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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 1

Mark One:
         |X| Annual  Report  pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934. For the fiscal year ended December 31, 2000; or

         |_| Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange  Act of 1934 For the  transition  period  from  __________  to
         __________.

                           COMMISSION FILE NO. 0-18754

                          BLACK WARRIOR WIRELINE CORP.
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             (Exact name of Registrant as specified in its charter)

DELAWARE                                                         11-2904094
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(State or other jurisdiction of                                (IRS Employer
Incorporation or organization)                               Identification No.)

3748 HIGHWAY #45 NORTH, COLUMBUS, MISSISSIPPI                       39701
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(Address of Principal Executive Offices)                          (Zip Code)

                                 (662) 329-1047
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              (Registrant's telephone number, including area code)

    Securities Registered Pursuant to Section 12(b) of the Exchange Act: NONE

      Securities Registered Pursuant to Section 12(g) of the Exchange Act:
                              (Title of Each Class)

                    COMMON STOCK, PAR VALUE $.0005 PER SHARE

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past twelve (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 ninety (90) days. |X| Yes _____ |_| No

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

         State the aggregate market value of the voting stock held by non-
affiliates as of March 30, 2001:
              COMMON STOCK, PAR VALUE $.0005 PER SHARE, $7,122,953
         (Non-affiliates have been determined on the basis of holdings set forth
under Item 12 of this Annual Report on Form 10-K.)
         Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
                Class: COMMON STOCK, PAR VALUE $.0005 PER SHARE
                Outstanding at March 30, 2001: 12,496,408 SHARES

                       DOCUMENTS INCORPORATED BY REFERENCE
                  No documents are  incorporated  by reference  into this Annual
Report on Form  10-K

<PAGE>

This amended Annual Report on Form 10-K/A is filed to correct the descriptions
found in Items 1 and 7 of the terms on which the Company's litigation with
Bendover Company was resolved in December 1999.

ITEM 1.  BUSINESS

GENERAL

         Black Warrior Wireline Corp. (the "Company") is an oil and gas service
company currently providing various services to oil and gas well operators
primarily in the Black Warrior and Mississippi Salt Dome Basins in Alabama and
Mississippi, the Permian Basin in West Texas and New Mexico, the San Juan Basin
in New Mexico, Colorado and Utah, the East Texas and Austin Chalk Basins in East
Texas, the Powder River and Green River Basins in Wyoming and Montana, the
Williston Basin in North Dakota and areas of the Gulf of Mexico offshore
Louisiana and South Texas. The Company's principal lines of business include (a)
wireline services, (b) directional drilling services , and (c) workover
services. Since November 1996, the Company completed seven material
acquisitions, the most recent of which were the acquisitions of the drilling
assets of Phoenix Drilling Services, Inc., in March 1998 and Petro Wireline in
June 1998.

RECENT RECAPITALIZATION

         On January 24, 2000, the Company entered into a Loan and Security
Agreement (the "Loan Agreement") with Coast Business Credit, a division of
Southern Pacific Bank ("Coast"), and an amendment thereto dated January 29,
2001. Pursuant to the Loan Agreement, the Company is enabled to make secured
borrowings in the aggregate amount of up to the lesser of $25.0 million or such
maximum aggregate amount as is available to be borrowed under a receivables loan
and two term loans described below. Of such amount, $14.5 million, based on the
lesser of 75% of the appraised net eligible forced liquidation value of the
Company's equipment or $14.5 million, is a term loan, an additional $2.0 million
is a term loan, and the balance is available to be borrowed in an amount not
exceeding 80% of the Company's eligible receivables. On February 15, 2000, the
Company borrowed an aggregate of $15.6 million pursuant to the Loan Agreement.
The proceeds were used to repay the Company's former senior secured lender in
the amount of $13.5 million, to repay other indebtedness aggregating $1.5
million, and the balance was used for general corporate purposes, including the
payment of outstanding accounts payable. In addition, commencing on December 17,
1999 and during the first quarter of 2000, the Company sold to private investors
$7.0 million principal amount of convertible promissory notes originally due on
January 15, 2001, which were extended to June 30, 2001 in January 2001, and
warrants to purchase 28.7 million shares of Common Stock. All of the Company's
remaining indebtedness is subordinated to the Company's indebtedness to Coast.

         During the first quarter of 2000, the Company executed a Compromise
Agreement with Release with Bendover Company ("Bendover") whereby Bendover
agreed to return to the Company promissory notes aggregating $3,182,190
principal amount and receive in exchange 2,666,667 shares of the Company's
common stock, valued in the transaction at $0.75 per share,

                                       2

<PAGE>

and a promissory note in the principal amount of $1,182,890 due on January 15,
2001, bearing interest at 10% per annum. On January 15, 2001, the note was
extended to June 15, 2001, bearing interest at 20% per annum, with 10% per annum
interest paid monthly and the balance paid on maturity of the note.

WIRELINE SERVICES

         The Company's wireline logging service activities contributed revenues
of $21.6 million (approximately 47.3% of revenues) in 2000, $17.7 million
(approximately 60.5% of revenues) in 1999, and $11.6 million (approximately
33.7% of revenues) in 1998. At December 31, 2000, the Company owned 50
operational motor vehicle mounted wireline units, of which 36 are equipped with
a state-of-the-art computer system, 6 are analog equipped and 8 are devoted
exclusively to hoisting operations. In the third quarter of 1998, the Company
commenced providing wireline services offshore to customers with operations in
the Gulf of Mexico. As of December 31, 2000, the Company owned 8 operational
cased-hole wireline units skid-mounted for offshore work, all of which are
equipped with state of the art computers.

         Truck or skid-mounted wireline logging services are used to evaluate
downhole conditions at various stages of the process of drilling and completing
oil and gas wells as well as at various times thereafter until the well is
depleted and abandoned. Such services are provided using a wireline unit
equipped with an armored cable that is lowered by winch into an existing well.
The cable lowers instruments and tools into the well to perform a variety of
services and tests. The wireline unit's instrument cab contains electronic
equipment to supply power to the downhole instruments, to receive and record
data from those instruments in order to produce the "logs" which define specific
characteristics of each formation and to display the data received from
downhole. The Company's wireline units are equipped with state-of-the-art
computerized systems or analog equipment.

         Open hole wireline services are performed after the drilling of the
well but prior to its completion. Cased hole wireline services are performed
during and after the completion of the well, as well as from time to time
thereafter during the life of the well. The Company's services primarily relate
to providing cased hole wireline services. Cased hole services include
radioactive and acoustic logging used to evaluate downhole conditions such as
lithology, porosity, production patterns and the cement bonding effectiveness
between the casing and the formation. Other cased hole services include
perforating, which opens up the casing to allow production from the
formation(s), and free-point and back-off, which locates and frees pipe that has
become lodged in the well. Cased hole services are used in the initial
completion of the well and in virtually all subsequent workover and stimulation
projects throughout the life of the well. The Company performs these services on
a contract basis at the well site for operators and producers of the wells
primarily on a bid basis at prices related to Company standard prices.

         These services are routinely provided to the Company's customers and
are subject to the customers' time schedule, weather conditions, availability of
Company personnel and complexity of the operation. These procedures generally
take approximately one to one-and-one-half days to perform.

                                       3

<PAGE>


         Manufacturing. The Company operates a manufacturing facility located in
Laurel, Mississippi to assemble and install wireline service equipment, both
mounted on motor vehicles and on wireline skids, for internal use and for sale
to others. During the year ended December 31, 2000, the Company manufactured for
internal use 6 new wireline trucks and 4 new offshore wireline skids. The
manufacturing facility also totally refurbished for internal use 4 wireline
trucks.

DIRECTIONAL DRILLING SERVICES

         The Company's directional drilling services contributed revenues of
$22.9 million (approximately 50.2% of revenues) in 2000, $10.3 million
(approximately 35.2% of revenues) in 1999 and $21.3 million (approximately 61.9%
of revenues) in 1998.

