```

                                                                                                    RESTATED SEE NOTE 1
                                                                                   (audited)           (unaudited)
                                                                                  December 31,           June 30,
                                                                                     2000*                 2001
                                                                              --------------------- -------------------
ASSETS
Current assets:
  Cash and cash equivalents                                                         $     2,000,826      $    4,996,866
  Accounts receivable:
    Oil and gas                                                                           4,057,527           2,588,021
    Others, net of allowance for doubtful account of $157,187 in
      2000 and 2001                                                                         319,818             334,703
  Affiliate                                                                                  19,569                   -
                                                                                    ---------------      --------------
                                                                                          4,396,914           2,922,724
Other assets                                                                                 27,166             286,457
Deferred income taxes                                                                             -             309,499
                                                                                    ---------------      --------------
                                                                                          6,424,906           8,515,546
                                                                                    ---------------      --------------
Property and equipment, at cost:
  Oil and gas properties, full cost method                                               72,316,384          78,079,312
  Other                                                                                     372,765             542,913
                                                                                    ---------------      --------------
                                                                                         72,689,149          78,622,225
  Less accumulated depreciation and depletion                                           (32,742,060)        (36,037,626)
                                                                                    ---------------     ---------------

         Net property and equipment                                                      39,947,089          42,584,599
                                                                                    ---------------      --------------

Other assets, net of accumulated amortization of $114,971 in
  2000 and $65,097 in 2001                                                                   84,442             166,834
                                                                                    ---------------      --------------

                                                                                    $    46,456,437      $   51,266,979
                                                                                    ===============      ==============
```

```

                                                                                                          RESTATED SEE NOTE 1
                                                                                           (audited)        (unaudited)
                                                                                         December 31,         June 30,
                                                                                             2000*              2001
                                                                                       ------------------ -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term debt                                              $       803,531      $    1,314,000
  Investment liability in First Permian (Note 6)                                            366,765             366,765
  Accounts payable and accrued liabilities:
    Trade                                                                                 2,443,773           3,047,877
  Income taxes payable (Note 4)                                                              50,000                   -
                                                                                    ---------------      --------------

                                                                                          3,664,069           4,728,642
                                                                                    ---------------      --------------

Long-term debt, excluding current maturities (Note 2)                                    11,624,000           9,686,000

Stockholders' equity:
  Series A preferred stock -- par value $.10 per share (aggregate liquidation
    preference of $26) authorized 50,000 shares                                                   -                   -
  Preferred stock -- $.60 cumulative convertible preferred stock -- par value
    of $.10 per share (aggregate liquidation preference of $10) authorized
    10,000,000 shares, issued and outstanding 974,500 in 2000 and 2001                       97,450              97,450
  Common stock -- par value $.01 per share, authorized 60,000,000 shares,
    issued and outstanding 20,331,858 in 2000 and 20,443,558 in 2001                        203,319             204,436
  Additional paid-in capital                                                             34,238,078          34,070,335
  Retained earnings (deficit)                                                            (3,370,479)          2,480,116
                                                                                    ---------------      --------------

Total stockholders' equity                                                               31,168,368          36,852,337

Commitments and contingencies (Note 9)
                                                                                    ---------------      --------------

                                                                                    $    46,456,437      $   51,266,979
                                                                                    ===============      ==============
```

```

                                                                 RESTATED                   RESTATED
                                                                 SEE NOTE 1                SEE NOTE 1
