filed February 14,
2008.











UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS


For the
three months ended April 30, 2008







Actual
      for the three months ended April 30, 2008
              Actual
      for the period
      from        February 1, 2008
      through       February 14,
      2008
              
              Pro
      Forma
              
              Pro
      FormaBest
      Energy
              BWS
              BBD
              
              Adjustments
              
              ConsolidatedRevenues
              $   4,285,728
              $       775,498
              $        10,000
              
              $              -
              
              $     5,071,226Operating
      expenses:Cost
      of operations
              1,944,158
              142,156
              37,068
              
              -
              
              2,123,382Depreciation
      and amortization
              719,521
              45,610
              9,433
              
              88,861
              (a)
              863,425General
      and administrative expense
              3,189,834
              50,194
              6,273
              
              (18,218)
              (b)
              3,228,083Total
      operating expenses
              5,853,513
              237,960
              52,774
              
              
              
              6,214,890Operating
      income (loss)
              (1,567,785)
              537,538
              (42,774)
              
              
              
              (1,143,664)Other
      income (expense):Investment
      income (loss)
              -
              -
              444
              
              (444)
              (c
      )
              -Interest
      income
              19,111
              1,389
              -
              
              -
              
              20,500Interest
      expense
              (2,857,487)
              400
              -
              
              (58,702)
              (d)
              (2,915,789)Total
      other income (expense)
              (2,838,376)
              1,789
              444
              
              
              
              (2,895,289)Income
      (loss) before income taxes
              (4,406,161)
              539,327
              (42,330)
              
              
              
              (4,038,953)Income
      tax (expense) recovery
              -
              188,764
              (14,816)
              
              
              
              173,949Net
      income (loss)
              (4,406,161)
              728,091
              (57,146)
              
              
              
              (3,865,004)Net
      income per share:Basic
      and diluted
              $          (0.26)
              
              
              
              
              
              $            (0.19)Weighted
      average shares outstanding:Basic
      and diluted
              16,956,702
              
              
              
              3,259,664
              
              20,216,366





See notes
to unaudited pro forma condensed consolidated financial
statements.








UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS


For the
three months ended April 30, 2007







Actual
      for the three months ended April 30, 2007
              Actual
      for the three months ended March 31, 2007
              
              Pro
      Forma
              
              Pro
      FormaBest
      Energy
              BWS
              BBD
              
              Adjustments
              
              ConsolidatedRevenues
              $                       -
              $            4,116,711
              $           190,279
              
              $                     -
              
              $          4,306,990Operating
      expenses:Cost
      of operations
              -
              1,250,195
              277,327
              
              -
              
              1,527,522Depreciation
      and amortization
              -
              273,661
              62,322
              
              525,000
              (a)
              860,983General
      and administrative expense
              12,146
              917,491
              344,750
              
              (91,091)
              (b)
              1,183,296Total
      operating expenses
              12,146
              2,441,347
              684,399
              
              
              
              3,571,801Operating
      income (loss)
              (12,146)
              1,675,364
              (494,120)
              
              
              
              735,189Other
      income (expense):Other
      income (expense)
              -
              -
              25,000
              
              -
              
              25,000Investment
      income (loss)
              -
              -
              403,797
              
              (403,797)
              (c
      )
              -Interest
      income
              -
              33,345
              6,004
              
              (33,345)
              (c
      )
              6,004Interest
      expense
              -
              (1,588)
              -
              
              (2,915,789)
              (d)
              (2,917,377)Total
      other income (expense)
              -
              31,757
              434,801
              
              
              
              (2,886,373)Income
      (loss) before income taxes
              (12,146)
              1,707,121
              (59,319)
              
              
              
              (2,151,184)Income
      tax (expense) recovery
              -
              597,492
              (20,762)
              
              
              
              576,731Net
      income (loss) from continuing operations
              (12,146)
              2,304,613
              (80,081)
              
              
              
              (1,574,453)Net
      income per share:Basic
      and diluted
              $                (0.00)
              
              
              
              
              
              $                   (0.08)Weighted
      average shares outstanding:Basic
      and diluted
              9,685,000
              
              
              
              10,531,366
              
              20,216,366


See notes
to unaudited pro forma condensed consolidated financial
statements.








BEST
ENERGY SERVICES, INC.


NOTES
TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS





1.
Pro Forma Adjustments:





The
unaudited pro forma condensed consolidated financial statements reflect the
following adjustments:








(a)
            Record
      incremental depreciation on property and equipment as a result of the
      acquisition of BWS and BBD.(b)
            Eliminate
      related party expenses incurred by BWS and BBD which will not be incurred
      acquisitions.(c)
            Reverse
      investment income (loss) as trading securities will not be included in
      acquisition of BWS and BBD.(d)
            Record
      interest expense on Credit Facility and amortization of deferred financing
      costs.











ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




Statements
we make in the following discussion that express a belief, expectation or
intention, as well as those that are not historical fact, are forward-looking
statements that are subject to risks, uncertainties and assumptions. Our actual
results, performance or achievements, or industry results, could differ
materially from those we express in the following discussion as a result of a
variety of factors, including general economic and business conditions and
industry trends, the continued strength or weakness of the contract land
drilling and well service industry in the geographic areas in which we operate,
decisions about onshore exploration and development projects to be made by oil
and gas companies, the highly competitive nature of our business, the
availability, terms and deployment of capital, the availability of qualified
personnel, and changes in, or our failure or inability to comply with,
government regulations, including those relating to the environment. We have
discussed many of these factors elsewhere in this report, including under the
headings “Disclosure Regarding Forward-Looking Statements” below, in
this Item 2. These factors are not necessarily all the important factors
that could affect us. Unpredictable or unknown factors we have not discussed in
this report could also have material adverse effects on actual results of
matters that are the subject of our forward-looking statements. All
forward-looking statements speak only as of the date on which they are made
and we undertake no duty to update or revise any forward-looking statements. We
advise our shareholders that they should (1) be aware that important
factors not referred to above could affect the accuracy of our forward-looking
statements and (2) use caution and common sense when considering our
forward-looking statements.




Company
Overview




You
should read the following discussion and analysis together with our consolidated
financial statements and notes thereto and the discussion in Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” included in our Annual Report on Form 10-K for the year ended
January 31, 2008.  The following information contains forward-looking
statements that involve risks, uncertainties and assumptions.  Should one
or more of these risks or uncertainties materialize, our actual results may
differ from those expressed or implied by the forward-looking statements. 
See “Disclosure Regarding Forward-Looking Statements” below.





General




We are an
energy services company engaged in well service, drilling services and related
complimentary activities.   We own a total of 25 workover rigs
and 12 drilling rigs, and we conduct our well service and drilling services in
the Rocky Mountain and Mid-Continent regions of the United
States.  We also provide housing accommodations to the oil and gas
drilling industry principally in Texas.




Best
Energy Services, Inc. was incorporated in Nevada on October 31, 2006 as Hybrook
Resources Corp.  Hybrook was formed for the purpose of acquiring
exploration and development stage mineral properties.   On
February 14, 2008, Hybrook changed its name to Best Energy Services,
Inc.





Since
inception on October 31, 2006 through February 14, 2008, as Hybrook Resources
Corp., we were a development stage company with an option to purchase an 85%
interest in a mineral claim in British Columbia.  We did not exercise
our option and no minerals have been discovered.




On
February 14, 2008, we completed the acquisition of two companies, Best Well
Service, Inc. (“BWS”), a Kansas corporation, and Bob Beeman Drilling Company
(“BBD”), a Utah corporation.  On February 27, 2008, we acquired
certain assets from American Rig Housing, Inc. (“ARH”), Robert L. Beeman d/b/a
BB Drilling Co. (“BB Drilling”), and Drill Site Services & Investments, LLC
(“DSS”).




As a
result of these acquisitions, we operate in one industry segment, oilfield
services, which includes well service, drilling services and the housing
accommodations sectors.




In the
Well Services Division, our acquisition of BWS brings us a strong footprint in
the hydrocarbon rich Hugoton basin. BWS has distinguished itself over the years
in its service to major oil companies and large independents, as well as an
employee retention history that is among the best in the industry.




In the
Drilling Services Division, our acquisition of BBD, and the assets of its
affiliates established us in three separate markets, which currently are in the
Rocky Mountain region:




·Core
      hole drilling in minerals;





·Water
      well drilling in five states; and




·Oil
      and gas drilling capability.




We
believe that the BBD acquisition helps establish our presence with these three
customer bases, but we also have a large surplus of underutilized equipment
which we believe can be redeployed which would increase utilization rates and
cash flows to us.





In the
Housing Accommodations Division, our acquisition of the assets of ARH
established our presence in the fabrication and/or rental of crew quarters for
the drilling sector. Our operations in this division are located near our
corporate headquarters in Houston, Texas.




Significant
Developments





2008
Acquisitions




On
February 14, 2008,we acquired BWS by purchasing all of its issued and
outstanding stock from its sole shareholder, Tony Bruce, for a total purchase
price of $20,600,000, payable as follows: (i) a note for $20,000,000 was issued
to the seller at closing which was paid off shortly thereafter through funding
provided by our Credit Facility; (ii) funds in the amount of $500,000 were
delivered to an escrow agent to be held as security for seller’s indemnification
obligations under the acquisition agreement for a period of six months; and
(iii) we agreed to issue to Mr. Bruce common stock valued at $100,000 based on a
10 day volume weighted average price, commencing with the first day of trading
(46,744 shares).  As part of this transaction, we have entered into a
three year lease with Mr. Bruce for an equipment yard located in Liberal, Kansas
at $3,500 per month plus related expenses that we anticipate will additionally
cost approximately $1,500 per month over the term of the lease.  BWS
continues to operate as our wholly-owned subsidiary.  In addition, as
part of the Acquisition Agreement, we also entered into a one year employment
agreement with Mr. Bruce under which he will serve as a Vice President of our
Central Division for an annual salary of $150,000.  Mr. Bruce has also
agreed to join our board of directors.  Prior to the execution of the
foregoing agreements with Mr. Bruce, there was no material relationship between
us and Mr. Bruce.




