|    X | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---------------------|------------------------------------------------------------------------------------------------|

|   | For      the Fiscal Year ended December 31,2008 |
|--------|-------------------------------------------------|

|   | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------------------------------------------------------------------------------------|

| Delaware                                      | 74-1753147                                |
|-----------------------------------------------|-------------------------------------------|
| (State      of Incorporation)                 | (I.R.S.      Employer Identification No.) |
|                                          |                                      |
| 4400      Post Oak Parkway Ste. 2700          |                                      |
| Houston,      Texas                           | 77027                                     |
| (Address      of Principal executive offices) | (Zip      Code)                           |

| Title of each class               | Name of each exchange on which      registered |
|-----------------------------------|------------------------------------------------|
| Common      Stock, $.10 Par Value | NYSE      Amex                                 |

----

----

----

|      |   | Oil      Wells |   |   | Gas      Wells |   |   | Total      Wells |   |
|-----------|--------|----------------|--------|--------|----------------|--------|--------|------------------|--------|
|      |   | Gross          |   |   | Net            |   |   | Gross            |   |   | Net |   |   | Gross |   |   | Net |   |
| Texas     |   |           | 56     |   |           |   | 8.07   |             |   |   | 106 |   |   |   | 11.58 |   |   |   | 162 |   |   |   | 19.65 |   |
| Louisiana |   |           | 11     |   |           |   | .62    |             |   |   | 24 |   |   |   | 1.12 |   |   |   | 35 |   |   |   | 1.74 |   |
| Other     |   |           | 85     |   |           |   | 3.85   |             |   |   | 41 |   |   |   | 4.78 |   |   |   | 126 |   |   |   | 8.63 |   |
|      |   |           | 152    |   |           |   | 12.54  |             |   |   | 171 |   |   |   | 17.48 |   |   |   | 323 |   |   |   | 30.02 |   |

|      |   | Developed      Acreage |   |   | Undeveloped      Acreage |   |
|-----------|--------|------------------------|--------|--------|--------------------------|--------|
|      |   | Gross                  |   |   | Net                      |   |   | Gross |   |   | Net |   |
| Texas     |   |                   | 73,373 |   |                     |   | 12,396 |   |   |   | 168,960 |   |   |   | 16,433 |   |
| Louisiana |   |                   | 5,072  |   |                     |   | 282 |   |   |   | 1,082 |   |   |   | 145 |   |
| Kansas    |   |                   | -      |   |                     |   | - |   |   |   | 31,334 |   |   |   | 3,133 |   |
| Other     |   |                   | 4,226  |   |                     |   | 718 |   |   |   | 2,368 |   |   |   | 1,206 |   |
|      |   |                   | 82,671 |   |                     |   | 13,396 |   |   |   | 203,744 |   |   |   | 20,917 |   |

|                           |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                           |   | Gross  |   |   | Net    |   |   | Gross  |   |   | Net |   |   | Gross |   |   | Net |   |
| Exploratory      wells drilled |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| -      Productive              |   |   | 2      |   |   |   | .13    |   |   |   | 3 |   |   |   | .15 |   |   |   | 6 |   |   |   | .52 |   |
| -      Dry                     |   |   | 2      |   |   |   | .22    |   |   |   | 2 |   |   |   | .10 |   |   |   | 3 |   |   |   | .35 |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Development      wells drilled |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| -      Productive              |   |   | 17     |   |   |   | 1.06   |   |   |   | 18 |   |   |   | 1.37 |   |   |   | 26 |   |   |   | 1.89 |   |
| -      Dry                     |   |   | 7      |   |   |   | .68    |   |   |   | 6 |   |   |   | .35 |   |   |   | 2 |   |   |   | .08 |   |

|                                           |   | December      31, |   |
|------------------------------------------------|--------|-------------------|--------|
|                                           |   | 2008              |   |   | 2007 |   |   | 2006 |   |
| Crude      oil (barrels)                       |   |              | 230    |   |   |   | 297 |   |   |   | 396 |   |
| Natural      gas (mcf)                         |   |              | 6,443  |   |   |   | 7,068 |   |   |   | 8,300 |   |
| Standardized      measure of discounted future |   |              |   |   |   |   |   |   |   |   |   |   |
| net      cash flows from oil and gas reserves  |   | $                 | 11,547 |   |   | $ | 19,590 |   |   | $ | 18,770 |   |

----

|                                                                           Years      Ended  |   | Crude      Oil |   |   | Natural   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|-----------|--------|
|                                                                           December      31, |   | (barrels)      |   |   | Gas (mcf) |   |
|                                                                           2008              |   |           | 50,500 |   |      |   | 1,243,000 |   |
|                                                                           2007              |   |           | 69,250 |   |      |   | 1,182,000 |   |
|                                                                           2006                                            |   |           | 75,900 |   |      |   | 1,604,000 |   |

|                                         |   | Years      Ended December 31, |   |
|----------------------------------------------|--------|-------------------------------|--------|
|                                         |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
| Average      oil and condensate              |   |                          |   |   |   |   |   |   |   |
| sales      price per barrel                  |   | $                             | 99.25  |   |   | $ | 70.21 |   |   | $ | 64.26 |   |
| Average      natural gas                     |   |                          |   |   |   |   |   |   |   |   |   |   |
| sales      price per mcf                     |   | $                             | 9.84   |   |   | $ | 7.54 |   |   | $ | 7.53 |   |
| Average      production cost, per equivalent |   |                          |   |   |   |   |   |   |   |   |   |   |
| barrel,      charged to expense              |   | $                             | 18.34  |   |   | $ | 15.32 |   |   | $ | 12.40 |   |

----

| -   | The      Solid Waste Disposal Act, as amended by the Resource Conservation and      Recovery Act of 1976, as amended. |
|---------------|-----------------------------------------------------------------------------------------------------------------------|

| -   | Comprehensive      Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"      or "Superfund"), as amended. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------|

| -   | The      Clean Water Act of 1972, asamended. |
|---------------|----------------------------------------------|

| -   | Federal      Oil Pollution Act of 1990, asamended. |
|---------------|----------------------------------------------------|

| -   | The      Clean Air Act of 1970, as amended. |
|---------------|---------------------------------------------|

| -   | The      Toxic Substances Control Act of 1976, as  amended. |
|---------------|-------------------------------------------------------------|

| -   | The      Emergency Planning and Community Right-to-Know  Act. |
|---------------|---------------------------------------------------------------|

| -   | The      Occupational Safety and Health Act of 1970, as  amended. |
|---------------|-------------------------------------------------------------------|

| -   | Texas      Clean Air Act. |
|---------------|---------------------------|

| -   | Texas      Solid Waste Disposal Act. |
|---------------|--------------------------------------|

| -   | Texas      Water Code. |
|---------------|------------------------|

| -   | Texas      Oil Spill Prevention and Response Act of 1991, as  amended. |
|---------------|------------------------------------------------------------------------|

----

----

----

----

| ·   | supply      and demand for oil and gas and expectations regarding supply and      demand; |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | political      conditions in other oil-producing countries, including the possibility of      insurgency or war in such areas; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ·   | economic      conditions in the United States andworldwide; |
|--------------------|-------------------------------------------------------------|

| ·   | governmental      regulations and taxation; |
|--------------------|---------------------------------------------|

| ·   | impact      of energy conservation efforts; |
|--------------------|---------------------------------------------|

| ·   | the      price and availability of alternative fuel  sources; |
|--------------------|---------------------------------------------------------------|

| ·   | weather      conditions; |
|--------------------|--------------------------|

| ·   | availability      of local, interstate and intrastate transportation systems;      and |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | market      uncertainty. |
|--------------------|--------------------------|

----

----

| ·   | regional,      domestic and international supply anddemand; |
|--------------------|-------------------------------------------------------------|

| ·   | availability      and adequacy of transportationfacilities; |
|--------------------|-------------------------------------------------------------|

| ·   | energy      legislation; |
|--------------------|--------------------------|

| ·   | federal      and state taxes, if any, on the sale or transportation of natural      gas; |
|--------------------|------------------------------------------------------------------------------------------|

| ·   | abundance      of supplies of alternative energysources; |
|--------------------|----------------------------------------------------------|

| ·   | political      unrest among oil producing countries;and |
|--------------------|---------------------------------------------------------|

| ·   | opposition      to energy development in environmentally sensitive  areas. |
|--------------------|----------------------------------------------------------------------------|

| ·   | lack      of acceptable prospective acreage; |
|--------------------|----------------------------------------------|

| ·   | inadequate      capital resources; |
|--------------------|------------------------------------|

| ·   | weather; |
|--------------------|----------|

| ·   | title      problems; |
|--------------------|----------------------|

| ·   | compliance      with governmental regulations; and |
|--------------------|----------------------------------------------------|

| ·   | mechanical      difficulties. |
|--------------------|-------------------------------|

----

----

| Item      5. | MARKET      FOR THE REGISTRANT'S COMMON STOCK, RELATED SECURITY HOLDER MATTERS AND      ISSUER REPURCHASE OF EQUITYSECURITIES |
|--------------|-------------------------------------------------------------------------------------------------------------------------------|

|                |   | American      Stock Exchange |   |
|---------------------|--------|------------------------------|--------|
|                |   | High                         |   |   | Low |   |
| 2007                |   |                         |   |   |   |   |
| First      Quarter  |   | $                            | 40.85  |   |   | $ | 26.95 |   |
| Second      Quarter |   |                         | 41.40  |   |   |   | 27.91 |   |
| Third      Quarter  |   |                         | 30.65  |   |   |   | 20.06 |   |
| Fourth      Quarter |   |                         | 32.85  |   |   |   | 24.29 |   |
|                |   |                         |   |   |   |   |   |   |
| 2008                |   |                         |   |   |   |   |   |   |
| First      Quarter  |   | $                            | 28.65  |   |   | $ | 22.00 |   |
| Second      Quarter |   |                         | 35.35  |   |   |   | 26.35 |   |
| Third      Quarter  |   |                         | 34.95  |   |   |   | 22.32 |   |
| Fourth      Quarter |   |                         | 23.00  |   |   |   | 13.55 |   |