                                                 Three Months Ended June 30, Six Months Ended June 30,
                                                 --------------------------- --------------------------
                                                       2000          2001         2000          2001
                                                 ------------- ------------- ------------ -------------
Oil and gas revenues                              $ 3,196,614  $   4,791,063 $  5,971,205 $  12,079,265
                                                 ------------- ------------- ------------ -------------
Cost and expenses:
  Lease operating expense                              618,570     1,047,527    1,232,385     2,166,593
  General and administrative                           260,160       303,881      457,960       602,089
  Depreciation, depletion and amortization           1,219,142     1,617,747    2,282,611     3,295,567
                                                 ------------- ------------- ------------ -------------
                                                     2,097,872     2,969,155    3,972,956     6,064,249
                                                 ------------- ------------- ------------ -------------
Operating income                                     1,098,742     1,821,908    1,998,249     6,015,016
                                                 ------------- ------------- ------------ -------------

Other income (expense), net:
  Equity in loss of First Permian, LLC                (109,572)            -     (496,083)            -
  Interest income                                       12,490        63,739       31,245        82,788
  Other income                                          41,976        25,207       48,437        50,413
  Interest expense                                    (348,842)     (247,655)    (691,747)     (474,511)
  Other expense                                           (276)      (77,357)      (1,982)     (132,610)
                                                 ------------- ------------- ------------ -------------
    Total other expense, net                          (404,224)     (236,066)  (1,110,130)     (473,920)
                                                 ------------- ------------- ------------ -------------

Income before income taxes                             694,518     1,585,842      888,119     5,541,096
Income tax expense (benefit), net                            -       371,169            -      (309,499)
                                                 ------------- ------------- ------------ -------------

    Net income                                   $     694,518 $   1,214,673 $    888,119 $   5,850,595
                                                 ============= ============= ============ =============

Cumulative preferred stock dividend              $     146,175 $     146,175 $    316,713 $     292,350
                                                 ============= ============= ============ =============

    Net income available to common stockholders  $     548,343 $   1,068,498 $    571,406 $   5,558,245
                                                 ============= ============= ============ =============

Net income per common share:

  Basic                                                $ 0.027       $ 0.052      $ 0.028       $ 0.272
                                                 ============= ============= ============ =============

  Diluted                                              $ 0.027       $ 0.051      $ 0.028       $ 0.246
                                                 ============= ============= ============ =============

Weighted average common share outstanding

  Diluted                                           20,583,831    23,826,809   20,569,109    23,758,020
                                                 ============= ============= ============ =============
```

```

                                                                                      RESTATED
                                                                                     SEE NOTE 1
                                                                        Six Months Ended June 30
                                                                      -----------------------------
                                                                          2000           2001
                                                                      ------------- ---------------

Cash flows from operating activities:
  Net income                                                           $     888,119 $     5,850,595

Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and depletion                                               2,282,611       3,295,567
  Equity in loss from investments in First Permian, LLC                      496,083               -
  Income taxes                                                                     -        (309,499)
  Other, net                                                                  (6,362)        (82,392)
  Changes in assets and liabilties:
  Decrease (increase) in accounts receivables                               (648,109)      1,474,190
  Decrease (increase) in prepaid expenses and other                          (12,782)       (259,291)
  (Decrease) increase in accounts payable and accrued liabilities           (464,337)        554,104
                                                                       ------------- ---------------
  Net cash provided by operating activities                                2,535,223      10,523,274
                                                                       ------------- ---------------
Cash flows from investing activities:
  Additions to property and equipmjent                                    (1,909,566)     (5,933,076)
  Proceeds from disposition of property and equipment                      2,917,392               -
  Distribution from First Permian, LLC                                        67,500               -
                                                                       ------------- ---------------
    Net cash used in investing activities                                  1,075,326      (5,933,076)
                                                                       ------------- ---------------
Cash flows from financing activities:
  Borrowings from bank line of credit
  Payments on bank line of credit                                         (1,665,889)     (1,427,531)
  Proceeds from exercise of options and warrants                                   -         125,723
  Payment of preferred stock dividend                                       (316,713)       (292,350)
                                                                       ------------- ---------------
