<PAGE>   1





                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                        FORM 10-K
(Mark One)
 X       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (FEE REQUIRED)
         For the Fiscal Year ended December 31, 1997
                                       OR
___      TRANSITION REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
         For the Transition Period from ________ to _________

                         Commission File Number 1-7908

                         ADAMS RESOURCES & ENERGY, INC.
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                     74-1753147
       (State or other jurisdiction of      (I.R.S. Employer Identification No.)
         incorporation or organization)

                5 POST OAK PARK STE. 2700
                HOUSTON, TEXAS                                    77027
       (Address of Principal executive offices)                (Zip Code)

      Registrant's telephone number, including area code:  (713) 881-3600

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

      Title of each class           Name of each exchange on which registered
      -------------------           -----------------------------------------
   COMMON STOCK, $.10 PAR VALUE               AMERICAN STOCK EXCHANGE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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

         Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to the
filing requirements for the past 90 days.  YES  [X]    NO  [ ]

         A total of 4,217,596 shares of Common Stock were outstanding at  March
13, 1998.

         The aggregate market value of the voting stock held by nonaffiliates
as of March 13, 1998 was $26,953,832.


                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for Annual Meeting of Stockholders to be held
April 29, 1998 are incorporated by reference in Part III.


                                     I-1
<PAGE>   2

                                     PART I


Items 1 and 2.  BUSINESS AND PROPERTIES.

General

         Adams Resources & Energy, Inc. and its subsidiaries (the "Company")
are engaged in the business of oil and gas exploration and production, crude
oil marketing, petroleum products marketing and tank truck transportation of
petroleum products and liquid chemicals.

         The revenues and operating earnings for each industry segment and the
identifiable assets attributable to each industry segment for the three years
ended December 31, 1997 are set forth in Note 8 of the Notes to Consolidated
Financial Statements included elsewhere herein.

Oil and Gas Exploration and Production

         Since its inception, the Company has been actively engaged in domestic
onshore oil and gas exploration and development activities, primarily in Texas
and Oklahoma.  Exploration offices are maintained at the Company's headquarters
in Houston, Texas.  The Company holds an interest in 261 wells, of which 76 are
Company-operated.

         Producing Wells--The following table sets forth the Company's gross
and net productive wells at December 31, 1997. Gross wells are the total number
of wells in which the Company has an interest, while net wells are the sum of
the Company's fractional interests owned.


<TABLE>
<CAPTION>
                                      Oil Wells                Gas Wells                 Total Wells
                                     ----------                ---------                 -----------

                                   Gross      Net           Gross         Net          Gross       Net  
                                   -----    -------         ------       ------        -----     -------
               <S>                  <C>      <C>             <C>         <C>           <C>         <C>
               Texas                119      20.85           21          5.23          140         26.08
               Oklahoma              14       3.97           12          2.05           26          6.02
               Other                 87        .04            8           .63           95           .67
                                   ----     ------          ---         -----         ----       -------
                                                                                           
                                                                                           
                                    220      24.86           41          7.91          261         32.77
                                   ====      =====           ==          ====          ===         =====

</TABLE>

         Acreage--The following table sets forth the Company's gross and net
developed and undeveloped acreage as of December 31, 1997.

<TABLE>
<CAPTION>
                                             Developed Acreage         Undeveloped Acreage 
                                             -----------------         --------------------
                                            Gross         Net         Gross           Net 
                                            ------       -----        ------         -----
                           <S>               <C>         <C>          <C>            <C>
                           Texas             55,175      10,320       69,314         11,919
                           Oklahoma           3,265         592        2,141            820
                           Other              3,911       1,185          671            609
                                            -------     -------     --------         ------


                                             62,351      12,097       72,126         13,348
                                             ======      ======       ======         ======
</TABLE>





                                      I-2
<PAGE>   3
         Drilling Activity--The following table sets forth the Company's
drilling activity for each of the three years during the period ended December
31, 1997.  All drilling activity was onshore in Texas and Oklahoma.

<TABLE>
<CAPTION>
                                                      1997                  1996                 1995
                                                      ----                  ----                 ----
                                                   Gross       Net       Gross       Net       Gross      Net 
                                                   -----      -----      -----      -----      -----     -----
              <S>                                 <C>       <C>            <C>      <C>          <C>     <C>             
              Exploratory wells drilled
                 - Productive                      -            -           -          -           -        -
                 - Dry                             -            -           -                      2      .38
                                                                                       -                     
                                                                                                             
              Development wells drilled                                                                      
                 - Productive                     14         1.99          10       1.62          24     3.85
                 - Dry                             -            -           -          -           1      .07
                                                                                                             
</TABLE>                                                                     
                                                                             
         In addition to the above wells drilled and completed, at year end
1997, the Company had 4 wells (.64 net wells) in process.  All such wells were
subsequently completed as producers in 1998.

         Production and Reserve Information--The Company's estimated net
quantities of proved oil and gas reserves, the estimated future net cash flows
and present value of future net cash flows from oil and gas reserves before
income taxes, calculated at a 10% discount rate for the three years ended
December 31, 1997, are presented in the table below.


<TABLE>
<CAPTION>
                                                                             December 31,
                                                                1997            1996              1995
                                                                ----            ----              ----
                                                                           (In thousands)
              <S>                                             <C>             <C>             <C>
              Crude oil (Barrels)                                  211             225             281
              Natural gas (Mcf)                                  9,761           9,834           7,692
              Future net cash flows                           $ 18,468        $ 29,566        $ 14,893
              Present value of future net cash flows          $ 13,644        $ 21,467        $ 10,102
</TABLE>

         The estimates of the Company's oil and gas reserves and future net
revenues therefrom as of December 31, 1997, were made by the Company's
independent petroleum engineers, Ryder Scott Company.  The reserve estimates
provided at December 31, 1997 are based on oil prices of approximately $17.19
per barrel and natural gas prices of approximately $2.25 per Mcf.  In most
instances, the Company's natural gas sales contracts provide for the Company to
receive a percentage of the combined proceeds from the sales of natural gas and
associated natural gas liquids.  Therefore, average natural gas reserve
quantities and prices reported herein include the value of associated natural
gas liquids.

         Reserve estimates are based on many judgmental factors.  The accuracy
of reserve estimates depends on the quantity and quality of geological data,
production performance data and reservoir engineering data, as well as the
skill and judgment of petroleum engineers in interpreting such data.  The
process of estimating reserves involves continual revision of estimates
(usually on an annual basis) as additional information is made available
through drilling, testing, reservoir studies and acquiring historical pressure
and production data.  In addition, the discounted present value of estimated
future net revenues should not be construed as the fair market value of oil and
gas producing properties.  Such estimates do not necessarily portray a
realistic assessment of current value or future performance of such properties.
Such revenue calculations are also based on estimates by petroleum engineers as
to the timing of oil and





                                      I-3
<PAGE>   4
gas production, and there is no assurance the actual timing of production will
conform to or approximate such estimates.  Also, certain assumptions have been
made with respect to pricing; essentially, the estimates assume that prices
will remain constant from the date of the engineer's estimates except for
changes reflected under natural gas sales contracts.  There can be no assurance
that actual future prices will not vary as industry conditions, governmental
regulation and other factors impact the market price for oil and gas.

         The Company's net oil and gas production for the three years ended
December 31, 1997 has been as follows:

<TABLE>
<CAPTION>
                 Year Ended                          Crude Oil               Natural
                 December 31,                        (Barrels)              Gas (Mcf)
                 ------------                        ---------              ---------
         <S>                                          <C>                   <C>
         1997............................               62,000              3,775,000
         1996............................               92,000              3,450,000
         1995............................              105,000              3,055,000
</TABLE>

         Certain financial information relating to the Company's oil and gas
activities is summarized as follows:

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                         -----------------------------------
                                                            1997        1996         1995        
                                                         ----------   ---------   ----------
<S>                                                      <C>          <C>          <C>
Average oil and condensate                                  
  sales price per Bbl.  . . . . . . . . . . . . . .      $    19.88   $   18.31    $   16.58
Average natural gas                                                                  
  sales price per Mcf   . . . . . . . . . . . . . .      $     2.28   $    2.12    $    1.50
Average production cost,                                                             
  per equivalent Bbl, charged to expense  . . . . .      $     2.62   $    2.54    $    2.16
</TABLE>                                                                      

         The average crude oil and natural gas sales price received for
December 1997 production was $15.01 per barrel and $2.22 per Mcf, respectively.
Such prices for January 1998 production averaged $14.57 per barrel and $2.00
per Mcf.  In most instances, the Company's natural gas sales contracts provide
for the Company to receive a percentage of the combined proceeds from the sales
of natural gas and associated natural gas liquids.  Therefore, average natural
gas prices reported herein include the value of associated natural gas liquids.

         The Company has had no reports to Federal authorities or agencies of
estimated oil and gas reserves except for a required report on the Department
of Energy's "Annual Survey of Domestic Oil and Gas Reserves".   The Company is
not obligated to provide any fixed and determinable quantities of oil or gas in
the future under existing contracts or agreements associated with its oil and
gas exploration and production segment.

         Reference is made to the Supplementary Financial Data following the
Notes to Consolidated Financial Statements for additional disclosures relating
to oil and gas exploration and production activities.





                                      I-4
<PAGE>   5
Crude Oil Marketing

         The Company's crude oil marketing subsidiary, GulfMark Energy, Inc.,
purchases crude oil at the wellhead and arranges transportation to refiners and
other customers. Crude oil acquired at the wellhead is transported via common
carrier pipeline, barge or truck, with activity primarily concentrated on
properties located offshore Louisiana and onshore throughout Texas. Crude oil
purchases at the wellhead approximate 90,000 barrels per day.   As part of its
crude oil marketing business, the Company currently operates 42 tractor-trailer
rigs and maintains over 100 pipeline inventory locations or injection stations,
primarily in Louisiana, Texas and New Mexico.  In addition, in January 1998,
the company completed construction of a 7.5 mile 6 inch crude oil gathering
pipeline in the Louisiana offshore, Ship Shoal, area.

         Crude oil is generally purchased at field posted prices that fluctuate
with market conditions.  The crude oil is transported and either sold outright
at the field level or the Company will enter into buy-sell arrangements
(trades) in order to minimize transportation or to maximize the sales prices.
Except in certain limited situations where back- to-back fixed price trades are
in place, the contracted sales price is also pegged to a posted price that
fluctuates with market conditions, thus reducing the Company's loss exposure
from sudden changes in crude oil prices. Sales of crude oil are facilitated in
the industry by established trade points that include Cushing, Oklahoma, St.
James, Louisiana and Midland, Texas.  A key element of the Company's
profitability is the differential between market prices at the field level and
at the various trade points.  Such price differentials will vary with local
supply and demand conditions and unforeseen fluctuations in price differentials
can impact the Company's financial results in either a favorable or an
unfavorable manner.  While the Company's policies are designed to minimize
market risk, some degree of exposure to unforeseen fluctuations in market
conditions will remain.

         Crude oil marketing revenues totaled $1.9 billion for 1997 and the
Company believes alternative customers are available should any of its
customers reduce their purchases.

Petroleum Products Marketing

         Through its subsidiary Ada Resources, Inc., the Company markets
branded and unbranded refined petroleum products, such as gasoline and diesel
fuel. The marketing service area includes primarily metropolitan Houston and
the surrounding one hundred miles.  Purchases are made at the suppliers'
established jobber prices with such prices generally being lower than the
Company's sales price to its customers.  The Company relies upon such sales
price differentials for its margin of profit.  In order to secure certain
market outlets, the Company periodically assists third parties by financing a
portion of the construction costs of facilities for gasoline service station
operations.  Earnings stem from the lease of the property and sales of
gasoline.  The Company is currently involved with 17 such properties.  The
Company is also a supplier of industrial lubricants, oils and greases.  The
Company's primary product distribution and warehousing facility is located on
5.5 acres in Houston, Texas.  This facility includes a 60,000 square foot
warehouse, 11,000 square feet of office space, bulk storage for 100,000 gallons
of motor fuels and a high speed loading rack and storage facility for 200,000
gallons of lubricating oil.

         Petroleum products marketing revenues totaled $37 million for 1997 and
the Company believes alternative customers are available should any of its
customers reduce their purchases.

Tank Truck Transportation

         Through its Service Transport Company subsidiary, the Company
transports liquid chemicals and petroleum products on a "for hire" basis
throughout the Continental United States and Canada.





                                      I-5
<PAGE>   6

Transportation service is provided to over 400 customers under contracts or a
call and demand basis. Pursuant to regulatory requirements, the Company holds a
Hazardous Materials Certificate of Registration issued by the U.S.  Department
of Transportation.

         The Company presently operates 245 truck tractors and 350 tank
trailers and also operates truck terminals in Houston, Corpus  Christi, and
Beaumont (Nederland), Texas as well as Geismar, Louisiana and Mobile
(Saraland), Alabama.  The Company's primary terminal facility in Houston, is
situated on 22 acres and includes maintenance facilities, an office building
and a six bay, state of the art, internal tank washrack and water treatment
system.  Contracts have been let to construct a similar facility on an 11 acre
company owned tract in Geismar, Louisiana.