----

| 1.   | $100.00      was invested on December 31, 2003 in the Company’s common stock, the      S&P 500 Index, and the S&P 500 Integrated Oil and Gas      Index. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Dividends      are reinvested on the ex-dividenddates. |
|----------------|--------------------------------------------------------|

| Total      Return To Shareholders         |
|-------------------------------------------|
| (Includes      reinvestment of dividends) |

|                                            |   | INDEXED      RETURNS |
|-------------------------------------------------|--------|----------------------|
|                                            | Base   | Years      Ending    |
|                                            | Period |                 |   |   |   |   |
| Company      / Index                            | Dec03  | Dec04                | Dec05 | Dec06 | Dec07 | Dec08 |
| Adams      Resources & Energy, Inc.         | 100    | 132.38               | 174.27 | 232.92 | 202.56 | 138.45 |
| S&P      500 Index                          | 100    | 110.88               | 116.33 | 134.70 | 142.10 | 89.53 |
| S&P      500 Integrated Oil & Gas Index | 100    | 128.83               | 151.55 | 204.33 | 265.33 | 207.51 |
|                                            |   |                 |   |   |   |   |
|                                            |   |                 |   |   |   |   |
|                                            |   |                 |   |   |   |   |
|                                                 |
|                                            |

|   |
|--------|

----

|                                            |   | Years      Ended December 31,              |      |
|-------------------------------------------------|--------|--------------------------------------------|-----------|
|                                            |   | 2008                                       |      |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Revenues:                                       |   | (In      thousands, except per share data) |      |
| Marketing                                       |   | $                                          | 4,074,677 |   |   | $ | 2,558,545 |   |   | $ | 2,167,502 |   |   | $ | 2,292,029 |   |   | $ | 2,010,968 |   |
| Transportation                                  |   |                                       | 67,747    |   |   |   | 63,894 |   |   |   | 62,151 |   |   |   | 57,458 |   |   |   | 47,323 |   |
| Oil      and gas                                |   |                                       | 17,248    |   |   |   | 13,783 |   |   |   | 16,950 |   |   |   | 15,346 |   |   |   | 10,796 |   |
|                                            |   | $                                          | 4,159,672 |   |   | $ | 2,636,222 |   |   | $ | 2,246,603 |   |   | $ | 2,364,833 |   |   | $ | 2,069,087 |   |
| Operating      Earnings:                        |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing                                       |   | $                                          | (2,704    | ) |   | $ | 20,152 |   |   | $ | 12,975 |   |   | $ | 22,481 |   |   | $ | 13,597 |   |
| Transportation                                  |   |                                       | 4,245     |   |   |   | 5,504 |   |   |   | 5,173 |   |   |   | 5,714 |   |   |   | 5,687 |   |
| Oil      and gas operations                     |   |                                       | (3,348    | ) |   |   | (2,853 | ) |   |   | 5,355 |   |   |   | 6,765 |   |   |   | 2,362 |   |
| Oil      and gas property sale                  |   |                                       | -         |   |   |   | 12,078 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| General      and administrative                 |   |                                       | (9,667    | ) |   |   | (10,974 | ) |   |   | (8,536 | ) |   |   | (9,668 | ) |   |   | (7,867 | ) |
|                                            |   |                                       | (11,474   | ) |   |   | 23,907 |   |   |   | 14,967 |   |   |   | 25,292 |   |   |   | 13,779 |   |
| Other      income (expense):                    |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                            |   |                                       | 1,103     |   |   |   | 1,741 |   |   |   | 965 |   |   |   | 188 |   |   |   | 62 |   |
| Interest      expense                           |   |                                       | (187      | ) |   |   | (134 | ) |   |   | (159 | ) |   |   | (128 | ) |   |   | (107 | ) |
| Earnings      (loss) from continuing operations |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| before      income taxes                        |   |                                       | (10,558   | ) |   |   | 25,514 |   |   |   | 15,773 |   |   |   | 25,352 |   |   |   | 13,734 |   |
|                                            |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax benefit (provision)             |   |                                       | 4,986     |   |   |   | (8,458 | ) |   |   | (5,290 | ) |   |   | (8,583 | ) |   |   | (4,996 | ) |
|                                            |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) from continuing operations |   |                                       | (5,572    | ) |   |   | 17,056 |   |   |   | 10,483 |   |   |   | 16,769 |   |   |   | 8,738 |   |
| Earnings      (loss) from discontinued          |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations,      net of taxes                   |   |                                       | -         |   |   |   | - |   |   |   | - |   |   |   | 872 |   |   |   | (130 | ) |
| Net      earnings (loss)                        |   | $                                          | (5,572    | ) |   | $ | 17,056 |   |   | $ | 10,483 |   |   | $ | 17,641 |   |   | $ | 8,608 |   |
|                                            |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (Loss) Per Share                  |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From      continuing operations                 |   | $                                          | (1.32     | ) |   | $ | 4.04 |   |   | $ | 2.49 |   |   | $ | 3.97 |   |   | $ | 2.07 |   |
| From      discontinued operations               |   |                                       | -         |   |   |   | - |   |   |   | - |   |   |   | .21 |   |   |   | (.03 | ) |
|                                            |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings (loss) per share            |   | $                                          | (1.32     | ) |   | $ | 4.04 |   |   | $ | 2.49 |   |   | $ | 4.18 |   |   | $ | 2.04 |   |
|                                            |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends      per common share                 |   | $                                          | .50       |   |   | $ | .47 |   |   | $ | .42 |   |   | $ | .37 |   |   | $ | .30 |   |
|                                            |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      Position                         |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Working      capital                            |   | $                                          | 41,559    |   |   | $ | 50,572 |   |   | $ | 35,208 |   |   | $ | 39,321 |   |   | $ | 35,789 |   |
| Total      assets                               |   |                                       | 210,926   |   |   |   | 357,075 |   |   |   | 289,287 |   |   |   | 312,662 |   |   |   | 238,854 |   |
| Long-term      debt, net of                     |   |                                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| current      maturities                         |   |                                       | -         |   |   |   | - |   |   |   | 3,000 |   |   |   | 11,475 |   |   |   | 11,475 |   |
| Shareholders’      equity                 |   |                                       | 81,761    |   |   |   | 89,442 |   |   |   | 74,368 |   |   |   | 65,656 |   |   |   | 49,575 |   |
| Dividends      on common shares                 |   |                                       | 2,109     |   |   |   | 1,982 |   |   |   | 1,771 |   |   |   | 1,560 |   |   |   | 1,265 |   |

| -   | In      2007, certain oil and natural gas producing properties were sold for $14.9      million producing a net gain of $12.1million. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Item      7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF OPERATIONS |
|--------|---------------------------------------------------------------------------------------------------------|

|                           |   | 2008   |      |   | 2007   |   |      | 2006   |   |
|--------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
| Revenues                       |   |   |      |   |   |   |      |   |   |
| Crude      oil                 |   | $      | 3,849,531 |   |   | $      | 2,373,838 |   |   | $ | 1,975,972 |   |
| Natural      gas               |   |   | 11,586    |   |   |   | 13,764    |   |   |   | 13,621 |   |
| Refined      products          |   |   | 213,560   |   |   |   | 170,943   |   |   |   | 177,909 |   |
| Total                          |   | $      | 4,074,677 |   |   | $      | 2,558,545 |   |   | $ | 2,167,502 |   |
|                           |   |   |      |   |   |   |      |   |   |   |   |   |
| Operating      Earnings (loss) |   |   |      |   |   |   |      |   |   |   |   |   |
| Crude      oil                 |   | $      | (4,545    | )      |   | $      | 15,321    |   |   | $ | 5,088 |   |
| Natural      gas               |   |   | 2,247     |   |   |   | 4,999     |   |   |   | 6,558 |   |
| Refined      products          |   |   | (406      | )      |   |   | (168      | )      |   |   | 1,329 |   |
| Total                          |   | $      | (2,704    | )      |   | $      | 20,152    |   |   | $ | 12,975 |   |
|                           |   |   |      |   |   |   |      |   |   |   |   |   |
| Depreciation                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Crude      oil                 |   | $      | 2,039     |   |   | $      | 657       |   |   | $ | 857 |   |
| Natural      gas               |   |   | 163       |   |   |   | 162       |   |   |   | 59 |   |
| Refined      products          |   |   | 565       |   |   |   | 457       |   |   |   | 428 |   |
| Total                          |   | $      | 2,767     |   |   | $      | 1,276     |   |   | $ | 1,344 |   |

|                                   | 2008                                                                          | 2007                                                                    | 2006                                                                                            |
|----------------------------------------|-------------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|
|                                   |                                                                          |                                                                    |                                                                                            |
| Field      Level Purchases per day (1) |                                                                          |                                                                    |                                                                                            |
| -  Crude      Oil            |         67,800      bbls              |         61,500      bbls        |      61,800      bbls                                                  |
| -  Natural      Gas          |         437,000      mmbtu            |         423,000      mmbtu      |     354,000      mmbtu                                                      |
|                                   |                                                                          |                                                                    |                                                                                            |
| Average      Purchase Price            |                                                                          |                                                                    |                                                                                            |
| -  Crude      Oil            |     $     99.72/bbl              |     $      70.70/bbl  |  $        62.40/bbl                                |
| -  Natural      Gas          |     $       8.63/mmbtu |     $      6.79/mmbtu |            $        6.62/mmbtu |

|   | (1) Reflects the volume purchased      from third parties at the oil and natural gas field level and pipeline      pooling points. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