 Net cash used in financing activities                                    (1,982,602)     (1,594,158)
                                                                       ------------- ---------------
Net increase (decrease) in cash and cash equivalents                       1,627,947       2,996,040

Beginning cash and cash equivalents                                        1,276,417       2,000,826
                                                                       ------------- ---------------
Ending cash and cash equivalents                                       $   2,904,364 $     4,996,866
                                                                       ============= ===============

Non-cash financing activities:
  Accrued preferred stock dividend                                     $      24,363       $ 316,713
                                                                       ============= ===============
  Transfer of assets held for sale to oil and gas property             $   2,127,734               -
                                                                       ============= ===============
```

```

Type             Volume/Month         Term          Price             Commodity
----            --------------    ------------   -------------      ------------

Collar          40,000 barrels    7/01 - 12/02   $18.00-$28.75        WTI NYMEX

Collar          40,000 barrels    7/01 - 12/02   $19.00-$24.80        WTI NYMEX
```

```

                                                    Three Months Ended               Six Months Ended
                                               June 30,                                  June 30,
                                          ----------------------------------------  ----------------------------------------
                                                 2000                 2001                 2000                2001
                                          -------------------  -------------------  ------------------- --------------------
Basic EPS Computation:
Numerator-
  Net income                                       $ 694,518          $ 1,214,673            $ 888,119          $ 5,850,595
  Preferred stock dividend                          (146,175)            (146,175)            (316,713)            (292,350)
                                          -------------------  -------------------  ------------------- --------------------
  Net income available to common
    stockholders                                   $ 548,343          $ 1,068,498            $ 571,406          $ 5,558,245
                                          ===================  ===================  =================== ====================

Denominator-
  Weighted average common shares
    outstanding                                   20,331,858           20,433,721           20,331,858           20,426,480
                                          ===================  ===================  =================== ====================
Basic earnings per share                             $ 0.027              $ 0.052              $ 0.028              $ 0.272
                                          ===================  ===================  =================== ====================

Diluted EPS Computation:
  Numerator-
  Net income                                       $ 694,518          $ 1,214,673            $ 888,119          $ 5,850,595
  Preferred stock dividend                          (146,175)                   -             (316,713)                   -
                                          -------------------  -------------------  ------------------- --------------------
  Net income available to common
    stockholders                                   $ 548,343          $ 1,214,673            $ 571,406          $ 5,850,595
                                          ===================  ===================  =================== ====================

Denominator-
  Weighted average common shares
    outstanding                                   20,331,858           20,433,721           20,331,858           20,426,480
  Employee stock options                             251,973              608,844              237,251              547,296
  Preferred stock                                          -            2,784,244                                 2,784,244
                                          -------------------  -------------------  ------------------- --------------------
                                                  20,583,831           23,826,809           20,569,109           23,758,020
                                          ===================  ===================  =================== ====================
Diluted earnings per share                           $ 0.027              $ 0.051              $ 0.028              $ 0.246
                                          ===================  ===================  =================== ====================
```

```

                                         Three Months Ended       Three Months Ended
                                    ----------------------------- -------------------
                                    12-31-00  3-31-01   6-30-01   6-30-00   6-30-01
                                    -------- ---------- --------- -------- ----------
Production and prices:
Oil (Bbls)                            38,784    34,914    39,098    44,753    39,098
Natural gas (Mcf)                    860,651 1,009,532   934,951   657,039   934,951
Equivalent barrels of oil (EBO)      182,226   203,169   194,923   154,260   194,923

Oil price (per Bbl)                  $ 32.38   $ 27.81   $ 26.50   $ 27.13   $ 26.50
Gas price (per Mcf)                  $  6.67   $  6.25   $  4.02   $  3.02   $  4.02
Price per EBO                        $ 38.42   $ 35.87   $ 24.58   $ 20.72   $ 24.58

Results of operations per EBO:
Oil and gas revenues                 $ 38.42   $ 35.87   $ 24.58   $ 20.72   $ 24.58
Costs and expenses:
Lease operating expense                 6.19      5.51      5.37      4.01      5.37
General and administrative              3.03      1.47      1.56      1.69      1.56
Depreciation and depletion              9.10      8.26      8.30      7.90      8.30
                                    ---------  -------- --------- ---------  --------
Total costs and expense                18.32     15.24     15.23     13.60     15.23
                                    ---------  -------- --------- ---------  --------
Operating income (loss)                20.10     20.63      9.35      7.12      9.35
                                    ---------  -------- --------- ---------  --------

Interest expense, net                  (1.50)    (1.02)    (0.94)    (2.18)    (0.94)
Other income, net                       0.71     (0.15)    (0.27)     0.27     (0.27)