         Service Transport Company has maintained its registration to the
ISO-9002 Quality Management Standard.  The scope of this Quality System
Certificate, registered in both the United States and Europe, covers the
carriage of bulk liquids throughout their area of operations as well as the
tank trailer cleaning facilities and equipment maintenance.  The Company's
quality management process is one of its major assets.  The practice of using
statistical process control covering safety, on-time performance and customer
satisfaction aids the Company to continuously improve in all areas of quality
service to customers.

Employees and other

         At December 31, 1997 the Company employed 512 persons, 21 of whom were
employed in oil and gas exploration and production, 118 in the marketing of
crude oil and petroleum products, 344 in transportation operations and 17 in
administrative capacities.  None of the Company's employees are represented by
a union.  Management believes its employee relations are satisfactory.

         The Company leases approximately 12,000 square feet of office space
for its executive offices located at 5 Post Oak Park, Suite 2700,  Houston,
Texas.

Competition

         In all phases of its operations, the Company encounters strong
competition from a number of companies, including some very large companies.
Many of these larger competitors possess and employ financial and personnel
resources substantially in excess of those which are available to the Company.
The Company faces competition principally in pricing and quality of service.
In its oil and gas operation, the Company also competes for the acquisition of
mineral properties. The Company's marketing division also competes with
integrated oil companies which in some cases own or control a majority of their
own refining and marketing facilities.  These major oil companies may offer
their products to others on more favorable terms than those available to the
Company.  The Company is a minor competitor in all the businesses in which it
has operations.





                                      I-6
<PAGE>   7
         From time to time in recent years, there has been an oversupply of
crude oil and natural gas in the marketplace.  This in turn has led to a
reduced level of prices for crude oil and natural gas, and as a result, there
is a high degree of uncertainty regarding the future market price for oil and
gas.  Historically, however, demand for oil and gas has been in balance with
readily available supplies, and the Company believes the long-term prospects
for the oil and gas industry continue to be good.

Federal and State Taxation

         The Company is subject to the provisions of the Internal Revenue Code
of 1986, as amended. Prior to 1997, the Company's current cash flow was not
significantly impacted by federal taxation because of available net operating
loss and statutory depletion carryforwards.  In recent years, the Company
generally paid a 2% effective current federal tax rate.  Such carryforwards
were fully utilized in 1997 and in the future, the Company's effective current
federal tax rate is expected to approach the statutory (34%) level.

         The Company's operations are primarily conducted within the State of
Texas.  As such, the Company is subject to a 4.5% state tax on corporate net
taxable income as computed for federal income tax purposes. Oil and gas
activities are also subject to state and local income, severance, property and
other taxes. Management believes the Company is currently in compliance with 
all federal and state tax regulations.

Forward-Looking Statements--Safe Harbor Provisions

         This annual report for the year ended December 31, 1997 contains
certain forward-looking statements which are intended to be covered by the safe
harbors provided under Federal securities law and regulation.  To the extent
such statements are not recitations of historical fact, forward-looking
statements involve risks and uncertainties.  In particular, statements under
the captions (a) Production and Reserve Information, (b) Competition, (c)
Regulatory Status and Potential Environmental Liability, (d) Management's
Discussion and Analysis of Financial Condition and Results of Operations, (e)
Use of Estimates, (f) Income Taxes, (g) Concentration of Credit Risk, (h)
Commitments and Contingencies, (i) Supplementary Financial Data, among others,
contain forward-looking statements. Where the Company expresses an expectation
or belief to future results or events, such expression is made in good faith
and believed to have a reasonable basis in fact.  However, there can be no
assurance that such expectation or belief will actually result or be achieved.

         A number of factors could cause actual results or events to differ
materially from those anticipated.  Such factors include, (a) general economic
conditions, (b) fluctuations in hydrocarbon prices and margins, (c)
unanticipated environmental liabilities or regulatory changes, (d) the
availability and cost of insurance, (e) changes in tax laws, and (f) the
availability of capital, among others.





                                      I-7
<PAGE>   8

                    Environmental Compliance and Regulation

         The Company is subject to an extensive variety of evolving United
States federal, state and local laws, rules and regulations governing the
storage, transportation, manufacture, use, discharge, release and disposal of
product and contaminants into the environment, or otherwise relating to the
protection of the environment.  A non-exclusive listing of the environmental
laws which potentially impact the Company's Regulated Environmental Activities
is set out below:

Resource Conservation and Recovery Act of 1976, as amended in 1984
("RCRA")--The United States Congress enacted RCRA in 1976 and amended it in
1984.  RCRA established a comprehensive regulatory framework for the management
of hazardous wastes at active facilities.  RCRA creates a "cradle to grave"
system for managing hazardous wastes.  Those who generate, transport, treat,
store or dispose of waste above certain quantities are required to undertake
certain performance, testing and record keeping.  The 1984 amendments to RCRA
known as the Hazardous and Solid Waste Amendments "HSWA" increased the scope of
RCRA to regulate small quantity hazardous waste generators and waste oil
handlers and recyclers as well as require the identification and regulation of
underground storage tanks in which liquid petroleum or hazardous substances
were stored.  HSWA and its implementing regulations require the notification to
designated state agencies of the existence and condition of regulated
underground storage tanks and impose design, construction and installation
requirements; leak detection, reporting, and cleanup requirements; tank closure
and removal requirements; and fiscal responsibility requirements.  RCRA
specifically excludes "drilling fluids, produced waters, and other wastes
associated with the exploration, development, or production of crude oil,
natural gas or geothermal energy."

Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA" or "Superfund") as amended in 1986--CERCLA established the Superfund
program to clean up inactive sites at which hazardous substances had been
released.  Superfund has been interpreted to create strict, joint and several
liability for the costs of removal and remediation, other necessary response
costs and damages for injury to natural resources.  Superfund liability extends
to generators of hazardous substances, as well as to (i) the current owners and
operators of a site at which hazardous substances were disposed; (ii) any prior
owner or operator of the site at the time of disposal; and (iii) waste
transporters who selected such facilities for treatment or disposal of
hazardous substances.  CERCLA allows the United States Environmental Protection
Agency ("EPA") to investigate and remediate contaminated sites and to recover
the costs of such activities (response costs), as well as damages to natural
resources, from parties specified as liable under the statute.  CERCLA also
authorizes private parties who incur response costs to seek recovery from
statutorily liable parties.  CERCLA was amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA").  SARA provides a separate funding
mechanism for the clean up of underground storage tanks.  CERCLA excludes
petroleum, including crude oil or any fraction thereof, with certain
limitations from the definition of "hazardous substances" for which liability
for clean up of a contaminated site will attach.  This exclusion also applies
to those otherwise hazardous substances which are inherent in petroleum, but
not to those added to or mixed with petroleum products.

The Clean Water Act of 1972, as amended (the "Clean Water Act")--The Clean
Water Act establishes water pollutant discharge standards applicable to many
basic types of manufacturing facilities and imposes standards on municipal
sewage treatment plants.  The Clean Water Act requires states to set water
quality standards for significant bodies of water within their boundaries and
to ensure attainment and/or maintenance of those standards.  Many industrial
and governmental facilities must apply for and obtain discharge permits,
monitor pollutant discharges and under certain conditions reduce certain
discharges.  The Clean Water Act also requires pre-treatment of certain
discharges prior to release into a publicly owned treatment works.





                                      I-8
<PAGE>   9


Federal Oil Pollution Act of 1990 ("OPA")--The OPA amends the Clean Water Act
and expands the liability for the discharge of oil into navigable waters.
Liability is triggered by discharge or substantial threat of a discharge of oil
into navigable waters of adjoining shoreline from any vessel or any on-shore or
off-shore facility.  OPA defines three classes of parties subject to liability:
1) owners, operators, and persons chartering vessels; 2) lessees and permitees
of areas where off-shore facilities are located; and 3) owners and operators of
on-shore facilities.

The Clean Air Act of 1970, as amended (the "Clean Air Act")--The Clean Air Act
required EPA to establish and ensure compliance with national ambient air
quality standards ("NAAQS") for certain pollutants.  The NAAQS generally are to
be achieved by the individual states through state implementation plans
("SIPs").  SIPs typically attempt to meet the NAAQS by, among other things,
regulating the quantity and quality of emissions from specific industrial
sources.  As required by the Clean Air Act, EPA also has established
regulations that limit emissions of specified hazardous air pollutants and
other regulations that limit emissions from new industrial sources within
certain source categories. The Clean Air Act was amended extensively in 1990,
to, among other things, impose additional emissions standards that must be
implemented by the EPA through regulations.  The implementation of the Clean
Air Act requirements is accomplished in Texas by the Texas Natural Resources
Conservation Commission ("TNRCC").

The Toxic Substances Control Act of 1976 ("TSCA")--TSCA authorizes the EPA to
gather information on the risks of chemicals, and to monitor and regulate the
manufacture, distribution, processing, use and disposal of many chemicals.

The Emergency Planning and Community Right-to-Know Act ("EPCRA")--EPRCA
requires emergency planning notification, emergency release notification and
reports with respect to the storage and release of specified chemicals.
Industry must provide information to communities regarding the presence of
extremely hazardous substances at facilities within those communities.

The Occupational Safety and Health Administration Act ("OSHA")--OSHA regulates
exposure to toxic substances and other forms of workplace pollution.  The
Department of Labor administers OSHA. OSHA specifies maximum levels of toxic
substance exposure.  OSHA also sets out a "right-to-know" rule which requires
that workers be informed of, and receive training relating to, the physical and
health hazards posed by hazardous materials in the workplace.

Texas Clean Air Act and Texas Natural Resources Conservation Commission
Regulations--Pursuant to the federal Clean Air Act and the Texas Clean Air Act,
the TNRCC has established rules that, among other things, regulate various
types of emissions from industrial sources. Among these rules is a requirement
that each industrial source in Texas that emits any air pollutant be authorized
by a permit, or be exempt from permitting through a standard exemption or
because such facility was in existence as of August 30, 1971 and has not been
modified since then (i.e., is "grandfathered").  Industrial sources that are
located in areas in which the NAAQS have not been attained for certain
pollutants ("non-attainment areas") and that emit such pollutants, are often
subject to additional and/or more stringent rules than similar facilities
located in attainment areas.

Texas Solid Waste Disposal Act ("TSWDA")--The TSWDA and the TNRCC regulations
promulgated thereunder regulate the generation and management of industrial
solid waste, including hazardous waste, and municipal solid waste.  These
regulations include permitting requirements applicable to most facilities that
manage such wastes.  The TNRCC regulations relating to the generation and
management of





                                      I-9
<PAGE>   10
hazardous wastes implement the requirement of RCRA (discussed above).  The
TSWDA also contains enforcement provisions that allow for civil and criminal
penalties and/or injunctive relief for violations of the TSWDA and/or
associated regulations.  A state "superfund" program, which is similar to the
federal Superfund program, was also established by the TSWDA to provide
remediation of inactive sites at which hazardous substances have been released.

Texas Water Code--Chapter 26 of the Texas Water Code and the TNRCC regulations
promulgated thereunder prohibit the unauthorized discharge of waste into or
adjacent to waters of the State.  They also regulate (including requiring
permits) industrial, domestic, and municipal wastewater discharges to ensure
that the state water quality standards are satisfied.  The Texas Water Code
contains enforcement provisions that provide for civil and/or criminal
penalties and/or injunctive relief for violations of the Texas Water Code
and/or associated regulations. Another program mandated by the Texas Water Code
regulates underground storage tanks that store certain materials, including
among other materials gasoline, oil, and other petroleum products, and
established a fee-based fund to remediate contamination from leaking
underground storage tanks.

Texas Oil Spill Prevention and Response Act of 1991 ("OSPRA")--With respect to
oil spills in the marine environment, OSPRA provides a comprehensive legal
framework and funding system allowing the State to establish and monitor oil
spill prevention and response requirements for vessels and facilities that
handle oil, to establish and carry out an effective program for state response
to oil spills, to provide timely and equitable settlement and compensation of
claims for those harmed by oil spills, and to provide for assessment and
restoration for environmental damage from oil spills.  OSPRA supports and
compliments OPA.

State and Local Government Regulation--Many states have been authorized by the
EPA to enforce regulations promulgated under various federal statutes.  In
addition, there are numerous other state as well as local authorities that
regulate the environment, some of which impose more stringent environmental
standards than Federal laws and regulations.  The penalties for violations of
states law vary but typically include injunctive relief, recovery of damages
for injury to air, water or property and fines for non-compliance.