----

| -   | Comparison      2007 to 2006 – |
|---------------|--------------------------------------|

|                    |   | 2008   |   |   | 2007      |   |   | 2006   |   |
|-------------------------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|
|                    |   | Amount |   |   | Change(1) |   |   | Amount |   |   | Change(1) |   |   | Amount |   |   | Change(1) |   |
|                    |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                |   | $      | 67,747 |   |      |   | 6      | %      |   | $ | 63,894 |   |   |   | 3 | % |   | $ | 62,151 |   |   |   | 8 | % |
|                    |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      earnings |   | $      | 4,245  |   |      |   | (23    | )%     |   | $ | 5,504 |   |   |   | 6 | % |   | $ | 5,173 |   |   |   | (9 | )% |
|                    |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation            |   | $      | 3,843  |   |      |   | (10    | )%     |   | $ | 4,275 |   |   |   | (6 | )% |   | $ | 4,538 |   |   |   | 45 | % |

| (1) | Represents      the percentage increase (decrease) from the prior  year. |
|-----|--------------------------------------------------------------------------|

----

| -   | Comparison      2008 to 2007 |
|---------------|------------------------------|

|   | - | Comparison      2007 to 2006 |
|--------|---|------------------------------|

|                                |   | 2008   |   |   | 2007      |   |   | 2006   |   |
|-------------------------------------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|
|                                |   | Amount |   |   | Change(1) |   |   | Amount |   |   | Change(1) |   |   | Amount |   |   | Change(1) |   |
|                                |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                            |   | $      | 17,248 |   |      |   | 25     | %      |   | $ | 13,783 |   |   |   | (19 | )% |   | $ | 16,950 |   |   |   | 10 | % |
|                                |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      earnings (loss)      |   |   | (3,348 | )      |      |   | 17     | %      |   |   | (2,853 | ) |   |   | (153 | )% |   |   | 5,355 |   |   |   | (21 | )% |
|                                |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and depletion     |   |   | 6,763  |   |      |   | 16     | %      |   |   | 5,833 |   |   |   | 62 | % |   |   | 3,603 |   |   |   | 60 | % |
|                                |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Producing      Property Impairments |   |   | 3,078  |   |      |   | 153    | %      |   |   | 1,216 |   |   |   | 43 | % |   |   | 841 |   |   |   | 96 | % |

|  (1) | Represents      the percentage increase (decrease) from the prior  year. |
|-----------|--------------------------------------------------------------------------|

|                    | 2008                                                                  | 2007                                                      | 2006                                                       |
|-------------------------|-----------------------------------------------------------------------|-----------------------------------------------------------|------------------------------------------------------------|
|                    |                                                                  |                                                      |                                                       |
| Production      Volumes |                                                                  |                                                      |                                                       |
| -      Crude Oil        |         50,500      bbls      |     69,250      bbls                  |      75,900      bbls             |
| -      Natural Gas      |         1,243,000      mcf    |     1,182,000      mcf                |     1,604,000    mcf                   |
|                    |                                                                  |                                                      |                                                       |
| Average      Price      |                                                                  |                                                      |                                                       |
| -      Crude Oil        |       $       99.25/bbl            |     $  70.21/bbl            |      $   64.26/bbl |
| -      Natural Gas      |       $    9.84/mcf |     $    7.54/mcf |      $   7.53/mcf                 |

----

|                        |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Dry      hole expense       |   | $      | 2,421  |   |   | $      | 3,187  |   |   | $ | 1,230 |   |
| Prospect      abandonment   |   |   | 2,834  |   |   |   | 845    |   |   |   | 564 |   |
| Seismic      and geological |   |   | 775    |   |   |   | 1,475  |   |   |   | 1,101 |   |
|                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                       |   | $      | 6,030  |   |   | $      | 5,507  |   |   | $ | 2,895 |   |

|                                 |   | 2008             |      |   | 2007             |   |      | 2006             |   |
|--------------------------------------|--------|------------------|-----------|--------|------------------|--------|-----------|------------------|--------|
|                                 |   | (Eq.      Bbls.) |      |   | (Eq.      Bbls.) |   |      | (Eq.      Bbls.) |   |
|                                 |   |             |      |   |             |   |      |             |   |
| Beginning      of year               |   |             | 1,475,000 |   |             |   | 1,779,000 |             |   |   | 2,003,000 |   |
| Estimated      reserve additions     |   |             | 395,000   |   |             |   | 246,000   |             |   |   | 577,000 |   |
| Production                           |   |             | (258,000  | )      |             |   | (266,000  | )                |   |   | (343,000 | ) |
| Reserves      sold                   |   |             | -         |   |             |   | (245,000  | )                |   |   | - |   |
| Revisions      of previous estimates |   |             | (308,000  | )      |             |   | (39,000   | )                |   |   | (458,000 | ) |
|                                 |   |             |      |   |             |   |      |             |   |   |   |   |
| End      of year                     |   |             | 1,304,000 |   |             |   | 1,475,000 |             |   |   | 1,779,000 |   |

----

| -   | Oil      and gas property sale |
|---------------|--------------------------------|

| -   | General      and administrative, interest income and income  tax |
|---------------|------------------------------------------------------------------|

----

| -   | Establish      marketing operating earnings at the $10 million  level. |
|---------------|------------------------------------------------------------------------|

| -   | Maintain      transportation operating earnings at the $2 million  level. |
|---------------|---------------------------------------------------------------------------|

| -   | Establish      oil and gas operating earnings at the $2 million level and replace 80      percent of 2009 production with current reserve  additions. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                |   | 2009   |   |   | 2010   |   |   | 2011   |   |   | 2012 |   |   | 2013   |   |   | Thereafter |   |   | Total  |   |
|---------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|
| Long-term      debt |   | $      | -      |   |   | $      | -      |   |   | $      | -    |   |   | $      | -      |   |       | $      | -      |   |   | $ | - |   |   | $ | - |   |
| Lease      payments |   |   | 1,878  |   |   |   | 1,047  |   |   |   | 702  |   |   |   | 100    |   |       |   | 47     |   |   |   | - |   |   |   | 3,774 |   |
| Total               |   | $      | 1,878  |   |   | $      | 1,047  |   |   | $      | 702  |   |   | $      | 100    |   |       | $      | 47     |   |   | $ | - |   |   | $ | 3,774 |   |

----

|             |   | January |    |   | Remaining |   |   |   |   |   |   |   |   |       |   |   |   |   |
|------------------|--------|---------|---------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|
|             |   | 2009    |    |   | 2009      |   |   | 2010   |   |   | 2011   |   |   | Thereafter |   |   | Total  |   |
| Crude      Oil   |   | $       | 57,776  |   |      | $      | 8,139  |   |   | $      | -      |   |   | $          | -      |   |   | $      | - |   |   | $ | 65,915 |   |
| Natural      Gas |   |    | 50,651  |   |      |   | 21,097 |   |   |   | -      |   |   |       | -      |   |   |   | - |   |   |   | 71,748 |   |
|             |   | $       | 108,427 |   |      | $      | 29,236 |   |   | $      | -      |   |   | $          | -      |   |   | $      | - |   |   | $ | 137,663 |   |

----

----

----

----

|                                                                           |   | Page   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|
|                                                                           |   |   |   |
| REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                   |   |   | 28     |   |
|                                                                           |   |   |   |   |
| FINANCIAL      STATEMENTS:                                                     |   |   |   |   |
|                                                                           |   |   |   |   |
| Consolidated      Balance Sheets as of December 31, 2008 and 2007              |   |   | 29     |   |
|                                                                           |   |   |   |   |
| Consolidated      Statements of Operations for the Years Ended                 |   |   |   |   |
| December      31, 2008, 2007 and 2006                                          |   |   | 30     |   |
|                                                                           |   |   |   |   |
| Consolidated      Statements of Shareholders’ Equity for the Years Ended |   |   |   |   |
| December      31, 2008, 2007 and 2006                                          |   |   | 31     |   |
|                                                                           |   |   |   |   |
| Consolidated      Statements of Cash Flows for the Years Ended                 |   |   |   |   |
| December      31, 2008, 2007 and 2006                                          |   |   | 32     |   |
|                                                                           |   |   |   |   |
| Notes      to Consolidated Financial Statements                                |   |   | 33     |   |

