<PAGE> 1
                    SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C.  20549

                                 Form 10-Q
                           ____________________

(Mark One)
(X)          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

             For the quarterly period 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 number 0-12757

                        TMBR/SHARP DRILLING, INC.
          (Exact name of registrant as specified in its charter)

                TEXAS                                    75-1835108
    (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                   Identification No.)

         4607 WEST INDUSTRIAL BLVD.
               MIDLAND, TEXAS                                79703
    (Address of principal executive offices)               (Zip Code)

    Registrant's telephone number (including area code) (915) 699-5050

     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 preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                         Yes   X    No

     Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

     Common Stock, $.10 Par Value         Outstanding at February 9, 2001
           (Title of Class)                         4,997,386













<PAGE> 2
                         TMBR/SHARP DRILLING, INC.
                             FORM 10-Q REPORT

                                   INDEX



                                                                   Page No.

Part I.  Financial Information (Unaudited)

  Item 1.  Financial Statements

           Balance Sheets, December 31, 2000 and
             March 31, 2000 . . . . . . . . . . . . . . . . . . . .   3

           Statements of Operations, Three Months
             Ended December 31, 2000 and 1999 . . . . . . . . . . .   5

           Statements of Operations, Nine Months
             Ended December 31, 2000 and 1999 . . . . . . . . . . .   7

           Statements of Stockholders'
             Equity . . . . . . . . . . . . . . . . . . . . . . . .   9

           Statements of Cash Flows, Nine Months
             Ended December 31, 2000 and 1999 . . . . . . . . . . .  10

           Notes to Financial Statements. . . . . . . . . . . . . .  11

  Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations. . . . . . . . . .  15

  Item 3.  Quantitative and Qualitative Disclosures
             About Market Risk. . . . . . . . . . . . . . . . . . .  17


Part II.  Other Information

  Item 1.  Legal Proceedings. . . . . . . . . . . . . . . . . . . .  18

  Item 6.  Exhibits and Reports on Form 8-K . . . . . . . . . . . .  18











                                  -2-





<PAGE> 3
PART ONE - FINANCIAL INFORMATION (UNAUDITED)

Item 1.  FINANCIAL STATEMENTS


                         TMBR/SHARP DRILLING, INC.
                              BALANCE SHEETS
             December 31, 2000 (Unaudited) and March 31, 2000
                   (In thousands, except per share data)



                                                December 31,
                                                    2000            March 31,
  ASSETS                                         (Unaudited)          2000
  ------                                        ------------       -----------

Current assets:
  Cash and cash equivalents                        $    145         $     980
  Marketable securities                                  91                49
  Trade receivables,
    net of allowance for doubtful
      accounts of $1,611 at December 31,
      2000 and $1,486 at March 31, 2000               8,487             6,398
  Inventories                                           235               111
  Deposits                                               73                73
  Other                                                 624               796
                                                    --------          --------
    Total current assets                              9,655             8,407
                                                    --------          --------

Property and equipment, at cost:
  Drilling equipment                                 53,529            51,858
  Oil and gas properties, based on
    successful efforts accounting                    23,794            21,155
  Other property and equipment                        3,971             3,768
                                                    --------          --------
                                                     81,294            76,781

Less accumulated depreciation,
  depletion and amortization                        (63,532)          (61,736)
                                                    --------          --------

    Net property and equipment                       17,762            15,045
                                                    --------          --------

Other assets                                            173               173
                                                    --------          --------
    Total assets                                   $ 27,590          $ 23,625
                                                    ========          ========

See accompanying notes to financial statements.


