SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K


[x]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2001 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 0-5704
                       ------

                                MAYNARD OIL COMPANY
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                         75-1362284
-------------------------------------------------    ---------------------------

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


8080 N. Central Expressway, Suite 660, Dallas, TX              75206
-------------------------------------------------    ---------------------------
(Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code:     (214)891-8880
                                                    ----------------------------

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:

                            Common Stock - $.10 Par Value
--------------------------------------------------------------------------------
                                (Title of class)

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,  and (2) has been subject to such filing  requirements
for the past 90 days.
                                    Yes  x    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  the  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. [ x ]

While it is difficult to determine the number of shares owned by  non-affiliates
(within  the  meaning  of the  term  under  the  applicable  regulations  of the
Securities and Exchange Commission), the Registrant estimates that the aggregate
market  value of its Common Stock held by  non-affiliates  on March 18, 2002 was
$41,090,752  (based  upon an  estimate  that 43.4% of the shares are so owned by
non-affiliates  and upon the closing  price for the Common  Stock as reported by
NASDAQ (NMS)).

The number of shares outstanding of the Registrant's $.10 par value common stock
as of March 18, 2002 was 4,880,368 shares.

The following documents are incorporated into this Form 10-K by reference: Proxy
Statement for Annual Meeting of Stockholders - Part III of Form 10K.


                                       -1-

<PAGE>





                                                          PART I.
ITEM 1.           BUSINESS

THE COMPANY

         Maynard Oil Company is a Delaware  corporation  which was  organized in
1971 to continue the oil and gas operations  conducted on an individual basis by
its  founders,  including  Mr. James G.  Maynard,  its Chairman of the Board and
Chief Executive Officer.  The Company's principal executive office is located at
8080 N. Central,  Ste. 660,  Dallas,  Texas 75206,  and its telephone  number is
(214) 891-8880.  Unless the context requires otherwise, as used herein, the term
"Company" refers to Maynard Oil Company and its wholly-owned subsidiary.

         The Company's principal line of business is the production and sale of,
and  exploration and development of crude oil and natural gas. The Company's oil
and gas operations are conducted exclusively in the United States,  primarily in
the states of Texas, Oklahoma, Louisiana, New Mexico and Arkansas.

POSSIBLE SALE OF THE COMPANY

         In July 2001,  the Board of Directors  announced  that it was exploring
strategic alternatives,  including a potential merger or sale of the Company. It
retained William Blair & Company as its financial advisor and McDermott,  Will &
Emery  as  its  legal   counsel  to  assist  in  the   evaluation  of  strategic
alternatives.

         The Company contacted  potential  acquirors in the oil and gas industry
and  provided   information  to  parties  expressing   interest  in  a  business
combination transaction. In December 2001, the Board of Directors announced that
it had  received  expressions  of  interest  from a number of  strategic  buyers
regarding  the possible  acquisition  of the Company.  While the Board found the
valuations  disappointing,  the  Board  authorized  continued  exploration  of a
possible sale or merger of the Company.

         As of March 31, 2002, the Company was engaged in discussions concerning
a possible merger of the Company,  although the proposals by potential acquirors
involve a price to the Company's stockholders below the recent trading range for
the Company's stock.

         The  Company's  Board  of  Directors  cautions  that  there  can  be no
guarantee that the Company would enter into a transaction to sell Maynard Oil or
any other transaction.

RECENT ACQUISITION ACTIVITIES

         Since  January 1,  2001,  the  Company  has spent  approximately  $12.9
million increasing its working interest position in the Tex-Mex field

                                       -2-

<PAGE>



located in Gaines  County,  Texas.  The  Company  estimates  that  approximately
1,056,000  barrels  of oil and  1.5 bcf of gas  were  added  to its  hydrocarbon
reserve base through these transactions.

OIL AND GAS OPERATIONS

         The Company is an independent oil and gas company, engaged primarily in
the  production  and  exploration  phases of the oil and gas  business.  Company
operations include acquiring, exploring, developing, and operating crude oil and
natural gas properties.

         The  Company  seeks  to  accomplish  its  overall  goal  of  increasing
hydrocarbon  reserves  and cash flow by  selectively  acquiring  and  exploiting
producing oil and gas properties.  When possible, the Company acquires producing
properties on which it can act as operator,  and thus,  supervise production and
development activities.

         A total of forty-nine  wells were drilled in 2001,  one of which was an
exploratory well operated by Maynard, which failed to find commercial quantities
of  hydrocarbons.  Another  eight wells were  completed  as  injection  wells on
waterflood  projects  operated  by other  companies.  Additionally,  the Company
participated in drilling forty productive  development wells, seven completed as
gas  producers  and  thirty-three  as successful  oil wells.  Maynard  served as
operator on fourteen of these forty wells.

         Prices  realized from the sale of oil and gas from the Company's  wells
depend on numerous  factors  beyond the control of the  Company,  including  the
amount of domestic  production,  the  importation  of oil, the  proximity of the
Company's  property to natural gas pipelines and the capacity of such pipelines,
the market for other  competitive  fuels,  fluctuations in seasonal demand,  and
governmental  regulations  relative to hydrocarbon  production and pricing.  The
production of oil and gas is also subject to the laws of supply and demand,  and
therefore,  is subject to purchaser cutbacks and price reductions during periods
of  oversupply.  At  December  31,  2001,  approximately  68% of  the  Company's
estimated proved reserves and 64% of the 2001 production,  were  attributable to
crude oil and condensate on a net equivalent barrel basis (net equivalent barrel
"NEB" uses a conversion ratio of six thousand cubic feet of gas (MCF) to one net
equivalent barrel of oil) and consequently, the Company is primarily impacted by
oil markets.

         As  described  above,  the  Company  was  successful  in  adding to its
hydrocarbon  reserve  base,  the  underlying  asset for an oil and gas  company,
through current year producing property acquisitions and development drilling on
existing  Company  properties.   Because  of  these  acquisitions  and  drilling
activities,  oil  production  volumes rose  approximately  6% and gas production
increased  almost 26% over the prior  year.  Average  gas prices  experienced  a
modest  increase  from $3.90 per mcf in 2000 to $4.00 per mcf in 2001.  However,
oil prices  fell an  average of $4.10 per barrel  (from an average of $27.36 per
barrel received in 2000 to an average of $23.26 per barrel in 2001), once again

                                       -3-

<PAGE>



illustrating  the challenges and volatility  experienced by the domestic oil and
gas  business  and how it is  affected by  conditions  beyond the control of the
Company.

         During the year ended December 31, 2001,  two purchasers  accounted for
approximately 17% and 13%,  respectively,  of consolidated revenues. The Company
does not  believe it would be  adversely  affected by the loss of its oil or gas
purchasers due to large numbers of available purchasers.

         The market price for natural gas has also fluctuated significantly from
month to month and year to year for the past several years. Like the oil market,
the Company cannot predict gas price movements with any certainty.

         Except for curtailed  exploration and production activity  occasionally
experienced  in severe  weather and normal  curtailments  of gas sales in summer
months,  the Company  does not consider its business to be seasonal and does not
carry significant amounts of inventory.

GENERAL

         The oil and gas business  involves  intense  competition  in all of its
phases and,  because of its size,  the Company is not a significant  competitive
factor in the industry.  In its efforts to acquire property rights,  the Company
competes with many companies  having access to substantially  greater  financial
resources and larger technical staffs.

         The Company's oil and gas exploration efforts often involve exploratory
drilling on unproven  acreage  involving high risks.  There is no assurance that
any  oil or gas  production  will  be  obtained,  or that  such  production,  if
obtained,  will be  profitable.  The cost of drilling,  completing and operating
wells is often  uncertain.  Drilling  may be curtailed or delayed as a result of
many factors,  including title problems,  weather  conditions,  and shortages of
pipe and equipment.

         The Company's  operations are subject to potential  hazards inherent in
the  exploration  for and  production of  hydrocarbons,  including  blowouts and
fires.  These and other  events can cause a suspension  of drilling  operations,
severe damage to equipment or surrounding property, personal injury, and perhaps
even a loss of life.  The Company may be subject to liability  for pollution and
other  damages  and  is  subject  to  statutes  and   regulations   relating  to
environmental and other matters.  While the Company maintains  insurance against
certain of these risks,  there are certain risks against which it cannot insure,
or which it may elect not to insure due to premium  costs or for other  reasons.
Substantial uninsured liabilities to third parties may arise.

         The oil and gas  operations of the Company are subject to local,  state
and  federal   environmental   regulations.   To  date,  compliance  with  these
regulations by the Company has had no material  effect on the Company's  capital
expenditures. Although the Company is unable to

                                       -4-

<PAGE>



assess  or  predict  at  this  time  the  impact  that   compliance   with  such
environmental regulations may have on its future capital expenditures,  earnings
and  financial  position,  it does not  anticipate  making any material  capital
expenditures for environmental control facilities during 2002.

         Many facets of the  Company's  operations  are subject to  governmental
regulations.  All of the Company's oil and gas  properties are located in states
in  which  oil  and  gas  production  is  regulated  by  state   production  and
conservation laws and regulations.  These laws and regulations in many instances
also require permits for the drilling of wells, the spacing of wells, prevention
of waste, conservation of oil and natural gas and various other requirements.

         The Company's  activities are subject to taxation at numerous levels of
government,  including taxes on income, severance of minerals, and payroll. Laws
governing  taxation,  protection of the  environment,  crude oil and natural gas
operations  and  production,   and  other  crucial  areas  are  all  subject  to
modification at any time.

         At March 18,  2002 the  Company  employed  40  persons,  including  one
geologist and five petroleum engineers.

ITEM 2.           PROPERTIES

         The Company's executive offices are presently located at 8080 N.
Central, Ste. 660, Dallas, Texas occupying approximately 14,300 square
feet of space under a lease agreement which expires in April, 2005.

         The  Company's   principal   property  holdings  consist  of  leasehold
interests  in oil  and gas  properties  located  solely  in the  United  States,
primarily in Oklahoma, Texas, New Mexico, Louisiana and Arkansas. The leaseholds
remain in force so long as production from lands under lease is maintained.  The
Company believes that it has  satisfactory  title to its oil and gas properties.
Such properties are subject to customary  royalty  interests,  liens incident to
operating  agreements,  liens for  current  taxes,  and other  burdens and minor
encumbrances,  easements, and restrictions. The Company believes such burdens do
not materially detract from the value of the properties or materially  interfere
with their use in the  operation  of the  Company's  business.  The  Company has
pledged certain of its oil and gas properties to secure its term loan.

ESTIMATED PROVED RESERVES,
FUTURE NET REVENUES AND PRESENT VALUE

         Reflected  below are the estimated  quantities of proved  developed and
undeveloped  reserves  of crude oil and  natural  gas owned by the Company as of
December 31, 2001, 2000, and 1999. Such reserve information has been prepared by
the  Company's  staff of  petroleum  engineers  and  audited by the  independent
petroleum consulting firm of Netherland, Sewell, and Associates, Inc. No reserve
reports with respect to the Company's  proved net oil or gas reserves were filed
with

                                       -5-

<PAGE>



any federal authority or agency during the fiscal year ended December 31, 2001.

