UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended December 31, 1996.

             [  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                      OF THE SECURITIES EXCHANGE ACT OF 1934
                      For the transition period from to

                         Commission file number 0-27732

                        DAWSON PRODUCTION SERVICES, INC.
             (Exact name of registrant as specified in its charter)

              TEXAS                                74-2231546
   (State or other jurisdiction                (I.R.S. Employer 
         or organization)                     Identification No.)
               
  901 N.E. Loop 410, Suite 700
     San Antonio, Texas                            78209-1306
(Address of principal executive offices)           (Zip Code)

       Registrant's telephone number, including area code: (210) 828-1838

                                 NOT APPLICABLE
             (Former name, former address and former fiscal year,
                       if changed since last report)

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

     The number of shares outstanding of each of the issuer's classes of common
stock. as of February 14 , 1997: Common Stock, $0.01 par value per share -
6,399,725 shares.

<PAGE>
                                     PART I
                                   
ITEM 1. FINANCIAL STATEMENTS (unaudited)                                   
                                   
                        DAWSON PRODUCTION SERVICES, INC.
                           CONSOLIDATED BALANCE SHEETS

ASSETS
                                                    March 31,      December 31,
                                                       1996            1996
                                                   ------------    ------------
                                                                    (unaudited)
Current assets:
     Cash and cash equivalents .................   $ 13,863,108    $  9,183,167
     Trade receivables (net of allowance for
          doubtful accounts of $290,839
          and $407,080, respectively) ..........      8,773,156      16,382,461
     Other receivables .........................         95,202         277,322
     Income taxes receivable ...................        740,768         466,814
     Prepaid expenses and other ................        215,497         571,868
                                                   ------------    ------------
               Total current assets ............     23,687,731      26,881,632
Net property and equipment, substantially
     all pledged ...............................     29,114,671      39,273,241
Goodwill and other assets ......................      3,565,555      10,542,591
                                                   ------------    ------------
               Total assets ....................   $ 56,367,957    $ 76,697,464
                                                   ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable ..........................   $  2,909,390    $  3,951,418
     Accrued liabilities .......................      2,825,926       3,944,088
     Current portion of long-term debt .........         20,055       9,329,311
     Current portion of obligations under
         capital leases ........................      1,167,384       1,203,713
                                                   ------------    ------------
               Total current liabilities .......      6,922,755      18,428,530
                                                   ------------    ------------
Long-term debt, net of current portion .........      1,530,903       2,740,602
Obligations under capital leases,
     net of current portion ....................      2,163,610       1,742,824
Deferred income taxes ..........................         56,310       4,301,784
Shareholders' equity :
     Preferred stock, no par value, 560,600
         shares authorized, none
         issued and outstanding ................           --              --   
     Common stock, $.01 par value,
          20,560,600 shares authorized,
          6,382,526 and 6,391,126 issued
          and outstanding, respectively ........         63,826          63,912
    Paid-in capital ............................     41,458,254      41,522,152
    Retained earnings ..........................      4,314,177       8,039,538
    Notes receivable from officers .............       (141,878)       (141,878)
                                                   ------------    ------------
               Total shareholders' equity ......     45,694,379      49,483,724
Commitments and contingencies ..................   ------------    ------------
               Total liabilities and equity ....   $ 56,367,957    $ 76,697,464
                                                   ============    ============
                                   
          See accompanying notes to consolidated financial statements.
                                   
                                       1
<PAGE>

                        DAWSON PRODUCTION SERVICES, INC.
                                                  