                                  -3-




<PAGE> 4
                         TMBR/SHARP DRILLING, INC.
                              BALANCE SHEETS
             December 31, 2000 (Unaudited) and March 31, 2000
                   (In thousands, except per share data)


                                                December 31,
                                                    2000            March 31,
LIABILITIES AND STOCKHOLDERS' EQUITY             (Unaudited)          2000
------------------------------------            ------------       -----------

Current liabilities:
  Trade payables                                  $   2,673           $ 4,240
  Other                                               2,177             1,339
                                                    --------          --------
     Total current liabilities                        4,850             5,579
                                                    --------          --------
Long Term liabilities:
  Borrowings from bank                                1,950             2,250
                                                    --------          --------
     Total liabilities                                6,800             7,829
                                                    --------          --------

Contingencies

Stockholders' equity:
  Common stock, $0.10 par value
    Authorized, 50,000,000 shares;
    issued 6,266,125 and 6,227,125
    shares at December 31, and
    March 31, 2000, respectively                        627               623
  Additional paid-in capital                         69,829            69,672
  Accumulated deficit                               (49,520)          (54,311)
  Accumulated other comprehensive
    income (loss)                                         4               (38)
  Treasury stock-common, 1,268,739
    shares at December 31, and
    March 31, 2000, at cost                            (150)             (150)
                                                    --------          --------
     Total stockholders' equity                      20,790            15,796
                                                    --------          --------
     Total liabilities and
       stockholders' equity                        $ 27,590          $ 23,625
                                                    ========          ========

See accompanying notes to financial statements.







                                   -4-





<PAGE> 5
                         TMBR/SHARP DRILLING, INC.
                         STATEMENTS OF OPERATIONS
         Three months ended December 31, 2000 and 1999 (Unaudited)
                   (In thousands, except per share data)




                                                      Three months ended
                                                         December 31,
                                                 -----------------------------
                                                    2000              1999
                                                 -----------       -----------
  Revenues:
     Contract drilling                          $     8,914       $     4,680
     Oil and gas                                      1,340               894
                                                 -----------       -----------
         Total revenues                              10,254             5,574
                                                 -----------       -----------

  Operating costs and expenses:
     Contract drilling                                5,737             3,730
     Oil and gas production                             363               248
     Dry holes and abandonments                          59                49
     Exploration                                         25                 4
     Depreciation, depletion and
       amortization                                   1,322               729
     General and administrative                         606               426
                                                 -----------       -----------
         Total operating costs
           and expenses                               8,112             5,186
                                                 -----------       -----------
         Operating income                             2,142               388
                                                 -----------       -----------

  Other income (expense):
     Interest, net                                      (52)                4
     Gain on sales of assets                             --                31
     Other, net                                          32                 1
                                                 -----------       -----------
     Total other income (expense)                       (20)               36
                                                 -----------       -----------
  Net income before income
     tax provision                                    2,122               424
  Provision for income taxes                            (44)               --
                                                 -----------       -----------

  Net income                                     $    2,078       $       424
                                                 ===========       ===========

See accompanying notes to financial statements.



                                  -5-




<PAGE> 6
                         TMBR/SHARP DRILLING, INC.
                         STATEMENTS OF OPERATIONS
         Three months ended December 31, 2000 and 1999 (Unaudited)
                   (In thousands, except per share data)




                                                      Three months ended
                                                         December 31,
                                                 -----------------------------
                                                    2000              1999
                                                 -----------       -----------

Net income per common share:

  Basic                                       $        .42        $       .09
  Diluted                                              .38                .08
                                                 ===========       ===========

Weighted average number of
  common shares outstanding:

  Basic                                           4,993,310         4,871,795
  Diluted                                         5,456,418         5,252,675
                                                 ===========       ===========

See accompanying notes to financial statements.

