Oil and Gas Operations--The Company's oil and gas drilling and production
activities are generally subject to existing laws and regulations relating to
environmental quality and pollution control.  One associated aspect of the
Company's oil and gas operation is the disposal of used drilling fluids,
saltwater, and crude oil sediments.  In addition, at times low-level naturally
occurring radiation may occur with the production of crude oil and natural gas.
The Company's policy in these areas has been to comply with environmental
regulations and industry standards as they have historically existed.
Environmental standards in these areas are becoming increasingly stringent and
the Company, from time to time, has been required to remediate past practices.
Management believes that such required remediations in the future, if any, will
not have a material adverse impact on the Company's financial position or
results of operations.





                                      I-10
<PAGE>   11


All states in which the Company owns significant producing oil and gas
properties have statutory provisions regulating the production and sale of
crude oil and natural gas.  Regulations generally require permits for the
drilling of wells and extend to the spacing of wells, the prevention of waste
of oil and gas reserves, the rate of production, prevention and clean-up of
pollution and other matters.  In Texas, the Texas Railroad Commission is the
state agency with primary jurisdiction for regulating oil and gas operations.

Historically, the Federal government has instituted a number of regulations
designed to control and limit the market price for crude oil and/or natural
gas.  Under the current weak market conditions and the recent deregulation
practices of the federal government, this area of federal law does not
generally impact the Company's operations.

Marketing Operations--The Company's marketing facilities are subject to a
number of state and federal environmental statutes and regulations, including
the regulation of underground fuel storage tanks.  The EPA's Office of
Underground Tanks has established regulations requiring owners or operators of
underground fuel tanks to demonstrate evidence of financial responsibility for
the costs of corrective action and the compensation of third parties for bodily
injury and property damage caused by sudden and nonsudden accidental releases
arising from operating underground tanks.  In addition, the EPA requires the
installation of leak detection devices and stringent monitoring of the ongoing
condition of underground tanks.  Should leakage develop in an underground tank,
the Company would be obligated to provide for clean up costs, subject to
certain recoveries from the State of Texas sponsored clean up fund.

Transportation Operations--The Company's tank truck operations are conducted
pursuant to authority of the United States Department of Transportation (DOT)
and various State regulatory authorities.  The Company's transportation
operations must also be conducted in accordance with various laws relating to
pollution and environmental control.  Interstate motor carrier operations are
subject to safety requirements prescribed by the DOT.  Such matters as weight
and dimension of equipment are also subject to federal and state regulations.
DOT regulations also require mandatory drug testing of drivers and require
certain tests for alcohol levels in drivers and other safety personnel.  The
trucking industry is subject to possible regulatory and legislative changes
such as increasingly stringent environmental regulations or limits on vehicle
weight and size.  Regulatory change may affect the economics of the industry by
requiring changes in operating practices or by changing the demand for common
or contract carrier services or the cost of providing truckload services.  In
addition, the Company's tank wash facilities are subject to increasingly more
stringent local, state and federal environmental regulations.

Former Coal Operations--Under Kentucky and Illinois law and the Federal Surface
Mining Control and Reclamation Act of 1977, the Company was required to obtain
permits prior to beginning active mining operations.  In order to obtain a
permit, the Company was required to show that its mining operations would meet
certain reclamation and environmental standards. The Company believes it has
complied in all respects with the regulations under which the permits were
issued.

Regulatory Status and Potential Environmental Liability--The operations and
facilities of the Company are subject to numerous federal, state and local
environmental laws and regulations including those described above, as well as
associated permitting and licensing requirements.  The Company regards
compliance with applicable environmental regulations as a critical component of
its overall operation, and devotes significant attention to providing quality
service and products to its customers, protecting the health and safety of its
employees, and protecting the Company's facilities from damage.  Management





                                      I-11
<PAGE>   12
believes the Company has obtained or applied for all permits and approvals
required under existing environmental laws and regulations to operate its
current business.  Management has reported that the Company is not subject to
any pending or threatened environmental litigation or enforcement action(s)
which could materially and adversely affect the Company's business.  While the
company has, where appropriate, implemented operating procedures at each of its
facilities designed to assure compliance with environmental laws and
regulation, the Company, given the nature of its business, is subjected to
environmental risks and the possibility remains that the Company's ownership of
its facilities and its operations and activities could result in civil or
criminal enforcement and public as well as private action(s) against the
Company, which may necessitate or generate mandatory clean up activities,
revocation of required permits or licenses, denial of application for future
permits, or significant fines, penalties or damages, any and all of which could
have a material adverse effect on the Company.

Item 3.  LEGAL PROCEEDINGS

         The Company's subsidiary, Ada Crude Oil Company (Ada), has been named
as one of sixty-three defendants in a lawsuit styled The State of Texas et al
vs Amerada Hess Corporation.  The suit alleges, among other claims, that the
defendants as "common purchasers of oil" discriminated against the plaintiffs
in favor of the defendants' own production and that of others.  The plaintiffs
also seek class certification. In response, the Company has filed a general
denial and has asserted a number of affirmative defenses. Further, the Company
believes plaintiffs' claims against the Company are vague, ambiguous and
without merit.  The Company intends to vigorously contest this matter.

         In the normal course of business, the Company and its subsidiaries
become involved in litigation incident to operations.  Management is of the
opinion that ultimate resolution of all matters of litigation and dispute will
not have a material adverse impact on the Company's financial position or
results of operations.

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

         None.
                      EXECUTIVE OFFICERS OF THE REGISTRANT

         The persons who are currently serving as executive officers of the
Company, their ages and the positions they hold with the Company are as
follows:

<TABLE>
<CAPTION>
       Name                                   Age                       Positions with the Company                 
----------------------                        ---           -------------------------------------------------------
<S>                                            <C>          <C>                                    
K. S. Adams, Jr.                               75           Chairman, President and Chief Executive Officer
William R. Sharp                               73           Vice President-Oil and Gas
Claude H. Lewis                                54           Vice President-Land Transportation
Richard B. Abshire                             45           Vice President-Finance
David B. Hurst                                 44           Secretary
</TABLE>

         Each officer has served in his present position for at least five
years.  No family relationship exists between any of the officers.  Mr. Hurst
is a partner in the law firm of Chaffin & Hurst.





                                      I-12
<PAGE>   13


                                    PART II

Item 5.     MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
            HOLDER MATTERS

         The Company's common stock is traded on the American Stock Exchange.
The following table sets forth the high and low sales prices of the common
stock as published in The Wall Street Journal for issues listed on the American
Stock Exchange for each calendar quarter since January 1, 1996.

<TABLE>
<CAPTION>
                                                                              American Stock Exchange
                                                                             -------------------------
Year                                                                          High               Low
----                                                                         ------            -------
<S>                                                                          <C>               <C>
1996
  First Quarter   . . . . . . . . . . . . . . . . . . . .                     7-7/8             5-3/4
  Second Quarter  . . . . . . . . . . . . . . . . . . . .                     8-5/8             6-1/2
  Third Quarter   . . . . . . . . . . . . . . . . . . . .                        11             6-3/4
  Fourth Quarter  . . . . . . . . . . . . . . . . . . . .                    13-7/8             9-1/2
                                                                                               
1997                                                                                           
  First Quarter   . . . . . . . . . . . . . . . . . . . .                    18-3/8            11-5/8
  Second Quarter  . . . . . . . . . . . . . . . . . . . .                    15-3/8            11-5/8
  Third Quarter   . . . . . . . . . . . . . . . . . . . .                    15-5/8                12
  Fourth Quarter  . . . . . . . . . . . . . . . . . . . .                    16-3/4           13-5/16
</TABLE>                                                                      
                                                                              
         At December 31, 1997 there were 841 holders of record of the Company's
common stock and the closing stock price was $14-3/8 per share.               
                                                                              
         The terms of the Company's bank loan agreement require the Company to
retain at least 50% of annual net income as an addition to total shareholders'
equity, thus such amount would not be available for payment of cash dividends
on the Company's common stock.

         On each of December 15, 1997, 1996 and 1995, the Company paid an
annual cash dividend of $.10, $ .07 and $.05, respectively, to all holders of
its common stock of record on December 1st of each year.  Such dividends
aggregated $422,000, $292,000 and $207,000, respectively.





                                      II-1
<PAGE>   14


Item 6.  SELECTED FINANCIAL DATA



                  FIVE YEAR REVIEW OF SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                  Years Ended December 31,
                                           ------------------------------------------------------------------------
                                               1997            1996             1995            1994         1993
                                           ------------     -----------      -----------    ------------   --------
                                                            (In thousands, except per share data)
<S>                                        <C>              <C>              <C>            <C>            <C>
Revenues:
   Marketing  . . . . . . . . . . .        $  1,921,486     $  1,466,736     $   803,669    $    610,944   $675,915
   Transportation   . . . . . . . .              31,970           21,282          21,390          20,455     16,687
   Oil and gas  . . . . . . . . . .               9,904            9,061           6,378           3,586      2,733
                                           ------------     ------------     -----------    ------------   --------
                                           $  1,963,360     $  1,497,079     $   831,437    $    634,985   $695,335
                                           ============      ===========     ===========    ============   ========

Operating earnings:
   Marketing  . . . . . . . . . . .        $      1,382     $      5,816     $     2,496    $      2,114   $  1,303
   Transportation   . . . . . . . .               5,225            2,356           2,045           2,923      2,354
   Oil and gas    . . . . . . . . .               4,059            3,711          (1,410)(1)       1,272        861
                                           ------------     ------------     -----------    ------------   --------
                                           $     10,666           11,883           3,131           6,309      4,518
Other income (expense):
   General and administrative   . .              (2,578)          (2,783)         (2,176)         (2,018)    (2,015)
   Property sales and other   . . .                 792              142           1,134             583          4
   Interest   . . . . . . . . . . .                (318)            (477)           (526)           (106)      (189)
                                           ------------     ------------     -----------    ------------   -------- 
Earnings before income taxes  . . .               8,562            8,765           1,563           4,768      2,318

Income tax provision
   Current  . . . . . . . . . . . .               1,092              624             100             305        150
   Deferred   . . . . . . . . . . .               1,737            2,500             238           1,446        716
                                           ------------     ------------     -----------    ------------   --------
                                                  2,829            3,124             338           1,751        866
                                           ------------     ------------     -----------    ------------   --------

Net earnings  . . . . . . . . . . .        $      5,733     $      5,641     $     1,225    $      3,017   $  1,452
                                           ============     ============     ===========    ============   ========

Basic and diluted earnings per
   common share   . . . . . . . . .        $       1.36     $       1.34     $       .29    $        .72   $    .35
                                           ============     ============     ===========    ============   ========


FINANCIAL POSITION

Working capital . . . . . . . . . .        $      8,694     $     10,484     $     5,115    $      2,957   $  2,773
Total assets  . . . . . . . . . . .             114,283          110,882          80,917          62,301     50,295
Long-term debt, net of
   current maturities   . . . . . .               6,900            6,171          10,589           9,263      3,947
Shareholders' equity  . . . . . . .              28,138           22,760          15,678          13,233     10,296
Dividends on common shares  . . . .                 422              292             207             124          -

</TABLE>

______________________

(1) The oil and gas operating loss in 1995 resulted from reduced prices for
    natural gas and an increased provision for depreciation, depletion, and 
    amortization ("DD&A"). Contributing to increased DD&A were certain 
    write-downs of oil and gas properties.





                                      II-2
<PAGE>   15
Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
 
RESULTS OF OPERATIONS

Comparison of 1997 to 1996

Marketing

         Marketing segment profitability is dependent upon the spread between
the price paid to suppliers for the commodity purchased (i.e., crude oil or
refined products) and the sales price to the end market customer, less
distribution costs.  Since the Company is marketing a commodity, the gross
purchase price at the supplier level and the gross sales price at the customer
level tend to move in unison.  However, the spread between purchase and sales
contracts will vary with localized supply and demand conditions.  In a
commodity business, operating margins as a percentage of gross revenues are
typically very narrow; e.g., less than 1/2 of 1% in the case of crude oil.  As
a small margin, high volume business, a relatively minor change in the spread
can have a significant impact on earnings.

         The Company's strategy for crude oil marketing is to link purchase and
sales contracts to established quotations (postings) that move with general
market trends.  Thus, the Company is insulated from the impact of general
movements in world crude oil prices.  During 1997, however, crude oil prices
fell from the $25 per barrel range at year-end 1996 to the $17 per barrel
range at year-end 1997.  As a result, the carrying value of the Company's crude
oil inventory held in pipelines was reduced.  During 1997, the Company recorded
cumulative inventory valuation write-downs totaling $1.1 million with a
substantial portion ($500,000) occurring in the fourth quarter of 1997.  While
the Company policy is designed to minimize market risk, some degree of exposure
to unforeseen market conditions remains.

             Gross revenues for the Company's Marketing operations increased by
$454,750,000 or 31%, in the comparative current period as a result of increased
volumes of crude oil purchased at the wellhead and a more active crude oil
trading effort. Average wellhead purchases were 76,000 barrels per day in 1997
versus 58,000 barrels per day in 1996.  Marketing division operating earnings
for 1997 were reduced to $1,382,000 versus $5,816,000 in 1996.  This resulted
from the reversal of the unusually favorable market demand conditions that
existed in 1996.  During the first half of 1996, there were a number of spot
market shortages of crude oil that served to temporarily increase the Company's
margins.