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)
<TABLE>
<CAPTION>
                                                     Three Months Ended               Nine Months Ended
                                                         December 31,                    December 31,
                                                 ----------------------------    ----------------------------
                                                     1995            1996            1995            1996 
                                                 ------------    ------------    ------------    ------------
<S>                                              <C>             <C>             <C>             <C>         
Revenues .....................................   $ 13,059,200    $ 22,455,685    $ 38,947,587    $ 56,267,119
                                                 ------------    ------------    ------------    ------------
Costs and expenses:
     Operating ...............................      8,592,345      13,881,062      25,467,503      35,774,569
     General and administrative ..............      2,347,245       3,705,837       6,585,256       9,174,641
     Depreciation and amortization ...........      1,197,858       1,968,979       3,214,282       4,844,953
                                                 ------------    ------------    ------------    ------------
               Total costs and expenses ......     12,137,448      19,555,878      35,267,041      49,794,163
                                                 ------------    ------------    ------------    ------------
                 Operating income ............        921,752       2,899,807       3,680,546       6,472,956
                                                 ------------    ------------    ------------    ------------
Other income and expenses:
     Interest expense ........................        448,502         295,457       1,401,374         591,479
      Other expense (income), net ............        (50,846)        (96,404)        (78,053)       (348,224)
                                                 ------------    ------------    ------------    ------------
               Total other income and expenses        397,656         199,053       1,323,321         243,255
                                                 ------------    ------------    ------------    ------------
               Income before minority interest
                    and income taxes .........        524,096       2,700,754       2,357,225       6,229,701
Minority interest in consolidated subsidiary .        150,163            --           937,164            --   
                                                 ------------    ------------    ------------    ------------
Income before income taxes ...................        373,933       2,700,754       1,420,061       6,229,701
Provision for income taxes ...................        162,490       1,150,396         560,490       2,504,340
                                                 ------------    ------------    ------------    ------------
Net income ...................................        211,443       1,550,358         859,571       3,725,361
                                                 ------------    ------------    ------------    ------------
Preferred stock dividends ....................         19,094           --             69,180           --   
                                                 ------------    ------------    ------------    ------------
Net income applicable to common stock ........   $    192,349    $  1,550,358    $    790,391    $  3,725,361
                                                 ============    ============    ============    ============
Earnings per common share:
     Primary .................................   $       0.06    $       0.24    $       0.31    $       0.57
     Fully diluted ...........................   $       0.06    $       0.23    $       0.30    $       0.57

Weighted average common  and common equivalent
   shares outstanding:
     Primary .................................      2,971,284       6,547,701       2,542,720       6,516,844
     Fully diluted ...........................      2,971,284       6,617,754       3,228,113       6,575,160
</TABLE>
                                             
          See accompanying notes to consolidated financial statements.
                                             
                                        2
<PAGE>

                        DAWSON PRODUCTION SERVICES, INC.
                              
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                              
<TABLE>
<CAPTION>
                                                                     Nine Months Ended                  
                                                                        December 31,                 
                                                                ----------------------------
                                                                    1995            1996           
                                                                ------------    ------------
<S>                                                             <C>             <C>         
Cash flows from operating activities:
     Net income .............................................   $    859,571    $  3,725,361
Adjustments to reconcile net income to net cash
 provided by operating activities:
     Minority interest in net income of
          subsidiary company ................................        937,164            --   
     Depreciation and amortization ..........................      3,214,280       4,844,953
     Allowance for doubtful accounts ........................        (43,589)        116,241
     (Gain) loss on sale of assets ..........................        (91,873)        108,916
     Increase (decrease) in deferred income taxes ...........        488,444       2,035,787
     Decrease (increase) in receivables .....................       (803,618)     (3,652,125)
     Decrease (increase) in prepaid expense and other .......       (368,916)       (152,398)
     Decrease (increase) in other assets ....................       (286,814)         12,283
     Increase (decrease) in accounts payable ................        517,175         214,834
     Increase (decrease) in income tax payable ..............       (865,572)        114,579
     Increase (decrease) in accrued expenses ................       (192,749)        (38,072)
                                                                ------------    ------------
                 Net cash provided by operating activities ..      3,363,503       7,330,359
Cash flows from investing activities:
     Acquisitions ...........................................           --       (13,304,887)
     Additions to property and equipment ....................     (3,415,276)     (3,870,011)
     Proceeds from sales of property ........................        200,030          72,279
                                                                ------------    ------------
                  Net cash used in investing activities .....     (3,215,246)    (17,102,619)
Cash flows from financing activities:
     Long-term borrowings ...................................        959,023       7,261,330
     Payments on long-term debt .............................     (2,172,816)       (770,613)
     Capital lease payments .................................       (749,977)     (1,462,382)
     Exercise of common stock options and warrants ..........           --            63,984
     Tax benefit realized from stock options ................         42,326            --   
     Cash dividends on preferred stock ......................        (69,180)           --   
     Subsidiary distributions to minority owner .............       (267,102)           --   
                                                                ------------    ------------
          Net cash (used) provided in financing activities ..     (2,257,726)      5,092,319
                                                                ------------    ------------
          Net increase (decrease) in cash ...................     (2,109,469)     (4,679,941)
     Cash and cash equivalents at the beginning of the period      2,796,540      13,863,108
                                                                ------------    ------------
     Cash and cash equivalents at the end of the period .....   $    687,071    $  9,183,167
                                                                ============    ============