                                  -6-





<PAGE> 7
                         TMBR/SHARP DRILLING, INC.
                         STATEMENTS OF OPERATIONS
         Nine months ended December 31, 2000 and 1999 (Unaudited)
                   (In thousands, except per share data)




                                                       Nine months ended
                                                          December 31,
                                                 -----------------------------
                                                    2000              1999
                                                 -----------       -----------
  Revenues:
     Contract drilling                           $   24,404       $     9,849
     Oil and gas                                      3,622             2,143
                                                 -----------       -----------
         Total revenues                              28,026            11,992
                                                 -----------       -----------

  Operating costs and expenses:
     Contract drilling                               15,926             8,404
     Oil and gas production                             978               666
     Dry holes and abandonments                         808               389
     Exploration                                        171                16
     Depreciation, depletion and
       amortization                                   3,759             1,896
     General and administrative                       1,485             1,385
                                                 -----------       -----------
         Total operating costs
           and expenses                              23,127            12,756
                                                 -----------       -----------
         Operating income (loss)                      4,899              (764)
                                                 -----------       -----------

  Other income (expense):
     Interest, net                                     (183)               30
     Gain on sales of assets                            142               137
     Other, net                                          32                18
                                                 -----------       -----------
     Total other income (expense)                        (9)              185
                                                 -----------       -----------
  Net income (loss) before income
     tax provision                                    4,890              (579)
  Provision for income taxes                            (99)               --
                                                 -----------       -----------

  Net income (loss)                              $    4,791       $      (579)
                                                 ===========       ===========

See accompanying notes to financial statements.




                                  -7-



<PAGE> 8
                         TMBR/SHARP DRILLING, INC.
                         STATEMENTS OF OPERATIONS
         Nine months ended December 31, 2000 and 1999 (Unaudited)
                   (In thousands, except per share data)




                                                       Nine months ended
                                                         December 31,
                                                 -----------------------------
                                                    2000              1999
                                                 -----------       -----------

Net income (loss) per common share:

  Basic                                           $     .96       $      (.12)
  Diluted                                               .88              (.12)
                                                 ===========       ===========

Weighted average number of
  common shares outstanding:

  Basic                                           4,970,928         4,729,286
  Diluted                                         5,423,578         4,729,286
                                                 ===========       ===========

See accompanying notes to financial statements.























                                  -8-







<PAGE> 9
                         TMBR/SHARP DRILLING, INC.

                     STATEMENTS OF STOCKHOLDERS EQUITY

            Nine Months Ended December 31, 2000 (Unaudited) and

                    Year Ended March 31, 2000 (Audited)

                              (In thousands)



<TABLE>
<CAPTION>
                                                                   Accumulated
                      Common Stock     Additional                     Other       Treasury Stock       Total
                     --------------     Paid-In     Accumulated   Comprehensive   --------------    Stockholders'
                     Shares  Amount     Capital       Deficit     Income (Loss)   Shares  Amount       Equity
                     ------  ------     -------     -----------   -------------   ------  ------    ------------
<S>                  <C>     <C>       <C>           <C>              <C>          <C>    <C>         <C>
Balance,
  March 31, 2000     6,227   $ 623     $ 69,672      $(54,311)        $(38)        1,270  $(150)      $ 15,796

Exercise of
  Stock Options         39       4          157            --           --            --     --            161

Net Income              --      --           --         4,791           --            --     --          4,791

Other comprehensive
 income, net of tax
   Unrealized gain
   on marketable
   equity securities    --      --           --            --           42            --     --             42
                                                                                                       -------
Comprehensive
 Income                 --      --           --            --           --            --     --          4,833
                     -----    -----     --------      --------         ----       -------  -----       -------

Balance,
  December 31,
    2000             6,266   $ 627     $ 69,829      $(49,520)        $  4         1,270  $(150)      $ 20,790
                     =====    =====     ========      ========         ====       =======  =====       =======
</TABLE>
See accompanying notes to financial statements.