Transportation

      Transportation revenues and operating earnings increased as follows:

<TABLE>
<CAPTION>
                                                                          Percentage
                                     1997                   1996           Increase
                                --------------        ----------------    -----------
    <S>                         <C>                   <C>                    <C>
    Revenues                    $  31,970,000         $   21,282,000          50%
                          
    Operating earnings          $   5,225,000         $    2,356,000         122%
</TABLE>                  

             The revenue increase resulted from generally strong customer
demand during the current year.  Improved customer demand is consistent with
the generally strong United States economy. Operating earnings improved as a
direct result of the increased demand. Because of the fixed cost component of
the company's petrochemical trucking operation, on a percentage basis,
operating earnings will improve at a faster rate than revenues. As presently
configured, the Transportation





                                      II-3
<PAGE>   16


division's fixed costs are approximately $14 million per year and consist
primarily of tractor-trailer rentals, insurance and terminal operating
expenses. Variable costs, which typically approximate 40 percent of gross
revenues, consist primarily of drivers' wages and fuel. Historically, when
revenues increasingly exceed the Company's fixed cost requirements, operating
profits increase at an even faster rate, and vice versa.  As a result of
varying demand conditions, revenues and operating earnings may experience
significant variations between periods.

Oil and Gas

             Oil and gas revenues and operating earnings in 1997 increased by
9% relative to 1996 as a result of increased natural gas volumes and prices.
The Company's recent drilling efforts led to the production volume increase.
Volumes and prices compare as follows:

<TABLE>
<CAPTION>
                                                   Crude Oil                             Natural Gas         
                  Year Ended               --------------------------             --------------------------
                 December 31,                Barrels      Avg. Price                 Mcf's        Avg. Price
                 ------------              ----------     -----------             ------------    ----------
         <S>                                  <C>             <C>                    <C>            <C>
         1997 . . . . . . . . . . . .          62,000          $19.88                3,775,000       $2.29
         1996 . . . . . . . . . . . .          92,000          $18.31                3,450,000       $2.12
         1995 . . . . . . . . . . . .         105,000          $16.58                3,055,000       $1.50
</TABLE>



Other Income (Expense)

         Property sales and other income in 1997 include a $400,000 recovery
from an insurance carrier for prior year overcharges and a $230,000 gain
realized on the sale of twenty-one truck tractors. Seven tank trailers were
sold in 1996 for a $168,000 gain.  Interest expense is reduced in 1997 because
the Company used its excess cash flow to reduce long term debt during the first
eight months of 1997.


Comparison of 1996 to 1995

  Marketing

         Gross revenues for the Company's Marketing operations increased by
$663,067,000, or 83%, in 1996 because of increased volumes of crude oil
purchased at the wellhead and a more active crude oil trading effort.
Comparative average purchases of crude oil at the wellhead were 58,000 barrels
per day in 1996 versus 45,000 barrels per day in 1995. Marketing division
operating margins also increased for 1996 to $5,816,000 versus $2,496,000 for
1995.  The operating margin increase was partially a result of greater sales
volume.  The most significant factor affecting 1996 margins, however, was a
severe crude oil shortage situation that existed in the mid-continent region of
the United States during the first half of 1996.  As a supplier of crude oil to
the region, this demand condition served to temporarily improve the Company's
margins.





                                      II-4
<PAGE>   17
  Oil and Gas

         Oil and gas revenues increased by 42% to $9,061,000 in 1996 relative
to 1995 as a direct result of increased oil and gas prices coupled with
increased natural gas production volumes as shown above.  Oil and gas operating
earnings improved to $3,711,000 in 1996 with improved prices and volumes and
because of a reduced provision for depreciation, depletion and amortization.
The $1,410,000 oil and gas division operating loss experienced in 1995 resulted
from reduced prices for natural gas and a greater increased provision for
depreciation, depletion and amortization. The provision for oil and gas
depreciation, depletion and amortization in 1995 was $6,460,000 as compared to
$3,655,000 in 1996. The provision was reduced in 1996 as a result of lower
capitalized costs subject to amortization and because of favorable oil and gas
reserve revisions.

  Other Income (Expense)

         In 1995, the Company recognized a $704,000 gain upon the sale of 19
tractors and 22 trailers. Also during 1995, the Company substantially completed
its coal land reclamation obligations and as a result, the Company reduced its
estimated liability for future coal related costs by $482,000.


Liquidity and Capital Resources

  Overview

         The Company's liquidity and its capital investment program are
primarily a function of the level of ongoing annual net earnings as adjusted by
the non-cash provisions for depreciation, depletion, amortization and federal
income taxes (See the discussion below concerning the availability of tax
carryforwards to offset taxable income).  In recent years, the Company has
utilized its available cash flow to make discretionary investments in its oil
and gas, transportation and marketing businesses.  The table below illustrates
this relationship.

<TABLE>
<CAPTION>
                                                                   1997          1996           1995  
                                                              ----------        -------         ------
                                                                             (In thousands)
         <S>                                                  <C>              <C>         <C>
         Net earnings . . . . . . . . . . . . . .             $   5,733        $  5,641        $   1,225
         Depreciation, depletion & amortization .                 5,914           6,160            7,649
         Non-cash income taxes  . . . . . . . . .                 1,737           2,500              238
                                                              ---------        --------        ---------
         Funds provided by operations . . . . . .                13,384          14,301            9,112
         Debt and other financing activities  . .                   579          (8,344)          (2,247)
                                                              ---------        -------         --------- 

         Property and equipment  additions  . . .             $  13,963        $  5,957        $   6,865
                                                              =========        ========        =========
</TABLE>

         Historically, the Company's operating earnings from its diversified
operations have been stable and reliable.  Management relies on the continued
stability of this earnings stream in making capital project decisions. All
capital projects are divided into manageable segments and the timing of their
implementation is accelerated or delayed based on current cash flows.





                                      II-5
<PAGE>   18
         The balancing factor for the Company's short term cash needs is the
Company's bank line of credit. For the past five years the Company has
maintained an approximate $4 - 7 million outstanding balance on its bank line
of credit.  Day-to-day fluctuations in cash flow needs are accommodated by
daily borrowing or repayments on the line of credit.  While the Company's bank
line of credit is fully secured, the bank is primarily relying on the Company's
ability to generate cash flow from continuing operations for repayment.

         Also important to the Company's liquidity and capital availability is
the Company's ability to conduct its truck fleet management program through
lease financing transactions.  The Company has readily found lease financing
from a number of major national leasing concerns.  See Note 7 to Consolidated
Financial Statements.   The Company's philosophy is to maintain a modern,
up-to-date fleet of tractors and trailers to accommodate demand for its
services.  This requires frequent replacements as well as modest growth in the
size of the fleet.  Since tractors and trailers hold their value and there is a
large active secondary market for such used equipment, historically the Company
has realized gains upon the disposition of such equipment.

         With respect to the other components of working capital such as
accounts receivable and accounts payable, because of the high volume of
transactions that flow through the Company, such items can fluctuate
dramatically from day to day and no particular significance should be ascribed
to such variations.  A key factor that provides order and discipline for cash
flow is the practice of the crude oil industry to settle all accounts by cash
payment on the 20th of the month following inception of the date of the
transaction.  Since 90% of the Company's business is tied to crude oil
marketing, this settlement process is critical and the Company relies on
payments received from its customers to satisfy the requirements to pay its
suppliers on the same day.  See Note 4 to Consolidated Financial Statements for
a discussion of "Concentration of Credit Risk."  Also,  with respect to the
other components of working capital, the Company relies on its bank lines of
credit to balance day-to-day cash needs.

  Banking Relationships

         The Company's bank loan agreement provides for two separate lines of
credit with interest at the bank's prime rate minus 1%.  The agreement also
provides for an interest rate option at the lender's quoted Eurodollar rate
(LIBOR) plus 2%.  The working capital loan provides for borrowing up to $5
million based on 80% of eligible accounts receivable and 50% of eligible
inventories.  Available capacity under the line is calculated monthly and as of
December 31, 1997 was established at $4,714,000. The working capital loan also
provides for the issuance of letters of credit.  The amount of each letter of
credit obligation is deducted from the borrowing capacity.  The oil and gas
production loan provides for flexible borrowings subject to a borrowing base
established semi-annually by the bank.  The borrowing base is presently
established at $3 million, with the next scheduled redetermination date being
September 1, 1998.  The line of credit loans are scheduled to expire on October
31, 1999, with the then present balance outstanding converting to a term loan
payable in 12 equal quarterly installments.  As of December 31, 1997, bank debt
outstanding under the Company's two revolving credit facilities totaled
$6,900,000, with letters of credit outstanding totaling $25,000.





                                      II-6
<PAGE>   19
         The Company's GulfMark subsidiary maintains a separate banking
relationship in order to support its crude oil purchasing activities.  GulfMark
has established a bank letter of credit facility that is maintained on a
month-to-month basis in order to secure the purchase of crude oil.  In addition
to providing letters of credit, GulfMark's banking institution will also
finance up to $2,000,000 of crude oil inventory and certain accounts receivable
associated with crude oil sales. Such financing is provided on a demand note
basis with interest at the bank's prime rate plus 2 percent. As of December 31,
1997, no amounts were outstanding under this facility.

  Investment Activities

         During 1997, the Company invested approximately $5.6 million in oil
and gas projects and $1.4 for expansion of its truck terminals and fleet and
$3.6 million for the construction of a 7.5 mile offshore crude oil gathering
pipeline.  An additional $3.3 million was also invested in facilities, trucks
and equipment for the Company's marketing operations.  Oil and gas exploration
and development efforts continue and the Company plans to invest approximately
$6 million toward such projects in 1998.  An additional $2 million is
anticipated to be invested during 1998 toward improvements in the Company's
transportation facilities.

         During 1997, the Company entered into certain operating lease
transactions in order to acquire 55 tractors and 55 trailers for use in its
common carrier fleet.  Further, during 1998 the Company anticipates entering
into certain operating lease transactions in order to acquire approximately 25
additional tractors and 65 trailers for use in its trucking fleet.  Annual
lease costs associated with the planned 1998 additions are estimated to be $1
million.

  Market Risk

         Market risk represents the potential loss that can be caused by a
change in the market value of an asset or a commitment.  As part of its crude
oil marketing operations, the Company enters into forward contracts to minimize
the impact of market fluctuations on its purchases of crude oil.  The Company
also enters into swap agreements with certain customers to provide for them a
floor price on the purchase of certain supply.  In each instance, the Company
enters into a separate matching swap agreement with a third party in order to
minimize the market risk of these financial instruments.  The contracts are no
longer than one year in duration.  The Company monitors all commitments and
positions to ensure that all positions are effectively balanced.

  Year 2000

         The Company has begun the process of identifying, evaluating and
implementing new operating computer systems necessary to address potential year
2000 compliance issues.  Many of the Company's operating and financial systems
are already compliant.  The Company's remaining operating and financial systems
are scheduled for compliance in phases and will be compliant by the year 2000.
The Company is communicating with software vendors, business partners and
others with which it conducts business to provide written assurances that their
systems will be year 2000 compliant.  The total future cost associated with
potential year 2000 compliance issues has not been determined, but is not
expected to have a material adverse effect on the consolidated financial
position or results of operations of the Company.





                                      II-7
<PAGE>   20
  Other

         As a result of certain tax loss and statutory depletion carryforwards,
historically, the Company's obligation to pay federal income taxes was
substantially reduced.  Because of this situation, in recent years the Company
has been required to pay state income and federal alternative minimum tax only.
As a result, the Company's recorded provision for federal income taxes
represented primarily a non-cash charge to earnings based on the federal
statutory tax rate.  Beginning in 1997, such carryforwards are depleted, and
the Company's effective current federal tax rate now approaches the statutory
(34%) level.  See also Note 3 to Consolidated Financial Statements.

         From time to time in recent years there has been an oversupply of
crude oil and natural gas in the marketplace.  This in turn has led to a
reduced level of prices for crude oil and natural gas, and as a result, there
is a high degree of uncertainty regarding the future market price for oil and
gas.  Historically, however, demand for oil and gas has been in balance with
readily available supplies, and the Company believes the long-term prospects
for the oil and gas industry continue to be good.