<TABLE>

                                                    December 31
                      ----------------------------------------------------------------------

                               2001                    2000                   1999
                      ----------------------  -----------------------  ---------------------

                      Oil (MB)    Gas (MMCF)   Oil (MB)    Gas (MMCF)  Oil (MB)    Gas (MMCF)

<S>                    <C>         <C>         <C>          <C>        <C>         <C>
Proved Developed       9,423.2     27,524.7    11,085.4     29,362.1   10,072.7    28,917.2
Proved Undeveloped     1,577.1      3,294.7     2,524.9      2,715.6    1,447.3     3,009.7
                      --------     --------    --------     --------   --------    --------

Total Proved Reserves 11,000.3     30,819.4    13,610.3     32,077.7   11,520.0    31,926.9
                      ========     ========    ========     ========   ========    ========

</TABLE>

       The following  table  summarizes  the future net revenues,  using current
prices  and  costs as of the  dates  indicated,  as well as the  present  value,
discounted  at 10%, of such future net revenues  from  estimated  production  of
proved reserves of crude oil and natural gas as of December 31, 2001,  2000, and
1999.  Oil and gas prices used in the  tabulation of the amounts below are based
on the price received for each lease at December 31 of the appropriate year. The
weighted average prices at December 31, 2001, 2000, and 1999, respectively, used
in the estimates  were $17.62,  $25.27,  and $23.69 per barrel of oil and $2.49,
$9.72,  and $2.04 per mcf of natural  gas.  Lease and well  operating  costs are
based upon actual operating expense records.

<TABLE>

                                                           December 31
                           --------------------------------------------------------------------------

                                    2001                       2000                        1999
                           -------------------       ---------------------       --------------------
                            Future     Present         Future      Present         Future     Present
                              Net       Value            Net        Value            Net       Value
Expressed in 000's         Revenue      @ 10%         Revenue       @ 10%         Revenue      @ 10%
                           -------     -------        -------      -------        -------     -------

<S>                       <C>          <C>           <C>          <C>            <C>         <C>
Proved Developed          $117,355     $78,822       $383,769     $245,567       $171,425    $112,842
Proved Undeveloped          12,595       4,919         53,015       24,945         20,593       9,851
                          --------     -------       --------     --------       --------    --------

Total Proved Reserves     $129,950     $83,741       $436,784     $270,512       $192,018    $122,693
                          ========     =======       ========     ========       ========    ========

</TABLE>

Amounts presented in the tables above are before the effects of income taxes.



                                       -6-

<PAGE>



PRODUCTION, SALES PRICES AND COSTS

     The following  table sets forth the  Company's net oil and gas  production,
average sales prices and production costs for the three years ended December 31,
2001.
                                                            December 31
                                                --------------------------------
                                                  2001         2000        1999
                                                  ----         ----        ----
Production:
  Oil (MB)                                      1,446.4      1,369.5       990.9
  Gas (MMCF)                                    4,931.8      3,915.3     2,289.6

Average Sales Prices:
  Oil (per BBL)                                  $23.26       $27.36      $17.64
  Gas (per MCF)                                  $ 4.00       $ 3.90      $ 2.58

Average Production Costs:
  Per net equivalent barrel of oil (1)(2)        $ 7.91       $ 7.01      $ 5.71

(1)      Six MCF of gas equals one net equivalent barrel ("NEB").
(2)      Production costs are comprised of severance and advalorem taxes, if
         applicable, and lease operating expenses, which include workover
         costs.

PRODUCTIVE WELLS AND ACREAGE

         As of December 31, 2001, the Company owned an interest in approximately
1,309 gross  (525.3 net) wells,  of which 1,211 gross  (485.3 net) are oil wells
and 98 gross (40.0 net) are gas wells,  located on  approximately  51,871  gross
(24,255 net) producing acres.

UNDEVELOPED ACREAGE

         The following  table sets forth the Company's gross and net undeveloped
acreage as of December 31, 2001.
                                                       Undeveloped Acreage
                                                       -------------------
                                                        Gross        Net
                                                        -----        ---

Arkansas...............................................    420         88
Colorado...............................................     80         10
Louisiana..............................................    436        136
Mississippi............................................    160          6
Montana................................................  7,291        160
New Mexico.............................................  1,280         47
North Dakota...........................................     62          4
Oklahoma...............................................    249         60
Texas.................................................. 19,322      3,121
Wyoming................................................  5,253        843
                                                        ------     ------

Total                                                   34,553      4,475
                                                       =======      ======



                                       -7-

<PAGE>



DRILLING ACTIVITY

         The following  table sets forth the results of the  Company's  drilling
activity during the three years ended December 31, 2001.

<TABLE>

                                    Exploratory                  Development                     Total
                                    -----------                  -----------                     -----
                             Gross            Net          Gross           Net          Gross           Net
                             -----            ---          -----           ---          -----           ---

<S>                              <C>         <C>              <C>       <C>                <C>       <C>
December 31, 2001
         Productive              0           .000             40        14.199             40        14.199
         Dry                     1           .504              0          .000              1          .504
                               ---          -----            ---        ------            ---        ------

  Total                          1           .504             40        14.199             41        14.703
                               ===          =====            ===        ======            ===        ======


December 31, 2000
         Productive              1           .400             22         8.096             23         8.496
         Dry                     0           .000              0          .000              0          .000
                               ---          -----            ---        ------            ---        ------

  Total                          1           .400             22         8.096             23         8.496
                               ===          =====            ===        ======            ===        ======

December 31, 1999
         Productive              0           .000              5         1.888              5         1.888
         Dry                     2           .650              0          .000              2          .650
                               ---          -----            ---        ------            ---        ------

  Total                          2           .650              5         1.888              7         2.538
                               ===          =====            ===        ======            ===        ======

</TABLE>

         At December  31,  2001,  the Company  had two  development  wells being
drilled which have both been successfully completed during 2002.

ITEM 3.           LEGAL PROCEEDINGS

         The Company is a defendant  in minor  lawsuits  that have arisen in the
ordinary  course of business.  The Company does not expect any of these lawsuits
or other items to have a material  adverse effect on the Company's  consolidated
financial position or results of operations.

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

         None.

EXECUTIVE OFFICERS OF THE REGISTRANT

         Information  with  respect to the  Company's  executive  officers as of
March 18, 2002, is set forth in the table below.

         Name                  Position             Age               Since
         ----                  --------             ---               -----

James G. Maynard      Chairman of the Board,         75                1971
                        Chief Executive Officer
                        and Treasurer

Glenn R. Moore        President and Chief            64                1982
                        Operating Officer



                                       -8-

<PAGE>



L. Brent Carruth      Executive Vice President       68                1984
                        of Operations

Kenneth W. Hatcher    Executive Vice President       58                1983
                        of Finance

Linda K. Burgess      Vice President of              53                1984
                        Accounting and
                        Corporate Secretary

Cassondra Foster      Vice President of Land         59                1999

Jerry G. Keen         Vice President of Engineering  53                1999

         Mr.  Maynard has been a director  since 1971 and engaged in oil and gas
exploration  as an  independent  operator  and private  investor for the past 40
years.

         Mr. Moore has over 35 years  experience in domestic and foreign oil and
gas exploration and production.  Prior to joining the Company in November, 1982,
Mr. Moore served as President of Shannon Oil and Gas, Inc. and Hanover Petroleum
Corporation.

         Mr.  Carruth  has over 35 years of  petroleum  engineering  experience.
Prior to joining the Company in  January,  1984,  he served for one year as Vice
President of Operations of Cordova Resources.  Preceding that, Mr. Carruth was a
petroleum  consultant  for three years and served as Manager of  Engineering  of
Texas Pacific Oil Company for eight years.

         Mr. Hatcher has over 35 years of finance and  accounting  experience in
the oil and gas industry and is a Certified Public Accountant.  Prior to joining
the  Company in  February,  1983,  Mr.  Hatcher  served as  Controller  and Vice
President  of  Finance  of  Shannon  Oil and Gas,  Inc.  for three  years and as
Controller and Vice President of Hanover Petroleum Corporation for four years.

         Ms.  Burgess  has in  excess  of 30  years  of oil and  gas  accounting
experience.  Prior to joining the Company in May,  1984,  Ms.  Burgess served as
Controller for  Trans-Western  Exploration Inc. for four years and as Controller
for Energy Resources Oil and Gas for three years.

         Ms. Foster has over 30 years of petroleum land  management  experience,
joining Maynard Oil Company's Land Department in 1974.  Prior to that Ms. Foster
was a Title Analyst for Texas Oil & Gas.

         Mr. Keen has over 30 years of petroleum engineering  experience and has
been employed by Maynard Oil Company since 1984.

         Each  officer's  term of office  expires on the date of the next annual
meeting of the Board of Directors,  or until his earlier resignation or removal.
There are no family relationships among the executive officers listed, and there
are no arrangements or understandings pursuant to which any of them were elected
or appointed as officers.

                                       -9-

<PAGE>



                                                                         PART II

ITEM 5.           MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
                  HOLDER MATTERS.

         The Company's  Common Stock is traded in the  over-the-counter  market,
NASDAQ trading  symbol "MOIL".  The high and low sales prices for each quarterly
period during the two years ended December 31, 2001, were as follows:

      2001        High       Low              2000            High         Low
      ----        ----       ---              ----            ----         ---

First Quarter    $19.000   $15.875         First Quarter     $26.125     $ 9.875
Second Quarter    21.500    15.250         Second Quarter     19.187      10.125
Third Quarter     25.070    18.750         Third Quarter      22.875      14.750
Fourth Quarter    24.000    17.400         Fourth Quarter     23.125      15.250

         As of March 18, 2002, the Company had approximately 723 shareholders of
record.

         The Company has not paid any dividends on its Common Stock in the past,
nor does it plan to pay  dividends  in the  foreseeable  future.  The  Company's
ability to pay dividends is currently  restricted  under its Loan Agreement with
Bank One, Texas.

ITEM 6.           SELECTED FINANCIAL DATA.

         The following  table  summarizes  certain  selected  financial  data to
highlight  significant trends in the Company's financial condition and operating
results for the periods indicated.  The selected financial information presented
should be read in conjunction  with the  consolidated  financial  statements and
related notes appearing elsewhere in this Report and the Management's Discussion
and Analysis of Financial  Condition and Results of  Operations  set forth under
Item 7  below.  All  amounts  are  expressed  in  thousands,  except  per  share
information.

                                                December 31
                              --------------------------------------------------
                              2001       2000       1999        1998        1997
                              ----       ----       ----        ----        ----
Oil and gas sales
  and royalties              53,363    $52,739    $23,392     $16,166    $26,477
Income (loss) before
  income taxes (1)           12,457     22,273      7,148     (11,897)     6,613
Net income (loss) (1)         7,954     14,103      4,355      (7,816)     4,455
Per share income
 (loss) (1)(2)                 1.63       2.89        .89       (1.60)       .91
Total assets                 07,234    107,858     94,708      60,363     78,286
Long-term debt               17,213     24,863     32,513       6,250     11,250
Shareholders' equity         72,039     64,087     49,991      45,647     53,509
Net working capital           8,080     14,151      8,321      16,448     17,503
Net cash provided by
  operating activities       26,370     26,795      9,661       5,025     11,250


                                      -10-

<PAGE>



(1)      Includes effect of 2001  and 1998 impairment  of oil and gas properties
         amounting to $3,382,741 and $8,754,846 respectively.
(2)      Basic and diluted earnings (loss) per share were the same for all years
         presented.