On
February 14, 2008, we acquired BBD by acquiring all of its issued and
outstanding stock from its sole shareholder, Robert L. Beeman, for a total
purchase price of $4,750,000, payable as follows: (i) a note for $4,050,000 was
issued to Mr. Beeman at closing which was paid off shortly thereafter through
funding provided by our Credit Facility; (ii) $200,000 in a previously paid
deposit; and (iii) funds in the amount of $500,000 were delivered to an escrow
agent to be held as security for Mr. Beeman’s indemnification obligations under
the acquisition agreement for a period of six months.   As part
of this transaction, we have entered into a three year lease with Mr. Beeman for
an equipment yard located in Moab, Utah at $6,000 per month plus related
expenses that we anticipate will additionally cost approximately $1,500 per
month over the term of the lease.  BBD continues to operate as our
wholly-owned subsidiary.  Prior to the execution of the foregoing
agreements with Mr. Beeman, there was no material relationship between us and
Mr. Beeman.




On
February 27, 2008, we acquired certain assets of ARH in exchange for 6,200,000
shares of our common stock.  These assets consist of oil field rig houses,
motor vehicles, rolling stock and related tools and equipment.  We assumed
no liabilities of ARH in connection with this transaction.  We have valued
this transaction at $2,271,500 based on a third-party appraisal of the
assets.  ARH was owned and controlled by Mr. Larry Hargrave, our chief
executive officer and a director.  As part of this transaction, we have
entered into a three year lease with Mr. Hargrave for an equipment yard located
in Cleveland, Texas at $6,000 per month plus related expenses that we anticipate
will additionally cost approximately $1,500 per month over the term of the
lease.  We intend to continue the operations as a division, using the name
American Rig Housing.  In addition, ARH has agreed to not compete with
us for a period of five years and to not solicit our customers, suppliers, or
employees for a period of three years.




Also on
February 27, 2008, we acquired certain assets of BB Drilling from its owner,
Robert L. Beeman, for a cash purchase price of $2,000,000, and certain assets of
DSS from its owner, Todd Beeman, for a total purchase price of $1,050,000 paid
in cash except for common stock valued at $50,000 based on a 10 day volume
weighted average price, commencing with the first day of trading (23,372
shares).  These assets consist of drilling rigs, motor vehicles, rolling
stock, pumps and related tools and equipment. We assumed no liabilities of BB
Drilling or DSS in connection with this transaction.  We contributed the
assets acquired from BB Drilling and DSS into BBD which will utilize them in its
operations.  As part of the transaction, the former owners have agreed
to restrict the disclosure of confidential information pertaining to our
business, and will not compete with our business or solicit our customers,
suppliers or employees for a period of five years.  We have entered
into an employment agreement with Todd Beeman to act as our General Manager of
Western Operations for an annual salary of $150,000.




2008
Financing




In order
to finance the acquisitions described above and to provide us with working
capital, on February 14, 2008, we completed the initial closing of a
private placement resulting in gross proceeds to us of
$8,640,000.  Units consisting of 625 shares of our common stock and 90
shares of our Series A Preferred Stock were purchased by accredited investors at
a purchase price of $1,000 per Unit.  In total, as of April 14, 2008,
we had sold a total of 13,566 Units, consisting of 8,478,750 shares of our
common stock and 1,220,940 shares of Series A Preferred Stock, for total gross
proceeds of $13.566 million.  None of the Units or the underlying
shares of common or Series A Preferred Stock sold in the Offering has been
registered under the Securities Act or under any state securities
laws.  The issuance and sale of said securities was made in reliance
upon exemptions from registration pursuant to Rule 506 of Regulation D under the
Securities Act and certain private placements under the state securities
laws.




The
Series A Preferred Stock has a stated face value of $10 per share, which shall
be redeemed by the Company using not less than 25% of its net income after tax
each year. The unredeemed portion of the face value of the Series A Preferred
Stock will receive dividends at an annual rate of 7%, payable quarterly in kind
at the then-current market price or in cash at the Company’s option. The
unredeemed face value of the Series A Preferred may be converted into common
stock (i) by the holder thereof at a conversion price of $4.00 per share or (ii)
by the Company at a conversion price of $4.00 per share in the event the
Company’s common stock closes at a market price of $9.60 per share or higher for
more than twenty consecutive trading days.




We
retained Andrew Garrett, Inc. of New York as our exclusive placement
agent.  Pursuant to our agreement, we paid Andrew Garrett a cash
commission of 10% of the gross proceeds of the Offering, plus a non-allocable
expense allowance of 2%, and warrants to purchase 10% of Units sold at any time
over the next five years at an exercise price of $1,000 per Unit.  We
have agreed to include the common and Series A Preferred Stock that underlie the
Units in the Warrants in any registration statement we file.




In
connection with the Offering, we agreed with the purchasers of the Units that we
would use our best efforts to file a resale registration statement with the SEC
covering all shares of Common Stock and Series A Preferred Stock included in the
Units sold in the Offering (“Registrable Securities”) with liquidated damages if
we did not file within 90 days after closing the Offering. Under this
Registration Rights Agreement we will maintain the effectiveness of the “resale”
registration statement from the effective date until the earlier of (i) the date
on which all of the Registrable Securities have been sold or (ii) the date on
which all of the Registrable Securities held by an investor may be sold without
restriction pursuant to Rule 144(k) under the Securities Act, subject to our
right to suspend or defer the use of such registration statement in certain
events. We have also agreed to use our reasonable best efforts to have such
“resale” registration statement declared effective by the SEC as soon as
possible after the initial filing date.   On June 11, 2008, we filed a
resale a registration covering all shares of Common Stock and Series A Preferred
Stock included in the Units sold in the Offering (“Registrable
Securities”).