                                      II-8
<PAGE>   21
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                         INDEX TO FINANCIAL STATEMENTS

Item 8.
<TABLE>
<CAPTION>
                                                                                                   Page
                                                                                                   ----
<S>                                                                                                <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS  . . . . . . . . . . . . . . . . . . . . . . . . .        II-10

FINANCIAL STATEMENTS:

         Consolidated Balance Sheet as of
           December 31, 1997 and 1996   . . . . . . . . . . . . . . . . . . . . . . . . . .        II-11

         Consolidated Statement of Earnings for
           the Years Ended December 31, 1997,
           1996 and 1995  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        II-12

         Consolidated Statement of Shareholders'
           Equity for the Years Ended
           December 31, 1997, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . .        II-13

         Consolidated Statement of Cash Flows
           for the Years Ended December 31,
           1997, 1996 and 1995  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        II-14

         Notes to Consolidated Financial Statements   . . . . . . . . . . . . . . . . . . .        II-15

         Supplementary Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . .        II-25

</TABLE>




                                      II-9
<PAGE>   22


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Adams Resources & Energy, Inc.:

         We have audited the accompanying consolidated balance sheet of Adams
Resources & Energy, Inc. (a Delaware corporation) and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
earnings, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1997.  These consolidated financial statements
are the responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

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

         In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Adams
Resources & Energy, Inc. and subsidiaries as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.

         As discussed in Note 1 to the Consolidated Financial Statements,
effective December 31, 1995, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of".




                                                            ARTHUR ANDERSEN LLP



Houston, Texas
March 16, 1998





                                     II-10
<PAGE>   23
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         December 31,        
                                                                                 ----------------------------
                           ASSETS                                                    1997             1996   
                                                                                 -------------     ----------
<S>                                                                              <C>               <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                      $    6,496        $    3,782
  Accounts receivable, net                                                           73,806            80,238
  Inventories                                                                         5,092             4,867
  Prepaids                                                                            1,675             1,116
  Deferred income taxes                                                                   -             1,475
                                                                                 ----------        ----------

                 Total current assets                                                87,069            91,478
                                                                                 ----------        ----------

PROPERTY AND EQUIPMENT:
  Marketing                                                                          14,432             7,607
  Transportation                                                                     11,144            10,244
  Oil and gas (successful efforts method)                                            30,623            25,677
  Other                                                                                  99                79
                                                                                 ----------        ----------
                                                                                     56,298            43,607
  Less -Accumulated depreciation, depletion
          and amortization                                                          (30,361)          (25,440)
                                                                                 ----------        ---------- 
                                                                                     25,937            18,167
                                                                                 ----------        ----------


OTHER ASSETS                                                                          1,277             1,237
                                                                                 ----------        ----------
 

                                                                                 $  114,283        $  110,882
                                                                                 ==========        ==========


                 LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                               $   74,829        $   77,449
  Accrued and other liabilities                                                       3,475             3,481
  Current maturities of long-term debt                                                   71                64
                                                                                 ----------        ----------

         Total current liabilities                                                   78,375            80,994

LONG-TERM DEBT, less current maturities                                               6,900             6,171

OTHER LIABILITIES                                                                       870               957
                                                                                 ----------        ----------
                                                                                     86,145            88,122
                                                                                 ----------        ----------

COMMITMENTS AND CONTINGENCIES (NOTE 7)

SHAREHOLDERS' EQUITY:
  Preferred stock, $1.00 par value, 960,000
    shares authorized, none outstanding                                                   -                 -
  Common stock, $.10 par value, 7,500,000 shares
    authorized, 4,217,596 and 4,203,346 shares
    issued and outstanding, respectively                                                422               420
  Contributed capital                                                                11,693            11,628
  Retained earnings since December 31, 1992                                          16,023            10,712
                                                                                 ----------        ----------

       Total shareholders' equity                                                    28,138            22,760
                                                                                 ----------        ----------

                                                                                 $  114,283        $  110,882
                                                                                 ==========        ==========
</TABLE>

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





                                     II-11
<PAGE>   24
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF EARNINGS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                              Years Ended December 31,         
                                                                        -----------------------------------------
                                                                             1997         1996            1995      
                                                                          ----------    -----------    ----------
<S>                                                                     <C>
REVENUES:
   Marketing                                                            $   1,921,486  $  1,466,736 $     803,669
   Transportation                                                              31,970        21,282        21,390
   Oil and gas                                                                  9,904         9,061         6,378
                                                                        -------------  ------------ -------------
                                                                            1,963,360     1,497,079       831,437
                                                                        -------------  ------------ -------------
COSTS AND EXPENSES:
   Marketing                                                                1,918,885     1,459,021       800,567
   Transportation                                                              26,106        18,346        18,814
   Oil and gas                                                                  1,810         1,695         1,328
   General and administrative                                                   2,578         2,783         2,176
   Depreciation, depletion and amortization                                     5,914         6,160         7,649
                                                                        -------------  ------------ -------------
                                                                            1,955,293     1,488,005       830,534
                                                                        -------------  ------------ -------------

OPERATING EARNINGS                                                              8,067         9,074           903

OTHER INCOME (EXPENSE):
   Property sales and other                                                       813           168         1,186
    Interest                                                                     (318)         (477)         (526)
                                                                        -------------- ------------  ------------ 

EARNINGS BEFORE INCOME TAXES                                                    8,562         8,765         1,563

INCOME TAX PROVISION
   Current                                                                      1,092           624           100
   Deferred                                                                     1,737         2,500           238
                                                                        -------------  ------------ -------------
                                                                                2,829         3,124           338
                                                                        -------------  ------------ -------------

NET EARNINGS                                                            $       5,733  $      5,641 $       1,225
                                                                        =============  ============ =============

BASIC AND DILUTED EARNINGS PER SHARE                                    $        1.36  $       1.34 $         .29
                                                                        =============  ============ =============

DIVIDENDS PER COMMON SHARE                                              $         .10  $        .07 $         .05
                                                                        =============  ============ =============
</TABLE>




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





                                     II-12
<PAGE>   25


                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                                        TOTAL
                                                      COMMON         CONTRIBUTED          RETAINED   SHAREHOLDERS'
                                                      STOCK            CAPITAL            EARNINGS      EQUITY
                                                  --------------   ---------------        --------    ----------
<S>                                               <C>        <C>   <C>     <C>         <C>            <C>
BALANCE, December 31, 1994  . . . . . . . . .     $          418   $         8,470     $     4,345    $   13,233
  Stock options exercised   . . . . . . . . .                  2                60               -            62
  Deferred income taxes (Note 3)  . . . . . .                  -             1,365               -         1,365
  Net earnings  . . . . . . . . . . . . . . .                  -                 -           1,225         1,225
  Dividends paid on common stock  . . . . . .                  -                 -            (207)         (207)
                                                  --------------   ---------------     -----------    ---------- 
BALANCE, December 31, 1995  . . . . . . . . .                420             9,895           5,363        15,678
  Stock options exercised   . . . . . . . . .                  -                23               -            23
  Deferred income taxes (Note 3).........                      -             1,710               -         1,710
  Net earnings  . . . . . . . . . . . . . . .                  -                 -           5,641         5,641
  Dividends paid on common stock  . . . . . .                  -                 -            (292)         (292)
                                                  --------------   ---------------     -----------    ---------- 
BALANCE, December 31, 1996  . . . . . . . . .                420            11,628          10,712        22,760
  Stock options exercised   . . . . . . . .                   2                 65               -            67
  Net earnings .  . . . . . . . . . . . . . .                  -                 -           5,733         5,733
  Dividends paid on common stock  . . . . . .                  -                 -            (422)         (422)
                                                  --------------   ---------------     -----------    ---------- 
BALANCE, December 31, 1997  . . . . . . . . .     $          422   $        11,693     $    16,023    $   28,138
                                                  ==============   ===============     ===========    ==========
</TABLE>





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





                                     II-13
<PAGE>   26

                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   Years Ended December 31,
                                                                          ---------------------------------------------
                                                                               1997             1996            1995   
                                                                          -----------      -----------      -----------
<S>                                                                       <C>              <C>              <C>
CASH PROVIDED BY OPERATIONS:
  Net earnings  . . . . . . . . . . . . . . . . . . . . . . . . .         $     5,733      $     5,641      $     1,225
  Items of income not requiring (providing) cash -
    Depreciation, depletion and amortization  . . . . . . . . . .               5,914            6,160            7,649
    Deferred income taxes . . . . . . . . . . . . . . . . . . . .               1,737            2,500              238
    Gain on sales of properties . . . . . . . . . . . . . . . . .                (230)            (168)            (704)
    Other, net  . . . . . . . . . . . . . . . . . . . . . . . . .                (389)            (337)          (1,208)
  Decrease (increase) in accounts receivable  . . . . . . . . . .               6,432          (29,754)         (14,532)
  Decrease (increase) in inventories  . . . . . . . . . . . . . .                (225)          (1,690)          (1,053)
  Decrease (increase) in prepaids . . . . . . . . . . . . . . . .                (559)             (96)            (468)
  Increase (decrease) in accounts payable . . . . . . . . . . . .              (2,620)          27,912           14,117
  Increase (decrease) in accrued liabilities  . . . . . . . . . .                  (6)           1,065               29
                                                                          -----------      -----------      -----------
       Net cash provided by operating activities  . . . . . . . .              15,787           11,233            5,293
                                                                          -----------      -----------      -----------

INVESTING ACTIVITIES:
  Property and equipment additions  . . . . . . . . . . . . . . .             (13,963)          (5,957)          (6,865)
  Proceeds from property sales  . . . . . . . . . . . . . . . . .                 509              742              736
                                                                          -----------      -----------      -----------
       Net cash used in investing activities  . . . . . . . . . .             (13,454)          (5,215)          (6,129)
                                                                          -----------      -----------      ----------- 

FINANCING ACTIVITIES:
  Borrowings  . . . . . . . . . . . . . . . . . . . . . . . . . .               3,300                -            2,375
  Repayment of debt . . . . . . . . . . . . . . . . . . . . . . .              (2,564)          (6,004)             (52)
  Issuance of common stock  . . . . . . . . . . . . . . . . . . .                  67               23               62
  Dividend payments . . . . . . . . . . . . . . . . . . . . . . .               (422)             (292)            (207)
                                                                          -----------      -----------      ----------- 
      Net cash (used in) provided by financing activities . . . .                 381           (6,273)           2,178
                                                                          -----------      ------------     -----------
INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS   . . . . . . . . . . . . . . . . . . . . . . . .               2,714             (255)           1,342

CASH AND CASH EQUIVALENTS AT BEGINNING
     OF YEAR  . . . . . . . . . . . . . . . . . . . . . . . . . .               3,782            4,037            2,695
                                                                          -----------      -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR  . . . . . . . . . . . .         $     6,496      $     3,782      $     4,037
                                                                          ===========      ===========      ===========
</TABLE>


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





                                     II-14
<PAGE>   27
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

         The accompanying consolidated financial statements include the
accounts of Adams Resources & Energy, Inc., a Delaware corporation, and its
subsidiaries (the "Company") after elimination of all significant intercompany
accounts and transactions.  Certain reclassifications have been made to prior
year balances in order to conform to current year classifications.

  Nature of Operations

         The Company is engaged in the business of oil and gas exploration and
production, crude oil marketing, petroleum products marketing and tank truck
transportation of petroleum products and liquid chemicals.  Its primary area of
operation is within a 500 mile radius of Houston, Texas.

  Cash and Cash Equivalents

         Cash and cash equivalents include any treasury bill, commercial paper,
money market fund or federal fund with a maturity of 30 days or less.  Included
in the cash balance at December 31, 1997 and 1996 is a $2 million deposit to
collateralize the Company's month-to-month crude oil letter of credit facility.
See Note 2 to Consolidated Financial Statements.

  Inventories

         Crude oil and petroleum products inventories are carried at the lower
of cost or market.  Due to yearend market conditions, the Company recorded a
writedown of $500,000 on its December 31, 1997 crude oil inventory.  Petroleum
products inventories include gasoline, lubricating oils and other petroleum
products purchased for resale and are priced at cost determined primarily on
the first-in, first-out basis, while crude oil inventory is priced at average
cost.  Materials and supplies inventories are included in inventories at
specific cost, with a valuation allowance provided if needed.  Components of
inventory are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                    December 31,          
                                                                             -----------------------------
                                                                                   1997        1996   
                                                                                 --------    -------- 
             <S>                                                                 <C>           <C>
             Crude oil  . . . . . . . . . . . . . . . . . . . . .                $  3,638    $  3,608
             Petroleum products . . . . . . . . . . . . . . . . .                   1,062         973
             Materials and supplies . . . . . . . . . . . . . . .                     392         286
                                                                                 --------    --------
                                                                                 $  5,092    $  4,867
                                                                                 ========    ========
</TABLE>

  Property and Equipment

         Expenditures for major renewals and betterments are capitalized, and
expenditures for maintenance and repairs are expensed as incurred.  Interest
costs incurred in connection with major capital expenditures are capitalized
and amortized over the lives of the related assets. When properties are retired
or sold, the related cost and accumulated depreciation, depletion and
amortization ("DD&A") are removed from the accounts and any gain or loss is
reflected in earnings.