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

YEAR ENDED DECEMBER 31, 2001 COMPARED TO DECEMBER 31, 2000
----------------------------------------------------------
OVERVIEW
--------

         The Company  continued its strategy for growth through the  acquisition
of producing  properties in calendar 2001. A total of $12.9 million was spent on
acquisitions  this  year.  All of  these  funds  were  expended  for  additional
interests in the Tex-Mex Field located in Gaines County,  Texas.  In addition to
these  acquisition  dollars,  the Company  incurred capital  expenditures  which
totaled an additional $12.9 million, which was spent on the 49 new wells drilled
this year, as well as recompleting and installing equipment on other wells.

         Once again, the Company, like others in the oil and gas industry, dealt
with the  roller  coaster  effect  from the crude oil  markets.  The West  Texas
Intermediate posting for crude began the year averaging approximately $26.40 per
barrel,  hovered  at $23.35 to $24.49  per  barrel  for much of the year  before
declining to $16.28 during the last two months of 2001.  Obviously,  these price
reductions  negatively  impacted the  Company's  2001  revenues and cash flow by
approximately $5.6 million.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         Cash and cash  equivalents  totaled  $14.3 million and $21.2 million at
December 31, 2001 and December 31, 2000, respectively,  decreasing approximately
$6.9 million during 2001.

         Cash flow from operations  approximated  $26.4 million and was utilized
as follows:

                  Property acquisitions                $12.9  million
                  Drilling of 49 wells and other
                    capitalized workover activities     12.9  million
                  Repayment of debt                      7.6  million
                  Proceeds from sale of property,
                    net of miscellaneous expenditures    (.1) million
                  Cash decrease                         (6.9) million
                                                        ----

                  Total                                $26.4  million
                                                       =====

         Company  management  plans on utilizing cash generated from  operations
and additional  bank debt, if necessary,  to fund future oil and gas activities.
Any future product price reductions could dictate  reductions in planned capital
expenditures.  Since the Company serves as operator on 46% of its wells,  it can
exercise judgment about which projects are performed.


                                      -11-

<PAGE>



         As discussed in Note 3 to the 2001 Consolidated  Financial  Statements,
the  Company  has  entered  into  contracts  with its  employees  which  provide
incentive payments of approximately $5.1 million to be paid within a year should
a merger agreement be signed.  Additionally,  the Company is committed to making
cash  payments  on two other types of  contracts,  note  agreements  and leases.
Maynard Oil has no off-balance  sheet  financing  arrangements or any other such
unrecorded obligations, and the Company has not guaranteed the debt of any other
party.

         Presently, the Company anticipates the following transactions for 2002:

                               Oil and gas revenues, net of
                                 lease operating expenses         $23.6  million

                               Capital expenditure
                                 commitment                        (6.5) million

                               Repayment of debt                   (7.7) million

                               Lease payments                       (.4) million
                                                                   ----

                               Available cash                     $ 9.0  million
                                                                  =====

RESULTS OF OPERATIONS
---------------------
YEAR ENDED DECEMBER 31, 2001 COMPARED TO DECEMBER 31, 2000
----------------------------------------------------------

         During 2001, the Company earned $1.63 per share, or $7,953,823 compared
to 2000 earnings of $2.89 per share, or $14,103,093.

REVENUES

         Oil and gas revenue  remained  almost  constant  between  2001 and 2000
increasing  approximately  1% over the prior year.  Higher sales volumes made up
for the loss of crude oil  revenues  during the  current  year.  The table below
reflects the differentials by product:

                                             Avg.                 Avg.
                                  Oil       Price      Gas       Price
                                  Bbls       Bbl       MCF        MCF
                                  ----      -----      ---       -----
Twelve months 2001             1,446,375   $23.26    4,931,751   $4.00
Twelve months 2000             1,369,456    27.36    3,915,325    3.90

         Interest income declined approximately $442,000 due to lower investable
cash  balances  and  due  to  lower  rates  paid  in  the  investment   markets.
Additionally,  the  disposition  of assets  yielded a minor gain for the current
year while prior year dispositions reflected a minor loss.

COSTS AND EXPENSES

         On a net equivalent barrel basis (NEB),  lease operating  expenses rose
ninety  cents  per NEB  from  $7.01  per NEB in 2000 to  $7.91  per NEB in 2001.
Expense  workovers  represented  36% of the  cost  increases,  all  other  lease
operating items such as labor, saltwater disposal, and

                                      -12-

<PAGE>



plugging  charges  accounted for an additional 79% of the cost  increases  while
regulatory costs,  which include  severance taxes and advalorem taxes,  declined
for the year and reduced this category by 15%.

         Exploration,   dry  holes,  and  abandonments   fell  $192,591  due  to
reductions in acreage  impairments over the prior year. One exploratory well was
drilled and included in this category during the current year.

         The  general  and  administrative  (G&A)  expense  category  reflects a
nominal increase of $128,967. However, the prior year G&A expense was abnormally
high,  having been adjusted  upward  $1,020,023 to account for the phantom stock
activity last year.  During 2001, the remaining  11,000 phantom stock units were
exercised and G&A was charged an additional  $93,500. In July, 2001, the Company
announced   that  it  was  pursuing   strategic   alternatives   and  has  spent
approximately  $586,000  pursuant  to sale or merger  strategies.  Additionally,
other G&A items have risen during 2001 to accommodate  the growth of the Company
from  $60.3  million  in assets at  September  30,  1999  (prior to the  Questar
acquisition) to $107.2 million in assets currently.

         On  a  net  equivalent  barrel  basis,  the  current  depreciation  and
amortization  rate  increased  approximately  24% from  $5.01 per NEB in 2000 to
$6.21 per NEB during 2001.  Under the  successful  efforts method of accounting,
costs of oil and gas  properties  are amortized on a unit of  production  method
based upon estimated  proved  reserves.  These  estimates of proved reserves can
fluctuate from one accounting  period to the next because of product pricing and
its effect on the  recoverability  of these hydrocarbon  reserves.  During 2001,
there  were  downward   revisions  in  estimated  volumes  of  oil  reserves  of
approximately  2.5 million barrels which resulted in increased  depreciation and
amortization expense.

         Maynard Oil also recognized  non-cash  impairment charges of $3,382,741
to the carrying value of its oil and gas  properties.  Although the reduction in
oil pricing impacted this evaluation,  the specific  properties  involved in the
writedown had minimal  hydrocarbons  attached and little chance of recovery from
future price increases.

         Interest expense decreased  $1,189,473 between 2000 and 2001 because of
reductions in the  outstanding  bank loan due to scheduled  loan  repayments and
lower interest rates.  Offsetting this decreased interest expense in the current
year was a bad debt  allowance of $259,949  attributable  to the downturn in the
oil and gas industry.  Not only were  Maynard's oil and gas revenues  negatively
impacted by price reductions,  its joint interest  partners'  revenues were also
negatively  affected  by price  which  resulted  in slower pay on the  Company's
accounts receivable.

         Income tax expense for 2001  reflects  an  effective  tax rate of 36.1%
which  differs from the corporate  rate of 34% for Maynard Oil's pre-tax  income
level.  The primary reason for this difference  relates to income taxes assessed
at the state level.

RESULTS OF OPERATIONS
---------------------
YEAR ENDED DECEMBER 31, 2000 COMPARED TO DECEMBER 31, 1999
----------------------------------------------------------

         During  2000,  the  Company  earned  $2.89 per share  compared  to 1999
earnings of $.89 per share.

                                      -13-

<PAGE>




REVENUES

         Oil and gas revenue  more than doubled  during 2000,  rising from $23.3
million a year ago to $52.7 million during 2000.  Higher sales volumes accounted
for 57% of the revenue increase and pricing differentials the remaining 43%. The
table below reflects these differences by product:

                                        Avg.                         Avg.
                             Oil       Price          Gas           Price
                            Bbls        Bbl           MCF            MCF
                            ----        ---           ---            ---
Twelve months 2000      1,369,456      $27.36       3,915,325       $3.90
Twelve months 1999        990,877       17.64       2,289,563        2.58

         Interest income rose  approximately  $347,000 between 1999 and 2000 due
to increased  average cash  balances.  Additionally,  the  disposition of assets
reflects a loss for the current year while the prior year dispositions yielded a
gain to the Company.

COSTS AND EXPENSES

         On a net  equivalent  barrel  (NEB)  basis,  lease  operating  expenses
increased $1.30 per NEB from $5.71 per NEB to $7.01 per NEB.  Approximately  46%
of  this  increase  was  due to  higher  severance  taxes,  which  are  directly
proportional to sales values;  18% of the lease operating expense increase was a
result of expense  workovers;  12% was attributable to greater  advalorem taxes,
which are also functions of pricing; and 25% was attributable to all other lease
operating items such as labor and salt water disposal.

         The exploration, dry holes, and abandonments category decreased $84,520
during 2000 because no unsuccessful  exploratory  wells were drilled,  while two
such dry holes were drilled and expensed in 1999. A substantial  portion of this
expense  category for 2000 is represented by the impairment of acreage for which
the Company abandoned future drilling plans. The one successful exploratory well
drilled in 2000 was capitalized as oil and gas property.

         The general  and  administrative  (G&A)  expense  category  reflects an
increase of  $1,604,659  between 1999 and 2000,  primarily the result of phantom
stock  adjustments  which occur because of stock price  fluctuations.  Since the
phantom stock units were  originally  awarded in 1989, the Company's G&A expense
has  experienced  a great deal of  volatility  as the stock  price has risen and
fallen and the related charges and credits for phantom stock have been recorded.
At December 31,  1999,  the closing  stock price was $9.75,  and the Company had
accrued a liability of $449,625 for this phantom stock obligation on its balance
sheet with  $214,875 of this amount  recorded in 1999 G&A expense.  On September
28, 2000 the Company's Board of Directors  approved an amendment to the employee
incentive plan which originally awarded these phantom stock units. On this date,
the Company's  stock price had risen to $20.81 per share, so the Company accrued
an  additional  $934,773 to 2000 G&A expense for the 84,500  phantom stock units
that were exercised under the plan amendment.  At December 31, 2000, the Company
also had a

                                      -14-

<PAGE>



remaining  liability of  approximately  $136,000  attributable  to the remaining
11,000 stock participation units, $85,250 of which is also reflected in 2000 G&A
expense.  The remainder of 2000 G&A expense increase  represents costs to manage
the  growth  of the  Company  from  approximately  $60.3  million  in  assets at
September 30, 1999-prior to the Questar  acquisition-to $107.8 million in assets
at December 31, 2000.

         On a net equivalent  barrel basis,  the  depreciation  and amortization
rate increased approximately 18% from $4.26 per NEB during 1999 to $5.01 per NEB
during 2000. Under the successful efforts method of accounting, costs of oil and
gas properties are amortized on a unit of production method based upon estimated
proved reserves.  The Company  calculates and applies this rate on a property by
property basis.  Fluctuations in depreciation  and  amortization  expense can be
caused by variations in the performance of the oil and gas property,  the amount
invested in the property and the  hydrocarbon  reserves  ultimately  recoverable
from the property.  As the oil and gas properties and their associated  reserves
age  within a  company,  these  rates  become  more  predictable  and have  less
variance.