         Directional drilling is the intentional deviation of a well bore. The
deviation is achieved by utilizing downhole motors and guidance equipment to
move the well bore in a given direction and intersect a target formation at an
angle up to horizontal.

         On March 16, 1998, the Company completed the acquisition of the
domestic oil and gas well directional drilling and downhole survey service
business, including the related operating assets, from Phoenix Drilling
Services, Inc. This acquisition contributed to further increases in the
Company's revenues from directional drilling services commenced by the
acquisition of Diamondback Directional, Inc. in October, 1997. In addition, the
Phoenix acquisition has enabled the Company to provide downhole survey services
to the oil and gas industry. Prior to October, 1997, the Company had no revenues
from directional drilling services.

         The Company's Multi-Shot division provides directional surveying
services and directional surveying equipment to operators in the oil and gas
industry. These services include gyros, magnetic, single shot, high accuracy
magnetic probe, electric surface recording gyro, and MWD (measurement while
drilling). Management of the Company believes these services are
state-of-the-art.



                                       4

<PAGE>

WORKOVER AND COMPLETION SERVICES

         These activities contributed revenues of $1.1 million (approximately
2.5% of revenues) in 2000, $1.3 million (approximately 4.3% of revenues) in
1999, and $1.5 million (approximately 4.4% of revenues) in 1998. These services
are performed primarily on an hourly basis.

         Workover services include those operations performed on wells when
originally completed and on wells previously placed in production and requiring
additional work to restore or increase production. A completion or workover rig
is used to position tubing, pumps and other production equipment in a cased
hole. The unit is used for the initial completion of the well and subsequent
workover and remedial service. A completion or workover rig is generally a four
to six axle truck-mounted hoist unit with a 85 to 100 foot derrick capable of
lowering and hoisting up to 300,000 pound loads.

OTHER SERVICES

         The Company also engages in other oil and gas well service activities
including, primarily, the sale, rental and service of tools and equipment used
in the oil field services industry and conducts tool and equipment inspection,
maintenance and testing services. These activities are not deemed by management
to be material.

PRINCIPAL CUSTOMERS AND MARKETING

         During the year ended December 31, 2000, no single customer accounted
for more than 10% of the Company's net revenues. During the year ended December
31, 1999, two customers (Collins & Ware, Inc. and Burlington Resources)
accounted for approximately 21.0% of the Company's net revenues.

         The Company does not have any long-term agreements with its customers
and services are provided pursuant to short-term agreements negotiated by the
Company with the customer.

         The Company's services are marketed by its executive officers and a
sales staff of approximately EIGHTEEN persons working from its district offices.
In addition, the Company utilizes the services of a non-affiliated marketing
group. The Company relies extensively on its reputation in the industry to
create customer awareness of its services.


                                       5

<PAGE>



OPERATING HAZARDS AND INSURANCE

         The services of the Company are used in oil and gas well drilling,
workover and production operations that are subject to inherent risks such as
blow-outs, fires, poisonous gas and other oil and gas field hazards, many of
which can cause personal injury and loss of life, severely damage or destroy
equipment, suspend production operations and cause substantial damage to
property of others. Ordinarily, the operator of the well assumes the risk of
damage to the well, the producing reservoir and surrounding property and revenue
loss in the event of accident, except in the case of gross or willful negligence
on the part of the Company or its employees.

         The Company has general liability, property, casualty, officers' and
directors', and workers' compensation insurance. Although, in the opinion of the
Company's management, the limits of its insurance coverage are consistent with
industry practices, such insurance may not be adequate to protect the Company
against liability or losses occurring from all the consequences of such risks or
incidents. The occurrence of an event not fully covered by insurance (and a
determination of the liability of Company for consequential losses or damages)
could result in substantial losses to the Company and have a materially adverse
effect upon its financial condition, results of operations, and cash flows.

         The Company maintains two policies totaling $2.0 million on the life of
William L. Jenkins, its President and Chief Executive Officer, and maintains
$1.0 million policies on the lives of each of Allen R. Neel, Executive
Vice-President, Danny Ray Thornton, Vice President, and Alan Mann, Director. See
Item 10, "Directors and Executive Officers of the Registrant." The benefits
under such policies are payable to the Company.

COMPETITION

         Most of the Company's competitors are divisions of larger diversified
corporations which offer a wide range of oilfield services. Its chief
competitors include Halliburton Company, Schlumberger, Ltd. and Baker Hughes
Incorporated, as well as a number of other companies active in the industry.
These competitors have substantially greater economic resources than the
Company. Recent business combinations involving oil and gas service companies
may have the effect of intensifying competition in the industry. The decline in
1998 and early 1999 in demand for oil and natural gas well services resulted in
intensified competition. While competition throughout 2000 and to the present
time is intense, with the improved demand for oil and gas well services, the
Company's ability to compete with other suppliers of services has improved.
Competition principally occurs in the areas of technology, price, quality of
products and field personnel, equipment availability and facility locations.
Although price competition remains a significant characteristic of the industry,
the Company's ability to offer more technologically advanced services is
believed by management to have reduced the extent of the Company's exposure to
severe price competition. The Company continues to make a conscious effort to
compete, not just on price, but on its ability to offer advanced technology,
experienced personnel, and a safe working environment.

                                       6

<PAGE>

         The Company's growth is dependent upon its ability to attract and
retain skilled oilfield and management personnel. The competition for such
qualified employees is frequently intense and there can be no assurance that
sufficient qualified persons will be available at such times as the Company
requires their services.

REGULATION

         The oil and gas business is a heavily regulated industry. The Company's
activities are subject to various licensing requirements and minimum safety
procedures and specifications, anti-pollution controls on equipment, waste
discharge and other environmental and conservation requirements imposed by
federal and state regulatory authorities. Numerous governmental agencies issue
regulations to implement and enforce laws which are often difficult and costly
to comply with, and the violation of which may result in the revocation of
permits, issuance of corrective action orders, assessment of administrative and
civil penalties and even criminal proceedings.

         In its operations, the Company is subject to the following statutes,
among others:

   o     The federal Resource Conservation and Recovery Act and comparable state
         statutes. The U.S. Environmental Protection Agency (EPA) and state
         agencies have limited the approved methods of disposal for some types
         of hazardous and non-hazardous wastes. The Company generates wastes,
         some of which are hazardous wastes.

   o     The federal Comprehensive Environmental Response, Compensation, and
         Liability Act, also known as the "Superfund" law, and comparable state
         statutes impose liability, without regard to fault or legality of the
         original conduct, on classes of persons that are considered to have
         contributed to the release of a "hazardous substance" into the
         environment. These persons include the owner or operator of the
         disposal site or the site where the release occurred and companies that
         disposed of or arranged for the disposal of the hazardous substances at
         the site where the release occurred.

   o     The federal Water Pollution Control Act and analogous state laws impose
         restrictions and strict controls regarding the discharge of pollutants
         into state waters or waters of the United States. The discharge of
         pollutants are prohibited unless permitted by the EPA or applicable
         state agencies. In addition, the Oil Pollution Act of 1990 as amended
         by the Coast Guard Authorization Act of 1996, imposes a variety of
         requirements on "responsible parties" related to the prevention of oil
         spills and liability for damages, including natural resource damages,
         resulting from such spills in waters of the United States.

         Management of the Company believes that the Company is in substantial
compliance with the above laws.

                                       7

<PAGE>


         The Company is not currently the subject of any, nor is it aware of
any, threatened investigations or actions under any federal or state
environmental, occupational safety or other regulatory laws. The Company
believes that it will be able to continue compliance with such laws and
regulations without a material adverse effect on its earnings and competitive
position. However, there can be no assurance that unknown future changes in such
laws and regulations would not have such an effect if and when such changes
occur.