On
February 14, 2008, we also entered into a Revolving Credit, Term Loan and
Security Agreement with PNC Bank, N.A. (“Credit Facility”) pursuant to which we
may borrow up to a maximum amount of $25,000,000 at an interest rate to be
determined at the time of the particular draws, but generally equal to the PNC
Base Rate plus 1% over the Alternate Base Rate or 3% over the Eurodollar Rate,
as those terms are defined in the Credit Facility.  The revolving
credit portion of the debt, equal to $19,150,000, may be borrowed and
re-borrowed until maturity on February 14, 2012.  Monies borrowed
against the term loan portion of the total debt agreement, equal to $5,850,000,
are amortized and must be repaid on a 60 month amortization schedule, with an
annual 25% recapture of Excess Cash Flow applied to the principal balance.
Excess Cash Flow is defined as EBITDA less principal and interest payments made
against the Credit Facility, cash tax payments, non-financed capital
expenditures and payments to our holders of Series A Preferred
Stock.




We drew
upon a substantial portion of our Credit Facility in order to close our
acquisitions of BWS and BBD, and our acquisitions of assets from BB Drilling and
DSS.  Draws against the Credit Facility are secured by all of our
assets and equipment and by all of the assets and equipment of BWS and BBD, and
the assets acquired from BB Drilling, DSS, and ARH.




We made
further draws against the Credit Facility for general working capital
purposes.  Any equipment and assets purchased in the future will, once
acquired, also be subject to the security interest in favor of PNC Bank, N.A,
and may be used to increase our available funds under the terms of the Credit
Facility.





Leases




In
connection with our acquisition of BWS, we executed an agreement to lease
certain real property owned by Tony Bruce for a period of 3 years at $3,500 per
month, plus related expenses that we anticipate will additionally cost
approximately $1,500 per month over the term of the lease.  The leased
property consists of approximately 5 acres in Liberal, Kansas.  We
anticipate using the leased property to house the equipment necessary to run
BWS’s business over the term of the lease.




In
connection with our acquisition of BBD, we leased two parcels of real property
owned by Robert Beeman for a period of one year at $6,000 per month plus
related expenses that we anticipate will additionally cost approximately $1,500
per month over the term of the lease.  The first leased property
consists of approximately 7 acres in Moab, Utah.  The second leased
property consists of approximately 10 acres in Wellington, Utah.  We
anticipate using the leased properties to house the equipment necessary to run
BBD’s business over the term of the lease.




In
connection with our acquisition of assets from ARH, we executed an agreement to
lease certain real property owned by Larry Hargrave, our CEO and owner of ARH,
for a period of 3 years at a rate of $6,000 per month, plus related expenses
that we anticipate will cost approximately an additional $1,500 per month over
the term of the lease.  The leased property consists of approximately
11 acres in Cleveland, Texas.  We anticipate using the leased property
to house the equipment and perform the fabrication necessary to run our rig
housing operation over the term of the lease.





Cash Collateral
Agreement




On
February 14, 2008, PNC Bank, National Association entered into a Cash
Collateral Agreement with an individual investor in which the investor
agreed to put up cash in the amount of $2,500,000 as additional required
security for our obligations under the Credit Facility.  In
exchange for the agreement of such investor to enter into the Cash Collateral
Agreement, we agreed to issue to such investor 1,562,500 shares of our common
stock and 225,000 shares of our Series A preferred stock.  We will be
obligated to repay any funds drawn on the Credit Facility without regard to the
consideration given to the investor.  The value of the stock issued to
the investor was included in deferred financing costs and amortized this
quarter.





Market
Conditions in Our New Industry




The
United States contract land drilling services industry is highly cyclical.
Volatility in oil and natural gas prices can produce wide swings in the levels
of overall drilling activity in the markets we now serve and affect the demand
for our drilling services and the day rates we can charge for our rigs. The
availability of financing sources, past trends in oil and natural gas prices and
the outlook for future oil and natural gas prices strongly influence the number
of wells oil and natural gas exploration and production companies decide to
drill.





Natural
gas accounts for over 80% of the drilling rig activity in the U.S.  We
believe capital spent on incremental natural gas production will be driven by an
increase in hydrocarbon demand as well as changes in supply of natural gas. The
Energy Information Administration estimated that U.S. consumption of natural gas
exceeded domestic production by 16% in 2005 and forecasts that U.S. consumption
of natural gas will exceed U.S. domestic production by 24% in 2010. In addition,
a study published by the National Petroleum Council in September 2003 concluded
from drilling and production data over the preceding ten years that average
“initial production rates from new wells have been sustained through the use of
advanced technology; however, production declines from these initial rates have
increased significantly; and recoverable volumes from new wells drilled in
mature producing basins have declined over time.” The report went on to state
that “without the benefit of new drilling, indigenous supplies have reached a
point at which U.S. production declines by 25% to 30% each year” and predicted
that in ten years eighty percent of gas production “will be from wells yet to be
drilled.” We believe all of these factors tend to support a higher natural gas
price environment, which should create strong incentives for natural gas
exploration and production companies to increase drilling activity in the U.S.
Sustained high oil prices have increased oil drilling activity as
well.  Consequently, these factors may result in higher rig day rates
and rig utilization.