         Interest expense increased over 200% due to a full annual period having
lapsed  under  the  term  loan  agreement  put in  place  in  November,  1999 in
connection with the Questar acquisition.

         Income tax expense for 2000  reflects  an  effective  tax rate of 36.7%
which  differs from the corporate  rate of 35% for Maynard Oil's pre-tax  income
level.  The primary reason for this difference  relates to income taxes assessed
at the state level.

CRITICAL ACCOUNTING MATTERS
---------------------------

         The Company follows the  "successful  efforts" method of accounting for
its oil and gas  properties.  Under this method of accounting,  the  capitalized
costs of unproven leases are  periodically  assessed to determine  whether their
value has been impaired below the  capitalized  cost, and if such  impairment is
indicated,  a loss is  recognized in  exploration,  dry holes,  and  abandonment
expense.  The Company makes these  assessments  based on estimates of future oil
and gas prices and considers such other factors as future drilling plans and any
lease expiration terms.

         The  Company's   financial  position  and  results  of  operations  are
materially  effected  by  changes  in oil  and gas  prices.  The  Company  makes
estimates of future oil and gas prices to determine  the need for an  impairment
of  capitalized  costs of  proved  oil and gas  properties  under  Statement  of
Accounting Standards No.121(SFAS 121).

         Under SFAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived  Assets to be Disposed of", the Company  assesses the need for an
impairment of  capitalized  costs of proved oil and gas properties on a field by
field  basis.  Applying  SFAS 121, the Company  recognized  a non-cash  property
impairment of $3,382,741 in December 2001 to account for those  properties whose
investment  would not be recoverable  under current  pricing  assumptions.  Fair
value of the

                                      -15-

<PAGE>



property  is  estimated  by the Company  using the present  value of future cash
flows discounted at 10%.

         At  December  31,  2001,  the  average  oil and  gas  prices  used  for
assessment  purposes  were  $21.92 per  barrel and $3.16 per mcf,  respectively.
Accordingly,  a  significant  reduction  in oil and gas prices  used to estimate
future oil and gas revenues for  impairment  purposes  could  materially  impact
impairment expense.

         The  Company  uses  estimates  of oil and  gas  reserve  quantities  to
estimate  depreciation  and  amortization  expense  using the unit of production
method of accounting. The estimates of proved oil and gas reserve quantities are
also  effected  by  estimates  of future  oil and gas  prices  along  with other
reservoir engineering estimates. Accordingly, a significant reduction in oil and
gas reserve  quantities  could materially  impact  depreciation and amortization
expense.

         The Company  periodically enters into hedging arrangements with respect
to portions of its oil and gas  production  to achieve a more  predictable  cash
flow and to reduce exposure to price fluctuations.  Net income and cash flow can
be  significantly  effected by the Company's  hedging  activities if oil and gas
prices change significantly during the hedging period.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

         In June 2001, the Financial Accounting Standards Board (FASB)
issued Statement No. 141 (SFAS 141), "Business Combinations", and also
Statement No. 142 (SFAS 142), "Goodwill and Other Intangible Assets."

         SFAS  141  requires  all  business  combinations,  as  defined  by  the
standard,  initiated  after June 30, 2001 to be accounted for using the purchase
method.  Companies  may no longer use the  pooling  method to account for future
combinations.

         SFAS 142 is effective  for fiscal years  beginning  after  December 15,
2001 and will be adopted by the Company as of January 1, 2002. SFAS 142 requires
that goodwill no longer be amortized over an estimated useful life as previously
required. Instead, goodwill amounts will be subject to a fair-value-based annual
impairment assessment.  The standard also requires acquired intangible assets to
be recognized separately and amortized as appropriate.  The Company expects that
the  adoption of SFAS 142 will not have a  significant  impact on the  Company's
future financial statements.

         In July 2001,  the FASB issued  SFAS 143  "Accounting  for  Obligations
Associated with the Retirement of Long-Lived Assets".  SFAS 143 is effective for
fiscal years beginning after June 15, 2002, and early adoption is permitted. The
Company is  currently  assessing  the new standard  and has not  determined  the
impact on its  consolidated  results  of  operations,  cash  flows or  financial
position.



                                      -16-

<PAGE>



         In  August,  2001,  the  FASB  issued  SFAS  144  "Accounting  for  the
Impairment  or Disposal of  Long-Lived  Assets".  SFAS No. 144 is effective  for
fiscal years beginning after December 15, 2001, and early adoption is permitted.
The  Company  expects  that  the  adoption  of SFAS  No.  144  will  not  have a
significant impact on the Company's future financial statements.

CERTAIN FACTORS THAT COULD AFFECT FUTURE OPERATIONS
---------------------------------------------------

         Certain  information  contained in this report,  as well as written and
oral  statements  made or  incorporated  by  reference  from time to time by the
Company and its  representatives  in other reports,  filings with the Securities
and  Exchange  Commission,  press  releases,  conferences,   teleconferences  or
otherwise,  may be deemed to be 'forward-looking  statements' within the meaning
of Section  21E of the  Securities  Exchange  Act of 1934 and are subject to the
'Safe Harbor'  provisions of that section.  Forward-looking  statements  include
statements concerning the Company's and management's plans,  objectives,  goals,
strategies and future operations and performance and the assumptions  underlying
such  forward-looking   statements.  When  used  in  this  document,  the  words
"anticipates,"   "estimates,"  "expects,"  "believes,"  "intends,"  "plans"  and
similar  expressions are intended to identify such  forward-looking  statements.
Actual results and developments  could differ materially from those expressed in
or implied by such statements due to these and other factors.

ITEM 7.A.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

COMMODITY RISK
--------------

         The Company's  primary  commodity market risk exposure is to changes in
the pricing  applicable  to its oil  production,  which is normally  priced with
reference to a defined benchmark, such as light, sweet crude oil (WTI) traded on
the New York Mercantile  Exchange (NYMEX).  Actual prices received vary from the
benchmark depending on quality and location differentials. The markets for crude
oil historically have been volatile and are likely to continue to be volatile in
the future.

         From  time  to  time,  the  Company   enters  into   financial   market
transactions, including collars, with creditworthy counterparties,  primarily to
reduce the risk  associated with the pricing of a portion of the oil and natural
gas that it sells.  The policy is structured  to underpin the Company's  planned
revenues and results of  operations  and the ultimate  cash flow realized by the
Company.

         During 2001, the Company entered into a derivative financial instrument
whereby the Company hedged 2,000 barrels of daily  production from March 1, 2001
through  February 28, 2002 with a ceiling price of $28.18/bbl  and a floor price
of $24.00/bbl. The Company exercised its right to terminate this contract during
March,  2001 via payment of $803,000  which  reduced oil and gas revenue for the
first quarter of 2001.

         The Company is not currently a party to any derivative instrument.

                                      -17-

<PAGE>



INTEREST RATE RISK
------------------

         While the Company  does have  interest  rate risk  associated  with its
outstanding  borrowing as of December  31, 2001,  we do not consider the risk to
have a material  impact on the Company's  operations.  As such, the Company does
not hedge against interest rate risk exposure.

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The  information  required by Item 8 is included on pages 22 through 42
of this Report.

ITEM 9.           CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE.

         None

                                    PART III

         The information required by Part III (Items 10 through 13) is set forth
in the Company's Proxy  Statement for the annual meeting of stockholders  and is
incorporated  herein by  reference.  Information  with respect to the  Company's
executive  officers as of March 18, 2002, is set forth commencing on pages 8 and
9 thereof under the caption "Executive Officers of the Registrant".

                                     PART IV

ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K

FINANCIAL STATEMENTS AND SCHEDULES

         See Index to Consolidated  Financial Statements and Schedule on page 22
of this Report.

REPORTS ON FORM 8-K

         No  reports  on Form 8-K  were  filed by the  Company  during  the last
quarter of 2001.

EXHIBITS

         3.1      (a)      Certificate of  Incorporation,  as amended,  filed as
                           Exhibit 3.1 to the  Company's  Annual  Report on Form
                           10-K for its fiscal year ended December 31, 1980 (the
                           "1980  Form  10-K"),   and  incorporated   herein  by
                           reference.

                  (b)      Certificate    of   Amendment   of   Certificate   of
                           Incorporation  dated May 19,  1981,  filed as Exhibit
                           3.1(b) to the  Company's  Annual  Report on Form 10-K
                           for its fiscal  year  ended  December  31,  1981 (the
                           "1981  form  10-K"),   and  incorporated   herein  by
                           reference.


                                      -18-

<PAGE>



                  (c)      Certificate    of   Amendment   of   Certificate   of
                           Incorporation  dated May 22,  1987,  filed as Exhibit
                           3.1 to the  Company's  Quarterly  Report on Form 10-Q
                           for the period ended June 30, 1987, and  incorporated
                           herein by reference.

                  (d)      Certificate    of   Amendment   of   Certificate   of
                           Incorporation  dated June 3,  1993,  filed as Exhibit
                           3.1 to the  Company's  Quarterly  Report on Form 10-Q
                           for the period ended June 30, 1993, and  incorporated
                           herein by reference.

         3.2      (a)      By-Laws,  as amended,  filed as Exhibit 3.2(b) to the
                           1981 Form 10-K and incorporated herein by reference.

                  (b)      Amendment to the By-Laws,  filed as Exhibit 3.2(b) to
                           the  1981  Form  10-K  and  incorporated   herein  by
                           reference.

                  (c)      Amendment to the By-Laws,  filed as Exhibit 3.2(c) to
                           the  Company's  Annual  Report  on Form  10-K for its
                           fiscal year ended December 31, 1984, and incorporated
                           herein by reference.

                  (d)      Amendment to the By-Laws, filed as Exhibit 3.2 to the
                           Company's  Quarterly  Report  on  Form  10-Q  for the
                           period ended June 30, 1987, and  incorporated  herein
                           by reference.

                  (e)      Amendment to the By-Laws, filed as Exhibit 3.2 to the
                           Company's  Annual  Report on Form 10-K for its fiscal
                           year ended December 31, 1993 and incorporated  herein
                           by reference.

                  (f)      By-Laws,  as  amended,  filed as  Exhibit  3.2 to the
                           Company's  Quarterly  Report  on  Form  10-Q  for the
                           period ended  September  30, 1999,  and  incorporated
                           herein by reference.

          4.1     (a)      Second  Restated Loan  Agreement,  dated November 12,
                           1999 between Maynard Oil Company and Bank One, Texas,
                           N.A.,  filed as Exhibit 4.1 to the  Company's  Annual
                           Report  on  Form  10-K  for  its  fiscal  year  ended
                           December   31,   1999  (the  "1999  Form  10-K")  and
                           incorporated herein by reference.

                  (b)      First  Amendment to Second  Restated  Loan  Agreement
                           dated May 15,  2000  between  Maynard Oil Company and
                           Bank One,  Texas,  N.A.,  filed as Exhibit 4.1 to the
                           Company's  Annual  Report on Form 10-K for its fiscal
                           year ended  December  31, 2000 (the "2000 Form 10-K")
                           and incorporated herein by reference.