Supplemental disclosures of cash flow information:
   Cash paid for:
                Interest ....................................   $  1,525,200    $    563,312
                Income taxes ................................        600,000         576,000
Supplemental disclosures of non-cash transactions:
    Assets acquired under capital lease .....................      2,034,355       1,052,153
    Conversion of long-term debt to common stock ............         75,000            --   
    Issuance of common stock for minority interest ..........      7,700,000            --   
    Conversion of preferred stock to common stock ...........        252,500            --   
    Note issued to seller in acquisition ....................           --         1,750,000
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                          PART I--FINANCIAL INFORMATION

                        DAWSON PRODUCTION SERVICES, INC.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  GENERAL

      The unaudited consolidated financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to such rules and
regulations. These unaudited consolidated financial statements should be read in
conjunction with Dawson Production Services, Inc. (the "Company's") audited
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended March 31, 1996.

      The unaudited consolidated financial information included herein reflects
all adjustments, consisting only of normal recurring adjustments, which are
necessary, in the opinion of management, for a fair presentation of the
Company's financial position or results of operations for the interim periods
presented. The interim information contained herein is not necessarily
indicative of the results to be expected for the full year.

2.     ACQUISITIONS

      In April 1996, the Company acquired the assets of two small production
testing companies in Louisiana. The aggregate purchase price was approximately
$673,000. Goodwill and a non-compete agreement were recognized on these
transactions which amounted to approximately $111,000. These items are being
amortized over twenty and five year periods, respectively.

      In May 1996, the Company acquired the Texas-based well servicing division
of a non-affiliated company. The aggregate purchase price was $779,000.

      In July 1996, the Company acquired the assets of a trucking company in
Louisiana. The aggregate purchase price was approximately $400,000. Goodwill
recognized on the transaction amounted to $50,000 which is being amortized over
a twenty-year period.

      Effective July 29, 1996, the Company acquired all of the issued and
outstanding stock of Taylor Companies, Inc. for an aggregate purchase price of
$12,750,000, consisting of $11,100,000 in cash and $1,750,000 subordinated
promissory note payable to the selling shareholders. Goodwill recognized on this
transaction amounted to $6,690,000 which is being amortized over a twenty-year
period. The Company reported this acquisition and related proforma effects on a
current report on Form 8-K.

      The acquisitions have been accounted for as purchases and, accordingly,
the operating results have been included in the Company's statement of income
since the dates of acquisition. The effect on results of operations would not
have been material if such acquisitions had occurred at the beginning of the
year other than the Taylor acquisition.

<PAGE>
2.    ACQUISITIONS (CONTINUED)

      On January 20, 1997, the Company acquired the liquid services assets of
Mobley Environmental Services, Inc. for approximately $5.0 million in cash and
a $.5 million five year subordinated note

      On December 23, 1996, the Company entered into an Asset Purchase Agreement
pursuant to which the Company will acquire substantially all of U.S. land-based
well servicing assets of Pride Petroleum Services, Inc. for approximately
$135,900,000 in cash ("Pride Acquisition"). The acquisition is expected to be
financed through public offerings of senior subordinated notes and common stock.
The Company also expects the acquisition to close during the quarter ending
March 31, 1997.

3.    LOAN COMMITMENTS

      In July 1996, to finance a portion of the Taylor acquisition, the Company
obtained an unsecured loan from a bank in the amount of $7.0 million. The
promissory note carries an annual interest rate of 7.625% at December 31, 1996
and has a maturity date of March 31, 1997.