Our
drilling activities are not solely dependent on oil and gas.  Most of
the wells drilled by BBD in the last two years have been for mineral exploration
companies.  The level of drilling activity for these wells is
influenced by price expectations for the underlying mineral commodity, e.g.,
uranium, copper, and molybdenum.  Also, BBD has drilled and expects to
continue to drill large diameter municipal water source wells in Utah, Nevada,
Arizona, New Mexico, and Colorado.




Our well
service operations at BWS are less price sensitive.  BWS operates
workover rigs that are used to restore production from existing wells when they
develop a mechanical problem or to complete new wells after they have been
drilled and evaluated as potentially productive.  Prices would have to
drop severely to cause a change in a production company’s willingness to work
over an existing well to repair a production problem.  In addition,
Kansas has more wells permitted to be drilled to a depth of 5,000 feet or
shallower than any other state.  As these wells are drilled, the BWS
rigs can be used for completion work and subsequent well repair work on these
additional wells.





Critical Accounting
Policies





This
discussion and analysis of our financial condition and results of operations is
based upon our consolidated financial statements. The preparation of these
financial statements requires us to make estimates and assumptions that affect
the reported amounts. On an ongoing basis, we evaluate our estimates, including
those related to bad debts, inventories, intangible assets, assets held for
sale, long-lived assets, income taxes, and contingencies and litigation. We base
our estimates on historical experience and on various other assumptions and
factors that we believe to be reasonable under the circumstances. Based on our
ongoing review, we make adjustments we consider appropriate under the facts and
circumstances. The accompanying condensed consolidated financial statements are
prepared using the critical accounting policies discussed in Note 2 to the
Consolidated Financial Statements for the period ended April 30, 2008 on this
report.





Results
from Operations





Three
months Ended April 30, 2008 compared with the Three Months Ended April 30,
2007





Revenues
were approximately $4,285,727 for the three months ended April 30, 2008 compared
with no revenue for the three months ended April 30, 2007. The increase of
$4,285,727 was primarily the result of the acquisitions of BWS and BBD in
February 2008.





Operating
Expenses were approximately $5,853,513 for the three months ended April
30, 2008 compared with approximately $12,146 for the three months ended April
30, 2007 resulting in an increase of approximately of
$5,841,367.  This increase was primarily as result of the acquisitions
of BWS and BBD in February 2008 and non-recurring or non-cash costs incurred in
assuming control of their operations.





Net loss from
operations was $1,567,785 for the three months ended April 30, 2008
compared with a net loss of $12,146 for the three months ended April 30, 2007
resulting in an increased loss of $1,555,639.  Because significant
operations commenced in 2008 with the acquisitions of BWS and BBD in February
2008, no comparison can be made between the periods.





General and
administrative expenses for the three month period ended April 30, 2008
were $3,189,834 compared with  no expense for the three month period
ended April 30, 2007.  Because significant operations commenced
in 2008 with the acquisitions of BWS and BBD in February 2008, no comparison can
be made between the periods.  Costs in the 2008 period included over
$300,000 in non-recurring costs and approximately $1,050,000 in non-cash costs
associated with assuming control of the BWS and BBD operations.





Interest
expense increased by $2,857,487 for the three month period ended April
30, 2008,  compared with the three month period ended April 30,
2007.  This increase is primarily due to an increase in the
utilization of the PNC Bank credit facility and the amortization of deferred
financing costs .  This includes a one-time non-cash charge of $2,500,000
for the amortization of financing costs resulting from the stock issuance
required by the Cash Collateral Agreement.





Net Loss
was $4,406,161 or $0.25 per share for the three months ended April 30, 2008
compared with a net loss of $16,601 or $0.00 per share for the three months
ended April 30, 2007 resulting in an increased loss of
$4,389,560.  This loss was primarily related to non-recurring and
non-cash charges associated with assuming control of the operations of BWS and
BBD.  Included in the loss is the amortization of $2,500,000 in stock
costs caused by the Cash Collateral Agreement, $1,000,000 in deferred
compensation granted to our CEO upon the commencement of combined operations but
to be paid over time, and $50,000 in stock-based compensation
costs.  Excluding these non-cash costs the loss is approximately
$750,000.  In addition, we incurred over $300,000 of non-recurring
cash costs; excluding these charges the loss is less than
$450,000.  Still included in the loss is depreciation expense of
$719,521.





While
non-recurring and non-cash costs were the primary cause for a loss, income
suffered from low utilization rates at BBD and ARH.  However,
operations at BWS continued to be robust.  The table below shows
utilization rates for BWS, BBD and ARH:





February
            March
            April
            MayBest
      Well Service
            100%
            100%
            100%
            100%Beeman
      Drilling
            3%
            8%
            11%
            24%American
      Rig Housing
            15%
            15%
            15%
            23%





The
annualized sales for Best Well Service are approximately $18.6 million, ahead of
the $17.7 million in sales that it earned in the year 2007.  Beeman
Drilling’s municipal water well and mineral core hole drilling exhibit seasonal
lows in the first quarter.  Even with very low utilization rates,
Beeman earned $301,088 in revenue this year compared with $61,438 in the period
last year.  American Rig Housing earned $47,359 from rentals this year
compared to $23,819 last year; however, it sold one unit compared to two last
year, so its revenues from unit sales fell to $63.484 from $129,781 last
year.  For the full year 2008, sales and refurbishment orders already
in hand are expected to produce revenue from unit sales equal to revenue from
unit sales in 2007.  Therefore, the loss in the first quarter appears
to be driven by one-time costs and seasonal factors.