                                  -9-





<PAGE> 10
                           TMBR/SHARP DRILLING, INC.
                            STATEMENTS OF CASH FLOWS
        For the nine months ended December 31, 2000 and 1999 (Unaudited)
                                 (In thousands)

                                              Nine months ended December 31,
                                              ------------------------------
                                                2000                 1999
                                              ---------            ---------
Cash flows from operating activities:
  Net income (loss)                            $ 4,791             $   (579)
  Adjustments to reconcile net income
  to net cash provided by
      operating activities:
       Depreciation, depletion and
        amortization                             3,759                1,896
       Dry holes and abandonments                  808                  389
       Gain on sales of assets                    (142)                (137)
       Grant of stock options                       --                   97
       Changes in assets and liabilities:
        Trade receivables                       (2,089)              (1,067)
        Inventories and other assets                48                  244
        Trade payables                          (1,567)                 312
        Accrued interest and other liabilities     838                  270
                                               --------             --------
         Total adjustments                       1,655                2,004
                                               --------             --------
         Net cash provided by
          operating activities                   6,446                1,425

Cash flows from investing activities:
  Additions to property and equipment           (7,498)              (2,857)
  Proceeds from sales of property and
    equipment                                      356                  154
                                               --------             --------
         Net cash required by
          investing activities                  (7,142)              (2,703)

Cash flows from financing activities:
  Borrowings from Bank                           1,400                  750
  Repayments of Bank Borrowings                 (1,700)                  --
  Proceeds from exercise of stock options          161                   28
                                               --------             --------
         Net cash (required) provided
          by financing activities                 (139)                 778
                                               --------             --------
         Net decrease in
          cash and cash equivalents               (835)                (500)

Cash and cash equivalents at beginning
  of period                                        980                1,195
                                               --------             --------
Cash and cash equivalents at end of
  period                                       $   145              $   695
                                               ========             ========

See accompanying notes to financial statements.

                                  -10-
<PAGE> 11

                         TMBR/SHARP DRILLING, INC.
                       NOTES TO FINANCIAL STATEMENTS



     The amounts presented in the balance sheet as of March 31, 2000 were
derived from the Company's audited financial statements included in its Form
10-K Report filed for the year then ended.  The notes to such statements are
incorporated herein by reference.


(1) Management's Representation

     In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are of a normal recurring
nature) necessary to present fairly the Company's financial position as of
December 31, 2000 and March 31, 2000, the results of operations for the three
and nine months ended December 31, 2000 and 1999, and the cash flows for the
nine month periods ended December 31, 2000 and 1999.

     While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the related notes in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2000.


(2) Summary of Significant Accounting Policies

Marketable Securities

     Under SFAS No. 115,  "Accounting for Certain Investments in Debt and
Equity Securities",  marketable securities, such as those owned by the
Company, are classified as available-for-sale securities and are to be
reported at market value, with unrealized gains and losses, net of income
taxes, excluded from earnings and reported as a separate component of
stockholders' equity.  The market value of these securities at December 31,
2000 was approximately $91,000.  An unrealized gain of approximately $42,000
was added to stockholders equity and was included as a component of other
comprehensive income.

Inventories

     Inventories consist primarily of casing and tubing.  The Company values
its inventories at the lower of cost or estimated net recoverable value using
the specific identification method.

Property and Equipment

     Drilling equipment is depreciated on a units-of-production method based
on the monthly utilization of the equipment.  Drilling equipment which is not
utilized during a month is depreciated using a minimum utilization rate of
approximately twenty-five percent.  Estimated useful lives range from four to
eight years.  Other property and equipment is depreciated using the straight-


                                  -11-

<PAGE> 12
line method of depreciation with estimated useful lives of three to seven
years.

     Oil and gas properties are accounted for using the successful efforts
method.  Accordingly, the costs incurred to acquire property (proved and
unproved), all development costs and successful exploratory costs are
capitalized, whereas the costs of unsuccessful exploratory wells are
expensed.  Geological and geophysical costs, including seismic costs, are
charged to expense when incurred.  In cases where the Company provides
contract drilling services related to oil and gas properties in which it has
an ownership interest, the Company's proportionate share of costs related to
these properties is capitalized as stated above, net of the Company's working
interest share of profits from the related drilling contracts.  Capitalized
costs of undeveloped properties, which are not depleted until proved reserves
can be associated with the properties, are periodically reviewed for possible
impairment.