                                     II-15
<PAGE>   28
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Oil and gas  exploration and development expenditures are accounted
for in accordance with the successful efforts method of accounting.  Direct
costs of acquiring developed or undeveloped leasehold acreage, including lease
bonus, brokerage and other fees, are capitalized. Exploratory drilling costs
are initially capitalized until the properties are evaluated and determined to
be either productive or nonproductive.  If any exploratory well is determined
to be nonproductive, the capitalized costs of drilling the well are charged to
expense. Costs incurred to drill and complete development wells, including dry
holes, are capitalized.  Effective December 31, 1995, the Company adopted the
requirements of Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting For the Impairment of Long- Lived Assets and Long-Lived Assets to
Be Disposed Of", which specifies, in certain instances, that the carrying
values of assets be written down to fair values.  In 1995, one of the Company's
proved oil and gas fields was deemed impaired because it was not expected to
individually recover its entire carrying value.  A $677,000 pretax charge for
this asset impairment was included in 1995 DD&A.

         Producing oil and gas leases, equipment and intangible drilling costs
are depleted or amortized over the estimated recoverable reserves using the
unit-of-production method.  Other property and equipment is depreciated using
the straight-line method over the estimated average useful lives of eight to
twenty years for marketing, three to fifteen years for transportation and ten
to twenty  years for all others. The 1996 provision for depreciation, depletion
and amortization includes a $1,167,000 asset impairment recognized by the
Company on certain refined product marketing facilities and equipment. The
impairment was recorded because of continued operating and cash flow losses
associated with these assets.

  Other Assets

         Included in other assets is $1,137,000 held in escrow as part of the
Company's efforts to comply with State of Kentucky regulations governing
certain of the Company's former coal mining operations.  The Company is in the
final stage of obtaining approval for land reclamation on a 280 acre tract in
Kentucky.  When the State issues its final approval, the escrowed cash will be
returned to the Company.

  Crude Oil Marketing Activities

         The Company enters into forward contracts to minimize the impact of
market fluctuations on its purchases of crude oil.  The Company does not
consider these contracts to be financial instruments since the contracts permit
settlement in the delivery of crude oil.  These contracts are no longer than
one year in duration.  Gains and losses due to changes in the underlying market
value of crude oil are recognized in cost of sales in the month of physical
delivery.

         The Company also utilizes swap agreements with two counterparties,
which are financial instruments requiring payments to (or receipt of payments
from) counterparties based on the differential between a fixed and variable
price for stated volumes over a contractual period of time.  For each swap
agreement written, the Company enters into an offsetting swap agreement with a
separate counterparty. These swap agreements are accounted for using the
mark-to-market method of accounting and the gain or loss is recorded to cost of
sales in the period of change in the market.  Gains and losses on these
agreements were immaterial to the Company for the years ended December 31, 1997
and 1996.  No such agreements were utilized in 1995.





                                     II-16
<PAGE>   29

                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Statement of Cash Flows

         Interest paid (net of interest capitalized) totaled  $323,000,
$619,000 and $689,000 respectively, during the years ended December 31, 1997,
1996 and 1995.  Income taxes paid during these same periods totaled $2,075,000,
$564,000 and $243,000, respectively.

  Earnings Per Share

         In February 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 128, "Earnings Per Share", which established new standards for
computing and presenting earnings per share. The provisions of the statement
are effective for fiscal years ending after December 15, 1997, and accordingly,
have been adopted in the accompanying financial statements.  Under the
provisions of SFAS No. 128, the presentation of primary earnings per share has
been replaced with basic earnings per share, and fully diluted earnings per
share presentations have been replaced with diluted earnings per share for
potentially dilutive securities.  All prior period earnings per share data have
been restated.  Earnings per share are based on the weighted average number of
shares of common stock and common stock equivalents outstanding during the
period.  Such shares outstanding averaged 4,210,471 for 1997, 4,200,225 for
1996, and 4,189,097 for 1995.

  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 at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period.  Actual results could differ from those estimates.
Examples of significant estimates used in the accompanying consolidated
financial statements include the accounting for depreciation, depletion and
amortization, income taxes and contingencies.

  Recent Accounting Pronouncements

         In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income."  The statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements.  The statement requires (a) classification of items of
other comprehensive income by their nature in a financial statement and (b)
display of the accumulated balance of other comprehensive income separate from
retained earnings and additional paid-in capital in the equity section of the
balance sheet.  SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997 and reclassification of financial statements for earlier
periods provided for comparative purposes is required.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information."  Under the new standard,
companies will be required to report certain information about operating
segments in consolidated statements.  Operating segments will be determined
based on the method by which management organizes its business for making
operating decisions and assessing performance.  The standard also requires that
companies report certain information about their products and services, the
geographic areas in which they operate, and their major customers.  SFAS No.
131 is effective for financial statements for periods beginning after December
15, 1997.





                                     II-17
<PAGE>   30
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         SFAS No. 130 and 131 will not have any effect on the Company's
financial position or results of operations.  Management is evaluating what, if
any, additional disclosures may be required when these two statements are
implemented.

 (2)  LONG-TERM DEBT

         Long-term debt is comprised of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                          December 31,       
                                                                                     ------------------------
                                                                                        1997          1996   
                                                                                     -----------    ---------
     <S>                                                                             <C>            <C>
     Bank lines of credit, secured by substantially all of
           the Company's (excluding GulfMark's) assets, due
           in twelve quarterly installments commencing on
           October 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . .          $     6,900    $   6,100
     Notes payable in varying installments
           through September 1998, interest rate up
           to 10%, secured by certain land and equipment  . . . . . . . . .                   71          135
                                                                                     -----------    ---------
                          Total debt  . . . . . . . . . . . . . . . . . . .                6,971        6,235
           Less - current maturities  . . . . . . . . . . . . . . . . . . .                   71           64
                                                                                     -----------    ---------

     Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $     6,900    $   6,171
                                                                                     ===========    =========
</TABLE>


         The Company's revolving bank loan agreement provides for two separate
lines of credit with interest at the bank's prime rate minus 1%.  The agreement
also provides for an interest rate option at the lender's quoted Eurodollar
rate (LIBOR) plus 2%.  The first line of credit or working capital loan
provides for borrowings up to $5 million based on the total of 80% of eligible
accounts receivable and 50% of eligible inventories.  Available borrowing
capacity under the working capital line is calculated monthly and as of
December 31, 1997 was established at $4,714,000 with $4,200,000 outstanding at
year end 1997.  The working capital loan also provides for the issuance of
letters of credit.  The amount of each letter of credit obligation is deducted
from the borrowing capacity.  As of December 31, 1997, letters of credit under
this facility totaled $25,000.  The second line of credit or oil and gas
production loan provides for flexible borrowings, subject to a borrowing base
established semi-annually by the bank. The borrowing base is presently
established at $3 million, with the next scheduled redetermination date being
September 1, 1998. As of December 31, 1997, $2,700,000 was outstanding under
the oil and gas production loan facility.  The revolving line of credit loans
are scheduled to expire on October 31, 1999, with the then present balance
outstanding converting to a term loan payable in 12 equal quarterly
installments.

         The revolving loan agreement, among other things, places certain
restrictions on the Company with respect to additional borrowings and the
purchase or sale of assets, as well as requiring the Company to comply with
certain financial covenants, including maintaining a 1.0 to 1.0 ratio of
consolidated current assets to consolidated current liabilities. The Company is
also required to restrict from dividend payment at least 50% of annual net
income.

         A subsidiary of the Company (Gulfmark) maintains a separate banking
relationship to provide letters of credit and to provide financing for up to $2
million of crude oil inventories and certain accounts





                                     II-18
<PAGE>   31
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

receivable associated with sales of crude oil.  Such financing is provided on a
demand note basis with interest at the bank's prime rate plus 2 percent.  The
letter of credit and demand note facilities are secured by substantially all of
GulfMark's assets.  GulfMark had approximately $85 million and $78.6 million in
letters of credit outstanding as of December 31, 1997 and 1996, respectively,
in support of its crude oil purchasing activities.  As of December 31, 1997 and
1996, no amounts were outstanding under the Gulfmark term loan facility.

         The Company's average effective interest rate for 1997, 1996, and 1995
was 7.5%, 7.9% and 8.2%, respectively.  During 1995, $330,000 of interest
incurred was capitalized.  No interest was capitalized during 1997 or 1996.  At
December 31, 1997, the scheduled aggregate principal maturities of the
Company's long-term debt are:  1998 - $71,000; 1999 - $575,000; 2000 -
$2,300,000; 2001 - $2,300,000; and 2002 - $1,725,000.

 (3)  INCOME TAXES

         The following table shows the components of the Company's income tax
provision (in thousands):

<TABLE>
<CAPTION>
                                                                           Years Ended December 31,          
                                                                       --------------------------------------
                                                                         1997          1996           1995   
                                                                       ----------    ----------     ---------
         <S>                                                           <C>           <C>            <C>
         Current:
             Federal  . . . . . . . . . . . . . . . . . . . . . .      $      707    $      170     $      30
             State  . . . . . . . . . . . . . . . . . . . . . . .             385           454            70
                                                                       ----------    ----------     ---------
                                                                            1,092           624           100
                                                                       ----------    ----------     ---------
         Deferred:
             Federal  . . . . . . . . . . . . . . . . . . . . . .           1,737         2,500           238
                                                                       ----------    ----------     ---------
                                                                       $    2,829    $    3,124     $     338
                                                                       ==========    ==========     =========
</TABLE>


         The following table shows the components of the Company's deferred
income tax asset and liability (in thousands):

<TABLE>
<CAPTION>
                                                                                           December 31,        
                                                                                     --------------------------
                                                                                       1997            1996    
                                                                                     ----------      ----------
         

         <S>                                                                         <C>             <C>
         Statutory depletion carryforward . . . . . . . . . . . . . . . . .          $        -      $   1,434
         Excess tax (book) basis of fixed assets and other  . . . . . . . .                (229)            41
                                                                                     ----------      ---------

         Deferred tax asset (liability) . . . . . . . . . . . . . . . . . .          $     (229)     $   1,475
                                                                                     ==========      =========
</TABLE>


         During 1997, the Company used its remaining statutory depletion
carryforwards totaling $4,219,000 to reduce taxable earnings.  The Company
fully utilized its alternative minimum tax credit and remaining net operating
loss carryforwards in 1996.  For the years ended December 31, 1996 and 1995,
the valuation allowance was reduced by $1,710,000 and $1,365,000, respectively,
with such amounts being credited to contributed capital, in order to reflect
pre-1992 carryforwards then expected to be utilizable.





                                     II-19
<PAGE>   32
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         A reconciliation of taxes computed at the corporate federal income tax
rate to the reported income tax provision is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                             Years Ended December 31,        
                                                                         ------------------------------------
                                                                           1997         1996          1995   
                                                                         ----------   ----------    ---------
         <S>                                                             <C>          <C>           <C>
         Statutory federal income tax provision at 34%  . . .            $    2,780   $    2,825    $     531
         State income tax provision . . . . . . . . . . . . .                   385          454           70
         Federal statutory depletion  . . . . . . . . . . . .                  (340)        (175)        (221)
         Other  . . . . . . . . . . . . . . . . . . . . . . .                     4           20          (42)
                                                                         ----------   ----------    --------- 
                 Income taxes as reported . . . . . . . . . .            $    2,829   $    3,124    $     338
                                                                         ==========   ==========    =========
</TABLE>

(4)  FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

  Fair Value of Financial Instruments

         Cash Equivalents, Long and Short Term Debt

     The carrying amount of cash equivalents are assumed to approximate their
fair values because of the short maturities of these instruments.
Substantially all of the Company's long and short term debt obligations bear
interest at floating rates.  As such, carrying amounts approximate fair values.

         Trading Activities

     During 1997 and 1996, the Company entered into swap agreements which
require payments to (or receipt of payments from) counterparties based on the
differential between a fixed and variable price for the commodities specified.
The Company accounts for these agreements using the mark-to-market method of
accounting and records the gain or loss as a cost of sales in the period of
change in the market with an offsetting entry to trade accounts receivable or
payable as appropriate.  This activity was not material to the Company's
financial position or results of operations in 1997 or 1996.

     The Company does not consider its forward contracts to be financial
instruments since the contracts permit settlement through the delivery of crude
oil.

  Concentration of Credit Risk

         Credit risk represents the account loss which the Company would absorb
if its customers failed to perform pursuant to contractual terms.  Management
of credit risk involves a number of considerations, such as the financial
profile of the customer, the value of collateral held, if any, specific terms
and duration of the contractual agreement, and the customer's sensitivity to
economic developments.  The Company has established various procedures to
manage credit exposure, including initial credit approval, credit limits, and
rights of offset.  Letters of credit and guarantees are also utilized to limit
credit risk.