----

----

|                                                                   |   | December      31, |    |
|------------------------------------------------------------------------|--------|-------------------|---------|
| ASSETS                                                                 |   | 2008              |    |   | 2007 |   |
|                                                                   |   |              |    |   |   |   |
| CURRENT      ASSETS:                                                   |   |              |    |   |   |   |
| Cash      and cash equivalents                                         |   | $                 | 18,208  |   |   | $ | 23,697 |   |
| Accounts      receivable, net of allowance for doubtful accounts of    |   |              |    |   |   |   |   |   |
| $1,251      and $192, respectively                                     |   |              | 119,401 |   |   |   | 261,710 |   |
| Inventories                                                            |   |              | 14,207  |   |   |   | 14,776 |   |
| Fair      value contracts                                              |   |              | 8,697   |   |   |   | 5,388 |   |
| Income      tax receivable                                             |   |              | 3,629   |   |   |   | 2,554 |   |
| Prepayments                                                            |   |              | 5,224   |   |   |   | 3,768 |   |
|                                                                   |   |              |    |   |   |   |   |   |
| Total      current assets                                              |   |              | 169,366 |   |   |   | 311,893 |   |
|                                                                   |   |              |    |   |   |   |   |   |
| PROPERTY      AND EQUIPMENT:                                           |   |              |    |   |   |   |   |   |
| Marketing                                                              |   |              | 19,510  |   |   |   | 15,315 |   |
| Transportation                                                         |   |              | 32,661  |   |   |   | 32,087 |   |
| Oil      and gas (successful efforts method)                           |   |              | 66,593  |   |   |   | 63,025 |   |
| Other                                                                  |   |              | 99      |   |   |   | 99 |   |
|                                                                   |   |              | 118,863 |   |   |   | 110,526 |   |
|                                                                   |   |              |    |   |   |   |   |   |
| Less      – Accumulated depreciation, depletion and amortization |   |              | (83,277 | ) |   |   | (70,828 | ) |
|                                                                   |   |              | 35,586  |   |   |   | 39,698 |   |
| OTHER      ASSETS:                                                     |   |              |    |   |   |   |   |   |
| Fair      value contracts                                              |   |              | -       |   |   |   | 1,563 |   |
| Deferred      income tax benefit                                       |   |              | 2,035   |   |   |   | - |   |
| Cash      deposits and other                                           |   |              | 3,939   |   |   |   | 3,921 |   |
|                                                                   |   | $                 | 210,926 |   |   | $ | 357,075 |   |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                        |   |              |    |   |   |   |   |   |
|                                                                   |   |              |    |   |   |   |   |   |
| CURRENT      LIABILITIES:                                              |   |              |    |   |   |   |   |   |
| Accounts      payable                                                  |   | $                 | 115,183 |   |   | $ | 252,310 |   |
| Accounts      payable – related party                            |   |              | 89      |   |   |   | 84 |   |
| Fair      value contracts                                              |   |              | 8,196   |   |   |   | 4,116 |   |
| Accrued      and other liabilities                                     |   |              | 3,930   |   |   |   | 3,707 |   |
| Current      deferred income taxes                                     |   |              | 409     |   |   |   | 1,104 |   |
| Total      current liabilities                                         |   |              | 127,807 |   |   |   | 261,321 |   |
|                                                                   |   |              |    |   |   |   |   |   |
| LONG-TERM      DEBT                                                    |   |              | -       |   |   |   | - |   |
|                                                                   |   |              |    |   |   |   |   |   |
| OTHER      LIABILITIES:                                                |   |              |    |   |   |   |   |   |
| Asset      retirement obligations                                      |   |              | 1,260   |   |   |   | 1,153 |   |
| Deferred      income taxes and other                                   |   |              | 98      |   |   |   | 4,063 |   |
| Fair      value contracts                                              |   |              | -       |   |   |   | 1,096 |   |
|                                                                   |   |              | 129,165 |   |   |   | 267,633 |   |
| COMMITMENTS      AND CONTINGENCIES (NOTE 8)                            |   |              |    |   |   |   |   |   |
|                                                                   |   |              |    |   |   |   |   |   |
| 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      issued and outstanding                                  |   |              | 422     |   |   |   | 422 |   |
| Contributed      capital                                               |   |              | 11,693  |   |   |   | 11,693 |   |
| Retained      earnings                                                 |   |              | 69,646  |   |   |   | 77,327 |   |
| Total      shareholders’ equity                                  |   |              | 81,761  |   |   |   | 89,442 |   |
|                                                                   |   | $                 | 210,926 |   |   | $ | 357,075 |   |

----

|                                                 |   | Years      Ended December 31, |      |
|------------------------------------------------------|--------|-------------------------------|-----------|
|                                                 |   | 2008                          |      |   | 2007 |   |   | 2006 |   |
| REVENUES:                                            |   |                          |      |   |   |   |   |   |   |
| Marketing                                            |   | $                             | 4,074,677 |   |   | $ | 2,558,545 |   |   | $ | 2,167,502 |   |
| Transportation                                       |   |                          | 67,747    |   |   |   | 63,894 |   |   |   | 62,151 |   |
| Oil      and gas                                     |   |                          | 17,248    |   |   |   | 13,783 |   |   |   | 16,950 |   |
|                                                 |   |                          | 4,159,672 |   |   |   | 2,636,222 |   |   |   | 2,246,603 |   |
| COSTS      AND EXPENSES:                             |   |                          |      |   |   |   |   |   |   |   |   |   |
| Marketing                                            |   |                          | 4,074,614 |   |   |   | 2,537,117 |   |   |   | 2,153,183 |   |
| Transportation                                       |   |                          | 59,659    |   |   |   | 54,115 |   |   |   | 52,440 |   |
| Oil      and gas operations                          |   |                          | 13,833    |   |   |   | 10,803 |   |   |   | 7,992 |   |
| Oil      and gas property sale                       |   |                          | -         |   |   |   | (12,078 | ) |   |   | - |   |
| General      and administrative                      |   |                          | 9,667     |   |   |   | 10,974 |   |   |   | 8,536 |   |
| Depreciation,      depletion and amortization        |   |                          | 13,373    |   |   |   | 11,384 |   |   |   | 9,485 |   |
|                                                 |   |                          | 4,171,146 |   |   |   | 2,612,315 |   |   |   | 2,231,636 |   |
|                                                 |   |                          |      |   |   |   |   |   |   |   |   |   |
| Operating      Earnings (Loss)                       |   |                          | (11,474   | ) |   |   | 23,907 |   |   |   | 14,967 |   |
|                                                 |   |                          |      |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                         |   |                          |      |   |   |   |   |   |   |   |   |   |
| Interest      income                                 |   |                          | 1,103     |   |   |   | 1,741 |   |   |   | 965 |   |
| Interest      expense                                |   |                          | (187      | ) |   |   | (134 | ) |   |   | (159 | )               |
|                                                 |   |                          |      |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) before income taxes             |   |                          | (10,558   | ) |   |   | 25,514 |   |   |   | 15,773 |   |
|                                                 |   |                          |      |   |   |   |   |   |   |   |   |   |
| Income      Tax Benefit (Provision):                 |   |                          |      |   |   |   |   |   |   |   |   |   |
| Current                                              |   |                          | (1,689    | ) |   |   | (8,093 | ) |   |   | (4,878 | ) |
| Deferred                                             |   |                          | 6,675     |   |   |   | (365 | ) |   |   | (412 | ) |
|                                                 |   |                          | 4,986     |   |   |   | (8,458 | ) |   |   | (5,290 | ) |
|                                                 |   |                          |      |   |   |   |   |   |   |   |   |   |
| Net      Earnings (Loss)                             |   | $                             | (5,572    | ) |   | $ | 17,056 |   |   | $ | 10,483 |   |
|                                                 |   |                          |      |   |   |   |   |   |   |   |   |   |
| EARNINGS      (LOSS) PER SHARE:                      |   |                          |      |   |   |   |   |   |   |   |   |   |
| Basic      and diluted net earnings (loss) per share |   | $                             | (1.32     | ) |   | $ | 4.04 |   |   | $ | 2.49 |   |
|                                                 |   |                          |      |   |   |   |   |   |   |   |   |   |
| DIVIDENDS      PER COMMON SHARE                      |   | $                             | .50       |   |   | $ | .47 |   |   | $ | .42 |   |

----

|                                |   |   |   |   |        |   |   |     |   |   | Total               |   |
|-------------------------------------|--------|--------|--------|--------|-------------|--------|--------|----------|--------|--------|---------------------|--------|
|                                |   | Common |   |   | Contributed |   |   | Retained |   |   | Shareholders’ |   |
|                                |   | Stock  |   |   | Capital     |   |   | Earnings |   |   | Equity              |   |
|                                |   |   |   |   |        |   |   |     |   |   |                |   |
| BALANCE,      January 1, 2006       |   | $      | 422    |   |        | $      | 11,693 |     |   | $      | 53,541              |   |   | $ | 65,656 |   |
| Net      earnings                   |   |   | -      |   |        |   | -      |     |   |   | 10,483              |   |   |   | 10,483 |   |
| Dividends      paid on common stock |   |   | -      |   |        |   | -      |     |   |   | (1,771              | )      |   |   | (1,771 | ) |
| BALANCE,      December 31, 2006     |   | $      | 422    |   |        | $      | 11,693 |     |   | $      | 62,253              |   |   | $ | 74,368 |   |
| Net      earnings                   |   |   | -      |   |        |   | -      |     |   |   | 17,056              |   |   |   | 17,056 |   |
| Dividends      paid on common stock |   |   | -      |   |        |   | -      |     |   |   | (1,982              | )      |   |   | (1,982 | ) |
| BALANCE,      December 31, 2007     |   | $      | 422    |   |        | $      | 11,693 |     |   | $      | 77,327              |   |   | $ | 89,442 |   |
| Net      earnings (loss)            |   |   | -      |   |        |   | -      |     |   |   | (5,572              | )      |   |   | (5,572 | ) |
| Dividends      paid on common stock |   |   | -      |   |        |   | -      |     |   |   | (2,109              | )      |   |   | (2,109 | ) |
| BALANCE,      December 31, 2008     |   | $      | 422    |   |        | $      | 11,693 |     |   | $      | 69,646              |   |   | $ | 81,761 |   |