     Depletion, depreciation and amortization of capitalized oil and gas
property costs was provided using the units-of-production method based on
estimated proved or proved developed oil and gas reserves, as applicable, of
the respective property units.

     Major renewals and betterments are capitalized in the appropriate
property accounts while the cost of repairs and maintenance is charged to
operating expense in the period incurred.  For assets sold or otherwise
retired, the cost and related accumulated depreciation amounts are removed
from the accounts and any resulting gain or loss is recognized.

Net Income (Loss) Per Common Share

     On April 1, 1997, the Company adopted Statement of Financial Accounting
Standards No. 128 ("SFAS 128") "Earnings Per Share" which superseded
Accounting Principles Board Opinion No. 15 ("APB 15") "Earnings Per Share".
SFAS 128 simplifies earnings per share ("EPS") calculations by replacing
previously reported primary EPS with basic EPS which is calculated by
dividing reported earnings available to common shareholders by the weighted
average shares outstanding.  No dilution for potentially dilutive securities
is included in basic EPS.  Previously reported fully diluted EPS is called
diluted EPS which includes all potentially dilutive securities.

Reclassifications

     Certain reclassifications have been made to the December 31, 1999
financial statements to conform to the December 31, 2000 presentation.


(3)  Debt

     Line of Credit

     In May, 1998, the Company entered into a loan agreement with its bank
lender which provided for a $5.0 million revolving line of credit secured by
substantially all of the Company's drilling rigs and related equipment,
accounts receivable and inventory.  Borrowings under the line of credit bore


                                  -12-


<PAGE> 13
interest at the bank's base rate and accrued interest was payable monthly.
The loan facility originally matured on May 26, 2000 but was extended to July
15, 2000.

     On June 26, 2000, the Company renewed and extended the prior loan
agreements with its bank lender.  The second amended and restated loan
agreement provides for a $5.0 million revolving line of credit secured by the
Company's drilling rigs and related equipment, accounts receivable and
inventory.  Borrowings under this line of credit bear interest at the Wells
Fargo Bank Texas, N. A. (formerly Norwest Bank, Texas N. A.) Base rate (9.5%
at December 31, 2000) and accrued interest is payable monthly.  The loan
facility will mature on August 31, 2002, at which time all outstanding
principal and interest will be due in full.  At March 31, 2000 and December
31, 2000, respectively, $2,250,000 and $1,950,000 were outstanding under the
loan facility.


(4)  Stockholders' Equity

     1984 Stock Option Plan

     In August 1984, the Company adopted the 1984 Stock Option Plan (the
"Plan") which initially authorized 375,000 shares of the Company's common
stock to be issued as either incentive stock options or nonqualified stock
options.  This Plan was amended in August 1986 to increase the authorized
shares to 475,000 shares of the Company's common stock.  In January 1988, the
Plan was amended to reduce the option price on certain options issued prior
to March 31, 1986, to reflect the then current fair market value of the
Company's common stock.  The Plan provides that options may be granted to key
employees or directors for various terms at a price not less than the fair
market value of the shares on the date of the grant.  Options to purchase
100,000 shares of common stock are outstanding and exercisable under the
Plan.  No additional shares are available for grant as the Plan expired by
its own terms in August 1994.  The options that were granted prior to the
expiration of the Plan, and which are outstanding, remain subject to the
terms of the Plan.