Liquidity
and Capital Resources




On
February 14, 2008, we completed the initial closing of a private placement
producing gross proceeds to us of $8,640,000.  Units consisting of 625
shares of our common stock and 90 shares of our Series A Preferred Stock, were
purchased by accredited investors at a purchase price of $1,000 per
Unit.  In total, as of April 14, 2008, we sold a total of 13,566
Units, consisting of 8,478,750 shares of our common stock and 1,220,940 shares
of Series A Preferred Stock, for total gross proceeds of $13.566
million.




The
Series A Preferred Stock has a stated face value of $10 per share, which shall
be redeemed by the Company using not less than 25% of its net income after tax
each year. The unredeemed portion of the face value of the Series A Preferred
Stock will receive dividends at an annual rate of 7%, payable quarterly in kind
at the then-current market price or in cash at the Company’s option. The
unredeemed face value of the Series A Preferred may be converted into common
stock (i) by the holder thereof at a conversion price of $4.00 per share or (ii)
by the Company at a conversion price of $4.00 per share in the event the
Company’s common stock closes at a market price of $9.60 per share or higher for
more than twenty consecutive trading days.




On
February 14, 2008, we also entered into a Revolving Credit, Term Loan and
Security Agreement with PNC Bank, N.A. (“Credit Facility”) pursuant to which we
may borrow up to a maximum amount of $25,000,000 at an interest rate to be
determined at the time of the particular draws, but generally equal to the PNC
Base Rate plus 1% over the Alternate Base Rate or 3% over the Eurodollar Rate,
as those terms are defined in the Credit Facility.  The revolving
credit portion of the debt, equal to $19,150,000, may be borrowed and
re-borrowed until maturity on February 14, 2012.  Monies borrowed
against the term loan portion of the total debt agreement, equal to $5,850,000,
are amortized and must be repaid on a 60 month amortization schedule, with an
annual 25% recapture of Excess Cash Flow applied to the principal balance.
Excess Cash Flow is defined as EBITDA less principal and interest payments made
against the Credit Facility, cash tax payments, non-financed capital
expenditures and payments to our holders of Series A Preferred
Stock.




We drew
upon a substantial portion of our Credit Facility in order to close our
acquisitions of BWS and BBD, and our acquisitions of assets from BB Drilling and
DSS.  Draws against the Credit Facility are secured by all of our
assets and equipment and by all of the assets and equipment of BWS and BBD, and
the assets acquired from BB Drilling, DSS, and ARH.




We made
further draws against the Credit Facility for general working capital
purposes.  Any equipment and assets purchased in the future will, once
acquired, also be subject to the security interest in favor of PNC Bank, N.A,
and may be used to increase our available funds under the terms of the Revolving
Credit facility.


We do not
anticipate the need for any additional capital to implement our business plan
and grow our acquired operations.  However, additional capital, if
available, could be useful in acquiring additional assets for our company and
accelerating our growth under our business plan.





Under
our credit facility, we are subject to customary covenants, including certain
financial covenants and reporting requirements. We are required to maintain a
fixed charge coverage ratio (defined as the ratio of EBITDA minus capital
expenditures (except capital expenditures financed by lenders other than under
the Credit Facility) made during such period minus cash taxes paid during such
period minus all dividends and distributions paid during such period (including,
without limitation, all payments to the holders of the Series A Convertible
Preferred Stock) to all senior debt payments during such period, of not less
than 1.10 to 1.00 and a leverage ratio of funded debt to EBITDA of not greater
than the amount set forth in the table below for such period:




Fiscal
      Quarter Ending:
            Leverage
      Ratio:March
      31, 2008
            3.5
      to 1.0June
      30, 2008
            3.5
      to 1.0September
      30, 2008
            3.5
      to 1.0December
      31, 2008
            3.5
      to 1.0March
      31, 2009
            3.0
      to 1.0June
      30, 2009
            3.0
      to 1.0September
      30, 2009
            3.0
      to 1.0December
      31, 2009
            3.0
      to 1.0March
      30, 2010 and each fiscal quarter ending thereafter
            2.50
      to 1.0





Due
primarily to non-recurring costs incurred in the assumption of operations
immediately after closing our acquisitions in February and the reoccurrence of
very low seasonal utilization of rigs by BBD, we are requesting a waiver for the
specified fixed charge coverage and leverage ratio calculations.  We
have proposed an alternative calculation for the first quarter that excludes the
partial month of February and relies on the trailing twelve months rather than
attempting to annualize Beeman’s results based on the seasonally low first
quarter months.  Our request is pending.





Under the
terms of our credit facility, we may not pay dividends on our common stock or
our preferred stock or redeem any shares of our common stock or preferred stock
exceptthat we may make payments (i)
utilizing up to 25% of our net income to the holders of the Series A Preferred
Stock in accordance with the provisions of the Certificate of Designation
therefor, so long as after giving effect to such payment (x) we have at least
$1,500,000 of undrawn availability and (y) we demonstrate to PNC’s reasonable
satisfaction pro forma compliance with financial covenants set forth
above.