         10.1              1989 Stock  Participation Plan, filed as Exhibit 10.1
                           to the  Company's  Annual Report on Form 10-K for its
                           fiscal year ended December 31, 1995 and  incorporated
                           herein by reference.

                                      -19-

<PAGE>



         10.2              Form of Retention  Incentive  Letter filed as Exhibit
                           10.2 to the Company's  Quarterly  Report on Form 10-Q
                           for  the  period   ended   September   30,  2001  and
                           incorporated herein by reference.

         10.3              Form  of  Management  Retention  Agreement  filed  as
                           Exhibit  10.3 to the  Company's  Quarterly  Report on
                           Form 10-Q for the period ended September 30, 2001 and
                           incorporated herein by reference.

         10.4              Form of Director  Indemnification  Agreement, between
                           the  Company   and  each   of  its  directors,  filed
                           herewith.

         21.1              List of  subsidiaries  of the  Company as of December
                           31, 2001, filed herewith.



                                      -20-

<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.

                                                     MAYNARD OIL COMPANY


                                                     By \s\   James G. Maynard
                                                        ------------------------
                                                        James G. Maynard
                                                        Chairman of the Board


Date:  March 29, 2002

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed below by the following persons in the capacities and
on the date indicated in multiple counterparts with the same force and effect as
if each person  executing a separate  counterpart has joined in execution of the
same counterpart.




/s/  James G. Maynard            Chairman of the Board,            April 1, 2002
------------------------         Chief Executive Officer
         James G. Maynard                & Treasurer

/s/  Glenn R. Moore              President and Chief               April 1, 2002
------------------------                 Operating Officer
         Glenn R. Moore

/s/  Kenneth W. Hatcher          Executive Vice President          April 1, 2002
------------------------                 of Finance(Principal
         Kenneth W. Hatcher              Financial and
                                         Accounting Officer)

/s/  Robert B. McDermott         Director                          April 1, 2002
------------------------
         Robert B. McDermott


/s/  Ralph E. Graham             Director                          April 1, 2002
------------------------
         Ralph E. Graham


/s/  Fred L. Oliver              Director                          April 1, 2002
------------------------
         Fred L. Oliver




                                      -21-

<PAGE>



                       MAYNARD OIL COMPANY AND SUBSIDIARY

             Index to Consolidated Financial Statements and Schedule


                                                                            Page
                                                                            ----


Financial Statements:

         Report of Independent Accountants                                    23

         Consolidated Balance Sheets - December 31, 2001 and 2000
                                                                              24

         Consolidated Statements of Operations - Three years ended
            December 31, 2001
                                                                              25

         Consolidated Statements of Changes in Shareholders'
            Equity - Three years ended December 31, 2001                      26

         Consolidated Statements of Cash Flows - Three years
            ended December 31, 2001                                           27

     Notes to Consolidated Financial Statements                               28

         II - Valuation and Qualifying Accounts                               42

         All  other  schedules  are  omitted  as  the  required  information  is
inapplicable  or the  information  is  presented in the  Consolidated  Financial
Statements or Notes thereto.


                                      -22-

<PAGE>



                        REPORT OF INDEPENDENT ACCOUNTANTS
                        ---------------------------------




To the Board of Directors and Shareholders of
 Maynard Oil Company

In our opinion, the consolidated financial statements listed in the accompanying
index  present  fairly,  in all material  respects,  the  financial  position of
Maynard Oil Company and its  subsidiary  at December 31, 2001 and 2000,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 2001 in  conformity  with  accounting  principles
generally accepted in the United States of America. In addition, in our opinion,
the financial  statement  schedule  listed in the  accompanying  index  presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.  These financial
statements and the financial  statement  schedule are the  responsibility of the
Company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements and the financial  statement schedule based on our audits.
We  conducted  our  audits  of these  statements  in  accordance  with  auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.






PricewaterhouseCoopers LLP
Dallas, TX
March 27, 2002

                                      -23-

<PAGE>



                       MAYNARD OIL COMPANY AND SUBSIDIARY
                           Consolidated Balance Sheets


                                                            December 31,
                                                   -----------------------------
                                                      2001              2000
                                                      ----              ----
ASSETS
Current assets:
     Cash and cash equivalents                    $  14,277,119    $ 21,228,040
     Accounts receivable, trade                       6,457,897       8,773,669
     Income taxes receivable                          1,769,928       1,437,587
     Other current assets                               448,194         441,027
                                                   ------------     -----------
         Total current assets                        22,953,138      31,880,323
                                                   ------------     -----------

Property and equipment, at cost:
   Oil and gas properties, successful
     efforts method                                 188,246,168     162,572,339
   Other property and equipment                         491,699         450,885
                                                   ------------     -----------
                                                    188,737,867     163,023,224
   Less accumulated depreciation and
    amortization                                   (104,457,017)    (87,045,360)
                                                   ------------     -----------
      Net property and equipment                     84,280,850      75,977,864
                                                   ------------     -----------

                                                  $ 107,233,988    $107,858,187
                                                   ============     ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current installments of
       long-term debt                             $   7,650,000    $  7,650,000
   Accounts payable                                   5,962,824       8,350,643
   Accrued expenses                                     746,806         927,828
   Income taxes payable                                 513,352         800,799
                                                   ------------     -----------
              Total current liabilities              14,872,982      17,729,270
                                                   ------------     -----------

Deferred income taxes                                 3,110,000       1,179,000

Long-term debt                                       17,212,500      24,862,500

Shareholders' equity:
   Preferred stock of $.50 par value.
     Authorized 1,000,000 shares; none
        issued                                              --              --
   Common stock of $.10 par value.
     Authorized 20,000,000 shares;
     4,880,368 and 4,880,516 shares
     issued and outstanding                             488,037         488,051
   Additional paid-in capital                        18,831,138      18,831,138
   Retained earnings                                 52,719,331      44,768,228
                                                   ------------     -----------
              Total shareholders' equity             72,038,506      64,087,417
                                                   ------------     -----------

Contingencies and commitments (note 10)
                                                  $ 107,233,988    $107,858,187
                                                   ============     ===========

See accompanying Notes to Consolidated Financial Statements.


                                      -24-

<PAGE>



<TABLE>

                       MAYNARD OIL COMPANY AND SUBSIDIARY
                      Consolidated Statements of Operations

<CAPTION>

                                                      Years ended December 31,
                                          -------------------------------------------
                                               2001           2000            1999
                                               ----           ----            ----
<S>                                       <C>            <C>             <C>
Revenues:
   Oil and gas sales and royalties        $ 53,363,128   $ 52,738,994    $ 23,392,231
   Interest and other                          699,471      1,141,333         794,478
   Gain (loss) on disposition of assets         96,027        (38,070)        312,746
                                          ------------   ------------    ------------
                                            54,158,626     53,842,257      24,499,455
                                          ------------   ------------    ------------

Costs and expenses:
   Operating expenses                       17,953,047     14,168,808       7,839,205
   Exploration, dry holes and
         abandonments                          256,497        449,088         533,608
   General and administrative, net           3,970,886      3,841,919       2,237,260
   Depreciation and amortization            14,079,545     10,120,721       5,848,272
   Impairment of proved oil and gas
         properties                          3,382,741           --              --
   Interest and other                        2,059,087      2,988,628         893,475
                                          ------------   ------------    ------------
                                            41,701,803     31,569,164      17,351,820
                                          ------------   ------------    ------------

   Income before income taxes               12,456,823     22,273,093       7,147,635

Income tax expense                           4,503,000      8,170,000       2,793,000
                                          ------------   ------------    ------------

     Net income                           $  7,953,823   $ 14,103,093    $  4,354,635
                                          ============   ============    ============

Weighted average number of common
   shares outstanding                        4,880,401      4,880,749       4,883,536
                                          ============   ============    ============

Net income per common share
   (basic and diluted)                    $       1.63   $       2.89    $        .89
                                          ============   ============    ============

See accompanying Notes to Consolidated Financial Statements.

</TABLE>

                                      -25-

<PAGE>


<TABLE>

                                                           MAYNARD OIL COMPANY
                                        Consolidated Statements of Changes in Shareholders Equity
                                                   Three Years Ended December 31, 2001
<CAPTION>

                                                                                   Accumulated
                                                                                      Other      Additional                Common
                                                      Comprehensive   Retained    Comprehensiv    Paid-in       Common     Stock
                                           Total          Income      Earnings        Income      Capital       Stock      Shares
                                           -----          ------      --------        ------     -------       -----       ------

<S>                                    <C>               <C>        <C>               <C>      <C>           <C>         <C>
Balance at December 31, 1998           $45,646,943                   $26,327,345                $18,831,138   $488,460    4,884,597
     Net income                          4,354,635                     4,354,635                       --        --            --
     Purchase and retirement
       of common stock                     (10,873)                      (10,502)                     --          (371)      (3,710)
                                         ----------                    ----------                ----------     -------    ---------

Balance at December 31, 1999            49,990,705                    30,671,478                 18,831,138    488,089    4,880,887
     Net income                         14,103,093                    14,103,093                       --          --          --
     Purchase and retirement
       of common stock                      (6,381)                       (6,343)                     --           (38)        (371)
                                         ----------                    ----------                ----------     -------    ---------

Balance at December 31, 2000            64,087,417                    44,768,228                 18,831,138    488,051    4,880,516

Comprehensive Income
     Net Income                          7,953,823      $7,953,823     7,953,823
     Cumulative effect of adopting
       SFAS 133                             86,757          86,757                   $86,757
     Reclassification adjustments
       for contract settlements            (86,757)        (86,757)                  (86,757)
                                                         ---------

     Comprehensive Income               $7,953,823
                                         =========

Purchase and retirement of
   common Stock                             (2,734)                       (2,720)                     --           (14)        (148)
                                        ----------                    ----------   ---------    ----------     -------     ---------

Balance at December 31, 2001           $72,038,506                   $52,719,331         --     $18,831,138   $488,037    4,880,368
                                        ==========                    ==========    =========    ==========    =======    =========




See accompanying Notes to Consolidated Financial Statements.