EMPLOYEES

         As of March 26, 2001, the Company employed approximately 344 persons on
a full-time basis. Of the Company's employees, 23 are management personnel, 17
are administrative personnel and 304 are operational personnel. The Company also
uses the services of approximately 20 to 30 independent contract drillers and
directional guidance personnel. None of the Company's employees is represented
by a labor union, and the Company is not aware of any current activities to
unionize its employees. Management of the Company considers the relationship
between the Company and its employees to be good.

INCORPORATION

         The Company was incorporated under the laws of the State of Delaware in
1987 under the name Teletek, Ltd. and in June 1989 Teletek, Ltd. merged with a
predecessor of the Company incorporated under the laws of the State of Alabama
and concurrently changed its name to Black Warrior Wireline Corp. The Company
and its predecessors have been engaged in providing wireline and other oil and
gas well support services since 1984.





                                       8

<PAGE>


CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.

         With the exception of historical matters, the matters discussed in this
Report are "forward-looking statements" as defined under the Securities Exchange
Act of 1934, as amended, that involve risks and uncertainties. The Company
intends that the forward-looking statements herein be covered by the safe-harbor
provisions for forward-looking statements contained in the Securities Exchange
Act of 1934, as amended, and this statement is included for the purpose of
complying with these safe-harbor provisions. Forward-looking statements include,
but are not limited to, the matters described below, as well as "Item 1.
Business - General," "- Principal Customers and Marketing," "--Operating Hazards
and Insurance," "--Competition," and "--Regulation." "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
General," "-Twelve-Month Periods Ended December 31, 2000 and 1999",
"-Twelve-Month Periods Ended December 31, 1999 and 1998", "- Liquidity and
Capital Resources" and "Item 7A. Quantitative and Qualitative Disclosure About
Market Risk." Such forward-looking statements relate to the Company's ability,
to generate revenues and attain and maintain profitability and cash flow, the
improvement in, stability and level of prices for oil and natural gas, pricing
in the oil and gas services industry and the willingness of customers to commit
for oil and natural gas well services, the ability of the Company to implement
any of the possible alternative means to maximize shareholder value in
conjunction with its agreement retaining Growth Capital Partners, including any
possible merger, sale of assets or other business combination transaction
involving the Company or raising additional debt or equity capital, to maintain,
implement and, if appropriate, expand its cost-cutting program instituted in
1998, the ability of the Company to compete in the premium services market, the
ability of the Company to meet or refinance its debt obligations as they come
due or to obtain extensions of the maturity dates for the payment of principal,
the ability of the Company to re-deploy its equipment among regional operations
as required, the ability of the Company to provide services using state of the
art tooling, the ability of the Company to raise additional capital to meet its
requirements and to obtain additional financing when required, and its ability
to maintain compliance with the covenants of its various loan documents and
other agreements pursuant to which securities have been issued. The inability of
the Company to meet these objectives or the consequences on the Company from
adverse developments in general economic conditions, adverse developments in the
oil and gas industry, declines and fluctuations in the prices for oil and
natural gas and the absence of any material decline in those prices, and other
factors could have a material adverse effect on the Company. The Company
cautions readers that various risk factors described below could cause the
Company's operating results, and financial condition to differ materially from
those expressed in any forward-looking statements made by the Company and could
adversely affect the Company's financial condition and its ability to pursue its
business strategy and plans. Risk factors that could affect the Company's
revenues, profitability and future business operations include, among others,
the following:

         Substantial Outstanding Indebtedness; Recent Losses; Current Maturities
of Indebtedness; Risks of Defaults. At December 31, 2000, the Company's total
indebtedness, inclusive of accrued interest, was approximately $51.9 million.
The Company had outstanding at February 28, 2001 total indebtedness, inclusive
of accrued interest, of $52.6 million. The

                                       9

<PAGE>

Company has incurred net losses of $4.2 million in 2000, $8.0 million in 1999
and $21.0 million in 1998. At December 31, 2000, its current liabilities
exceeded its current assets by $44.6 million. The Company's level of
indebtedness and the potential defaults thereunder, together with its recent
history of losses, pose substantial risk to the Company and the holders of its
securities, including the possibility that the Company may not be able to
generate sufficient cash flow to pay the principal of and interest on the
indebtedness when due or to refinance such indebtedness.

         At December 31, 2000, on the basis of its balance sheet at that date,
the Company had approximately $48.4 million of current indebtedness. Of this
indebtedness, the Company intends to seek to extend the maturity of
approximately $26.8 million of indebtedness, including any deferred excess cash
flow payments due through December 31, 2000, into 2002 and to seek, through
obtaining any required waivers or other accommodations of any covenant defaults
under loan documents, to repay an aggregate of $3 million in 2001 and $17.4
million in 2002 and thereafter. The Company will also seek to defer payment of
the excess cash flow payments accruing for the period January 1, 2001 through
June 30, 2001. If the Company is unable to obtain the required extensions and
waivers, it will seek to refinance approximately $20.3 million of indebtedness.
There can be no assurance that the Company will be successful in extending the
maturity or refinancing any part or all of its indebtedness. The inability of
the Company to obtain extensions of the due dates of principal payments or to
repay or refinance this indebtedness could cause, under the terms of such debt
agreements and the cross default provisions of other debt agreements, virtually
all the outstanding indebtedness to be accelerated and declared immediately due
and payable. Defaults in the repayment of this indebtedness, either at maturity
or by acceleration of the due date, could lead the creditors to foreclose on
substantially all of the Company's assets.

         Restrictions On Operations Imposed by Lenders; Borrowings Secured by
Substantially All the Company's Assets; Need to Rely on St. James for Funds. The
Company has outstanding at February 29, 2001 senior secured indebtedness
aggregating approximately $20.9 million under the Loan Agreement with Coast.
This indebtedness is collateralized by substantially all the Company's assets.
The instruments governing the Company's indebtedness to Coast impose significant
operating and financial restrictions on the Company. Financial covenants in the
Loan Agreement, as amended in January 2001, require the Company to have a
tangible net worth of $5.0 million on September 30, 2000 and increasing
quarterly thereafter by 80% of the Company's net income for the quarter and by
at least $1.0 million on June 30, 2001 and have a debt service coverage ratio of
1.0 to 1.0 through September 30, 2000 and thereafter of 1.25 to 1.00 quarterly.
Such restrictions, as well as various other affirmative and negative covenants
in the Loan Agreement, affect, and in many respects significantly limit or
prohibit, among other things, the ability of the Company to incur additional
indebtedness, pay dividends, repay indebtedness prior to its stated maturity,
sell assets or engage in mergers or acquisitions. These restrictions also limit
the ability of the Company to effect future financings, make certain capital
expenditures, withstand a downturn in the Company's business or economy in
general, or otherwise conduct necessary corporate activities. The Loan Agreement
places restrictions on the Company's ability to borrow money under the revolving
credit provisions of the Loan

                                       10

<PAGE>


Agreement. The Company's ability to borrow under this revolving credit
arrangement is necessary to fund the Company's ongoing operations. If the
Company were to default on its indebtedness owing to Coast and such indebtedness
was accelerated, so as to become due and immediately payable, there can be no
assurance that the assets of the Company would be sufficient to repay in full
such indebtedness and the Company's other liabilities. In addition, the
acceleration of the Company's indebtedness owing to Coast would constitute a
default under other indebtedness of the Company, which may result in such other
indebtedness also becoming immediately due and payable. Under such
circumstances, the holders of the Company's Common Stock may realize little or
nothing on their investment in the Company. Even if additional financing could
be obtained, there can be no assurance that it would be on terms that are
favorable or acceptable to the Company or its equity security holders.

         Principal and interest under the Coast Loan Agreement has been
guaranteed, subject to certain limitations, by St. James, principal stockholders
of the Company, and Charles Underbrink, a partner of St. James and a Director of
the Company. In addition, St. James has guaranteed all of the Company's
contractual obligations under the Loan Agreement, subject to certain
limitations. As amended in January 2001, the guaranty of St. James is backed by
a letter of credit in the amount of $8.2 million. Loans under the Loan Agreement
were subject to the fulfillment of a number of closing conditions and continue
to be subject to the accuracy of the Company's representations and warranties
and compliance with its covenants in the Loan Agreement.

