EXHIBIT 10.26
                        THIRD AMENDMENT TO LOAN AGREEMENT

     THIS THIRD AMENDMENT TO LOAN AGREEMENT (hereinafter referred to as the
"Third Amendment"), dated as of Janusry 28, 1997, is made by and between DAWSON
PRODUCTION SERVICES, INC.("Dawson"), a Texas corporation, whose principal
business address is at 901 N.E. Loop 410, Suite 700, San Antonio, Texas 78209-
1306, and THE FROST NATIONAL BANK, a national banking association with its
principal place of business at 100 W. Houston Street, San Antonio, Texas 78205
(the "Bank").

                                    RECITALS

     A.     On or about November 30, 1994, Dawson Well Servicing, Inc., a Texas
            corporation and Dawson WellTech, L.C., a Texas limited liability
            company and Bank entered into that certain Loan Agreement(the
            "Agreement") concerning the terms, conditions and covenants of that
            certain $13,000,000.00 Term Loan from Bank to WellTech and that
            certain $4,000,000.00 Revolving Credit Facility in favor of Dawson
            Well Servicing.

     B.     The Loan Agreement was amended by First Amendment to Loan
            Agreement dated November 28, 1995 and was subsequently amended by
            Second Amendment to Loan Agreement dated December 4, 1996.

     C.     Since the date of the First Amendment, Dawson Well Servicing,
            Inc. and Dawson WellTech, L.C. have been merged and a new company
            formed, Dawson Production Services, Inc.

     D.     This Third Amendment is to amend the Loan Agreement to extend the
            maturity date of the $4,000,000.00 Revolving Credit Facility to
            March 31, 1997.

     E.     All capitalized terms not otherwise defined in this Third Amendment
            shall have the same meanings as are set forth in the Agreement.

     NOW, THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, Bank and Dawson agree as follows:

                                   AGREEMENTS

     1.    The definition of "Borrowers" or "Borrower" as set forth in the Loan
           Agreement and in Appendix A to the Loan Agreement shall hereinafter
           mean Dawson Production Services, Inc.

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     2.    The $4,000,000.00 Revolving Credit Facility is renewed and shall be
           evidenced by a Promissory Note in the original principal amount of
           $4,000,000.00 dated January 28, 1997 executed by Dawson Production
           Services, Inc. and payable to the order of Bank.

     3.    Except as specifically modified or amended herein, all terms,
           provisions and requirements of the Agreement shall remain as written,
           and as amended from time to time. Borrowers hereby reaffirm all
           covenants, conditions, representations and warranties contained in
           the Agreement, as amended.

                        NOTICE TO COMPLY WITH STATE LAW

     For the purpose of this Notice, the term "WRITTEN AGREEMENT" shall include
the document set forth above, together with each and every other document
relating to and/or securing the same loan transaction, regardless of the date of
execution.

     THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.

     THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     EXECUTED as of the day and year first above written.

                                  BORROWER:
                                  --------

                                  DAWSON PRODUCTION SERVICES, INC.,
                                  a Texas corporation

                                  By: /s/ Michael E. Little
                                          Michael E. Little, President

                                  LENDER:
                                  ------

                                  THE FROST NATIONAL BANK

                                  By: /s/ James B. Crosby
                                          James B. Crosby, Senior Vice President