----

|                                                   |   | Years      Ended December 31, |     |
|--------------------------------------------------------|--------|-------------------------------|----------|
|                                                   |   | 2008                          |     |   | 2007 |   |   | 2006 |   |
|                                                   |   |                          |     |   |   |   |   |   |   |
| CASH      PROVIDED BY OPERATIONS:                      |   |                          |     |   |   |   |   |   |   |
| Net      earnings                                      |   | $                             | (5,572   | ) |   | $ | 17,056 |   |   | $ | 10,483 |   |
| Adjustments      to reconcile net earnings to net cash |   |                          |     |   |   |   |   |   |   |   |   |   |
| from      operating activities-                        |   |                          |     |   |   |   |   |   |   |   |   |   |
| Depreciation,      depletion and amortization          |   |                          | 13,373   |   |   |   | 11,384 |   |   |   | 9,485 |   |
| Loss      (gain) on property sales                     |   |                          | 354      |   |   |   | (12,025 | ) |   |   | (101 | ) |
| Dry      hole costs incurred                           |   |                          | 2,421    |   |   |   | 3,187 |   |   |   | 1,230 |   |
| Impairment      of oil and gas properties              |   |                          | 5,911    |   |   |   | 2,062 |   |   |   | 1,405 |   |
| Provision      for doubtful accounts                   |   |                          | 1,059    |   |   |   | (33 | ) |   |   | (383 | ) |
| Other,      net                                        |   |                          | (433     | ) |   |   | (93 | ) |   |   | 262 |   |
| Decrease      (increase) in accounts receivable        |   |                          | 141,250  |   |   |   | (67,580 | ) |   |   | 24,013 |   |
| Decrease      (increase) in inventories                |   |                          | 569      |   |   |   | (6,826 | ) |   |   | 3,742 |   |
| Net      change in fair value contracts                |   |                          | 1,238    |   |   |   | (275 | ) |   |   | 317 |   |
| Decrease      (increase) in tax receivable             |   |                          | (1,075   | ) |   |   | (1,158 | ) |   |   | (92 | ) |
| Decrease      (increase) in prepayments                |   |                          | (1,456   | ) |   |   | 771 |   |   |   | 3,047 |   |
| Increase      (decrease) in accounts payable           |   |                          | (137,548 | ) |   |   | 66,556 |   |   |   | (27,682 | ) |
| Increase      (decrease) in accrued liabilities        |   |                          | 223      |   |   |   | (4,190 | ) |   |   | 3,107 |   |
| Deferred      income taxes                             |   |                          | (6,675   | ) |   |   | 365 |   |   |   | 412 |   |
| Net      cash provided by operating activities         |   |                          | 13,639   |   |   |   | 9,201 |   |   |   | 29,245 |   |
|                                                   |   |                          |     |   |   |   |   |   |   |   |   |   |
| INVESTING      ACTIVITIES:                             |   |                          |     |   |   |   |   |   |   |   |   |   |
| Property      and equipment additions                  |   |                          | (17,688  | ) |   |   | (15,841 | ) |   |   | (15,832 | ) |
| Insurance      and tax refunds (deposits)              |   |                          | 502      |   |   |   | (303 | ) |   |   | (1,458 | ) |
| Proceeds      from property sales                      |   |                          | 167      |   |   |   | 14,954 |   |   |   | 142 |   |
| Redemption      of short-term investments              |   |                          | 10,000   |   |   |   | 25,000 |   |   |   | - |   |
| Investment      in short-term investments              |   |                          | (10,000  | ) |   |   | (25,000 | ) |   |   | - |   |
| Net      cash (used in) investing activities           |   |                          | (17,019  | ) |   |   | (1,190 | ) |   |   | (17,148 | ) |
|                                                   |   |                          |     |   |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITIES:                             |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net      repayments under credit agreements            |   |                          | -        |   |   |   | (3,000 | ) |   |   | (8,475 | ) |
| Dividend      payments                                 |   |                          | (2,109   | ) |   |   | (1,982 | ) |   |   | (1,771 | ) |
| Net      cash (used in) financing activities           |   |                          | (2,109   | ) |   |   | (4,982 | ) |   |   | (10,246 | ) |
|                                                   |   |                          |     |   |   |   |   |   |   |   |   |   |
| Increase      (decrease) in cash and cash equivalents  |   |                          | (5,489   | ) |   |   | 3,029 |   |   |   | 1,851 |   |
|                                                   |   |                          |     |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at beginning of year    |   |                          | 23,697   |   |   |   | 20,668 |   |   |   | 18,817 |   |
|                                                   |   |                          |     |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of year          |   | $                             | 18,208   |   |   | $ | 23,697 |   |   | $ | 20,668 |   |

----

|                    |   | December      31, |   |
|-------------------------|--------|-------------------|--------|
|                    |   | 2008              |   |   | 2007 |   |
|                    |   |              |   |   |   |   |
| Crude      oil          |   | $                 | 11,710 |   |   | $ | 12,437 |   |
| Petroleum      products |   |              | 2,497  |   |   |   | 2,339 |   |
|                    |   |              |   |   |   |   |   |   |
|                    |   | $                 | 14,207 |   |   | $ | 14,776 |   |

----

----

----

|   | Level      1 – quoted prices in active markets for identical assets or liabilities      that may be accessed at the measurement date.  Active markets      are those in which transactions for the asset or liability occur in      sufficient frequency and volume to provide pricing information on an      ongoing basis.  The Company utilizes the New York Mercantile      Exchange “NYMEX” for its Level      1 valuations |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level      2 – (a) quoted prices for similar assets or liabilities in active markets,      (b) quoted prices for identical assets or liabilities but in markets that      are not actively traded or in which little information is released to the      public, (c) observable inputs other than quoted prices and (d) inputs      derived from observable marketdata. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level      3 – Unobservable market data inputs for assets or    liabilities. |
|--------|------------------------------------------------------------------------------------|

|                               |   | Market      Data Inputs |   |   |         |   |
|------------------------------------|--------|-------------------------|--------|--------|--------------|--------|
|                               |   | Level      1            |   |   | Level      2 |   |   | Level      3 |   |   |   |   |
|                               |   | Quoted      Prices      |   |   | Observable   |   |   | Unobservable |   |   | Total |   |
| Derivatives                        |   |                    |   |   |         |   |   |   |   |   |   |   |
| -      Current assets              |   | $                       | 1,029  |   |         | $      | 7,668 |   |   | $ | - |   |   | $ | 8,697 |   |
| -  Long-term      assets |   |                    | -      |   |         |   | - |   |   |   | - |   |   |   | - |   |
| -      Current liabilities         |   |                    | -      |   |         |   | (8,196 | ) |   |   | - |   |   |   | (8,196 | ) |
| -      Long-term liabilities       |   |                    | -      |   |         |   | - |   |   |   | - |   |   |   | - |   |
| Net      Value                     |   | $                       | 1,029  |   |         | $      | (528 | ) |   | $ | - |   |   | $ | 501 |   |

----

|                                       |   | Level      1       |   |   | Level      2 |   |   |   |   |
|--------------------------------------------|--------|--------------------|--------|--------|--------------|--------|--------|--------|--------|
|                                       |   | Quoted      Prices |   |   | Observable   |   |   | Total  |   |
|                                       |   |               |   |   |         |   |   |   |   |
| Net      Fair Value January 1,             |   | $                  | 344    |   |         | $      | 1,395  |   |   | $ | 1,739 |   |
| -      Net realized (gains) losses         |   |               | (436   | )      |         |   | (835   | )      |   |   | (1,271 | ) |
| -      Net unrealized gains (losses)       |   |               |   |   |         |   |   |   |   |   |   |   |
| at      inception of contract              |   |               | 1,121  |   |         |   | (1,034 | )      |   |   | 87 |   |
| -      Net unrealized gains (losses)       |   |               |   |   |         |   |   |   |   |   |   |   |
| from      valuation methodology change     |   |               | -      |   |         |   | -      |   |   |   | - |   |
| -      Net other unrealized gains (losses) |   |               | -      |   |         |   | (54    | )      |   |   | (54 | ) |
|                                       |   |               |   |   |         |   |   |   |   |   |   |   |
| Net      Fair Value December 31,           |   | $                  | 1,029  |   |         | $      | (528   | )      |   | $ | 501 |   |

|                         |   | 2008   |   |   | 2007   |   |
|------------------------------|--------|--------|--------|--------|--------|--------|
|                         |   |   |   |   |   |   |
| Balance      on January 1,   |   | $      | 1,153  |   |   | $      | 1,152 |   |
| -Liabilities      incurred   |   |   | 57     |   |   |   | 44 |   |
| -Accretion      of discount  |   |   | 70     |   |   |   | 135 |   |
| -Liabilities      settled    |   |   | (20    | )      |   |   | (178 | ) |
| -Revisions      to estimates |   |   | -      |   |   |   | - |   |
| Balance      on December 31, |   | $      | 1,260  |   |   | $      | 1,153 |   |