In
addition to the foregoing and other customary covenants, our credit facility
contains a number of covenants that, among other things, will restrict our
ability to:




• incur
or guarantee additional indebtedness;




•
transfer or sell assets;




• create
liens on assets;




• engage
in transactions with affiliates other than on an "arm's-length" basis;
and




• make
any change in the principal nature of our business; and




Our
credit facility also contains customary events of default, including nonpayment
of principal or interest, violations of covenants, cross default and cross
acceleration to certain other indebtedness, bankruptcy, a change of control and
material judgments and liabilities.





We have
made all scheduled principal and interest payments, and have improved our
availability under the revolver from a low point of approximately $500,000 in
availability to over $1,500,000 in availability.





Off-Balance
Sheet Arrangements




As of
April 30, 2008, we had no transactions, agreements or other contractual
arrangements with unconsolidated entities or financial partnerships, often
referred to as special purpose entities, which generally are established for the
purpose of facilitating off-balance sheet arrangements.





Contractual
Obligations





Tabular
Disclosure of Contractual Obligations




Over the NextFive Years
            
            FY2008Long
      - Term Debt
            
            $
            21,496,000
            
            $
            1,398,000Operating
      Leases
            
            558,000
            
            155,000Employment/Consultant
      Contracts
            
            600,000
            
            600,000Total
            
            $
            225,656,000
            
            $
            2,153,000










Disclosure
Regarding Forward-Looking Statements




We
caution that this document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934.  All statements, other than statements of
historical facts, included in or incorporated by reference into this
Form 10-Q which address activities, events or developments which we expect,
believe or anticipate will or may occur in the future are forward-looking
statements.  The words “believes,” “intends,” “expects,” “anticipates,”
“projects,” “estimates,” “predicts,” “plans” and similar expressions, or the
negative thereof, are also intended to identify forward-looking
statements.  In particular, statements, expressed or implied, concerning
future operating results, the ability to increase utilization or redeply rigs,
or the ability to generate income or cash flows are by nature, forward-looking
statements.  These statements are based on certain assumptions and analyses
made by management in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances.  However,
forward-looking statements are not guarantees of performance and no assurance
can be given that these expectations will be achieved.




Important
factors that could cause actual results to differ materially from the
expectations reflected in the forward-looking statements include, but are not
limited to any of the following:  the timing and extent of changes in
commodity prices for crude oil, natural gas and related products, interest
rates, inflation, the availability of goods and services, operational risks,
availability of capital resources, legislative or regulatory changes, political
developments, and acts of war and terrorism.  A more detailed discussion on
risks relating to the oilfield services industry and to us is included in the
Company’s Annual Report on Form 10-K for the year ended January 31,
2008.




In light
of these risks, uncertainties and assumptions, we caution the reader that these
forward-looking statements are subject to risks and uncertainties, many of which
are beyond our control, which could cause actual events or results to differ
materially from those expressed or implied by the statements.  All
subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements.  We undertake no obligations to update or revise its
forward-looking statements, whether as a result of new information, future
events or otherwise.





Item
3. Quantitative and Qualitative Disclosures about Market Risk




Not
required for smaller reporting companies.





Item
4. Controls and Procedures




(a) Evaluation
of Disclosure Controls and Procedures




We
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer, of the effectiveness of our disclosure controls and
procedures as of April 30, 2008 (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)).  Based upon that evaluation, our principal executive
officer and principal financial officer concluded that, as of the end of the
period covered in this report, our disclosure controls and procedures were not
effective to ensure that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the required time periods and is accumulated and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure. In
particular, we found control weaknesses in financial statement disclosures, the
consolidation of subsidiaries’ general ledgers, segregation of duties in the
field and home offices, expenditure approval limits and documentation, and
variance analysis. As recently acquired operations are assimilated, we intend to
address these weaknesses.  Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error or fraud.  A control system,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are
met.  Further, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls must be
considered relative to their costs.  Due to the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, have been detected. To
address the material weaknesses, we performed additional analysis and other
post-closing procedures in an effort to ensure our consolidated financial
statements included in this annual report have been prepared in accordance with
generally accepted accounting principles. Accordingly, management believes that
the financial statements included in this report fairly present in all material
respects our financial condition, results of operations and cash flows for the
periods presented.





(b) Changes in Internal Control
over Financial Reporting




During
the quarter ended April 30, 2008, we began to consolidate control over the
financial reporting originating in our operations that we acquired during the
quarter.  None of these changes in internal control over financial
reporting materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.









PART II




Item
1. Legal Proceedings




We are
from time to time subject to litigation arising in the normal course of
business. As of the date of this Quarterly Report on Form 10-Q, there are no
pending or threatened proceedings which are currently anticipated to have a
material adverse effect on our business, financial condition or results of
operations.




Item
1A. Risk Factors




Not
required for smaller reporting companies.




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





On April
14, 2008, we announced that we had completed the sale Units consisting of 625
shares of our common stock and 90 shares of our Series A Preferred Stock, to
institutional and accredited purchasers at a purchase price of $1,000 per Unit
(the “Offering”).  We issued a total of 8,478,750 shares of common
stock and 1,220,940 shares of Series A Preferred Stock to institutional and
accredited investors, for total gross proceeds of $13.566
million.  None of the Units or the underlying shares of common or
Series A Preferred Stock sold in the Offering has been registered under the
Securities Act or under any state securities laws.  The issuance and
sale of these securities was made in reliance upon exemptions from registration
pursuant to Rule 506 of Regulation D under the Securities Act and certain
private placement exemptions under applicable state securities
laws.