         The Company's largest customers consist of large multinational
integrated oil companies.  In addition, the Company transacts business with
independent oil producers, major chemical concerns, crude oil trading companies
and a variety of commercial energy users. Accounts receivable associated with
crude oil marketing activities comprise approximately 90% of the Company's total
receivables as of





                                     II-20
<PAGE>   33
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1997, and industry practice requires payment for purchases of
crude oil to take place on the 20th of the month following a transaction.  The
Company's credit policy and the relatively short duration of receivables
mitigate the amount of the allowance for doubtful accounts required. The
Company had accounts receivable from one customer that comprised 20% of total
receivables at December 31, 1997 and from two customers that comprised 35% and
12%, respectively, of total receivables at December 31, 1996.

         An allowance for doubtful accounts is provided on non-crude oil
marketing receivables and accounts receivable are net of allowances for
doubtful accounts at December 31, 1997 and 1996, of $98,000 and $97,000,
respectively.

(5)  EMPLOYEE BENEFITS

         The Company's 1984 stock option plan authorized the granting of
incentive stock options or non-qualified stock options to certain executives
and key employees to purchase an aggregate of 125,000 shares of common stock at
not less than the fair market value at the date of grant. The plan expired in
1994 with respect to the granting of additional stock options.  During 1997,
14,250 stock options were exercised at prices ranging from $3.625 to $4.75 per
share.  During 1996, 5,750 stock options were exercised at prices ranging from
$3.625 to $4.75 per share.  During 1995, 16,500 stock options were exercised at
prices ranging from $3.625 to $4.75 per share. As of December 31, 1997, the
plan was terminated and the remaining 4,000 unexecuted options expired.

The Company maintains a 401(k) plan for the benefit of its employees. Company
contributions to the plan were $180,000 in 1997, $180,000 in 1996, and $120,000
in 1995.

(6)  TRANSACTIONS WITH RELATED PARTIES

         Sakco, Ltd. ("Sakco") and Kasco, Ltd. ("Kasco"), family limited
partnerships of which Mr. K. S. Adams, Jr., Chairman and President, is a
limited partner, Sakdril, Inc. ("Sakdril"), a wholly owned subsidiary of KSA
Industries Inc. (KSAI), and certain officers and members of the Board of
Directors of the Company have participated as working interest owners in
certain oil and gas wells and programs drilled or administered by the Company.
Sakco, Kasco, Sakdril and the officers and directors participated in each of
the wells and programs on the same terms as those afforded the other
non-affiliated working interest owners.  Associated with this activity, as of
December 31, 1997, the Company was owed $38,000 from Kasco and Sakco, and the
Company owed $720,000 to Kasco and Sakco.  As of December 31, 1996, the Company
was owed $161,000 from Kasco and Sakco, and the Company owed $580,000 to Kasco
and Sakco.

         KSAI and other affiliated entities paid the Company approximately
$103,000 and $292,000, respectively, in the years ended December 31, 1996 and
1995 for rental of space in the Company's leased office building.  Such rental
charges are comparable to those charged to unaffiliated entities.  During 1996,
the Company terminated its master office lease agreement and the related
sub-lease agreement with KSAI.

         David B. Hurst, Secretary of the Company, is a partner in the law firm
of Chaffin & Hurst. The





                                     II-21
<PAGE>   34
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company has been represented by Chaffin & Hurst since 1974 and plans to use the
services of that firm in the future.  Chaffin & Hurst currently leases office
space from the Company. Such transactions with Chaffin & Hurst are on the same
terms as those prevailing at the time for comparable transactions with unrelated
entities.

         The Company also enters into certain transactions in the normal course
of business with other affiliated entities.  These transactions with affiliated
companies are on the same terms as those prevailing at the time for comparable
transactions with unrelated entities.

(7)  COMMITMENTS AND CONTINGENCIES

         The Company has operating lease arrangements for tractors, trailers,
office space, warehousing and other equipment and facilities.  Rental expense
for the years ended December 31, 1997, 1996, and 1995 was $5,933,000,
$3,827,000 and $4,037,000, respectively.  At December 31, 1997, commitments
under long-term noncancelable operating leases for the next five years and
thereafter are payable as follows:  1998 - $3,947,000; 1999 - $3,181,000;  2000
- $2,448,000; 2001 - $2,221,000; 2002 - $1,379,000;  2003 and thereafter -
$2,691,000.

         The Company's subsidiary, Ada Crude Oil Company (Ada), has been named
as one of sixty-three defendants in a lawsuit styled The State of Texas et al
vs Amerada Hess Corporation.  The suit alleges, among other claims, that the
defendants as "common purchasers of oil" discriminated against the plaintiffs
in favor of the defendants' own production and that of others.  The plaintiffs
also seek class certification. In response, the Company has filed a general
denial and has asserted a number of affirmative defenses.  Further, the Company
believes plaintiffs' claims against the Company are vague, ambiguous and
without merit.  The Company intends to vigorously contest this matter.

          In the normal course of business, the Company and its subsidiaries
become involved in litigation incident to operations.  Management is of the
opinion that ultimate resolution of all matters of litigation and dispute will
not have a material adverse impact on the Company's financial position or
results of operations.





                                     II-22
<PAGE>   35
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8)  SEGMENT REPORTING

         The Company is primarily engaged in the business of crude oil and
petroleum products marketing, transportation, and oil and gas exploration and
production.  Information concerning the Company's various business activities
is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                             Depreci-
                                                                              ation,
                                                             Earnings        Depletion        Property
                                                             (Loss)            and              and      Identi-
                                                              from            Amorti-        Equipment   fiable
                                           Revenues        Operations         zation      Additions      Assets
                                           --------        ----------      -----------   -------------   ------

<S>                                   <C>                 <C>             <C>             <C>            <C>
Year ended
 December 31, 1997 -
   Marketing  . . . . . . . . .       $   1,921,486       $     1,382     $     1,219     $     6,913    $    82,923
   Transportation . . . . . . .              31,970             5,225             639           1,377         10,345
   Oil and gas  . . . . . . . .               9,904             4,059           4,035           5,653         12,445
   Other  . . . . . . . . . . .                   -                 -              21              20          8,570
                                      -------------       -----------     -----------     -----------    -----------
                                      $   1,963,360       $    10,666     $     5,914     $    13,963    $   114,283
                                      =============       ===========     ===========     ===========    ===========

Year ended
 December 31, 1996 -
   Marketing  . . . . . . . . .       $   1,466,736       $     5,816     $     1,899     $     1,953    $    84,087
   Transportation . . . . . . .              21,282             2,356             580             758          9,012
   Oil and gas  . . . . . . . .               9,061             3,711           3,655           3,161         11,218
   Other  . . . . . . . . . . .                   -                 -              26              85          6,565
                                      -------------       -----------     -----------     -----------    -----------
                                      $   1,497,079       $    11,883     $     6,160     $     5,957    $   110,882
                                      =============       ===========     ===========     ===========    ===========
Year ended
 December 31, 1995 -
   Marketing  . . . . . . . . .       $     803,669       $     2,496     $       606     $       924    $    52,416
   Transportation . . . . . . .              21,390             2,045             531           1,128          8,987
   Oil and gas  . . . . . . . .               6,378            (1,410)(1)       6,460           4,799         12,169
   Other  . . . . . . . . . . .                   -                 -              52              14          7,345
                                      -------------       -----------     -----------     -----------    -----------
                                      $     831,437       $     3,131     $     7,649     $     6,865    $    80,917
                                      =============       ===========     ===========     ===========    ===========
</TABLE>

---------------------                 
(1)      Includes a $5,156,000 comparative earnings decrease related to
         additional DD&A on oil and gas properties. See also Note 1.

         Intersegment sales are insignificant.  Other identifiable assets are
primarily corporate cash, accounts receivable, deferred tax asset and
properties not identified with any specific segment of the Company's business.
All sales by the Company occurred in the United States.

         The Company had sales to two customers which totaled more than 10% of
total sales in 1997 and 1996.  Such sales totaled $267 million and $261 million
in 1997 and $166 million and $151 million, in 1996.  During 1995 the Company
had no combined sales to one or more unrelated entities which individually
aggregated more than 10% of total revenues.





                                     II-23
<PAGE>   36

                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Earnings from operations by segment represent revenues less operating
costs and expenses and depreciation, depletion and amortization and are
reconciled to earnings from operations before income taxes, as follows (in
thousands):
<TABLE>
<CAPTION>
                                                                      Years Ended December 31,            
                                                                ------------------------------------------
                                                                    1997           1996           1995    
                                                                -------------   -----------    -----------
<S>                                                              <C>             <C>             <C>
Earnings from operations  . . . . . . . . . . . .                $  10,666       $  11,883       $   3,131
General and administrative expenses . . . . . . .                   (2,578)         (2,783)         (2,176)
Property sales and other  . . . . . . . . . . . .                      792             142           1,134
Interest expense  . . . . . . . . . . . . . . . .                     (318)           (477)           (526)
                                                                 ---------        --------       --------- 
Earnings before income taxes  . . . . . . . . . .                $   8,562        $  8,765       $   1,563
                                                                 =========        ========       =========
</TABLE>





                                     II-24
<PAGE>   37
                                      
               ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                                      
                         SUPPLEMENTARY FINANCIAL DATA
                                      
Quarterly Financial Data (Unaudited) -

         Selected quarterly financial data and earnings per share of the
Company are presented below for the years ended December 31, 1997 and 1996 (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                                    Net Earnings                 Dividends          
                                                             ------------------------     -----------------------
                                               Operating                        Per                         Per
                            Revenues           Earnings         Amount       Share(1)      Amount          Share
                          ------------        -----------    -----------     --------     --------        -------
<S>                       <C>                 <C>            <C>             <C>          <C>             <C>
1997 -
March 31  . . . .         $    494,145        $     2,721    $     1,882      $  .45      $      -        $     -
June 30 . . . . .              442,015                936(2)         716         .17             -              -
September 30  . .              451,870              2,436          1,568         .37             -              -
December 31...                 575,330              1,974          1,567         .37           422            .10
                          ------------        -----------    -----------      ------      --------        -------
                          $  1,963,360        $     8,067    $     5,733      $ 1.36      $    422        $   .10
                          ============        ===========    ===========      ======      ========        =======

1996 -
March 31  . . . .         $    284,901        $     1,591    $     1,035      $  .25      $      -        $     -
June 30..........              384,017              2,914          1,707         .40             -              -
September 30  . .              371,781              1,454            859         .20             -              -
December 31 . . .              456,380              3,115          2,040         .49           292            .07
                          ------------        -----------    -----------      ------      --------        -------
                          $  1,497,079        $     9,074    $     5,641      $ 1.34      $    292        $   .07
                          ============        ===========    ===========      ======      ========        =======
</TABLE>



_________________

(1)  Reflects basic and diluted earnings per share for indicated periods.
(2)  Second quarter 1997 operating earnings were reduced due to crude oil
     inventory  valuation writedowns and a crudewoil marketing margins related 
     to decreased overall prices for crude oil.





                                     II-25
<PAGE>   38
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA

Oil and Gas Producing Activities (Unaudited) -

         Total costs incurred in oil and gas exploration and development
activities, all incurred within the United States, were as follows (in
thousands, except per barrel information):

<TABLE>
<CAPTION>
                                                                         Years Ended December 31,          
                                                                 -------------------------------------
                                                                   1997           1996         1995   
                                                                 ---------      ---------   ----------

         <S>                                                     <C>            <C>         <C>
         Property acquisition costs
             Unproved . . . . . . . . . . . . . . . . .          $     472      $      41   $      239
             Proved . . . . . . . . . . . . . . . . . .                  -              -            -
         Exploration costs  . . . . . . . . . . . . . .                  -              -            -
         Development costs  . . . . . . . . . . . . . .              5,181          3,120        4,560
                                                                 ---------      ---------   ----------
             Total costs incurred . . . . . . . . . . .          $   5,653      $   3,161   $    4,799
                                                                 =========      =========   ==========
</TABLE>

         The aggregate capitalized costs relative to oil and gas producing
activities are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                             December 31,             
                                                                    -----------------------------
                                                                       1997               1996   
                                                                    ---------          ----------
         <S>                                                        <C>                <C>
         Unproved oil and gas properties  . . . . . . . .           $  1,135           $      976
         Proved oil and gas properties  . . . . . . . . .             29,488               24,701
                                                                    --------           ----------
                                                                      30,623               25,677
         Accumulated depreciation, depletion
           and amortization . . . . . . . . . . . . . . .            (19,641)             (16,273)
                                                                    --------           ---------- 

                 Net capitalized cost . . . . . . . . . .           $ 10,982           $    9,404
                                                                    ========           ==========

</TABLE>




                                     II-26
<PAGE>   39
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA

  Estimated Oil and Natural Gas Reserves (Unaudited) -

         The following information regarding estimates of the Company's proved
oil and gas reserves, all located in the United States, is based on reports
prepared on behalf of the Company by independent petroleum engineers, Ryder
Scott Company.  Because oil and gas reserve estimates are inherently imprecise
and require extensive judgments of reservoir engineering data, they are
generally less precise than estimates made in conjunction with financial
disclosures.   The revisions of previous estimates as reflected in the table
below result from more precise engineering calculations based upon additional
production histories.