</TABLE>



                                      -26-

<PAGE>



<TABLE>

                       MAYNARD OIL COMPANY AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
<CAPTION>

                                                                        Years ended December 31,
                                                                        ------------------------
                                                                   2001            2000            1999
                                                                   ----            ----            ----
<S>                                                            <C>             <C>             <C>
Cash flows from operating activities:
     Net income                                                $  7,953,823    $ 14,103,093    $  4,354,635
     Adjustments to reconcile net income
       to net cash provided by
       operating activities:

       Depreciation and amortization                             14,079,545      10,120,721       5,848,272
       Impairment of proved oil and gas
         properties                                               3,382,741            --              --
       Allowance for doubtful accounts                              259,949            --              --
       Deferred income tax expense                                1,931,000       1,527,000         333,000
       Exploration, dry holes and
         abandonments                                               212,720         429,424         451,688
       Current year costs of dry holes and
         abandonments                                              (213,599)          1,031        (424,077)
       (Gain) loss on disposition of assets                         (96,027)         38,070        (312,746)
     (Increase) decrease in current assets:
       Accounts receivable                                        2,055,823      (2,744,481)     (3,460,381)
       Income taxes receivable                                     (332,341)       (687,587)        227,587
       Other current assets                                          (7,167)        395,527        (357,874)
     Increase (decrease) in current liabilities:
     Accounts payable                                            (2,387,819)      4,100,919       1,666,367
     Accrued expenses                                              (181,022)       (329,790)        415,250
       Income taxes payable                                        (287,447)       (159,413)        919,413
                                                               ------------    ------------    ------------

       Net cash provided by operating
         activities                                              26,370,179      26,794,514       9,661,134
                                                               ------------    ------------    ------------

Cash flows from investing activities:
     Proceeds from disposition of assets                            103,496         780,447         555,022
     Additions to property and equipment                        (25,771,862)    (13,513,361)    (45,184,704)
                                                               ------------    ------------    ------------

       Net cash used by
         investing activities                                   (25,668,366)    (12,732,914)    (44,629,682)
                                                               ------------    ------------    ------------

Cash flows from financing activities:
     Proceeds from issuance of long-term debt                          --              --        32,000,000
     Principal payments on long-term debt                        (7,650,000)     (5,737,500)     (5,000,000)
     Purchase of common stock                                        (2,734)         (6,381)        (10,873)
                                                               ------------    ------------    ------------

       Net cash provided (used) by
         financing activities                                    (7,652,734)     (5,743,881)     26,989,127
                                                               ------------    ------------    ------------

Net increase (decrease) in cash
 and cash equivalents                                            (6,950,921)      8,317,719      (7,979,421)
Cash and cash equivalents at beginning
  of year                                                        21,228,040      12,910,321      20,889,742
                                                               ------------    ------------    ------------
Cash and cash equivalents at end of year                       $ 14,277,119    $ 21,228,040    $ 12,910,321
                                                               ============    ============    ============


See accompanying Notes to Consolidated Financial Statements

</TABLE>

                                      -27-

<PAGE>



                       MAYNARD OIL COMPANY AND SUBSIDIARY
                   Notes to Consolidated Financial Statements


(1)       Summary of Significant Accounting Policies
          ------------------------------------------

          Business Activity
          -----------------

          Maynard  Oil  Company  (the  Company)  is engaged in the  acquisition,
          exploration, development, production and sale of crude oil and natural
          gas in the  Continental  United  States,  primarily  in the  states of
          Texas, Oklahoma, Louisiana, New Mexico and Arkansas.

          Principles of Consolidation
          ---------------------------

          The consolidated  financial statements include the accounts of Maynard
          Oil  Company  and  its   wholly-owned   subsidiary.   All  significant
          intercompany   balances  and  transactions  have  been  eliminated  in
          consolidation.

          Cash Equivalents
          ----------------

          Cash  equivalents  are highly  liquid  investments  purchased  with an
          original maturity of three months or less.

          Property and Equipment
          ----------------------

          The Company  follows the  successful  efforts method of accounting for
          its oil and gas properties.  Intangible drilling and development costs
          related to  development  wells and  successful  exploratory  wells are
          capitalized, whereas the costs of exploratory wells which do not yield
          economic proved reserves are expensed.  All geological and geophysical
          costs not  reimbursed  are  expensed as  incurred.  Costs of acquiring
          unproved  leases are evaluated for  impairment  until such time as the
          leases are proved or abandoned.  In addition,  unamortized  costs at a
          field level are reduced to discounted fair value if the net book value
          exceeds the sum of expected undiscounted future cash flows.

          Depreciation  and  amortization  of producing  properties  is computed
          using  the unit of  production  method  based  upon  estimated  proved
          reserves.  Depreciation  of other property and equipment is calculated
          using the  straight-line  method  based upon  estimated  useful  lives
          ranging from two to ten years.

          Maintenance  and repairs are charged to expense as incurred.  Renewals
          and  betterments  are  capitalized.  When assets are sold,  retired or
          otherwise   disposed  of,  the   applicable   costs  and   accumulated
          depreciation and  amortization are removed from the accounts,  and the
          resulting gain or loss is recognized.



                                      -28-

<PAGE>



          Revenue Recognition
          -------------------

          The  Company  accounts  for oil and gas sales  from its  interests  in
          producing  wells under the sales method.  Under the sales method,  the
          Company recognizes revenues based on the amount of natural gas sold to
          purchasers,  which  may  be  different  from  the  Company's  entitled
          production  based  on its  interest  in the  properties.  Gas  balance
          obligations  as  of  December  31,  2001,   2000  and  1999  were  not
          significant.

          Overhead Reimbursement Fees
          ---------------------------

          The Company  reduces general and  administrative  expenses by only the
          amounts actually due from outside working interest owners for overhead
          charges.

          Deferred Income Taxes
          ---------------------

          The Company  recognizes  deferred tax  liabilities  and assets for the
          expected future tax consequences of temporary  differences between the
          tax  and  financial  reporting  bases  of  the  Company's  assets  and
          liabilities by applying  enacted tax rates.  A valuation  allowance is
          established  to reduce  deferred  tax assets if it is more likely than
          not that the related tax benefits will not be realized.

          Derivative Financial Instruments
          --------------------------------

          The  Company  periodically  enters  into  commodity  hedge  contracts,
          including  caps and floors which may require  payments to (or receipts
          from)  counterparties  based on the differential between a fixed price
          and a variable  price for a fixed quantity of crude oil or natural gas
          without the exchange of underlying  volumes.  The notional  amounts of
          these   derivative   financial   instruments  are  based  on  expected
          production  from  existing  wells.  The Company uses these  derivative
          financial  instruments  to  manage  cash  flow  risks  resulting  from
          fluctuations in commodity prices. The derivative financial instruments
          held by the Company are not leveraged and are held for purposes  other
          than trading.

          Correlation of the hedge contracts is determined by evaluating whether
          hedge contract gains and losses will substantially  offset the effects
          of price  changes on the  underlying  crude oil and  natural gas sales
          volumes.  To the extent  that  correlation  exists  between  the hedge
          contracts and the underlying  crude oil and natural gas sales volumes,
          realized gains or losses and related cash flows arising from the hedge
          contracts  are  recognized as a component of oil and natural gas sales
          in the same  period  as the  sale of the  underlying  volumes.  To the
          extent that correlation does not exist between the hedge contracts and
          the underlying  crude oil and the natural gas sales volumes,  realized
          gains or  losses  and  related  cash  flows  arising  from  the  hedge
          contracts are recognized in the period as a component of other income.
          The fair  market  value of any hedge  contract  that does not meet the
          correlation test outlined above is recorded as a deferred gain or loss
          on the balance sheet and is

                                      -29-

<PAGE>



          adjusted to current  market value at each balance  sheet date with any
          deferred gains or losses recognized as a component of other income.

          In the event that  management  decides to terminate a hedge  contract,
          generally  accepted  accounting  principles  require that any gains or
          losses  upon  termination  be  carried  forward  and  recognized  as a
          component  of oil and  natural  gas  sales in the  period in which the
          underlying volumes are sold.

          The Company is not currently a party to any derivative instrument.

          Income per Common Share
          -----------------------

          The  Company  does  not  have  a  complex   capital   structure,   and
          consequently,  net  income  per  common  share is  computed  using the
          weighted average number of common shares outstanding during each year.
          Basic and diluted  earnings per share were the same for 2001, 2000 and
          1999 as the Company has no potentially dilutive securities.

          Segment Information
          -------------------

          All of the Company's oil and gas properties and related operations are
          located in the United States and management  has  determined  that the
          Company has one reportable segment.

          The Use of Estimates in Preparing Financial Statements
          ------------------------------------------------------

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and   assumptions   that  affect  the  reported   amounts  of  assets,
          liabilities, disclosures of gain and loss contingencies at the date of
          the financial statements and reported amounts of revenues and expenses
          during the  reporting  period.  Since  estimates are made based on all
          information  available at the time, it is  reasonably  possible in the
          near term a change in an  estimate  may  occur or actual  amounts  may
          differ from estimated amounts.

          Reclassifications
          -----------------

          Certain reclassifications of prior period statements have been made to
          conform with the 2001 presentation.

          Recent Accounting Pronouncements
          --------------------------------

          In June 2001, the Financial Accounting Standards Board (FASB) issued
          Statement No. 141 (SFAS 141), "Business Combinations", and also
          Statement No. 142 (SFAS 142), "Goodwill and Other Intangible
          Assets."

          SFAS  141  requires  all  business  combinations,  as  defined  by the
          standard,  initiated after June 30, 2001 to be accounted for using the
          purchase  method.  Companies  may no longer use the pooling  method to
          account for future combinations.


                                      -30-

<PAGE>



          SFAS 142 is effective for fiscal years  beginning  after  December 15,
          2001 and will be  adopted by the  Company as of January 1, 2002.  SFAS
          142 requires  that  goodwill no longer be amortized  over an estimated
          useful life as previously required.  Instead, goodwill amounts will be
          subject  to  a  fair-value-based  annual  impairment  assessment.  The
          standard also  requires  acquired  intangible  assets to be recognized
          separately and amortized as appropriate.  The Company expects that the
          adoption  of SFAS  142  will  not  have a  significant  impact  on the
          Company's future financial statements.

          In July 2001,  the FASB issued SFAS 143  "Accounting  for  Obligations
          Associated  with the  Retirement  of Long-Lived  Assets".  SFAS 143 is
          effective for fiscal years  beginning  after June 15, 2002,  and early
          adoption is  permitted.  The Company is  currently  assessing  the new
          standard and has not determined the impact on its consolidated results
          of operations, cash flows or financial position.

          In  August,  2001,  the  FASB  issued  SFAS  144  "Accounting  for the
          Impairment  or  Disposal  of  Long-Lived  Assets".  SFAS  No.  144  is
          effective  for fiscal years  beginning  after  December 15, 2001,  and
          early adoption is permitted.  The Company expects that the adoption of
          SFAS  No.  144 will not have a  significant  impact  on the  Company's
          future financial statements.

(2)       Fair Value of Financial Instruments, Risk Management, and
          ---------------------------------------------------------
          Concentrations of Credit Risk
          -----------------------------

          Fair Value of Financial Instruments

          The  carrying   amounts  of  cash  and  cash   equivalents,   accounts
          receivable, and accounts payable approximate fair value because of the
          short maturity of these instruments.  The carrying amount of long-term
          debt,  including the current portion,  approximates fair value because
          the interest  rate on this  instrument  changes  with market  interest
          rates.

          Risk Management
          ---------------

          Effective  March  1,  2001,  the  Company  entered  into a  derivative
          financial  instrument  whereby 2,000 barrels of daily  production  was
          hedged with a ceiling  price of $28.18 per barrel and a floor price of
          $24.00  per  barrel.  This  hedging  arrangement  was due to expire on
          February  28,  2002.  However,  the Company  exercised  its ability to
          terminate  the contract  during  March,  2001 via payment of $803,000,
          which reduced oil and gas revenues for the first quarter of 2001.