                                    ---------  -------- --------- ---------  --------
                                       (0.79)    (1.17)    (1.21)    (1.91)    (1.21)
Equity in earnings (loss) of First
     Permian, LLC                          -         -         -     (0.71)        -
                                    ---------  -------- --------- ---------  --------
Pretax income per EBO                  19.31     19.46      8.14      4.50      8.14
Income tax expense (benefit)            0.71     (3.35)     1.90         -      1.90
                                    ---------  -------- --------- ---------  --------
Net income per EBO                   $ 18.60   $ 22.81   $  6.24   $  4.50   $  6.24
                                    =========  ======== ========= =========  ========
 Net operating cash flow before
working capital adjustments          $ 28.41   $ 27.72   $ 16.44   $ 13.11   $ 16.44
                                    =========  ======== ========= =========  ========
```

```

                                                    Six Months Ended
                                                   --------------------------------
                                                    6-30-99   6-30-00    6-30-01
                                                   ---------- --------- -----------

Production and prices:
  Oil (Bbls)                                            90,527    84,037      74,011
  Natural gas (Mcf)                                  1,447,449  1,227,543  1,944,483
  Equivalent barrels of oil (EBO)                      331,768   288,627     398,092

  Oil price (per Bbl)                                  $ 12.68   $ 26.93     $ 27.12
  Gas price (per Mcf)                                  $  1.94   $  3.01     $  5.18
  Price per EBO                                        $ 11.92   $ 20.69     $ 30.34

Results of operations per EBO:
Oil and gas revenues                                   $ 11.92   $ 20.69     $ 30.34
Costs and expenses:
  Lease operating expense                                 3.21      4.27        5.44
  General and administrative                              1.28      1.59        1.51
  Depreciation and depletion                              5.61      7.91        8.28
                                                     ---------- --------- -----------
    Total costs and expense                              10.10     13.77       15.23
                                                     ---------- --------- -----------
Operating income (loss)                                   1.82      6.92       15.11

Interest expense, net                                    (2.17)    (2.29)      (0.98)
Other income, net                                         0.03      0.16       (0.21)
                                                     ---------- --------- -----------
                                                         (2.14)    (2.13)      (1.19)
Equity in earnings (loss) of First Permian, LLC              -     (1.72)          -
                                                     ---------- --------- -----------

    Pretax income per EBO                                (0.32)     3.07       13.92
Income tax expense (benefit)                                 -         -       (0.78)
                                                     ---------- --------- -----------
    Net income per EBO                                 $ (0.32)   $ 3.07     $ 14.70
                                                     ========== ========= ===========

 Net operating cash flow before working capital
     adjustments                                       $  5.29   $ 12.70     $ 22.20
                                                    ========== ========= ===========
```

```

                                                       Three Months Ended                       Six Months Ended
                                                    --------------------------------------- --------------------------
                                                     12-31-00      3-31-01       6-30-01      6-30-00       6-30-01
                                                    ------------ ------------  ------------ ------------  ------------

Oil and gas revenues                                        100.0%       100.0%        100.0%       100.0%        100.0%
Costs and expenses:
  Lease operating expense                                    16.1         15.4          21.9         20.6          17.9
  General and administrative                                  7.9          4.1           6.3          7.7           5.0
  Depreciation and depletion                                 23.7         23.0          33.8         38.2          27.3
                                                     ------------ ------------  ------------ ------------  ------------
    Total costs and expenses                                 47.7         42.5          62.0         66.5          50.2
                                                     ------------ ------------  ------------ ------------  ------------
Operating income                                             52.3         57.5          38.0         33.5          49.8
                                                     ------------ ------------  ------------ ------------  ------------
Interest expense, net                                        (3.9)        (2.9)         (3.8)       (11.1)         (3.2)
Other income, net                                             1.9         (0.4)         (1.1)         0.8          (0.7)
                                                     ------------ ------------  ------------ ------------  ------------
                                                             (2.0)        (3.3)         (4.9)       (10.3)         (3.9)
Equity in earnings (loss) of First Permian, LLC                 -            -             -         (8.3)            -
                                                     ------------ ------------  ------------ ------------  ------------
                                                             (2.0)        (3.3)         (4.9)       (18.6)         (3.9)
                                                     ------------ ------------  ------------ ------------  ------------
    Pretax income                                            50.3         54.2          33.1         14.9          45.9
Income tax expense (benefit)                                  1.9         (9.4)          7.7            -          (2.6)
                                                     ------------ ------------  ------------ ------------  ------------
    Net income                                              48.4         63.6          25.4         14.9          48.5
                                                     ============ ============  ============ ============  ============
```