<TABLE>
<CAPTION>
                                                                  Years Ended December 31,                        
                                              --------------------------------------------------------------------
                                                     1997                     1996                   1995         
                                              -------------------    --------------------     --------------------
                                               Natural                Natural                  Natural
                                                 Gas         Oil        Gas         Oil          Gas       Oil
                                               (Mcf's)    (Bbls.)     (Mcf's)     (Bbls.)      (Mcf's)    (Bbls.)
                                                -----      -----       -----       -----        -----      ----- 
                                                                       (In thousands)
<S>                                             <C>          <C>        <C>          <C>        <C>          <C>
Proved developed and
 undeveloped reserves -
  Beginning of year                              9,834        225        7,692       281         8,759        229
  Revisions of previous
    estimates                                   1,153        (12)        1,124         1        (1,108)        68
  Extensions, discoveries
    and other additions                          2,549         60        4,468        35         3,096         89
  Production                                    (3,775)       (62)      (3,450)      (92)       (3,055)      (105)
                                              ---------   -------        -----       ---         -----        --- 
  End of year                                    9,761        211        9,834       225         7,692        281
                                              ========    =======        =====       ===         =====        ===

Proved developed reserves -
  End of year                                    9,761        211        9,834       225         7,692        281
                                              ========    =======        =====       ===         =====        ===
</TABLE>

  Standardized Measure of Discounted Future Net Cash Flows from Oil and Gas
  Operations and Changes Therein (Unaudited) -

         The standardized measure of discounted future net cash flows was
determined based on the economic conditions in effect at the end of the years
presented, except in those instances where fixed and determinable gas price
escalations are included in contracts.  The disclosures below do not purport to
present the fair market value of the Company's oil and gas reserves.  An
estimate of the fair market value would also take into account, among other
things, the recovery of reserves in excess of proved reserves, anticipated
future changes in prices and costs, a discount factor more representative of
the time value of money and risks inherent in reserve estimates.

         The reserve estimates provided at December 31, 1997 are based on oil
prices of approximately $17.19 per barrel and gas prices of  approximately
$2.25 per Mcf.  Such prices for January 1998 production averaged $14.51 per
barrel and $2.00 per Mcf.  In most instances, the Company's natural gas sales
contracts provide for the Company to receive a percentage of the combined
proceeds from the sales of natural gas and associated natural gas liquids.
Therefore, average natural gas prices reported herein include the value of
associated natural gas liquids.





                                     II-27
<PAGE>   40
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA


<TABLE>
<CAPTION>
                                                                      Years Ended December 31,           
                                                                  ---------------------------------------
                                                                     1997           1996          1995   
                                                                  -----------     ---------     ---------
                                                                               (In thousands)
<S>                                                               <C>             <C>           <C> 
Future gross revenues . . . . . . . . . . . . . . . . . . . .     $    25,569     $  38,074     $  21,944
Future costs -
   Lease operating expenses   . . . . . . . . . . . . . . . .          (7,042)       (8,407)       (6,950)
   Development costs  . . . . . . . . . . . . . . . . . . . .             (59)         (101)         (101)
                                                                  -----------     ---------     --------- 
Future net cash flows before income taxes . . . . . . . . . .          18,468        29,566        14,893
Discount at 10% per annum . . . . . . . . . . . . . . . . . .          (4,824)       (8,099)       (4,791)
                                                                  -----------     ---------     --------- 
Discounted future net cash flows
   before income taxes  . . . . . . . . . . . . . . . . . . .          13,644        21,467        10,102
Future income taxes, net of discount at 10%
   per annum  . . . . . . . . . . . . . . . . . . . . . . . .          (1,777)       (4,431)       (1,891)
                                                                  -----------     ---------     ---------
Standardized measure of
   discounted future net cash flows   . . . . . . . . . . . .     $    11,867     $  17,036     $   8,211
                                                                  ===========     =========     =========
</TABLE>

         The following are the principal sources of changes in the standardized 
measure of discounted future net cash flows:

<TABLE>
<CAPTION>
                                                                      Years Ended December 31,           
                                                                  ---------------------------------------
                                                                     1997           1996          1995   
                                                                  -----------     ---------     ---------
                                                                               (In thousands)
<S>                                                              <C>               <C>           <C>
Beginning of year  . . . . . . . . . . . . . . . . . . . . .      $    17,036      $   8,211     $   7,035
   Revisions to reserves proved in prior years -
     Net change in prices and production costs  . . . . . . .          (7,978)         2,875         1,192
     Net change due to revisions in quantity estimates  . . .           1,331          1,840          (706)
     Accretion of discount  . . . . . . . . . . . . . . . . .           2,146          1,010           921
     Production rate changes and other    . . . . . . . . . .            (770)         2,383          (592)
                                                                  -----------      ---------     ---------
         Total revisions  . . . . . . . . . . . . . . . . . .          (5,271)         8,108           815
   New field discoveries and extensions,
     net of future production costs   . . . . . . . . . . . .           5,542         10,623         5,124
   Sales of oil and gas produced, net of
     production costs   . . . . . . . . . . . . . . . . . . .          (8,094)        (7,366)       (5,055)
   Net change in income taxes   . . . . . . . . . . . . . . .           2,654         (2,540)          292
                                                                  -----------      ---------     ---------
   Net change in standardized measure of
     discounted future net cash flows   . . . . . . . . . . .          (5,169)         8,825         1,176
                                                                  -----------      ---------     ---------
End of year . . . . . . . . . . . . . . . . . . . . . . . . .     $    11,867      $  17,036     $   8,211
                                                                  ===========      =========     =========
</TABLE>





                                     II-28
<PAGE>   41
                ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA


  Results of Operations for Oil and Gas Producing Activities (Unaudited) -

         The results of oil and gas producing activities, excluding corporate
overhead and interest costs, are as follows:
<TABLE>
<CAPTION>
                                                                          Years Ended December 31,  
                                                                  ---------------------------------------
                                                                     1997           1996          1995   
                                                                  -----------     ---------     ---------
                                                                               (In thousands)
<S>                                                               <C>             <C>           <C>
Revenues  . . . . . . . . . . . . . . . . . . . . . . . . . .     $    9,904      $   9,061     $   6,378
Costs and expenses -
   Production   . . . . . . . . . . . . . . . . . . . . . . .          1,810          1,695         1,323
   Exploration  . . . . . . . . . . . . . . . . . . . . . . .              -              -             5
   Depreciation, depletion and amortization   . . . . . . . .          4,035          3,655         6,460
                                                                  ----------      ---------     ----------
Operating income (loss) before income taxes . . . . . . . . .          4,059          3,711        (1,410)
Income tax expense (benefit)  . . . . . . . . . . . . . . . .          1,380          1,170          (479)
                                                                  ----------      ---------     ----------
Operating income (loss) . . . . . . . . . . . . . . . . . . .     $    2,679      $   2,541     $    (931)
                                                                  ==========      =========     ==========

</TABLE>

Item 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

           None.





                                     II-29
<PAGE>   42
                                    PART III

Item 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The information concerning executive officers of the Company is
included in Part I.  The information concerning directors of the Company is
incorporated by reference from the Company's definitive Proxy Statement for the
Annual Meeting of Shareholders to be held April 29, 1998, to be filed with the
Commission not later than 120 days after the end of the fiscal year covered by
this Form 10-K.

Item 11.   EXECUTIVE COMPENSATION

Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by Items 11, 12 and 13 is incorporated by
reference from the Company's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held April 29, 1998, to be filed with the Commission not
later than 120 days after the end of the fiscal year covered by this Form 10-K.





                                     III-1
<PAGE>   43




                                    PART IV


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

(a)   The following documents are filed as a part of this Form 10-K:

              1. Financial Statements

                    Report of Independent Public Accountants

                    Consolidated Balance Sheet as of December 31, 1997 and 1996

                    Consolidated Statement of Earnings for the Years Ended
                            December 31, 1997, 1996 and 1995

                    Consolidated Statement of Shareholders' Equity for the
                            Years ended December 31, 1997, 1996 and 1995

                    Consolidated Statement of Cash Flows for the Years Ended
                            December 31, 1997, 1996 and 1995

                    Notes to Consolidated Financial Statements

                    Supplementary Financial Data (All unaudited)

              2. Exhibits required to be filed

3(a)     -    Certificate of Incorporation of the Company, as amended.
              (Incorporated by reference to Exhibit 3(a) filed with the Annual
              Report on Form 10-K of the Company for the fiscal year ended
              December 31, 1987)

3(b)     -    Bylaws of the Company, as amended (Incorporated by reference to
              Exhibits 3.2 and 3.2.1 of Amendment No. 1 to the Registration
              Statement on Form S-1 filed with the Securities and Exchange
              Commission on October 29, 1973 - File No. 2-48144)

3(c)     -    Amendment to the Bylaws of the Company to add an Article VII,
              Section 8. Indemnification of Directors, Officers, Employees and
              Agents (Incorporated by reference to Exhibit 3(c) of the Annual
              Report on Form 10- K of the Company for the fiscal year ended
              December 31, 1986)

4(a)     -    Specimen common stock Certificate (Incorporated by reference to
              Exhibit 4(a) of the Annual Report on Form 10-K of the Company for
              the fiscal year ended December 31, 1991)





                                      IV-1
<PAGE>   44



4(c)*    -    Fourth Amendment to Loan Agreement between Service Transport
              Company et al and NationsBank of Texas N.A. dated September 30, 
              1997.

21*      -    Subsidiaries of the Registrant

27*      -    Financial Data Schedule

______________________________
*  - Filed herewith

         All other financial schedules have been omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.

         The separate financial statements of Adams Resources & Energy, Inc.
(the "Parent") are omitted because the conditions specified in Rules 5-04 and
12-04 of regulation S-X are met.

         Copies of all agreements defining the rights of holders of long-term
debt of the Company and its subsidiaries, which agreements authorize amounts
not in excess of 10% of the total consolidated assets of the Company, are not
filed herewith but will be furnished to the Commission upon request.





                                      IV-2
<PAGE>   45




                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                            ADAMS RESOURCES & ENERGY, INC.
                                                              (Registrant)
                                     
                                     
By /s/ RICHARD B. ABSHIRE                  By /s/ K. S. ADAMS, JR.
   ----------------------------               --------------------------
   (Richard B. Abshire,                       (K. S. Adams, Jr.,
   Vice President-Finance, Director           President, Chairman of
   and Chief Financial Officer)               the Board, and Chief 
                                              Executive Officer)
                                     
                                     
Date:  March 16, 1998

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


By /s/CLAUDE H. LEWIS                     By /s/ E. C. REINAUER, JR.
   ---------------------------               --------------------------
   (Claude H. Lewis, Director)               (E. C. Reinauer, Jr., Director)

                                      
By /s/ THOMAS S. SMITH                    By /s/ E. JACK WEBSTER, JR. 
   ---------------------------               --------------------------
   (Thomas S. Smith, Director)               (E. Jack Webster, Jr., Director)

                                     
By /s/ FRANK T. WEBSTER                   By /s/ EDWARD WIECK                
   ---------------------------               --------------------------
   (Frank T. Webster, Director)              (Edward Wieck, Director)        
                                     
                                     
By /s/ JOHN A. BARRETT                
   ---------------------------               
   (John A. Barrett, Director        
                                     
                                     
                                     


Date:  March 16, 1998





                                      V-1
<PAGE>   46




                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
 Exhibit
Number            Description            
------            --------------------------------
<S>      <C>      <C>
3(a)     -        Certificate of Incorporation of the Company, as amended.  (Incorporated by reference to Exhibit 3(a)
                  filed with the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 1987)

3(b)     -        Bylaws of the Company, as amended (Incorporated by reference to Exhibits 3.2 and 3.2.1 of Amendment
                  No. 1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on
                  October 29, 1973 - File No. 2-48144)

3(c)     -        Amendment to the Bylaws of the Company to add an Article VII, Section 8. Indemnification of Directors,
                  Officers, Employees and Agents (Incorporated by reference to Exhibit 3(c) of the Annual Report on Form
                  10-K of the Company for the fiscal year ended December 31, 1986)

4(a)     -        Specimen common stock Certificate (Incorporated by reference to Exhibit 4(a) of the Annual Report on
                  Form 10-K of the Company for the fiscal year ended December 31, 1991)

4(b)     -        Loan Agreement between Adams Resources & Energy, Inc. and NationsBank Texas N.A. dated October 27,
                  1993 ( Incorporated by reference to Exhibit 4(b) of the Annual Report on Form 10-K of the Company for
                  the fiscal year ended December 31, 1993)

4(c)*    -        Fourth Amendment to Loan Agreement between Service Transport Company et al and NationsBank of Texas
                  N.A. dated September 30, 1997.

21*      -        Subsidiaries of the Registrant

27*      -        Financial Data Schedule
</TABLE>

______________________________
*  - Filed herewith





                                      V-2