      The Company is currently negotiating with Frost Bank for a $50.0 million
revolving credit facility and a $10.0 million to $20.0 million acquisition line
of credit. The $50.0 million facility is expected to be subject to the closing
of the public financings and the Pride Acquisition (as defined above). In the
event the Pride Acquisition does not close, the Company, based on discussions
with the bank, anticipates that the revolving credit facility will be reduced to
$10.0 million and closed. Although management believes that the revolving credit
will be consummated, there can be no assurance thereof and, the failure to
consummate the revolving credit facility could have a material adverse effect on
the Company's cash flow and working capital. The Company does not anticipate
closing the acquisition line of credit until there is a closing ( or a
determination not to close) the Pride Acquisition.

   4.        COMMITMENTS AND CONTINGENCIES

      The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position or results of operations.

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

Forward-Looking  Information

     This Quarterly Report on Form 10-Q includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statement of historical information provided herein are
forward-looking and may contain information about financial results, economic
conditions, trends and known uncertainties. The Company cautions the reader that
actual results could differ materially from those expected by the Company
depending on the outcome of certain factors, including without limitation (I)
fluctuations in the prices of oil and natural gas, competition, operating risks,
acquisition risks, liquidity and capital requirements and the effects of
governmental and environmental regulation, (ii) adverse changes in the
operations acquired in connection with the acquisition by the Company of the
land-based well servicing operation of Pride Petroleum Services, Inc. (the
"Pride Acquisition") and (iii) adverse changes in the market for the Company's
services. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to release publicly the results of any revisions to
these forward-looking statements which may be made to reflect events or
circumstances after the date hereof, including without limitation, changes in
the Company's business strategy or planned capital expenditures, or to reflect
the occurrence of unanticipated events.

Results of Operations - Quarters Ended  December 31, 1996 and 1995

     Revenues. Revenues were $22.5 million for the quarter ended December 31,
1996, a 72% increase compared with revenues of $13.1 million for the quarter
ended December 31, 1995. Compared to the same period in 1995, revenues for the
quarter ended December 31, 1996 increased by 22%, 161% and 78% in the workover,
liquid and production services lines of business, respectively. The increase in
revenues is attributable primarily to the acquisition of a liquid services
business, Taylor Service Company, Inc. (the "Taylor Acquisition") in July 1996,
which added 66 vacuum trucks to the Company's fleet. The remainder of the
increase is due to the addition of 11 vacuum trucks in March 1996, the
acquisition of six workover rigs in May 1996, the acquisition of a Louisiana
based production testing company in February 1996, commencement of limited
operations in Mexico and a general overall increase in demand in the workover,
liquid services and production services lines of business.

     Costs and Expenses. The Company's costs and expenses for the quarter ended
December 31, 1996 were $19.6 million, a 61% increase compared to costs and
expenses of $12.1 million for the quarter ended December 31, 1995. Operating
costs for the quarter ended December 31, 1996 increased $5.3 million from $8.6
million for the quarter ended December 31, 1995. General and administrative
expenses, which include field office general and administrative expenses,
increased $1.4 million over the same period in the previous fiscal year. The
increases are primarily attributable to the Taylor Acquisition; however, the
other acquisitions described above and overall increased demand for all of the
Company's services has also contributed to the increase in expenses.

     Interest Expense. Interest expense for the quarter ended December 31, 1996
was $0.3 million

<PAGE>
compared to $0.4 million for the quarter ended December 31, 1995. The decrease
of $0.1 million is attributable to the retirement of debt from funds generated
from the Company's initial public offering which was completed in March 1996.
The Company anticipates that interest expense will increase in future periods
due to the incurrence of debt in connection with the Taylor Acquisition and the
anticipated Pride Acquisition.

     Minority Interest. The elimination of the minority interest expense in the
quarter ended December 31, 1996 was due to the acquisition, in November 1995, of
the 39% minority interest in the Company's subsidiary, Dawson Welltech, L.C.

     Net Income. For the quarter ended December 31, 1996, the Company had net
income of $1.6 million, a 631% increase over the $0.2 million in net income for
the quarter ended December 31, 1995. The increase in net income reflects the
acquisitions made by the Company. The Taylor Acquisition has had the largest
impact on net income. Other factors that have contributed to the increase in net
income are stronger overall market conditions, the purchase of the remaining
minority interest in Dawson Welltech, L.C. and interest savings resulting from
the retirement of debt using a portion of the funds generated from the Company's
initial public offering completed in March 1996.