----

----

|      |   | Years      ended December 31, |   |
|-----------|--------|-------------------------------|--------|
|      |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
| Current:  |   |                          |   |   |   |   |   |   |   |
| Federal   |   | $                             | (1,349 | ) |   | $ | (6,637 | ) |   | $ | (4,506 | ) |
| State     |   |                          | (340   | ) |   |   | (1,456 | ) |   |   | (372 | ) |
|      |   |                          | (1,689 | ) |   |   | (8,093 | ) |   |   | (4,878 | ) |
| Deferred: |   |                          |   |   |   |   |   |   |   |   |   |   |
| Federal   |   |                          | 6,199  |   |   |   | (497 | ) |   |   | (504 | ) |
| State     |   |                          | 476    |   |   |   | 132 |   |   |   | 92 |   |
|      |   | $                             | 4,986  |   |   | $ | (8,458 | ) |   | $ | (5,290 | ) |

|                                                  |   | Years      ended December 31, |   |
|-------------------------------------------------------|--------|-------------------------------|--------|
|                                                  |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
| Statutory      federal income tax benefit (provision) |   | $                             | 3,696  |   |   | $ | (8,930 | ) |   | $ | (5,521 | ) |
| State      income tax benefit (provision)             |   |                          | 88     |   |   |   | (860 | ) |   |   | (266 | ) |
| Federal      statutory depletion                      |   |                          | 797    |   |   |   | 750 |   |   |   | 537 |   |
| Domestic      production deduction                    |   |                          | 62     |   |   |   | 141 |   |   |   | - |   |
| Foreign      investment write-off                     |   |                          | -      |   |   |   | 148 |   |   |   | - |   |
| Foreign      tax rate change                          |   |                          | -      |   |   |   | - |   |   |   | 108 |   |
| Valuation      allowance – foreign              |   |                          | -      |   |   |   | (13 | ) |   |   | (475 | ) |
| Change      in state tax rates                        |   |                          | 20     |   |   |   | 322 |   |   |   | 208 |   |
| Reduction      of prior FIN 48 liability              |   |                          | 320    |   |   |   | - |   |   |   | - |   |
| Texas      rate change adjustment                     |   |                          | -      |   |   |   | - |   |   |   | 108 |   |
| Other                                                 |   |                          | 3      |   |   |   | (16 | ) |   |   | 11 |   |
|                                                  |   | $                             | 4,986  |   |   | $ | (8,458 | ) |   | $ | (5,290 | ) |

----

|                                                         |   | Years      Ended December 31, |   |
|--------------------------------------------------------------|--------|-------------------------------|--------|
|                                                         |   | 2008                          |   |   | 2007 |   |
| Current      deferred tax asset (liability)                  |   |                          |   |   |   |   |
| Bad      debts                                               |   | $                             | 438    |   |   | $ | 67 |   |
| Prepaid      insurance                                       |   |                          | (672   | ) |   |   | (562 | ) |
| Mark-to-market      contracts                                |   |                          | (175   | ) |   |   | (609 | ) |
|                                                         |   |                          |   |   |   |   |   |   |
| Net      current deferred tax (liability)                    |   |                          | (409   | ) |   |   | (1,104 | ) |
|                                                         |   |                          |   |   |   |   |   |   |
| Long-term      deferred tax asset (liability)                |   |                          |   |   |   |   |   |   |
| Property                                                     |   |                          | 1,985  |   |   |   | (3,724 | ) |
| Uniform      capitalization                                  |   |                          | 263    |   |   |   | - |   |
| Insurance      returns                                       |   |                          | (323   | ) |   |   | (214 | ) |
| Other                                                        |   |                          | 110    |   |   |   | (7 | ) |
| Net      long-term deferred tax  asset (liability) |   |                          | 2,035  |   |   |   | (3,945 | ) |
|                                                         |   |                          |   |   |   |   |   |   |
| Net      deferred tax asset (liability)                      |   | $                             | 1,626  |   |   | $ | (5,049 | ) |

|                                            |   | 2008   |   |   | 2007   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Balance      as of January 1,                   |   | $      | 234    |   |   | $      | 120 |   |
| Additions      for tax positions of prior years |   |   | -      |   |   |   | 114 |   |
| Reductions      of prior positions              |   |   | (171   | )      |   |   |   |   |
| Balance      as of December 31,                 |   | $      | 63     |   |   | $      | 234 |   |

----

|            | Earliest      Open           |
|-----------------|------------------------------|
|            | Tax      Year                |
|            |                         |
| Federal         |     2005 |
| Texas           |     2004 |
| Louisiana       |     2005 |
| Michigan        |     2005 |
| Mississippi     |     2005 |
| Alabama         |     2005 |
| New      Mexico |     2005 |

----

|                                            |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                            |   |   |   |   |   |   |   |   |   |
| Balance,      beginning of year                 |   | $      | 192    |   |   | $      | 225    |   |   | $ | 608 |   |
| Provisions      for bad debts                   |   |   | 1,099  |   |   |   | 121    |   |   |   | 346 |   |
| Less:  Write-offs      and recoveries |   |   | (40    | )      |   |   | (154   | )      |   |   | (729 | ) |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      end of year                       |   | $      | 1,251  |   |   | $      | 192    |   |   | $ | 225 |   |

----

|                           |   | 2009 |   |   | 2010   |   |   | 2011   |   |   | 2012 |   |   | Thereafter |   |   | Total  |   |
|--------------------------------|--------|------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|--------|------------|--------|--------|--------|--------|
| Equipment      residual values |   | $    | 1,475  |   |   | $      | 217    |   |   | $      | 181  |   |   | $          | 72     |   |   | $      | 216 |   |   | $ | 2,161 |   |

----

|                           |   | 2009   |   |   | 2010   |   |   | 2011   |   |   | 2012 |   |   | Thereafter |   |   | Total  |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|--------|------------|--------|--------|--------|--------|
| Lease      payments            |   | $      | 1,878  |   |   |   | 1,047  |   |   |   | 702  |   |   |       | 100    |   |   |   | 47 |   |   |   | 3,774 |   |
| Equipment      residual values |   |   | 1,475  |   |   |   | 217    |   |   |   | 181  |   |   |       | 72     |   |   |   | 216 |   |   |   | 2,161 |   |
| Commodity      purchases       |   |   | 27,751 |   |   |   | -      |   |   |   | -    |   |   |       | -      |   |   |   | - |   |   |   | 27,751 |   |
| Letters      of credit         |   |   | 10,091 |   |   |   | -      |   |   |   | -    |   |   |       | -      |   |   |   | - |   |   |   | 10,091 |   |
|                           |   | $      | 41,195 |   |   | $      | 1,264  |   |   | $      | 883  |   |   | $          | 172    |   |   | $      | 263 |   |   | $ | 43,777 |   |

|                               |   |     |      |   | Segment      Operating |   |   | Depreciation      Depletion and |   |   | Property      and Equipment |   |
|------------------------------------|--------|----------|-----------|--------|------------------------|--------|--------|---------------------------------|--------|--------|-----------------------------|--------|
|                               |   | Revenues |      |   | Earnings (loss)        |   |   | Amortization                    |   |   | Additions                   |   |
| Year      ended December 31, 2008- |   |     |      |   |                   |   |   |                            |   |   |                        |   |
| Marketing                          |   |     |      |   |                   |   |   |                            |   |   |                        |   |
| -      Crude oil                   |   | $        | 3,849,531 |   |                   | $      | (4,545 | )                               |   | $      | 2,039                       |   |   | $ | 4,715 |   |
| -      Natural gas                 |   |     | 11,586    |   |                   |   | 2,247  |                            |   |   | 163                         |   |   |   | 12 |   |
| -      Refined products            |   |     | 213,560   |   |                   |   | (406   | )                               |   |   | 565                         |   |   |   | 114 |   |
| Marketing      Total               |   |     | 4,074,677 |   |                   |   | (2,704 | )                               |   |   | 2,767                       |   |   |   | 4,841 |   |
| Transportation                     |   |     | 67,747    |   |                   |   | 4,245  |                            |   |   | 3,843                       |   |   |   | 809 |   |
| Oil      and gas                   |   |     | 17,248    |   |                   |   | (3,348 | )                               |   |   | 6,763                       |   |   |   | 12,038 |   |
|                               |   | $        | 4,159,672 |   |                   | $      | (1,807 | )                               |   | $      | 13,373                      |   |   | $ | 17,688 |   |
| Year      ended December 31, 2007- |   |     |      |   |                   |   |   |                            |   |   |                        |   |   |   |   |   |
| Marketing                          |   |     |      |   |                   |   |   |                            |   |   |                        |   |   |   |   |   |
| -      Crude oil                   |   | $        | 2,373,838 |   |                   | $      | 15,321 |                            |   | $      | 657                         |   |   | $ | 1,397 |   |
| -      Natural gas                 |   |     | 13,764    |   |                   |   | 4,999  |                            |   |   | 162                         |   |   |   | 497 |   |
| -      Refined products            |   |     | 170,943   |   |                   |   | (168   | )                               |   |   | 457                         |   |   |   | 104 |   |
| Marketing      Total               |   |     | 2,558,545 |   |                   |   | 20,152 |                            |   |   | 1,276                       |   |   |   | 1,998 |   |
| Transportation                     |   |     | 63,894    |   |                   |   | 5,504  |                            |   |   | 4,275                       |   |   |   | 353 |   |
| Oil      and gas                   |   |     | 13,783    |   |                   |   | 9,225  |                            |   |   | 5,833                       |   |   |   | 13,490 |   |
|                               |   | $        | 2,636,222 |   |                   | $      | 34,881 |                            |   | $      | 11,384                      |   |   | $ | 15,841 |   |
| Year      ended December 31, 2006- |   |     |      |   |                   |   |   |                            |   |   |                        |   |   |   |   |   |
| Marketing                          |   |     |      |   |                   |   |   |                            |   |   |                        |   |   |   |   |   |
| -      Crude oil                   |   | $        | 1,975,972 |   |                   | $      | 5,088  |                            |   | $      | 857                         |   |   | $ | 1,395 |   |
| -      Natural gas                 |   |     | 13,621    |   |                   |   | 6,558  |                            |   |   | 59                          |   |   |   | 432 |   |
| -      Refined products            |   |     | 177,909   |   |                   |   | 1,329  |                            |   |   | 428                         |   |   |   | 1,085 |   |
| Marketing      Total               |   |     | 2,167,502 |   |                   |   | 12,975 |                            |   |   | 1,344                       |   |   |   | 2,912 |   |
| Transportation                     |   |     | 62,151    |   |                   |   | 5,173  |                            |   |   | 4,538                       |   |   |   | 1,342 |   |
| Oil      and gas                   |   |     | 16,950    |   |                   |   | 5,355  |                            |   |   | 3,603                       |   |   |   | 11,578 |   |
|                               |   | $        | 2,246,603 |   |                   | $      | 23,503 |                            |   | $      | 9,485                       |   |   | $ | 15,832 |   |
|                               |   |     |      |   |                   |   |   |                            |   |   |                        |   |   |   |   |   |

|   | Intersegment      sales are insignificant and all sales by the Company occurred in the      United States. |
|--------|------------------------------------------------------------------------------------------------------------|