     1994 Stock Option Plan

     In July 1994, the Company adopted its 1994 Stock Option Plan (the "1994
Plan") which authorized the grant of options to purchase up to 750,000 shares
of the Company's common stock.  These options may be issued as either
incentive or nonqualified stock options.  The 1994 Plan provides that options
may be granted to key employees (including officers and directors who are
also key employees) for various terms at a price not less than the fair
market value of the shares on the date of grant.  The 1994 Plan was ratified
and approved by the stockholders at the Company's annual meeting of
stockholders held on August 30, 1994.  In September 1998, options outstanding
under the plan were amended to reduce the option price to $4.125 per share.

     On September 3, 1996, the Company granted 465,000 shares of nonqualified
stock options to key employees under the 1994 Plan.  On September 1, 1998,
the Company granted 240,000 shares of incentive stock options at a price of
$4.125 to key employees under the 1994 Plan.  On March 9, 2000, options to



                                  -13-

<PAGE> 14
purchase 184,000 shares were earned and exercisable.  An additional 56,000
shares will become earned and exercisable over a two year period.  The
following table sets forth certain information concerning these options.

                                   Number
                                     of                Option
                                   Shares           Exercise Price
                                 Underlying       -------------------
                                  Options         Per Share     Total
                                 ----------       -------------------

Outstanding March 31, 2000        564,500     $4.125-4.5375   $ 2,387,963

Exercised                         (14,000)         4.125          (57,750)
                                  -------      ------------     ---------

Outstanding December 31,
 2000                             550,500     $4.125-4.5375   $ 2,330,213
                                  =======      ============     =========

     1998 Stock Option Plan

     In September 1998, the Company adopted, subject to stockholder approval,
its 1998 Stock Option Plan (the "1998 Plan") which authorizes the grant of
options to purchase up to 750,000 shares of the Company's common stock.
These options may be issued as either incentive or nonqualified stock
options.  The 1998 Plan provides that options may be granted to key employees
or directors at a price not less than the fair market value of the shares on
the date of grant.  The Company granted options to purchase 50,000 shares of
common stock to two outside directors under the 1998 Plan.  These
nonqualified options were granted on September 1, 1998, subject to
stockholder approval, at $4.125 per share and became exercisable on August
31, 1999, the date on which the stockholders of the Company approved and
adopted the 1998 Plan.  The fair market value of the Company's common stock
on August 31, 1999 was $6.063 per share.  As a result, the Company recognized
approximately $97,000 in compensation expense related to these nonqualified
options during the year ended March 31, 2000.  At December 31, 2000, no
options were outstanding under the 1998 Plan.

     In connection with a private placement completed in February 1997, the
Company issued and currently has outstanding a warrant to purchase 36,250
common shares with an exercise price of $13.20 per share.  This warrant
became exercisable on February 17, 1998 and expires on February 17, 2002.


(6)  Contingencies

     The Company is a defendant in various lawsuits generally incidental to
its business.  The Company does not believe that the ultimate resolution of
such litigation will have a significant effect on the Company's financial
position or results of operations.





                                  -14-


<PAGE> 15
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

     In addition to historical information, this discussion contains certain
forward-looking statements that involve risks and uncertainties about the
business, long-term strategy, financial condition and future of the Company.
Factors that may affect future results are included in the discussion below
and in Part I, Items 1 and 2 of the Company's Form 10-K for the year ended
March 31, 2000.  Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct, and actual
results could differ materially from those forward-looking statements.

Results of Operations

     Total revenues were $10,254,000 and $28,026,000 for the three and nine
months ended December 31, 2000 which represents an 84% and 134% increase,
respectively, from the same periods in the prior year.  Operating expenses as
a percent of revenues were 79% and 83% for the three and nine months ended
December 31, 2000 versus 93% and 106% for the same periods of the prior year.
The operating results were positively affected by an increase in demand for
the Company's contract drilling services which resulted in an increase in rig
utilization rates.  The Company has also experienced an increase in average
price received for its contract drilling services.  Rig utilization rates
were 68% and 66% for the three and nine months ended December 31, 2000
compared to 43% and 30% in the same periods in 1999.