         Under the January 2001 amendment to the Loan Agreement, if assets or
ownership interests in the Company are not sold on or before June 30, 2001 to
pay all obligations owing to Coast on or before June 30, 2001, including
deferred excess cash flow payments the Company is required to make for the
months of August 2000 through June 2001 and which aggregated $1.0 million at
December 31, 2000 and $2.5 million at March 31, 2001, then St. James is required
to make an additional equity investment in the Company sufficient to pay to
Coast the deferred excess cash flow payments. The failure of St. James to make
such investment is an event of default under the Loan Agreement.

         By virtue of its guarantees, in the event of a default under the
Company's Loan Agreement with Coast, Coast may seek to collect from St. James
Capital Partners, L.P. ("SJCP") and SJMB, L.L.C ("SJMB"), as well as Mr.
Underbrink, the outstanding principal and interest on the Company's obligation
to Coast. Mr. Underbrink's liability is limited to no more than $5.0 million.
Without continued improvement in the Company's revenues and operating results,
the Company may be substantially dependent upon the continuing support of SJCP
and SJMB during 2001 to fund its ongoing obligations, including its obligations
to Coast.

         Explanatory Paragraph of Auditor's Report. The report of the Company's
independent auditors on its audit of the Company's financial statements as of
December 31, 2000 contains an explanatory paragraph that describes an
uncertainty as to the Company's ability to continue as a going concern. Although
the Company is addressing that concern by seeking extensions of the due date of
the principal of indebtedness to be repaid in 2001 owing to Coast and to the
holders of other notes issued in January 2000, there can be no assurance that
these efforts will be

                                       11

<PAGE>


successful or that the Company's levels of cash flow in the year 2001, which
have improved by virtue of the improvement in the Company's operating results in
early 2001, will enable the Company to meet these payments or refinance these
obligations if it is unsuccessful in obtaining the extensions requested. Failure
to obtain these extensions may result in events of default under the terms of
the debt instruments enabling the lenders to declare the entire principal of
such indebtedness due and payable and further resulting in cross-defaults under
other of the Company's outstanding debt agreements. Under such circumstances,
substantially all of the Company's outstanding indebtedness may become
immediately due and payable.

         The Company's loan agreement with Coast requires the Company to provide
various reports to Coast, including, among others, an obligation to provide to
Coast within 90 days following the end of each fiscal year annual financial
statements containing an unqualified opinion and certified by an independent
certified public accountant acceptable to Coast. The Company was delayed in
providing its financial statements for 2000 to Coast beyond the 90 days. There
can be no assurance that Coast may not treat the auditor's report on the
Company's December 31, 2000 financial statements containing an explanatory
paragraph as a qualified opinion or the delay in providing the financial
statements as an event of default under the Loan Agreement and claim that the
Company is in violation of its reporting obligations to Coast under the Loan
Agreement. The Company has not obtained a waiver from Coast with respect to
either of the foregoing. Under such circumstances, Coast may claim it is
entitled to accelerate the maturity of all of the indebtedness of the Company
owing to it.

         Recent Fluctuations in Levels of Prices for Oil and Natural Gas;
Possible Adverse Impact on the Company's Revenues. The business environment for
the Company and its corresponding operating results are affected significantly
by petroleum industry exploration and production expenditures. These
expenditures are influenced strongly by oil company expectations about the
supply and demand for oil and natural gas, energy prices, and finding and
development costs. Petroleum supply and demand, pricing, and finding and
development costs, in turn, are influenced by numerous factors including, but
not limited to, the extent of domestic production, the level of imports of
foreign natural gas and oil, the general level of market demand on a regional,
national and worldwide basis, domestic and foreign economic conditions that
determine levels of industrial production, political events in foreign oil
producing regions, and variations in governmental regulations and tax laws or
the imposition of new governmental requirements upon the natural gas and oil
industry, among other factors. Prices for natural gas and oil are subject to
worldwide fluctuation in response to relatively minor changes in supply of and
demand for natural gas and oil, market uncertainty and a variety of additional
factors that are beyond the Company's control.

         Crude oil prices experienced record low levels in 1998, trading below
$15/bbl for most of the year and averaging only $14.41/bbl - the lowest yearly
average recorded since 1983 and down over 30 percent from prior-year levels.
Prices were lower due to increased supply from renewed Iraqi exports, increased
OPEC and non-OPEC production, higher inventories (particularly in North America)
and a simultaneous slowing of demand growth due to the Asian economic downturn
and a generally warmer than normal winter. U.S. natural gas weakened in 1998
compared to the prior year periods, also due to abnormally warm winter weather.
In response to lower oil prices which continued into 1999, oil companies cut
upstream capital spending, particularly in the second half of 1998.

                                       12

<PAGE>

         As a consequence of the decline in levels of oil and natural gas prices
throughout 1999 from levels experienced in 1997 and 1996, producers of oil and
natural gas curtailed their utilization of oil and natural gas well service
activities. Increases in oil and natural gas prices since mid-1999 have resulted
in an increase in demand for oil and natural gas well services. This has
impacted favorably the utilization of the Company's services and recent
revenues. There can be no assurance that the Company will continue to experience
an ongoing increase in the demand for and utilization of its services. Future
declines in oil and natural gas prices can be expected to adversely impact the
Company's revenues.

         Material Charge to Operations During 1998. In accordance with SFAS No.
121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of, the Company recognizes impairment losses on long-lived assets
used in operations when indicators of impairment are present and the projected
undiscounted cash flows over the life of the assets are less than the asset's
carrying amount. If an impairment exists, the amount of such impairment is
calculated based on projections of future discounted cash flows. These
projections are for a period of five years using a discount rate and terminal
value multiple that would be customary for evaluating current oil and gas
service company transactions.

         The Company considers external factors in making its assessment.
Specifically, changes in oil prices and other economic conditions surrounding
the industry, consolidation within the industry, competition from other oil and
gas well service providers, the ability to employ and maintain a skilled
workforce, and other pertinent factors are among the factors that could lead
management to reassess the realizability and/or amortization periods of its
goodwill.

         In 1998, the Company experienced a large decline in demand for its
services as a result of a substantial decrease in the price of oil and natural
gas, as well as the loss of a major customer. Consequently, management evaluated
the recoverability of its long-lived assets in relation to its business
segments. The analysis was first performed on an undiscounted basis which
indicated impairment in its directional drilling segment. The impairment was
then calculated using projections of discounted cash flows over five years
utilizing a discount rate and terminal value multiple commensurate with current
oil and gas services company transactions. At December 31, 1998, the discount
rate and the terminal multiple used was 12% and 6.5, respectively. The
assumptions used in this analysis represent management's best estimate of future
results.

         The analysis resulted in a charge to operations for the year ended
December 31, 1998 of $11.1 million which consisted of a write-down of
approximately $8.1 million, approximately $2.4 million, and approximately
$624,000, to goodwill, property, plant and equipment, and inventory,
respectively.

         Substantial Dilution. The Company has outstanding as of February 28,
2001, common stock purchase warrants, options and convertible securities
entitled to purchase or be converted into an aggregate of 115,928,690 shares of
the Company's Common Stock at exercise and conversion prices ranging from $0.75
to $8.01. Accordingly, if all such securities were exercised or converted, the
12,496,408 shares of Common Stock issued and outstanding on February 28, 2001,
would represent 9.8% of the shares outstanding on a fully diluted basis.