----

|                                       |   | Years      Ended December 31, |    |
|--------------------------------------------|--------|-------------------------------|---------|
|                                       |   | 2008                          |    |   | 2007 |   |   | 2006 |   |
| Segment      operating earnings (loss)     |   | $                             | (1,807  | ) |   | $ | 34,881 |   |   | $ | 23,503 |   |
| -      General and administrative expenses |   |                          | (9,667  | ) |   |   | (10,974 | ) |   |   | (8,536 | ) |
| Operating      earnings                    |   |                          | (11,474 | ) |   |   | 23,907 |   |   |   | 14,967 |   |
| -      Interest income                     |   |                          | 1,103   |   |   |   | 1,741 |   |   |   | 965 |   |
| -      Interest expense                    |   |                          | (187    | ) |   |   | (134 | ) |   |   | (159 | ) |
| Earnings      (loss) before income taxes   |   | $                             | (10,558 | ) |   | $ | 25,514 |   |   | $ | 15,773 |   |

|                    |   | Years      Ended December 31, |    |
|-------------------------|--------|-------------------------------|---------|
|                    |   | 2008                          |    |   | 2007 |   |
| Marketing               |   |                          |    |   |   |   |
| -      Crude oil        |   | $                             | 85,774  |   |   | $ | 186,163 |   |
| -      Natural gas      |   |                          | 46,599  |   |   |   | 74,585 |   |
| -      Refined products |   |                          | 13,037  |   |   |   | 21,844 |   |
| Marketing      Total    |   |                          | 145,410 |   |   |   | 282,592 |   |
| Transportation          |   |                          | 14,915  |   |   |   | 18,282 |   |
| Oil      and gas        |   |                          | 21,904  |   |   |   | 25,267 |   |
| Other                   |   |                          | 28,697  |   |   |   | 30,934 |   |
|                    |   | $                             | 210,926 |   |   | $ | 357,075 |   |

|              |        |   |     |      |   |      |   |    | Net      Earnings |   |   | Dividends |   |
|-------------------|-------------|--------|----------|-----------|--------|-----------|--------|---------|-------------------|--------|--------|-----------|--------|
|              |        |   |     |      |   | Operating |   |    |              |   |   | Per       |   |   |   |   |   | Per |   |
|              |        |   | Revenues |      |   | Earnings  |   |    | Amount            |   |   | Share     |   |   | Amount |   |   | Share |   |
|              | 2008      - |   |     |      |   |      |   |    |              |   |   |      |   |   |   |   |   |   |   |   |
| March      31     |        |   | $        | 965,988   |   |      | $      | 3,001   |              |   | $      | 2,211     |   |   | $ | .52 |   |   | $ | - |   |   | $ | - |   |
| June      30      |        |   |     | 1,280,352 |   |      |   | 7,133   |              |   |   | 4,825     |   |   |   | 1.15 |   |   |   | - |   |   |   | - |   |
| September      30 |        |   |     | 1,288,322 |   |      |   | (10,044 | )                 |   |   | (6,276    | )      |   |   | (1.49 | ) |   |   | - |   |   |   | - |   |
| December      31  |        |   |     | 625,010   |   |      |   | (11,564 | )                 |   |   | (6,332    | )      |   |   | (1.50 | ) |   |   | 2,109 |   |   |   | .50 |   |
| Total             |        |   | $        | 4,159,672 |   |      | $      | (11,474 | )                 |   | $      | (5,572    | )      |   | $ | (1.32 | ) |   | $ | 2,109 |   |   | $ | .50 |   |
|              |        |   |     |      |   |      |   |    |              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|              | 2007      - |   |     |      |   |      |   |    |              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March      31     |        |   | $        | 486,366   |   |      | $      | 827     |              |   | $      | 912       |   |   | $ | .22 |   |   | $ | - |   |   | $ | - |   |
| June      30      |        |   |     | 569,748   |   |      |   | 17,595  |              |   |   | 11,286    |   |   |   | 2.67 |   |   |   | - |   |   |   | - |   |
| September      30 |        |   |     | 700,295   |   |      |   | 3,813   |              |   |   | 2,855     |   |   |   | .68 |   |   |   | - |   |   |   | - |   |
| December      31  |        |   |     | 879,813   |   |      |   | 1,672   |              |   |   | 2,003     |   |   |   | .47 |   |   |   | 1,982 |   |   |   | .47 |   |
| Total             |        |   | $        | 2,636,222 |   |      | $      | 23,907  |              |   | $      | 17,056    |   |   | $ | 4.04 |   |   | $ | 1,982 |   |   | $ | .47 |   |

|  Note: |  First      and second quarter 2008      earnings above included pre-tax inventory liquidation gains totaling      $1,967,000 and $3,911,000, respectively, as crude oil prices increased      during the periods, while third and fourth quarter 2008 earnings included      pre-tax inventory liquidation losses totaling $11,600,000 and $6,122,000      respectively, as crude oil prices initially increased by $43 per barrel      and then declined by $93 per barrel during the second half of      2008.  Second quarter 2007 earnings include $12,078,000 of      pre-tax earnings attributable to a gain on sale of certain producing oil      and gas properties. |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Oil      and Gas Producing Activities (Unaudited)- |
|--------|----------------------------------------------------|

|                            |   | Years      Ended December 31, |   |
|---------------------------------|--------|-------------------------------|--------|
|                            |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
| Property      acquisition costs |   |                          |   |   |   |   |   |   |   |
| Unproved                        |   | $                             | 3,139  |   |   | $ | 1,428 |   |   | $ | 1,885 |   |
| Proved                          |   |                          | -      |   |   |   | - |   |   |   | - |   |
| Exploration      costs          |   |                          |   |   |   |   |   |   |   |   |   |   |
| Expensed                        |   |                          | 6,030  |   |   |   | 5,507 |   |   |   | 2,902 |   |
| Capitalized                     |   |                          | 178    |   |   |   | 1,289 |   |   |   | 2,173 |   |
| Development      costs          |   |                          | 3,466  |   |   |   | 6,741 |   |   |   | 5,628 |   |
| Total      costs incurred       |   | $                             | 12,813 |   |   | $ | 14,965 |   |   | $ | 12,588 |   |

|                                     |   | December      31, |    |
|------------------------------------------|--------|-------------------|---------|
|                                     |   | 2008              |    |   | 2007 |   |
|                                     |   |              |    |   |   |   |
| Unproved      oil and gas properties     |   | $                 | 5,945   |   |   | $ | 5,328 |   |
| Proved      oil and gas properties       |   |              | 60,648  |   |   |   | 57,697 |   |
|                                     |   |              | 66,593  |   |   |   | 63,025 |   |
| Accumulated      depreciation, depletion |   |              |    |   |   |   |   |   |
| and      amortization                    |   |              | (47,041 | ) |   |   | (40,525 | ) |
|                                     |   |              |    |   |   |   |   |   |
| Net      capitalized cost                |   | $                 | 19,551  |   |   | $ | 22,500 |   |

----

|                                 |   | Years      Ended December 31, |   |
|--------------------------------------|--------|-------------------------------|--------|
|                                 |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
|                                 |   | Natural                       |   |   |   |   |   | Natural |   |   |   |   |   | Natural |   |   |   |   |
|                                 |   | Gas                           |   |   | Oil |   |   | Gas |   |   | Oil |   |   | Gas |   |   | Oil |   |
|                                 |   | (Mcf’s)                 |   |   | (Bbls.) |   |   | (Mcf’s) |   |   | (Bbls.) |   |   | (Mcf’s) |   |   | (Bbls.) |   |
| Total      proved reserves-          |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      of year               |   |                          | 7,068  |   |   |   | 297 |   |   |   | 8,300 |   |   |   | 396 |   |   |   | 9,643 |   |   |   | 396 |   |
| Revisions      of previous estimates |   |                          | (1,350 | ) |   |   | (83 | ) |   |   | 132 |   |   |   | (61 | ) |   |   | (2,473 | ) |   |   | (45 | ) |
| Oil      and gas reserves sold       |   |                          | -      |   |   |   | - |   |   |   | (1,460 | ) |   |   | (2 | ) |   |   |   |   |   |   |   |   |
| Extensions,      discoveries and     |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| other      reserve additions         |   |                          | 1,968  |   |   |   | 67 |   |   |   | 1,278 |   |   |   | 33 |   |   |   | 2,734 |   |   |   | 121 |   |
| Production                           |   |                          | (1,243 | ) |   |   | (51 | ) |   |   | (1,182 | ) |   |   | (69 | ) |   |   | (1,604 | ) |   |   | (76 | ) |
| End      of year                     |   |                          | 6,443  |   |   |   | 230 |   |   |   | 7,068 |   |   |   | 297 |   |   |   | 8,300 |   |   |   | 396 |   |
|                                 |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proved      developed reserves-      |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| End      of year                     |   |                          | 6,443  |   |   |   | 230 |   |   |   | 7,068 |   |   |   | 297 |   |   |   | 8,300 |   |   |   | 396 |   |