     Oil and gas revenues increased by approximately 50% and 69% for the
three and nine months ended December 31, 2000.  The following table sets
forth certain information relating to oil and gas revenues:

                      Three months ended             Nine months ended
                         December 31,                   December 31,
                    ----------------------        ----------------------
                      2000           1999           2000           1999
                    -------        -------        -------        -------

Quantities
-----------
Oil (bbls)           25,223         18,689         81,658         78,217
Gas (mcf)           113,013        185,524        329,687        611,855

Average Price
-------------
Oil (bbls)          $ 32.85        $ 22.29        $ 29.36        $ 19.76
Gas (mcf)           $  4.52        $  2.57        $  3.71        $  2.25

     The decline in natural gas production from the prior year is due to the
plugging and abandonment of two non-operated natural gas wells in Ward
County, Texas.  Also, a recompletion of one well in Pecos County, Texas has
negatively affected the current year's natural gas production.  In addition,
the Company's interest in a natural gas well in Lea County, New Mexico was
reduced by 25% because the well reached "pay-out" status.



                                  -15-


<PAGE> 16
     Oil and gas production expenses increased approximately 46% and 47% for
the three and nine months ended December 31, 2000.  The increase in
production expenses for the three months ended December 31, 2000 can be
attributed to the increased water production and workover of one well in
Gaines County, Texas.  In addition, the Company has experienced a general
rise in the cost of services and supplies which are included in production
expenses.  Also nine month results are affected by a recovery of an insurance
claim in the prior year concerning the loss of a well bore in Lea County, New
Mexico.  The production expenses in the quarter ended September 30, 1999
reflect this recovery.

     Depreciation, depletion and amortization expense increased by
approximately 81% and 98% when compared to the three and nine months ended
December 31, 1999.  The increase in rig utilization rates caused an increase
in depreciation expense as drilling equipment is depreciated using the units-
of-production method based on the monthly utilization of the equipment.  In
addition, the Company added a Gardner Denver 800 rig to its available fleet
and purchased drill pipe and drill collars during the year ended March 31,
2000.  In the six months ended September 30, 2000, the Company also purchased
drill collars and drill pipe.  The increase in depreciation, depletion and
amortization expense for the nine months ended December 31, 2000 reflects the
added equipment.

     On January 4, 2001, subsequent to the end of the quarter, the Company
purchased a BDW 800 drilling rig with a depth capacity of approximately
16,000 feet.  This rig was put in service on February 6, 2001.  With the
addition of this rig, the Company has 19 rigs in its fleet.

     Net working capital was $4.8 million at December 31, 2000 compared to
$2.8 million at March 31, 2000.

Liquidity and Capital Resources

     In May, 1998, the Company entered into a loan agreement with its bank
lender which provided for a $5.0 million revolving line of credit secured by
substantially all of the Company's drilling rigs and related equipment,
accounts receivable and inventory.  Borrowings under the line of credit bore
interest at the bank's base rate and accrued interest was payable monthly.
The loan facility originally matured on May 26, 2000 but was extended to July
15, 2000.

     On June 26, 2000, the Company renewed and extended the prior loan
agreements with its bank lender.  The second amended and restated loan
agreement provides for a $5.0 million revolving line of credit secured by the
Company's drilling rigs and related equipment, accounts receivable and
inventory.  Borrowings under this line of credit bear interest at the Wells
Fargo Bank Texas, N. A. (formerly Norwest Bank, Texas N. A.) base rate (9.5%
at September 30, 2000) and accrued interest is payable monthly.  The loan
facility will mature on August 31, 2002, at which time all outstanding
principal and interest will be due in full.  At March 31, 2000 and December
31, 2000, respectively, $2,250,000 and $1,950,000 were outstanding under the
loan facility.





                                  -16-

<PAGE> 17
     The Company anticipates that funds for its capital expenditures in
fiscal 2001 will be available from a combination of sources, including (i)
borrowings under the line of credit, (ii) funds raised through issuances of
equity or debt securities in public or private transactions, and (iii)
internally generated funds.