                                       13

<PAGE>


         Possible Scarcity of Trained Personnel. The operation of the wireline,
directional drilling and other oil and gas well service equipment utilized by
the Company requires the services of employees having the technical training and
experience necessary to obtain the proper operational results. The Company's
operations are to a considerable extent dependent upon the continuing
availability of personnel with the necessary level of training and experience to
adequately operate its equipment. In the event the Company should suffer any
material loss of personnel to competitors or be unable to employ additional or
replacement personnel with the requisite level of training and experience to
adequately operate its equipment its operations could be adversely affected. The
recent improvement in the market for oil and gas well services has increased the
demand for such personnel, with a resulting scarcity in certain market sectors.
While the Company believes that its wage rates are competitive and that its
relationship with its workforce is good, a significant increase in the wages
paid by other employers could result in a reduction in the Company's workforce,
increases in wage rates, or both. If either of these events occurred for a
significant period of time, the Company's revenues could be impacted. There can
be no assurance that the Company's operations and a continued improvement in its
revenues may not be adversely affected by a scarcity of operating personnel.

         Dependence on Major Customers. Historically, a large portion of the
Company's revenues has been generated from a relatively small number of
companies. During the year ended December 31, 2000, one customer (Burlington
Resources) accounted for approximately 7.1% of the Company's revenues. During
1999, two customers each accounted for in excess of 10% of the Company's
revenues. Collins & Ware, Inc., a company in which St. James had a significant
ownership interest, accounted for 10.1% of revenues and Burlington Resources
accounted for 10.9% of revenues. A significant reduction in business done by the
Company with its principal customers, if not offset by revenues from new or
existing customers, could have a material adverse effect on the Company's
business, results of operations and prospects.

         Substantial Control by Principal Investor. As of February 28, 2001,
SJCP, including certain of its affiliated entities and partners, collectively
referred to as ("St. James"), held 5,017,481 shares of Common Stock, promissory
notes of the Company convertible into 29,933,334 shares of Common Stock and
warrants to purchase an additional 53,850,276 shares of Common Stock. Upon
conversion of the notes and exercise of the warrants, St. James would hold an
aggregate of 88,801,091 shares representing 92.2% of the Company's shares of
Common Stock then outstanding. In addition, St. James has certain additional
contractual rights which, among other things, give to St. James the right to
nominate one person for election to the Company's Board of Directors, certain
preferential rights to provide future financings for the Company, subject to
certain exceptions, prohibitions against the Company consolidating, merging or
entering into a share exchange with another person, with certain exceptions,
without the consent of St. James. The foregoing give St. James the ability to
exert significant influence over the business and affairs of the Company. The
interests of St. James may not always be the same as the interests of the
Company's other securityholders.

                                       14

<PAGE>


         Intense Competition. The wireline, directional drilling, workover and
well servicing industry is an intensely competitive and cyclical business. A
number of large and small contractors provide competition in all areas of the
Company's business. The wireline service trucks and other equipment used is
mobile and can be moved from one region to another in response to increased
demand. Many of the Company's competitors have greater financial resources than
the Company, which may enable them to better withstand industry downturns, to
compete more effectively on the basis of price, and to acquire existing or new
equipment.

         Operating Hazards and Uninsured Risks. The Company's insurance coverage
may not in all situations provide sufficient funds to protect the Company from
all liabilities that could result from its operations. Oil and gas well service
operations are subject to the many hazards inherent in the oil and gas drilling
and production industry. These hazards can result in personal injury and loss of
life, severe damage to or destruction of property and equipment, pollution or
environmental damage and suspension of operations. The Company maintains
insurance protection as it deems appropriate, but injuries and losses may occur
under circumstances not covered by the Company's insurance.

         Environmental Risks. The Company is subject to numerous domestic
governmental regulations that relate directly or indirectly to its operations,
including certain regulations controlling the discharge of materials into the
environment, requiring removal and cleanup under certain circumstances, or
otherwise relating to the protection of the environment. Laws and regulations
protecting the environment have become more stringent in recent years and may in
certain circumstances impose "strict liability" and render a company liable for
environmental damage without regard to negligence or fault on the part of such
company. Such laws and regulations may expose the Company to liability for the
conduct of, or conditions caused by others, or for acts of the Company that were
in compliance with all applicable laws at the time such acts were performed. The
application of these requirements or the adoption of new requirements could have
a material adverse effect on the Company.

         Seasonality and Weather Risks. The Company's operations are subject to
seasonal variations in weather conditions, daylight hours and favorable weather
conditions for its off-shore wireline operations. Since the Company's activities
take place outdoors, the average number of hours worked per day, and therefore
the number of wells serviced per day, generally is less in winter months than in
summer months, due to an increase in snow, rain, fog and cold conditions and a
decrease in daylight hours. Furthermore, demand for the Company's wireline
services by oil and gas companies in the first quarter is generally lower than
at other times of the year. As a result, the Company's revenue and gross profit
during the first quarter of each year are typically low as compared to the other
quarters.

         Dependence on Key Personnel.  The Company's  success  depends on, among
other  things,  the  continued  active  participation  of  William  L.  Jenkins,
President,   Allen  R.  Neel,  Executive  Vice-President,   Danny  R.  Thornton,
Vice-President,  Wireline Services, Gary J. Vaughn, Vice-President,  Directional
Drilling Services, and certain of the Company's other officers and key operating
personnel.  The loss of the  services of any one of these  persons  could have a
material adverse effect on the Company.  The Company has entered into employment
agreements  with  each of its  executive  officers,  including  Messrs.  Jenkins
(through  December 2001) and Thornton and Neel (through April 1, 2006),  and has
purchased "key-man" life insurance with respect to each of such persons.

                                       15

<PAGE>


         Absence of  Dividends.  The Company  has not  declared or paid any cash
dividends  on  the  Common  Stock  and  currently   anticipates  that,  for  the
foreseeable  future,  any earnings will be retained for the  development  of the
Company's  business.  Accordingly,  no cash  dividends  are  contemplated  to be
declared or paid on the Common Stock. In addition,  the Company's  existing loan
agreements  prohibit  the  payment of cash  dividends.  See "Item 5.  Market for
Registrant's Common Equity and Related Stockholder Matters."







                                       16

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

GENERAL

         The Company's results of operations are affected primarily by the
extent of utilization and rates paid for its services and equipment. The energy
services sector is completely dependent upon the upstream spending of the
exploration and production side of the industry. Much of the activity increase
from the exploration and production side of the industry during the latter half
of 1999 was in the area of infield recovery of properties shut-in as a result of
depressed commodity prices. These infield recovery efforts were those that would
provide the least capital expenditure, least risk of capital and would result in
a more rapid improvement of cash flow streams due to higher commodity pricing.
With the increase of commodity prices that occurred since the beginning of 2000
and anticipated continued price stability along with the Company's debt
refinancing, the Company believes it is positioned to experience an increase in
demand for its services due in large part to the broad base of services offered.
There can be no assurance that the Company will continue to experience any
material increase in the demand for and utilization of its services and its
revenues.

         The following table sets forth the Company's revenues from its three
principal lines of business for each of the years ended December 31, 2000, 1999
and 1998 (in thousands):

                                              2000          1999          1998
--------------------------------------------------------------------------------



Wireline Services                            $21,637       $17,727       $11,592

Directional Drilling                          22,918        10,310        21,311

Workover and Completion                        1,144         1,256         1,533

                                             -----------------------------------
                                             $45,699       $29,293       $34,437

                                             ===================================



         Management may in the future seek to raise additional capital, which
may be either debt or equity capital or a combination thereof or enter into
another material transaction involving the Company, including a possible sale of
the Company. As of May 15, 2001, no specific plans or proposals have been made
with regard to any additional financing or any other transaction. The Company
may engage in other material corporate transactions. The Company retained Growth
Capital Partners, L.P. ("GCP") as its financial advisor to the Company in
connection with examining various alternative means to maximize shareholder
value including a possible merger, sale of assets or other business combination
involving the Company or a possible private placement of equity and/or
equity-related securities. In the last quarter of 2000 and the first quarter of
2001, the Company and GPC on the Company's behalf explored the possibilities of
the Company entering into a business combination or other material transaction.
While information was provided to prospective acquirors and discussions held, no
agreements or

                                       17

<PAGE>

agreements in principal were entered into as a consequence of those activities
and the Company is not engaged in any negotiations at May 15, 2001 that may lead
to its acquisition or other material transaction. The Company believes that at
that time its operating results had not shown sufficient improvement for a
sufficient period of time to enable the Company to realize an acceptable price
in such a transaction. Nevertheless, subject to the Company's operating results
continuing at recent levels, the Company may again at a future date seek to
pursue a transaction leading to the possible acquisition of the Company or a
sale of some or all its assets. Any such transaction would be dependent upon the
ability of the Company to realize an acceptable price. There can be no assurance
that the Company will seek to enter into such a transaction and no
representation is made as to the terms on which any such a transaction may be
entered into or that such a transaction will occur. In the event the Company
should seek or be required to raise additional equity capital, there can be no
assurance that such a transaction will not dilute the interests of the Company's
existing security holders. Fluctuations in interest rates may adversely affect
the Company's ability to raise capital.

TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2000 AND 1999

         Revenues increased by approximately $16.4 million or 56.0% to $45.7
million for the year ended December 31, 2000 as compared to revenues of $29.3
million for the year ended December 31, 1999. Wireline services revenues
increased by approximately $3.9 million in 2000 primarily due to the increased
demand for the Company's services. Directional drilling revenues increased by
approximately $12.6 million as a consequence of the general level of oil and
natural gas well drilling activity which improved dramatically in the latter
half of 2000.

         Operating costs increased by $10.4 million for the year ended December
31, 2000, as compared to 1999. This increase was due primarily to the increase
in corresponding revenues of the Company as compared to 1999. Salaries and
benefits increased by $4.1 million for 2000 as compared to 1999. This was due
primarily to the Company's increased employee base as well as the level of
activity. Operating costs as a percentage of revenues decreased to 72.8% in 2000
from 77.8% in 1999 primarily because of the increased utilization of the
Company's assets.

         Selling, general and administrative expenses increased by approximately
$783,000 from $6.3 million in 1999 to $7.0 million in 2000. As a percentage of
revenues, selling, general and administrative expenses decreased from 21.4% in
1999 to 15.4% in 2000, primarily as a result of the revenue level generated in
2000 and the cost reduction program implemented in 1998.

         Depreciation and amortization increased from $5.0 million in 1999, to
$5.4 million in 2000, primarily because of the higher asset base of depreciable
properties in 2000 over 1999 due to the Company's capital expenditures of $5.7
million in 2000.

         Interest expense and amortization of debt discount increased by $1.6
million for 2000 as compared to 1999. This was directly related to the increased
amounts of indebtedness outstanding in 2000.

                                       18

<PAGE>


         Net gain or loss on sale of fixed assets increased in 2000 to a net
gain of $10,000 from a $7,000 net loss in 1999. Other income decreased by
$17,000 in 2000.

         The provision for income taxes was $-0- in both 2000 and 1999. The
provision is $0 due to the fact that a full valuation allowance has been
recorded against the net deferred tax assets generated in each of the years
ended December 31, 2000 and 1999.

         During the first two quarters of 2000, the Company executed agreements
with certain of its vendors to discount the outstanding obligations due to these
vendors. The agreements provided for a decrease in the outstanding obligations
of $968,575. Accordingly, the Company has recognized an extraordinary gain on
extinguishments of debt of $968,575, net of income taxes of $0.

         The Company's net loss for 2000 was $4.2 million, compared with $8.0
million in 1999. The Company's loss was primarily attributable to the reduced
demand for the Company's services in the first half of 2000. The improvement in
operating results was the result of increased revenues and the increase in
demand for the Company's services in the latter half of 2000.

TWELVE-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998

         Revenues decreased by $5.1 million or 14.9% to $29.3 million for the
year ended December 31, 1999 as compared to revenues of $34.4 million for the
year ended December 31, 1998. Wireline services revenues increased by $6.1
million in 1999 primarily because of the acquisition of Petro Wireline and the
Company's establishment of an offshore wireline operation and a new onshore
wireline facility at Minden, Louisiana and Corpus Christi, Texas. Directional
drilling revenues decreased as a consequence of the general level of oil and
natural gas well drilling activity which remained depressed for most of 1999.

         Operating costs decreased by $7.7 million for the year ended December
31, 1999, as compared to 1998. This decrease was due primarily to a combination
of the Company's cost reduction program and the reduced demand for the Company's
services. Salaries and benefits decreased by $3.9 million for 1999 as compared
to 1998. This was due primarily to the Company's cost reduction program
implemented in 1998 and continuing through 1999. Operating costs as a percentage
of revenues decreased to 77.8% in 1999 from 88.5% in 1998 primarily because of
the cost reduction program implemented in 1998.

         Selling, general and administrative expenses decreased by approximately
$1.2 million from $7.5 million in 1998 to $6.3 million in 1999. As a percentage
of revenues, selling, general and administrative expenses decreased from 21.6%
in 1998 to 21.4% in 1999, primarily as a result of the revenue level generated
in 1999 and the cost reduction program implemented in 1998.

         Depreciation and amortization increased from $4.8 million in 1998, to
$5.0 million in 1999, primarily because of the higher asset base of depreciable
properties in 1999 over 1998 due to the inclusion of a full year's depreciation
on the assets associated with the Phoenix and Petro-Log acquisitions and
operations in Houma, Louisiana.

                                       19

<PAGE>

         In accordance with SFAS No. 121 Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, the Company
recognizes impairment losses on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows over the
life of the assets are less than the asset's carrying amount. If an impairment
exists, the amount of such impairment is calculated based on projections of
future discounted cash flows. These projections are for a period of five years
using a discount rate and terminal value multiple that would be customary for
evaluating current oil and gas service company transactions.

         The Company considers external factors in making its assessment.
Specifically, changes in oil prices and other economic conditions surrounding
the industry, consolidation within the industry, competition from other oil and
gas well service providers, the ability to employ and maintain a skilled
workforce, and other pertinent factors are among the factors that could lead
management to reassess the realizability and/or amortization periods of its
goodwill.

         In 1998, the Company experienced a large decline in demand for its
services as a result of a large decrease in the price of oil and natural gas, as
well as the loss of a major customer. Consequently, management evaluated the
recoverability of its long-lived assets in relation to its business segments.
The analysis was first performed on an undiscounted basis which indicated
impairment in its directional drilling segment. The impairment was then
calculated using projections of discounted cash flows over five years utilizing
a discount rate and terminal value multiple commensurate with current oil and
gas services company transactions. At December 31, 1998, the discount rate and
the terminal multiple used was 12% and 6.5, respectively. The assumptions used
in this analysis represent management's best estimate of future results.

         The analysis resulted in a charge to operations for the year ended
December 31, 1998 of $11.1 million which consisted of a write-down of
approximately $8.1 million, approximately $2.4 million, and approximately
$624,000, to goodwill, property, plant and equipment, and inventory,
respectively.

         Interest expense and amortization of debt discount increased by $0.6
million for 1999 as compared to 1998. This was directly related to the increased
amounts of indebtedness outstanding incurred to finance acquisitions completed
in 1998.

         Net gain or loss on sale of fixed assets decreased in 1999 to a net
loss of $7,000 from a $155,000 net gain in 1998. Other income increased by
$45,000 in 1999.

         Income tax benefit was $0 million in 1999 compared to $1.1 million for
1998. The income tax benefit arises out of the Company's net losses for the
year. See "Note 10 of Notes to Consolidated Financial Statements."

         The Company's net loss for 1999 was $8.0 million. The Company's loss
was primarily attributable to declines in demand for the Company's services and
equipment utilization which arose in 1998 and continued into the first half of
1999 resulting from the declines in prices for oil and natural gas.