We
retained Andrew Garrett, Inc. of New York as our exclusive placement
agent.  Pursuant to our agreement, we paid Andrew Garrett a cash
commission of 10% of the gross proceeds of the Offering, plus a non-allocable
expense allowance of 2%, and warrants to purchase 10% of Units sold at any time
over the next five years at an exercise price of $1,000 per Unit.  We
have issued 1,507 unit warrants to Andrew Garrett or qualified selling agents as
designated by Andrew Garrett.  We have agreed to include the common
and Series A Preferred Stock that underlie the Units in the Warrants in any
registration statement we file.  These warrants were issued pursuant
to Section 4(2) of the Securities Act of 1933, as amended.




On March
17, 2008, the Board of Directors awarded options to Mr. James Byrd, a member of
our Board of Directors, to purchase a total of 75,000 shares of our common
stock, 25,000 at an exercise price of $0.16 per share which vest immediately and
50,000 at an exercise price of 0.50 per share which vest in March
2009.  These grants were made pursuant to Section 4(2) of the
Securities Act of 1933, as amended.




On March
5, 2008, the Board of Directors awarded options to the following Directors: Mark
Harrington, Joel Gold, David Gad, and Tony Bruce.  They each were
awarded options to purchase a total of 75,000 shares of our common stock, 25,000
at an exercise price of $0.16 per share and 50,000 at an exercise price of $0.50
per share.  The $0.16 options vested immediately and the $0.50 options
vest on March 5, 2009.  The Directors also granted warrants to Christy
Albeck, a contractor to the Company, to purchase a total of 75,000 shares of our
common stock, 25,000 at an exercise price of $0.16 per share and 50,000 at an
exercise price of $0.50 per share.  The $0.16 warrants vested
immediately and the $0.50 warrants vest on March 5, 2009. These grants were made
pursuant to Section 4(2) of the Securities Act of 1933, as amended.




On March
5, 2008, in connection with his appointment as Chief Operations Officer for the
Company, Mr. Charles Daniels was awarded 150,000 unregistered common shares of
the Company and 150,000 five-year warrants to purchase our common stock at an
exercise price of $0.50.  The warrants will vest on December 31, 2008.
On the same date, Mr. James W. Carroll was awarded 150,000 unregistered common
shares of the Company and 150,000 five-year options to purchase our common stock
at an exercise price of $0.50.  The options will vest on December 31,
2008.  On the same date, Mr. Larry W. Hargrave was awarded 300,000
five-year options to purchase our common stock at an exercise price of $0.16 and
300,000 five-year options to purchase our common stock at an exercise price of
$0.50.  The $0.16 options vested immediately and the $0.50 options
will vest on December 31, 2008.  These grants of unregistered shares,
warrants and options were made pursuant to Section 4(2) of the Securities Act of
1933, as amended.




On
February 27, 2008, we issued 6,200,000 shares of our common stock to the
designees of American Rig Housing, Inc., in connection with the acquisition of
certain assets from ARH.  In addition, we also agreed to issue Drill
Site Services & Investments LLC common stock valued at $50,000 based on a
10-day volume weighted average price (calculated as 23,372 shares), commencing
with the first day of trading in connection with the acquisition of certain
assets from DSS.  We have also agreed to issue Tony Bruce common stock
valued at $100,000 based on a 10-day volume weighted average price (calculated
as 46,744 shares), commencing on the first day of trading in connection with the
acquisition of Best Well Service, Inc., of which Tony Bruce was the
owner.  As such, DSS was issued 23,372 shares of common stock and Mr.
Bruce was issued 46,744 shares of common stock.  These shares were
issued pursuant to Section 4(2) of the Securities Act of 1933, as
amended.




On
February 14, 2008, we issued 1,562,500 shares of common stock and 225,000 shares
of Series A Preferred Stock to Morris Gad in conjunction with his pledge of
assets made pursuant to a cash collateral agreement between Morris Gad, the
Company and PNC Bank.  These shares were issued pursuant to Section
4(2) of the Securities Act of 1933, as amended.




On
February 14, 2008, we issued 200,000 warrants to purchase our common stock to
Elite Financial Communications Group, LLC.  Of these, 50,000 warrants
vested immediately with an exercise price of $0.20; 50,000 warrants vested March
29, 2008 with an exercise price of $0.24; 50,000 warrants will vest June 27,
2008 with an exercise price of $0.28; and, 50,000 warrants will vest September
25, 2008 with an exercise price of $0.32.  The term of the warrants
shall expire 24 months from the date the Registration Statement registering the
shares underlying the warrants is deemed effective.






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








31.1
            
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes -
      Oxley Act of 2002. (Filed herewith)31.2
            
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes -
      Oxley Act of 2002. (Filed herewith)32.1
            
            Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
      (Filed herewith)32.2
            
            Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
      (Filed herewith)














SIGNATURES




Pursuant
to the requirements 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.




Date:
      June 23, 2008BEST
      ENERGY SERVICES, INC./s/
      Larry HargraveLarry
      HargravePresident
      and Chief Executive Officer