Results of Operations - Nine Months Ended  December 31, 1996 and 1995

     Revenues. Revenues were $56.3 million for the nine months ended December
31, 1996, a 44% increase compared with revenues of $38.9 million for the nine
months ended December 31, 1995. Compared to the same period in 1995, revenues
for the nine months ended December 31, 1996 increased by 16%, 109% and 30% in
the workover, liquid and production services lines of business, respectively.
The increase in revenues is attributable primarily to the Taylor Acquisition ,
the addition of 11 vacuum trucks in March 1996, the acquisition of six workover
rigs acquired in May 1996, the acquisition of a Louisiana based production
testing facility in February 1996, commencement of limited operations in Mexico
and a general overall increase in demand in the workover, liquid services and
production services lines of business.

     Costs and Expenses. The Company's costs and expenses for the nine months
ended December 31, 1996 were $49.8 million, a 41% increase compared to costs and
expenses of $35.3 million for the nine months ended December 31, 1995. Operating
costs for the period ended December 31, 1996 increased $10.3 million from $25.5
million for the nine months ended December 31, 1995. General and administrative
expenses, which include the field office general and administrative expenses,
increased $2.6 million over the same period in the previous fiscal year. The
increases are primarily attributable to the Taylor Acquisition; however, the
other acquisitions described above and a general increase in demand for all of
the Company's services has also contributed to the increases in expenses.

     Interest Expense. Interest expense for the nine months ended December 31,
1996 was $0.6 million compared with $1.4 million for the corresponding period in
1995. The decrease of $0.8 million is attributable to the retirement of debt
from funds generated from the Company's initial public offering completed in
March 1996. The Company anticipates interest expense will increase in future
periods due to the incurrence of $7.0 million in debt to acquire Taylor.

     Minority Interest. The elimination of the minority interest expense in the
nine month period ended December 31, 1996 was due to the acquisition, in
November 1995, of the remaining 39% minority interest in the Company's
subsidiary, Dawson Welltech, L.C.

<PAGE>
     Net Income. For the nine months ended December 31, 1996, the Company had
net income of $3.7 million, a 371% increase over the $0.8 million in net income
for the same period in 1995. The increase in net income resulted primarily from
the acquisitions completed by the Company, and in particular the Taylor
Acquisition. Other factors that contributed to the increase in net income are
stronger overall market conditions, the purchase of the remaining minority
interest in Dawson Welltech, L.C. and interest savings resulting from the
retirement of debt using a portion of the funds generated from the Company's
initial public offering completed in March 1996.

Liquidity and Capital Resources

     Cash Flows. The Company had cash and cash equivalents of $9.2 million at
December 31, 1996 compared to $13.9 million at March 31, 1996. Working capital
was $8.5 million and $16.8 million at December 31, 1996 and March 31, 1996,
respectively. The Company used a net $17.1 million for investing activities in
the nine months ended December 31, 1996, primarily for the Taylor Acquisition
and for capital expenditures of $3.9 million. The Company used a net amount of
approximately $3.2 million for investing activities in the nine months ended
December 31, 1995. The Company anticipates that fiscal 1997 capital expenditures
will consist of approximately $7.0 million for improvements to its existing
equipment and expanding capital additions. Acquisitions of additional assets
and businesses are expected to continue to be an important part of the Company's
strategy for growth. The Company would, under certain circumstances, need to
obtain additional financing to fund such acquisitions. If the Company is unable
to locate suitable acquisitions or to obtain financing on acceptable terms, the
Company's growth will be adversely affected. While the Company believes it will
be able to negotiate favorable acquisitions and financing, there can be no
assurance that this will be the case.

     Credit Facilities and Long-Term Debt. The Company has available a bank line
of credit to finance temporary working capital requirements and to support the
issuance of letters of credit. The maximum availability is the lesser of (i)
$4.0 million or (ii) a calculated amount based on a percentage of accounts
receivable meeting certain criteria. This line of credit is secured by a first
lien security interest on the Company's accounts receivable. At December 31,
1996, the maximum availability was $4.0 million, none of which had been drawn in
cash, and $0.4 million of which was being utilized to support the issuance of
letters of credit related to the Company's workers' compensation coverage. This
line of credit matures March 31, 1997.