                                       20

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         Cash used in Company operating activities was $2.9 million for the year
ended December 31, 2000 as compared to cash used in operating activities of
$517,000 for the year ended December 31, 1999. Investing activities of the
Company used cash of $3.6 million during the year ended December 31, 2000 for
the acquisition of property, plant and equipment and was offset by proceeds from
the sale of fixed assets of $15,000. During the year ended December 31, 1999,
acquisitions of property, plant and equipment and other businesses used cash of
$1.8 million offset by proceeds of $35,000 from the sale of fixed assets.
Financing activities provided cash of $31.1 million from the net proceeds from
the issuance of convertible notes and warrants and other borrowings during the
year ended December 31, 2000 offset by principal payments on long-term notes and
capital lease obligations and loan origination costs of $25.7 million. During
the year ended December 31, 1999, the sale of convertible notes and warrants and
other borrowings resulted in proceeds of $6.9 million offset by principal
payments on long-term debt and capital lease obligations and loan origination
costs of $3.2 million.

         During the year ended December 31, 2000, the Company expended $2.1
million for the acquisition of property, plant and equipment financed under
capital leases and notes payable. During the year ended December 31, 1999, the
Company expended $108,000 for the acquisition of property, plant and equipment
financed under capital leases and notes payable.

         During 1999 and 2000, the Company experienced a decline in the demand
for its products and services as a result of a significant decrease in the price
of oil and natural gas. The decline in demand materially impacted the Company's
revenues, liquidity and its ability to remain in compliance with covenants in
its loan agreements and meet its obligations during 1999. Management of the
Company believes that the improvement in its revenues is be dependent upon a
continuing period of improved pricing and decisions by oil and natural gas
producers to make commitments to engage in oil and natural gas well
enhancements.

         The Company's outstanding indebtedness includes primarily senior
secured indebtedness aggregating approximately $20.3 million at December 31,
2000, other indebtedness of approximately $8.9 million, and $19.2 million owing
to SJCP and its affiliates.

         At December 31, 2000, on the basis of its balance sheet at that date,
the Company had approximately $48.4 million of current indebtedness. Of this
indebtedness, the Company intends to seek to extend the maturity of
approximately $26.8 million of indebtedness, including any deferred excess cash
flow payments due through December 31, 2000, into 2002 and to seek, through
obtaining any required waivers or other accommodations of any covenant defaults
under loan documents, to repay an aggregate of $3 million in 2001 and $17.4
million in 2002 and thereafter. The Company will also seek to defer payment of
the excess cash flow payments accruing for the period January 1, 2001 through
June 30, 2001. If the Company is unable to obtain the required extensions and
waivers, it will seek to refinance approximately $20.3 million of indebtedness.
There can be no assurance that the Company will be successful in extending the

                                       21

<PAGE>

maturity or refinancing any part or all of its indebtedness. The inability of
the Company to obtain extensions of the due dates of principal payments or to
repay or refinance this indebtedness could cause, under the terms of such debt
agreements and the cross default provisions of other debt agreements, virtually
all the outstanding indebtedness to be accelerated and declared immediately due
and payable. Defaults in the repayment of this indebtedness, either at maturity
or by acceleration of the due date, could lead the creditors to foreclose on
substantially all of the Company's assets.






                                       22

<PAGE>


Coast Business Credit Loan and Security Agreement
-------------------------------------------------

         The Company is a party to a Loan Agreement with Coast pursuant to which
it is enabled to make secured borrowings in the aggregate amount of up to the
lesser of $25.0 million or such maximum aggregate amount as is available to be
borrowed under a receivables loan and two term loans described below. Of such
amount, $14.5 million, based on the lesser of 75% of the appraised net eligible
forced liquidation value of the Company's equipment or $14.5 million, is a term
loan (the "Equipment Loan"), an additional $2.0 million is a term loan (the
"Installment Loan"), and the balance is available to be borrowed in an amount
not exceeding 80% of the Company's eligible receivables (the "Receivables
Loan"). The Equipment Loan is repayable commencing on August 30, 2000 in monthly
installments over a term of six years, with interest only payable monthly prior
to August 1, 2000. The Equipment Loan further requires that the Company make
additional monthly principal payments of 50% of its excess cash flow during the
preceding month during the period ending February 28, 2001, and thereafter
additional monthly principal payments of 40% of its excess cash flow during the
preceding month. In January 2001, Coast agreed to defer until June 30, 2001 the
excess cash flow payments otherwise due for the months of August 2000 through
June 2001. At December 31, 2000 and March 31, 2001, the deferred excess cash
flow payment due on or before June 30, 2001 amounted to $1.0 million and $2.5
million, respectively. Excess cash flow is defined to be the Company's net
income before income taxes, depreciation and amortization during a month minus
the sum of principal and interest payments made and taxes paid in cash
("EBITDA"). The Installment Loan is repayable in monthly installments over four
years commencing March 31, 2000, and, after the Equipment Loan is paid in full,
is also repayable out of excess cash flow as provided above. Under the January
2001 amendments to the Loan Agreement, if assets or ownership interests in the
Company are not sold on or before June 30, 2001 to pay all obligations owing to
Coast on or before June 30, 2001, then St. James is required to make an
additional equity investment in the Company sufficient to pay to Coast the
excess cash flow payments deferred for the months of August 2000 through June
2001 and the failure of St. James to make such investment is an event of default
under the Loan Agreement.

         The Loan Agreement ceases to be in effect on February 28, 2003,
provided, however, the Loan Agreement will automatically renew for additional
terms of one year unless either party elects not to renew the term. In the event
the Loan Agreement is not renewed on February 28, 2003, or at the end of any
renewal term thereafter, all borrowings then outstanding under the Loan
Agreement are then due and payable.

         On February 15, 2000, the Company borrowed an aggregate of $15.6
million pursuant to the Loan Agreement. The proceeds were used to repay the
Company's former senior secured lender in the amount of $13.5 million, to repay
other indebtedness aggregating $1.5 million, and the balance was used for
general corporate purposes, including the payment of outstanding accounts
payable.

         The Equipment Loan and the Installment Loan bear interest at the prime
rate, as defined, plus 2% per annum, and the Receivables Loan bears interest at
the prime rate, as defined, plus 1% per annum. The Company's obligations under
the Loan Agreement are collateralized by a senior lien and security interest in
substantially all of the Company's assets. Principal and

                                       23

<PAGE>

interest under the Loan Agreement has been guaranteed, subject to certain
limitations, by St. James, principal stockholders of the Company, and Charles
Underbrink, a partner of St. James and a Director of the Company. In addition,
St. James has guaranteed all of the Company's contractual obligations under the
Loan Agreement, subject to certain limitations. As amended in January 2001, the
guaranty of St. James is backed by a letter of credit in the amount of $8.2
million. Loans under the Loan Agreement were subject to the fulfillment of a
number of closing conditions and continue to be subject to the continuing
accuracy of the Company's representations and warranties and its compliance with
the covenants in the Loan Agreement.

         By virtue of its guarantees, in the event of a default under the
Company's loan agreement with Coast, Coast may seek to collect from SJCP and
SJMB, as well as Mr. Underbrink, the outstanding principal and interest on the
Company's obligation to Coast. Without the continued improvement in the
Company's revenues, the Company may be substantially dependent upon the
continuing support of SJCP and SJMB during 2001 to fund its ongoing obligations,
including its obligations to Coast.

         Events of default under the Loan Agreement include (i) any warranty,
representation, statement, report or certificate delivered to Coast by the
Company being untrue or misleading, (ii) the failure of the Company to pay when
due any loans under the Loan Agreement or any other monetary obligation under
the Loan Agreement, (iii) the total of the Company's loans outstanding exceeding
the Company's maximum borrowing limit under the Loan Agreement, (iv) the breach
of various covenants and obligations of the Company under the Loan Agreement,
(v) the insolvency or business failure of the Company or the commencement of any
reorganization or bankruptcy proceedings, (vi) a change of control of the
Company without Coast's consent, (vii) the inability of the Company to pay its
debts as they come due, (viii) the failure of St. James to make an additional
equity investment in the Company at June 30, 2001, if required, and (ix) certain
other events. Upon such an event of default, Coast may cease making loans to the
Company and accelerate the due date of all indebtedness outstanding under the
Loan Agreement.