          During  2000,  the  Company   entered  into  a  derivative   financial
          instrument   whereby  the  Company   hedged  1,000  barrels  of  daily
          production  from  September 1, 2000  through  February 28, 2001 with a
          ceiling  price of  $36.50/bbl  and a floor  price of  $24.00/bbl.  The
          contract called for a monthly  settlement such that if the average WTI
          for the month was greater than $36.50/bbl,  Maynard would remit to the
          counterparty  the excess  multiplied  by the number of barrels  hedged
          during the month. Conversely, if the average WTI for the

                                      -31-

<PAGE>



          month was less than $24.00/bbl, the counterparty would pay Maynard for
          the  difference  multiplied by the number of barrels hedged during the
          month.  If the average WTI for the month fell between  $24.00/bbl  and
          $36.50/bbl,  no  settlement  would  be  made.  As  a  result  of  this
          arrangement, no monies were exchanged.

          A second  derivative  instrument was entered into effective October 1,
          2000  through  March 31,  2001  which  mirrored  the first  except the
          ceiling  and  floor   amounts  were  $37.20  and  $25.00  per  barrel,
          respectively. Over the life of this contract, average WTI fell between
          $25.00 per barrel and $37.20 per barrel, so no cash was exchanged.

          The Company adopted Statement of Financial Accounting Standard No. 133
          (SFAS  133),   "Accounting  for  Derivative  Instruments  and  Hedging
          Activities",  on January  1, 2001 and  recorded  a  cumulative  effect
          adjustment of approximately  $87,000 to earnings to recognize the fair
          market  value of all  derivative  instruments  as a result of adopting
          SFAS 133. The hedging related components of other comprehensive income
          have been  recorded  net of income  tax  effects  using the  effective
          income tax rate for 2001.

          Concentration of Credit Risks
          -----------------------------

          Financial  instruments,  which  potentially  subject  the  Company  to
          concentrations  of credit risk,  consist  principally of cash and cash
          equivalents and accounts  receivable.  The Company places its cash and
          cash equivalents with high credit quality  institutions.  With respect
          to accounts receivable,  these financial instruments primarily pertain
          to oil and gas sales  and  joint  interest  billings.  These  accounts
          receivable   are  due  from  small  to  mid-size   companies   engaged
          principally in oil and gas activities.  The Company  performs  ongoing
          credit  evaluations  of  its  customers'   financial   condition  and,
          generally,  requires no collateral  from its customers.  Payment terms
          are on a short-term  basis and in accordance with industry  standards.
          During 2001, the Company  recorded a bad dept allowance of $259,949 to
          recognize potentially uncollectible accounts receivable.

          During  the year ended  December  31,  2001,  oil and gas sales to two
          purchasers  amounting to approximately  $9,041,000 and $6,867,000 each
          accounted for more than 10% of total consolidated revenues.

          During the year ended  December 31,  1999,  oil and gas sales to three
          customers,  amounting to  approximately  $4,143,000,  $2,868,000,  and
          $2,457,000  respectively,  each  accounted  for more than 10% of total
          consolidated  revenues.  During the year ended  December 31, 2000,  no
          single purchaser accounted for 10% of consolidated revenues.

(3)       Strategic Alternatives
          ----------------------

          On  July  23,  2001,  the  Company  announced  that  it was  exploring
          strategic  alternatives  including  the possible sale or merger of the
          Company. In December,  2001, the Company reported that it had received
          expressions of interest from a number of potential buyers,

                                      -32-

<PAGE>



          but that the valuations were disappointing.  Management was instructed
          by the Board to continue discussions with potentional acquirers.

          In  connection  with these  transactions,  the  Company  entered  into
          contracts  with its  personnel  which  provide  incentive  bonuses and
          retention arrangements that total approximately  $5,100,000 to be paid
          out within one year after a merger agreement is signed.

(4)       Impairment of Long-Lived Assets
          -------------------------------

          Oil  prices  fell from an  average of $27.36 per barrel for 2000 to an
          average of $23.26 per barrel for 2001, while gas prices averaged $4.00
          per thousand cubic feet (mcf) for 2001 compared with $3.90 per mcf for
          2000.  Because the Company is significantly  impacted by the crude oil
          markets, the Company performed an impairment evaluation of its oil and
          gas properties  and recognized a non-cash  impairment of $3,382,741 in
          December 2001 to account for those  properties  whose investment would
          not be recoverable  under current pricing  assumptions,  as defined by
          Statement of Financial  Accounting  Standards No. 121,  Accounting for
          the Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be
          Disposed  of ("SFAS  121").  Although  the  reduction  in oil  pricing
          impacted  this  evaluation,  the specific  properties  involved in the
          writedown  had minimal  volumes of  hydrocarbons  and little chance of
          recovery from any future price increases. Because no event occurred in
          2000 or 1999 which would  trigger an  impairment  evaluation,  no such
          evaluation was performed for those years.



                                      -33-

<PAGE>



(5)       Cash Flow Data
          --------------

          Supplemental  cash flow information for the three years ended December
          31, 2001 is summarized as follows:

                                             2001        2000            1999
                                             ----        ----            ----
          Cash paid for
            Interest net of $65,314,
                  $28,448 and $7,954
                  capitalized             $2,034,152    $3,015,276    $  758,695
                                           =========     =========     =========

            Income taxes                  $3,191,788    $7,490,000    $1,279,111
                                           =========     =========     =========

(6)       Long-term Debt
          --------------

          Long-term debt at December 31, 2001 and 2000 is summarized as follows:

                                                             2001       2000
                                                             ----       ----
          Term note due in 20 equal quarterly
            installments of $1,912,500 commencing
            April 1, 2000. Interest paid quarterly
            at varying rates.  Certain oil and gas
            properties are pledged as collateral.      $24,862,500   $32,512,500
          Less current installments                      7,650,000     7,650,000
                                                        ----------    ----------

            Long-term debt                             $17,212,500   $24,862,500
                                                        ==========    ==========

          The term note  permits the Company to choose  between  three  interest
          rate  options and to specify  what portion of the loan is covered by a
          specific  interest rate option and the  applicable  funding  period to
          which the interest rate option is to apply.  The interest rate options
          are as follows:

                  (1)      Bank's prime lending rate
                  (2)      Bank's certificate of deposit rate
                  (3)      London interbank eurodollar rate (Eurodollar)

          At  December  31,  2001  and  2000,  interest  on the bank  term  loan
          approximated 3.67% and 8.05%, respectively.

          The credit agreement  contains various financial  covenants related to
          working  capital,  net  worth,  and  cash  flow,  and  places  certain
          limitations  on the  incurrence of  additional  debt and prohibits the
          payment of dividends.



                                      -34-

<PAGE>



(7)       Employee Incentive Plans
          ------------------------

          During 2000, the Company's Board of Directors approved an amendment to
          an employee  incentive  plan in which  officers and key  employees had
          been awarded stock  participation units in 1989 and 1993 that entitled
          them to a cash payment equal to the excess of the fair market value of
          one share of the Company's  common stock over a specified  share price
          at the grant  date  times  the  number  of  vested  shares.  Under the
          original  terms of this plan,  no units could be  exercised  until the
          employee terminated his employment with the Company. Pursuant to terms
          of the amended plan, each employee holding stock  participation  units
          was given the opportunity to cash out all, or a portion,  of the units
          held. At the time of the plan amendment,  there were a total of 95,500
          stock  participation units outstanding with option prices of $4.50 and
          $5.625  per  share.  For  2000,  general  and  administrative  expense
          includes $1,020,023 for the 95,500 stock participation  units. A total
          of 84,500  units were  exercised  under the amended plan at $20.81 per
          share. As a result of the exercise of these units,  the Company made a
          cash payment of $1,332,835 to those electing employees.  Additionally,
          at December  31, 2000,  the Company had a liability  of  approximately
          $136,000  attributable  to the  remaining  11,000 stock  participation
          units.

          In  anticipation  of a potential  merger or sale of the  Company,  the
          remaining  11,000 stock  participation  units were exercised at $26.00
          per share with the  Company  making a cash  payment of  $230,313.  For
          2001,  general and  administrative  expense includes $93,500 for these
          remaining  stock   participation  units  and  there  is  no  remaining
          financial liability in connection with this plan.

(8)       Income Taxes
          ------------

          Income tax expense consists of the following:

                                               Years ended December 31,
                                               ------------------------
                                    2001              2000                1999
                                    ----              ----                ----
            Federal
              Current           $2,100,000        $5,898,000          $2,227,000
              Deferred           1,931,000         1,527,000             333,000
            State                  472,000           745,000             233,000
                                 ---------         ---------           ---------
                                $4,503,000        $8,170,000          $2,793,000
                                 =========         =========           =========



                                      -35-

<PAGE>



          Income tax expense for the three years ended December 31, 2001 differs
          from the amount  computed by applying the  applicable  U.S.  corporate
          income  tax rate of 34% in 2001  and  1999  and 35% in 2000 to  income
          before income taxes. The reasons for this difference are as follows:

<TABLE>

                                                        Years ended December 31,
                                                        ------------------------
                                                  2001             2000            1999
                                                  ----             ----            ----
          <S>                                <C>              <C>              <C>
          Income tax expense at
           U.S. statutory rate               $4,235,320       $7,795,583       $2,430,196
          State income taxes net
            of Federal income
            tax effects                          297,000          484,250          153,780
          Allowable depletion in
            excess of cost depletion             (32,109)          (8,750)        (135,215)
          Items not related to current
            year earnings                          -0-           (109,484)         305,751
          All other items                          2,789            8,401           38,488
                                                --------        ---------        ---------

            Income tax expense                $4,503,000       $8,170,000       $2,793,000
                                               =========        =========        =========

</TABLE>

          The components of the net deferred tax liability were as follows:

                                                              December 31,
                                                     2001                 2000
                                                     ----                 ----

          Oil and gas property assets            $3,110,000          $1,227,000
          Employee incentive plan                     -0-               (48,000)
                                                  ---------            ---------

          Net deferred tax liability             $3,110,000          $1,179,000
                                                  =========           =========

(9)       Employee Benefit Plans
          ----------------------

          The Company adopted a noncontributory  defined contribution retirement
          plan for all full-time  employees  age 21 or older who have  completed
          one  year  of  service.   The  plan  provides  for  a  minimum  annual
          contribution  by the Company equal to 3% of an employee's  base salary
          plus overtime  compensation.  At its discretion,  the Company may also
          make  supplemental  contributions to the plan. For calendar 1999, 2000
          and 2001,  the  Company  elected to  contribute  5% for each  employee
          covered by this plan.  Under this plan,  amounts  equal to  retirement
          plan  expense  are  funded  annually,   which  amounted  to  $129,551,
          $108,406, and $106,462, and respectively, for 2001, 2000 and 1999.

          The Company also has a profit  sharing plan pursuant to Section 401 of
          the Internal  Revenue  Code,  whereby  participants  may  contribute a
          percentage  of their  compensation  up to 15%. The Plan provides for a
          matching  contribution  by  the  Company  equal  to  one-half  of  the
          employee's  percentage  contribution  up  to  10%  of  the  employee's
          compensation.  During  2001,  2000 and 1999,  the  Company's  matching
          portion amounted to $113,281, $97,228 and $93,823 respectively.