     In July 1996, to finance a portion of the Taylor acquisition, the Company
obtained a loan from a bank in the amount of $7.0 million . The promissory note
carries an annual interest rate of 7.75% effective January 25, 1997 and has a
maturity date of March 31, 1997. In September 1996, the Company obtained a
take-out commitment for a term loan in the amount of $7.0 million to replace the
promissory note. The Company, however, intends to prepay the loan with a portion
of the proceeds from the Public Financings (as defined below) and has decided to
not take advantage of the take-out commitment.

     The Company is currently negotiating with Frost Bank for a $50.0 million
revolving credit facility and a $10.0 million to $20.0 million acquisition line
of credit. The $50.0 million facility is expected to be subject to the closing
of the Public Financings and the Pride Acquisition. In the event the Pride
Acquisition does not close, the Company, based on discussions with the bank,
anticipates that the revolving credit facility will be reduced to $10.0 million
and closed. Although management believes that the revolving credit will be
consummated there can be no assurance thereof and, the failure to consummate the
revolving credit facility could have a material adverse effect on the Company's
cash flow and working capital. The Company does not anticipate closing the
acquisition line of credit until there is a closing (or a determination not to
close) the Pride Acquisition.

<PAGE>
     In addition to the foregoing, in connection with the Taylor Acquisition,
the Company assumed $0.6 million of debt owed by Randy Taylor to a bank, and
guaranteed prompt payment of approximately $1.5 million of indebtedness owed by
Taylor Services Company, Inc. to the same bank.

     In December 1996, the Company signed an agreement to acquire the U.S.
land-based well servicing operations of Pride Petroleum Services, Inc. The
purchase price is estimated to be approximately $135.9 million which will be
financed through the sale of Senior Notes due 2007 of $140.0 million and the
sale for the account of the Company of Common Stock with net proceeds to the
Company of $47.1 million (the "Public Financings"). The Company also intends to
retire all of the outstanding capital leases and other non-subordinated debt to
banks, with the proceeds of the Public Financings. On February 14, 1997, the
Public Financings were offered for sale to the public. The closing of each of
the Public Financings is conditioned upon the simultaneous closing of the other
and upon the simultaneous closing of the Pride Acquisition. The anticipated
closing date of the Pride Acquisition is February 20, 1997. In the event the
Pride Acquisition is not closed by March 17, 1997, the Company will be subject
to a break-up fee of $5.0 million payable in cash or, at the Company's option,
$1.0 million in cash and $4.0 million in the Company's Common Stock.

Inflation

     Inflation has not had a significant impact on the Company's operations to
date.

<PAGE>
                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

           See note 4 herein to the Notes to the Unaudited Financial Statements.

ITEM 2.  CHANGES IN SECURITIES

           Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

           Not applicable.

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

           No matters have been submitted to a vote of security holders during
the quarter ended December 31, 1996.

ITEM 5.  OTHER INFORMATION

           Not applicable.

ITEM 6.  EXHIBITS

           (a) Exhibits
                 Exhibit Number
                  10.25 - Second  Amendment  to Loan  Agreement  between the
                  Company, Dawson Production Services, Inc. and The Frost
                  National Bank dated November 30, 1994 and Modification,
                  Renewal and Extension Agreement among The Frost National Bank,
                  and the Company, Dawson Production Services, Inc. dated
                  December 4, 1996.

                  10.26 - Third Amendment to Loan Agreement between the Company,
                  Dawson Production Services,  Inc. and The Frost National Bank
                  dated  November  30,  1994  and  Modification,  Renewal  and
                  Extension Agreement among The Frost National Bank, and the
                  Company,  Dawson  Production  Services,  Inc.  dated  January
                  28, 1997.

                  10.27 - The  Frost  National  Bank  Promissory  Note  dated
                  November 25, 1996.

                  10.28 - The  Frost  National  Bank  Promissory  Note  dated
                  January 25, 1997.

                  11.1 - Earnings per share computations.

<PAGE>
     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.

                                         DAWSON PRODUCTION SERVICES, INC.

                                         By: /s/ P. MARK STARK

                                         Date:   February 14, 1997