Trends and Prices

     The contract drilling industry is currently experiencing increased
demand and increasing prices for contract drilling services due to the rise
of oil and gas prices.  The Company will be affected by oil and gas price
fluctuations in the industry, but cannot predict either the future level of
demand for its contract drilling services or future conditions in the
contract drilling industry.

     In recent years, oil and gas prices have been extremely volatile.
Prices are affected by market supply and demand factors as well as by actions
of state and local agencies, the U.S. and foreign governments and
international cartels.  The Company has no way of accurately predicting the
supply of and demand for oil and gas, domestic or international political
events or the effects of any such factors on the prices received by the
Company for its oil and gas.


Year 2000 Issues

     The Year 2000 (Y2K) issue created a risk that computer systems, products
and equipment utilizing date-sensitive software or computer chips with two-
digit date fields would fail to properly recognize the Year 2000.  Such
failures by the Company's software and hardware or that of government
entities, service providers, suppliers and customers could have resulted in
interruptions of the Company's business which could have had a material
adverse impact on the Company.  Significant uncertainty existed concerning
the potential effects associated with such compliance as systems that
improperly recognized such information would generate erroneous data or cause
a system to fail.

     The Company is not currently aware of any Year 2000 compliance problems
relating to its own operations or that of its significant vendors, customers,
purchasers and local, state, federal and other U. S. government entities, but
intends to monitor and assess Year 2000 issues.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The primary sources of market risk for the Company include fluctuations
in commodity prices and interest rate fluctuations.  At December 31, 2000,
the Company had not entered into any hedge arrangements, commodity swap
agreements, commodity futures, options or other similar agreements relating
to crude oil and natural gas.






                                  -17-


<PAGE> 18
     At December 31, 2000, the Company had $1,950,000 borrowed under its $5.0
million revolving line of credit which bears interest at the lender's base
rate in effect from time to time.  As borrowings under this line of credit
bear interest at a variable rate, the Company is subject to interest rate
risk.


PART TWO - OTHER INFORMATION

Item 1.  Legal Proceedings

     The Company is a defendant in various lawsuits generally incidental to
its business.  The Company does not believe that the ultimate resolution of
such litigation will have a significant effect on the Company's financial
position or results of operations.


Item 6.  Exhibits and reports on Form 8-K.

     (a)  Exhibits:

          3.1  - Articles of Incorporation of the Company, as amended.
               (Incorporated by reference to exhibit 3.1 in Registrant's
               Annual Report on Form 10-K dated June 28, 1991)

          3.2  - Bylaws of the Registrant, as amended.  (Incorporated by
               reference to Exhibit 3.2 in Registrant's Annual Report on Form
               10-K dated June 27, 1994)

     (b)  Reports on Form 8-K:

          No reports on Form 8-K were filed during the quarter ended December
          31, 2000.






















                                  -18-



<PAGE> 19
                                SIGNATURES




     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                      TMBR/SHARP DRILLING, INC.




February 14, 2001                By:  /s/  Patricia R. Elledge
-----------------                     -------------------------
     Date                                  Patricia R. Elledge
                                           Controller/Treasurer

                                      (Ms. Elledge is the Chief Financial
                                      Officer and has been duly authorized
                                      to sign on behalf of the Registrant)


















































                                  -19-




<PAGE> 20
                               Exhibit Index





Exhibit
Number              Description
-------             -----------

  3.1          Articles of Incorporation of the Company, as amended.
               (Incorporated by reference to Exhibit 3.1 in Registrant's
               Annual Report on Form 10-K dated June 28, 1991)

  3.2          Bylaws of the Registrant, as amended.  (Incorporated by
               reference to Exhibit 3.2 in Registrant's Annual Report on Form
               10-K dated June 27, 1994)































                                  -20-