                                      -36-

<PAGE>



(10)      Contingencies and Commitments
          -----------------------------

          The Company is a  defendant  in certain  non-environmental  litigation
          arising from operations in the normal course of business.  While it is
          not  feasible to  determine  the outcome of these  actions,  it is the
          Company's opinion that the ultimate outcome of the litigation will not
          have a material adverse effect on the financial position or results of
          operations of the Company.

          All of the  Company's  operations  are  generally  subject to Federal,
          state and local environmental regulations. To the best of management's
          knowledge, the Company is in substantial compliance with such laws and
          regulations.

          The Company  leases office space and certain  equipment  under various
          operating  leases  which  expire over the next four years.  All leases
          require  the  payment of taxes and  insurance,  and the  office  lease
          requires  the  Company  to pay its pro  rata  share  of  increases  in
          maintenance  expense above that  prevailing in base years.  Management
          expects that, in the normal course of business, leases will be renewed
          or replaced by other  leases.  Rent  expense for the three years ended
          December 31, 2001 was $561,272, $453,440 and $362,443, respectively.

          Minimum payments for operating leases having initial or noncancellable
          terms in excess of one year are as follows:

                                                   2002               $  386,968
                                                   2003                  367,510
                                                   2004                  342,435
                                                   2005                  264,365
                                                                       ---------

                  Total minimum payments                              $1,361,278
                                                                       =========



                                      -37-

<PAGE>



(11)  Quarterly Financial Data (Unaudited)
      -----------------------------------

         Summarized  quarterly  financial  data for the years ended December 31,
         2001 and 2000 as follows:

<TABLE>

                                                        First             Second              Third             Fourth
                                                       Quarter            Quarter            Quarter            Quarter
                                                       -------            -------            -------            -------
         <S>                                        <C>                <C>                <C>               <C>
         Year Ended December 31, 2001
               Revenues                             $17,520,111        $14,190,988        $12,848,953       $ 9,598,574
               Operating Income (a)                   8,926,226          4,657,499          3,193,878         (2,961,164)
               Net Income                             5,673,213          2,803,627          2,004,257         (2,527,274)
               Net Income per common share                 1.16                .57                .41               (.51)

         Year Ended December 31, 2000
               Revenues                             $11,020,146        $11,566,965        $15,205,773        $16,049,373
               Operating Income (a)                   4,224,089          4,347,088          7,413,165          8,136,046
               Net Income                             2,475,864          2,601,185          4,623,290          4,402,754
               Net Income per common share                  .51                .53                .95                .90

         (a) Operating income excludes interest income and expense from pre-tax income.

</TABLE>

(12)     Supplemental Oil and Gas Disclosures (Unaudited)
         ------------------------------------------------

         Capitalized Costs
         -----------------

         A summary of the Company's aggregate capitalized property and equipment
         costs relating to oil and gas exploration  and  development  activities
         follows:
                                                           December 31,
                                                       -------------------
                                                       2001              2000
                                                       ----              ----
               Proved undeveloped leaseholds      $  3,960,520      $  1,945,518
               Producing properties                184,285,648       160,626,821
                                                   -----------       -----------
                                                   188,246,168       162,572,339
               Accumulated depreciation and
                 amortization                      104,165,363        86,828,540
                                                   -----------       -----------

               Net capitalized costs              $ 84,080,805      $ 75,743,799
                                                   ===========       ===========

         Costs Incurred
         --------------

         A summary of costs incurred in oil and gas acquisition, exploration and
         development activities follows:
                                                  Years ended December 31,
                                                  ------------------------
                                             2001           2000          1999
                                             ----           ----          ----
              Acquisition of properties
                Proved undeveloped       $ 2,015,003   $   243,885   $ 2,691,308
                Proved                    11,108,791     7,531,915    40,589,276
              Exploration costs              257,394       531,192     1,091,521
              Development costs           12,469,097     5,058,262     1,010,969
                                          ----------    ----------     ---------

                                         $25,850,285   $13,365,254   $45,383,074
                                          ==========    ==========    ==========



                                      -38-

<PAGE>



(12)     Supplemental Oil and Gas Disclosures (Unaudited) continued
         ----------------------------------------------------------

         Results of Operations
         ---------------------

              The results of operations  from oil and gas  producing  activities
              are as follows:

<TABLE>

                                                         Years ended December 31,
                                                         ------------------------
                                                2001                 2000                  1999
                                                ----                 ----                  ----

              <S>                           <C>                  <C>                    <C>
              Sales                         $53,363,128          $52,738,994            $23,392,231
              Production costs (a)          (17,953,047)         (14,168,808)            (7,839,205)
              Exploration expenses           (2,434,535)          (2,228,067)            (1,668,191)
              Depreciation and
                amortization                (13,998,648)         (10,053,256)            (5,780,413)
              Impairment of proved
                oil and gas
                properties                   (3,382,741)              --                     --
                                             ----------           ----------             ----------
                                             15,594,157           26,288,863             8,104,422
              Income tax expense             (5,302,013)          (9,201,101)            (2,744,385)
                                             ----------           ----------             ----------

              Results of operations
                from oil and gas
                producing activities        $10,292,144          $17,087,762            $ 5,360,037
                                             ==========           ==========             ==========

              (a)          Includes lifting costs, severance taxes and advalorem taxes.

</TABLE>

         Oil and Gas Reserve Quantities
         ------------------------------

         The following unaudited tables represent the Company's estimates of its
         proved  oil and gas  reserves.  The  Company  emphasizes  that  reserve
         estimates  are   inherently   imprecise  and  that   estimates  of  new
         discoveries  are more  imprecise  than those of  producing  oil and gas
         properties. Accordingly, the estimates are expected to change as future
         information  becomes  available.  The estimates  were  evaluated by the
         Company's  staff of  petroleum  engineers  and  audited by  independent
         petroleum engineers. It is their opinions that the reserve quantity and
         present value  information  in the following  tables  complies with the
         applicable  rules  and  regulations  of the SEC.  All of the  Company's
         reserves are located within the United States.



                                      -39-

<PAGE>




(12)     Supplemental Oil and Gas Disclosures (Unaudited) continued
         ----------------------------------------------------------

Proved Developed and                                 Oil                Gas
Undeveloped Reserves                               (Barrels)           (MCF)
--------------------                               ---------           -----
Total as of December 31, 1998                      5,019,452         12,904,100
         Revisions of previous estimates           1,874,514            559,013
         Purchases of reserves                     4,706,560         18,008,548
         Extensions and discoveries                  930,732          2,928,373
         Production                                 (990,877)        (2,289,564)
         Sales of reserves in place                  (20,351)          (183,610)
                                                   ----------         ----------

Total as of December 31, 1999                     11,520,030         31,926,860
         Revisions of previous estimates           1,549,760          1,146,955
         Purchases of reserves                       760,874          1,498,830
         Extensions and discoveries                1,230,077          2,196,522
         Production                               (1,369,456)        (3,915,325)
         Sales of reserves in place                  (80,935)          (776,122)
                                                   ----------         ----------

Total as of December 31, 2000                     13,610,350         32,077,720
         Revisions of previous estimates          (2,469,412)        1,478,240
         Purchases of reserves                     1,037,087          1,345,844
         Extensions and discoveries                  268,690            849,327
         Production                               (1,446,375)        (4,931,751)
                                                  ----------         ----------

Total as of December 31, 2001                     11,000,340         30,819,380
                                                  ==========         ==========

Proved Developed Reserves
-------------------------
December 31, 1999                                 10,072,772         28,917,190
December 31, 2000                                 11,085,442         29,362,127
December 31, 2001                                  9,423,192         27,524,641

Standardized Measure
--------------------

     The  standardized  measure of discounted  future cash flows from proved oil
and gas reserves determined in accordance with rules prescribed by the Financial
Accounting Standards Board is summarized as follows:

                                                  Years ended December 31,
                                                  ------------------------
                                              2001         2000          1999
                                             (000's)      (000's)       (000's)
                                             -------      -------      -------
Future cash inflows                         $ 270,608    $ 655,640    $ 338,098
Future production costs                      (125,842)    (201,244)    (134,474)
Future development costs                      (14,816)     (17,611)     (11,605)
                                            ---------    ---------    ---------
                                              129,950      436,785      192,019
Future income tax (expense)                   (19,177)    (127,452)     (39,884)
                                            ---------    ---------    ---------
Future net cash flows                         110,773      309,333      152,135
10% annual discount for estimated
  timing of cash flows                        (39,390)    (117,755)     (54,926)
                                            ---------    ---------    ---------
Standardized measure of discounted
  future net cash flows                     $  71,383    $ 191,578    $  97,209
                                            =========    =========    =========


                                      -40-

<PAGE>

(12)     Supplemental Oil and Gas Disclosures (Unaudited) continued
         ----------------------------------------------------------

The average  prices for oil and gas used to  calculate  future  cash  inflows at
December 31, 2001 were $17.62 per barrel and $2.49 per mcf, respectively.

The following are the principal  sources of changes in the standardized  measure
of discounted future net cash flows.

                                                   Years ended December 31,
                                                   ------------------------
                                                2001         2000         1999
                                              (000's)      (000's)       (000's)
                                              -------      -------       -------

Standardized measure - beginning of year    $ 191,578    $  97,209    $  24,490
Sales of oil and gas produced,
  net of production costs                     (35,410)     (38,570)     (15,553)
Net changes in prices and production
  costs                                      (164,336)     115,134       35,657
Extensions, discoveries, and improved
  recovery, less related costs                  1,709       20,979        9,151
Changes in future development costs            (9,968)      (3,336)        (228)
Development costs incurred                      4,097        2,137           60
Revisions of previous quantity estimates      (14,200)      26,108       15,202
Accretion of discount                          27,051        9,721        2,416
Purchase of proved reserves                     4,645       16,399       52,739
Sale of proved reserves                           -0-         (799)        (394)
Net change in income taxes                     66,577      (53,449)     (25,817)
Other                                            (360)          45         (514)
                                            ---------    ---------    ---------

Standardized measure - end of year          $  71,383    $ 191,578    $  97,209
                                            =========    =========    =========


                                      -41-

<PAGE>




                                                                     Schedule II
                                                                     -----------


                       MAYNARD OIL COMPANY AND SUBSIDIARY
                        Valuation and Qualifying Accounts
                       Three Years Ended December 31, 2001





                                              Charged to
                                Beginning      Cost and                  Ending
Description                      Balance       Expenses    Deductions   Balance
-----------                     ---------     ----------   ----------   --------

Allowance for Doubtful Accounts - (a)
-------------------------------------



December 31, 1999               $ 53,000           --         --        $ 53,000
                                ========      =========      =====      ========

December 31, 2000               $ 53,000           --         --        $ 53,000
                                ========      =========      =====      ========

December 31, 2001               $ 53,000      $ 259,949      $--        $312,949
                                ========      =========      =====      ========


(a)  Valuation  account  deducted  in  the  balance  sheet  from  trade accounts
     receivable.


                                      -42-

<PAGE>




                      MAYNARD OIL COMPANY AND SUBSIDIARIES

                                Index to Exhibits


                                                                    Sequentially
Exhibit                                                               Numbered
Number                                                                  Page
-------                                                             ------------

21.1              List of subsidiaries of the Company as
                  of December 31, 2001                                       44




                                      -43-