         The Company is obligated to fulfill various affirmative and negative
covenants contained in the Loan Agreement. The affirmative covenants include
requirements to comply with various financial covenants, maintain insurance
coverage, apply 30% of the proceeds from the sale of equity securities to the
repayment of principal of the term loans, provide written reports to Coast, and
provide Coast with access to the collateral for the indebtedness. The financial
covenants, as amended in January 2001, require the Company to have a tangible
net worth as defined in the Loan Agreement of $5.0 million on September 30, 2000
and increasing quarterly thereafter by 80% of the Company's net income for the
quarter and by at least $1.0 million on June 30, 2001 and have a debt service
coverage ratio of 1.0 to 1.0 through September 30, 2000 and thereafter of 1.25
to 1.00 quarterly. The Company's reporting obligations include, among others, an
obligation to provide to Coast within 90 days following the end of each fiscal
year annual financial statements containing an unqualified opinion and certified
by an independent certified public accountant acceptable to Coast. The Company
did not provide the financial statements for 2000 in a timely manner and has
neither sought nor received from Coast a waiver of this breach. Negative
covenants prohibit the Company, without Coast's consent, from merging or
consolidating with another entity; acquiring assets, subject to certain
exceptions; entering into

                                       24

<PAGE>


any other transaction outside the ordinary course of business; selling any
assets except in the ordinary course of business; restrictions on the
disposition of inventory; loaning money, subject to certain exceptions;
incurring indebtedness outside the ordinary course of business which has a
material adverse effect on the Company; paying or declaring any dividend or
making any other distributions; or a change in the Company's capital structure
that has a material adverse effect on it.

         At the closing of its initial borrowings, the Company paid a loan fee
of 2% of the maximum amount able to be borrowed under the Loan Agreement and is
obligated to pay an annual fee of 0.5% of such amount. In addition, the Company
is obligated to pay a facility fee of $15,000 each quarter and an unused
facility fee of 0.375% of the undrawn portion of the maximum amount able to be
borrowed. In the event of the sale or transfer of substantially all the assets
or ownership interests in the Company prior to February 28, 2003, Coast is
entitled to a success fee of $250,000. In the event the Loan Agreement is
terminated by the Company, including a termination as a result of the sale of
substantially all the Company's assets or a controlling interest in the Company
with the indebtedness to Coast repaid, Coast is entitled to a fee of $500,000.

Private Sale of $7.0 Million of Notes and Warrants

         Commencing on December 17, 1999 and during the first quarter of 2000,
the Company sold $7.0 million principal amount of convertible promissory notes
(the "Notes") originally due on January 15, 2001 and currently due on June 30,
2001 and warrants ("Warrants") to purchase 28.7 million shares of Common Stock.
The Notes and Warrants were purchased by 47 "accredited investors," (the
"Purchasers") as defined in Regulation D under the Securities Act of 1933, as
amended. Payment of principal and interest on the Notes is collateralized by
substantially all the assets of the Company, subject, however, to the terms of a
subordination agreement between the Purchasers and Coast. The Notes bear
interest at 10% per annum through September 30, 2000 and thereafter at the rate
of 15% per annum and are convertible into shares of the Company's Common Stock
at a conversion price of $0.75 per share, subject to anti-dilution adjustment
for certain issuances of securities by the Company at prices per share of Common
Stock less than the conversion price then in effect, in which event the
conversion price is reduced to the lower price at which such shares were issued.
The Warrants are exercisable at a price of $0.75 per share, subject to
anti-dilution adjustment for certain issuances of securities by the Company at
prices per share of Common Stock less than the exercise price then in effect, in
which event the exercise price is reduced to the lower price at which such
shares were issued and the number of shares issuable is adjusted upward. The
shares issuable on conversion of the Notes and exercise of the Warrants have
demand and piggy-back registration rights under the Securities Act of 1933. The
Notes contain various affirmative and negative covenants, including, among
others, a prohibition against the Company consolidating, merging or entering
into a share exchange with another person, with certain exceptions, without the
consent of the Purchasers. Events of default under the Notes include, among
other events, (i) a default in the payment of principal or interest on the
Notes; (ii) a default in the performance of any covenant of the Note

                                       25

<PAGE>

Purchase Agreement or other agreement entered into in connection therewith and
the failure to cure such default; (iii) any representation or warranty of the
Company in the Note Purchase Agreement or other agreement entered into in
connection therewith being untrue in any material respect and such default
remains uncured; (iv) the Company defaults in the payment when due or by
acceleration of any other indebtedness having an aggregate principal amount
outstanding in excess of $100,000 and such default remains uncured; (v) a
judgment for the payment of money in excess of $100,000 is entered against the
Company; and (vi) the commencement of certain bankruptcy or insolvency
proceedings. If an event of default occurs, the Notes may become immediately due
and payable.

Other Matters

         During the first quarter of 2000, the Company executed a Compromise
Agreement With Release with Bendover Company ("Bendover") whereby Bendover
agreed to return to the Company promissory notes aggregating $3,182,190
principal amount and receive in exchange 2,666,667 shares of the Company's
common stock, valued in the transaction at $0.75 per share, and a promissory
note in the principal amount of $1,182,890 due on January 15, 2001, bearing
interest at 10% per annum. The maturity of the promissory note was subsequently
extended to June 15, 2001 at an interest rate of 20% per annum with 10% per
annum paid monthly and the balance deferred until maturity.

         On March 1, 2000 the Company exercised its option and completed the
purchase of Measurement Specialists, Inc. ("MSI"). The Company paid the
outstanding notes payable related to the acquired assets of approximately
$385,000 and previously issued 144,445 shares of its common stock in connection
with the acquisition.

         On December 14, 2000 St. James converted $1,750,000 principal amount of
a note and $2,013,111 of accrued interest on indebtedness owing to it into
5,017,481 shares of the Company's Common Stock at a conversion price of $0.75
per share.

Recently Issued Accounting Pronouncements

         On December 3, 1999, the staff of the Securities and Exchange
Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue
Recognition in Financial Statements. SAB 101 provides guidance as to the
appropriate timing for recognition of revenue. The Company recognizes revenue
upon the delivery of the product to a customer. The Company adopted SAB 101 in
the fourth quarter, as required, and has concluded that SAB 101 did not have any
impact on its financial statements.

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities, subsequently amended by SFAS 137
and 138. FAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, (collectively referred to as derivatives) and for hedging activities.
The Company is not holding any derivative financial or commodity instruments and
does not believe adoption in 2001 will have any significant financial statement
impact.

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<PAGE>


INFLATION

         The  Company's  revenues  have been and are  expected to continue to be
affected by fluctuations in the prices for oil and gas. Inflation did not have a
significant effect on the Company's operations in 2000.

                                       27

<PAGE>



                                   SIGNATURES

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

         Dated: June 27, 2001


                                  BLACK WARRIOR WIRELINE CORP.

                            By:   /s/ William L. Jenkins
                                  ----------------------------------------------
                                  William L. Jenkins, President


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

<TABLE>


Signature                      Capacity                                         Date
---------                      --------                                         ----
<S>                            <C>                                              <C>

/s/ William L. Jenkins         President,  CEO and Director                     June 27, 2001
----------------------------   (Principal Executive Officer)
William L. Jenkins


/s/ Ron E. Whitter             Vice President - Finance                         June 27, 2001
----------------------------   (Principal Financial and Accounting Officer)
Ron E. Whitter


/s/ John L. Thompson           Director                                         June 27, 2001
----------------------------
John L. Thompson


/s/ Charles E. Underbrink      Director                                         June 27, 2001
----------------------------
Charles E. Underbrink


/s/ Alan W. Mann               Director                                         June 27, 2001
----------------------------
Alan W. Mann

</TABLE>



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