|                                           |   |  Years      Ended December 31, |    |
|------------------------------------------------|--------|-------------------------------------|---------|
|                                           |   | 2008                                |    |   | 2007 |   |   | 2006 |   |
|                                           |   |                                |    |   |   |   |   |   |   |
| Future      gross revenues                     |   | $                                   | 42,058  |   |   | $ | 74,133 |   |   | $ | 69,540 |   |
| Future      costs -                            |   |                                |    |   |   |   |   |   |   |   |   |   |
| Lease      operating expenses                  |   |                                | (11,057 | ) |   |   | (20,792 | ) |   |   | (20,677 | ) |
| Development      costs                         |   |                                | (816    | ) |   |   | (860 | ) |   |   | (684 | ) |
| Future      net cash flows before income taxes |   |                                | 30,185  |   |   |   | 52,481 |   |   |   | 48,179 |   |
| Discount      at 10% per annum                 |   |                                | (12,421 | ) |   |   | (22,344 | ) |   |   | (17,904 | ) |
| Discounted      future net cash flows          |   |                                |    |   |   |   |   |   |   |   |   |   |
| before      income taxes                       |   |                                | 17,764  |   |   |   | 30,137 |   |   |   | 30,275 |   |
| Future      income taxes, net of discount at   |   |                                |    |   |   |   |   |   |   |   |   |   |
| 10%      per annum                             |   |                                | (6,217  | ) |   |   | (10,547 | ) |   |   | (11,505 | ) |
| Standardized      measure of discounted        |   |                                |    |   |   |   |   |   |   |   |   |   |
| future      net cash flows                     |   | $                                   | 11,547  |   |   | $ | 19,590 |   |   | $ | 18,770 |   |

----

|                                                        |   | Years      Ended December 31, |    |
|-------------------------------------------------------------|--------|-------------------------------|---------|
|                                                        |   | 2008                          |    |   | 2007 |   |   | 2006 |   |
| Beginning      of year                                      |   | $                             | 19,590  |   |   | $ | 18,770 |   |   | $ | 29,960 |   |
| Revisions      to reserves proved in prior years -          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Net      change in prices and production costs              |   |                          | (10,041 | ) |   |   | 6,072 |   |   |   | (14,234 | ) |
| Net      change due to revisions in quantity estimates      |   |                          | (6,293  | ) |   |   | (664 | ) |   |   | (12,078 | ) |
| Accretion      of discount                                  |   |                          | 2,234   |   |   |   | 1,790 |   |   |   | 3,512 |   |
| Production      rate changes and other                      |   |                          | 2,679   |   |   |   | (2,424 | ) |   |   | (998 | ) |
| Total      revisions                                        |   |                          | (11,421 | ) |   |   | 4,774 |   |   |   | (23,798 | ) |
| Sale      of oil and gas reserves                           |   |                          | -       |   |   |   | (3,503 | ) |   |   | - |   |
| New      field discoveries and extensions, net of future    |   |                          |    |   |   |   |   |   |   |   |   |   |
| production      costs                                       |   |                          | 11,571  |   |   |   | 8,294 |   |   |   | 18,445 |   |
| Sales      of oil and gas produced, net of production costs |   |                          | (12,523 | ) |   |   | (9,703 | ) |   |   | (12,694 | ) |
| Net      change in income taxes                             |   |                          | 4,330   |   |   |   | 958 |   |   |   | 6,857 |   |
| Net      change in standardized measure of discounted       |   |                          |    |   |   |   |   |   |   |   |   |   |
| future      net cash flows                                  |   |                          | (8,043  | ) |   |   | 820 |   |   |   | (11,190 | ) |
| End      of year                                            |   | $                             | 11,547  |   |   | $ | 19,590 |   |   | $ | 18,770 |   |

|                                             |   | Years      Ended December 31, |   |
|--------------------------------------------------|--------|-------------------------------|--------|
|                                             |   | 2008                          |   |   | 2007 |   |   | 2006 |   |
|                                             |   |                          |   |   |   |   |   |   |   |
| Revenues                                         |   | $                             | 17,248 |   |   | $ | 13,783 |   |   | $ | 16,950 |   |
| Oil      and gas property sale                   |   |                          | -      |   |   |   | 12,078 |   |   |   | - |   |
| Costs      and expenses -                        |   |                          |   |   |   |   |   |   |   |   |   |   |
| Production                                       |   |                          | (4,725 | ) |   |   | (4,080 | ) |   |   | (4,256 | ) |
| Producing      property impairment               |   |                          | (3,078 | ) |   |   | (1,216 | ) |   |   | (841 | ) |
| Exploration                                      |   |                          | (6,030 | ) |   |   | (5,507 | ) |   |   | (2,895 | ) |
| Depreciation,      depletion and amortization    |   |                          | (6,763 | ) |   |   | (5,833 | ) |   |   | (3,603 | ) |
| Operating      income (loss) before income taxes |   |                          | (3,348 | ) |   |   | 9,225 |   |   |   | 5,355 |   |
| Income      tax expense (benefit)                |   |                          | 1,172  |   |   |   | (3,229 | ) |   |   | (1,875 | ) |
| Operating      income (loss)                     |   | $                             | (2,176 | ) |   | $ | 5,996 |   |   | $ | 3,480 |   |

----

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

----

| Item      10. | DIRECTORS,      EXECUTIVE OFFICERS AND CORPORATEGOVERNANCE |
|---------------|------------------------------------------------------------|

| Item      11. | EXECUTIVE      COMPENSATION |
|---------------|-----------------------------|

| Item      12. | SECURITY      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED      STOCKHOLDER MATTERS |
|---------------|----------------------------------------------------------------------------------------------------------|

| Item      13. | CERTAIN      RELATIONSHIPS, RELATED PARTY TRANSACTIONS AND DIRECTOR      INDEPENDENCE |
|---------------|---------------------------------------------------------------------------------------|

| Item      14. | PRINCIPAL      ACCOUNTING FEES AND SERVICES |
|---------------|---------------------------------------------|

----

| Item      15. | EXHIBITS      AND FINANCIAL STATEMENT SCHEDULES |
|---------------|-------------------------------------------------|

| 2.   | All      financial schedules have been omitted because they are not applicable or      the required information is shown in the financial statements or notes      thereto. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | 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 (-File      No. 1-7908) 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 (-File No.      1-7908) of the Company for the fiscal year ended December 31,      1986) |
|------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3(d) | - | Adams      Resources & Energy, Inc. and Subsidiaries’ Code of Ethics      (Incorporated by reference to Exhibit 3(d) of the Annual Report on Form      10-K (-File No. 1-7908) of the Company for the fiscal year ended December      31, 2002) |
|------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4(a) | - | Specimen      common stock Certificate (Incorporated by reference to Exhibit 4(a) of the      Annual Report on Form 10-K of the Company (-File No. 1-7908) 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) |
|------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | -   Change      in control/severance agreement dated July 25, 2008 by and between Adams      Resources & Energy, Inc. and Richard B. Abshire (Incorporated by      reference to Exhibit 10.1 to the Company’s current report on Form 8-K      filed on July 25, 2008). |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21* | - | Subsidiaries      of the Registrant |
|-----|---|-------------------------------------|

| 31.1* | - | Adams      Resources & Energy, Inc. Certification Pursuant to 17 CFR 13a-14      (a)/15d-14(a), As adopted pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002 |
|-------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2* | - | Adams      Resources & Energy, Inc. Certification Pursuant to 17 CFR      13a-14(a)/15d-14(a),  as adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 |
|-------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1* | - | Certification      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 |
|-------|---|----------------------------------------------------------------------------------------------------------------------------------|

| 32.2* | - | Certification      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 |
|-------|---|----------------------------------------------------------------------------------------------------------------------------------|

|   | ______________________________ |
|--------|--------------------------------|

|   | *  -      Filed herewith |
|--------|------------------------------------|

----

|                                | 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, Director       | Chairman      of the Board and          |
| and      Chief Financial Officer)   | Chief      Executive Officer)           |

| By      /s/ Frank T. Webster      | By      /s/ E. C. Reinauer,    Jr.    |
|-----------------------------------|---------------------------------------|
| (Frank      T. Webster, Director) | (E.      C. Reinauer, Jr., Director)  |
|                              |                                  |
|                              |                                  |
|                              |                                  |
| By      /s/ Larry E. Bell         | By      /s/ E. Jack Webster,    Jr.   |
| (Larry      E. Bell, Director)    | (E.      Jack Webster, Jr., Director) |
|                              |                                  |
|                              |                                  |
|                              |                                  |
|                              |                                  |
|                              |                                  |
|                              |                                  |
|                              |                                  |
|                              |                                  |
|                              |                                  |
|                              |                                  |

----

| 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) |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3(d) | -   Adams      Resources & Energy, Inc. and Subsidiaries’ Code of Ethics      (Incorporated by reference to Exhibit 3(d) of the Annual Report on Form      10-K of the Company for the fiscal year ended December 31,      2002) |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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) |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | -   Change      in control/severance agreement dated July 25, 2008 by and between Adams      Resources & Energy, Inc. and Richard B. Abshire (Incorporated by      reference to Exhibit 10.1 to the Company’s current report on Form 8-K      filed on July 25, 2008). |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21* | -     Subsidiaries      of the Registrant |
|-----|--------------------------------------------------------------------|

| 31.1* | -   Certification      Pursuant to 17 CFR 13a-14(a)/15d-14(a), As Adopted Pursuant to Section 302      of the Sarbanes-Oxley Act of 2002 |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2* | -   Certification      Pursuant to 17 CFR 13a-14(a)/15d-14(a), As Adopted Pursuant to Section302      of the Sarbanes-Oxley Act of 2002 |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1* | -    Certification      Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2* | -    Certification      Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ______________________________ |
|--------|--------------------------------|

|   | * -      Filed herewith |
|--------|-------------------------|

----