SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 for the quarterly period ended March 31, 2003; 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 0-18754
                                                -------

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

            DELAWARE                                            11-2904094
 -------------------------------------------------------------------------------
 (State or other jurisdiction of                             (I.R.S employer
 incorporation of organization)                              identification no.)

                 100 ROSECREST LANE, COLUMBUS, MISSISSIPPI 39701
               -------------------------------------------------
               (Address of principal executive offices, zip code)

                                 (662) 329-1047
               -------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                YES   X                     NO
                     ---                       ---

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).

                                                            Yes [_]       No [X]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         As of May 14, 2003, 12,499,528 shares of the Registrant's Common Stock,
$.0005 par value, were outstanding.
<PAGE>


                          BLACK WARRIOR WIRELINE CORP.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX

PART I - FINANCIAL INFORMATION
                                                                            Page
                                                                            ----

Item 1.     Financial Statements

            Condensed Balance Sheets - March 31, 2003 (unaudited)
            and December 31, 2002                                             3

            Condensed Statements of Operations -
            Three Months Ended March 31, 2003 (unaudited) and
            March 31, 2002 (unaudited)                                        4

            Condensed Statements of Cash Flows -
            Three Months Ended March 31, 2003 (unaudited) and
            March 31, 2002 (unaudited)                                        5

            Notes to Condensed Financial Statements -
            Three Months Ended March 31, 2003 (unaudited) and
            March 31, 2002 (unaudited)                                        6

Item 2.     Management's Discussion and Analysis of
            Financial Condition and Results of Operations                    12

Item 3.     Qualitative and Quantitative Disclosures About Market Risk       21

Item 4.     Controls and Procedures                                          22

PART II - OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K                                 22


                                       2
<PAGE>


PART I - FINANCIAL INFORMATION

         ITEM 1.  FINANCIAL STATEMENTS

BLACK WARRIOR WIRELINE CORP.
----------------------------
CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                 MARCH 31,        DECEMBER 31,
                                                                                   2003              2002
                                                                                (UNAUDITED)
<S>                                                                            <C>                <C>
                                   ASSETS

Current assets:
     Cash and cash equivalents                                                 $  5,401,395       $  2,388,866
     Accounts receivable, less allowance of $212,623 and $845,635,
       respectively                                                              10,798,794         12,801,228
     Other receivables                                                              129,143            130,540
     Prepaid expenses                                                             2,074,502             15,320
     Other current assets                                                           800,055            781,272
                                                                               ------------       ------------
                              Total current assets                               19,203,889         16,117,226

Inventories of tool components and sub-assemblies, net                            5,038,910          4,936,347
Property, plant and equipment, less accumulated depreciation                     22,954,738         24,569,343
Other assets                                                                        781,464            888,411
Goodwill and other intangible assets                                              3,278,733          3,159,782
                                                                               ------------       ------------
                              Total assets                                     $ 51,257,734       $ 49,671,109
                                                                               ============       ============

                   LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Accounts payable                                                          $  7,488,705       $  6,970,438
     Accrued salaries and vacation                                                1,010,231          1,106,070
     Accrued interest payable                                                       100,021            122,660
     Other accrued expenses                                                       1,359,039          1,048,985
     Current maturities of long-term debt and capital lease obligations          13,150,475         10,928,255
                                                                               ------------       ------------
                              Total current liabilities                          23,108,471         20,176,408

Long-term debt, less current maturities                                          11,365,089         12,370,084
Notes payable to related parties, net of unamortized discount                    24,253,249         24,238,263
Non current accrued interest payable to related parties                          11,719,482         10,798,224
Deferred revenue                                                                    136,575            136,575
                                                                               ------------       ------------
                              Total liabilities                                  70,582,866         67,719,554
                                                                               ============       ============

Stockholders' deficit:
     Preferred stock, $.0005 par value, 2,500,000 shares authorized,
       none issued at March 31, 2003 or December 31, 2002                                --                 --
     Common stock, $.0005 par value, 175,000,000 shares authorized,
       12,504,148 shares issued and outstanding at
       March 31, 2003 and December 31, 2002                                           6,252              6,252
     Additional paid-in capital                                                  20,275,963         20,275,963
     Accumulated deficit                                                        (38,900,368)       (37,603,083)
     Treasury stock, at cost, 4,620 shares at March 31, 2003 and
       December 31, 2002                                                           (583,393)          (583,393)
     Loan to shareholder                                                           (123,586)          (144,184)
                                                                               ------------       ------------
                              Total stockholders' deficit                       (19,325,132)       (18,048,445)
                                                                               ------------       ------------
                              Total liabilities and stockholders' deficit      $ 51,257,734       $ 49,671,109
                                                                               ============       ============
</TABLE>

          See accompanying notes to the condensed financial statements


                                       3
<PAGE>


Black Warrior Wireline Corp.
----------------------------
CONDENSED STATEMENTS OF OPERATIONS
For the three months ended March 31, 2003 and March 31, 2002

<TABLE>
<CAPTION>
                                                       MARCH 31, 2003     MARCH 31, 2002
                                                        (UNAUDITED)         (UNAUDITED)
<S>                                                     <C>                <C>
Revenues                                                $ 15,582,686       $ 12,649,603

Operating costs                                           11,156,723          9,143,614

Selling, general and administrative expenses               2,676,295          2,830,310

Depreciation and amortization                              1,985,901          1,948,060
                                                        ------------       ------------
                Loss from operations                        (236,233)        (1,272,381)

Interest expense and amortization of debt discount        (1,306,690)        (1,295,442)

Net gain on sale of fixed assets                             229,045             18,333

Other income                                                  16,593              7,644
                                                        ------------       ------------
                Loss before provision for income
                  taxes                                   (1,297,285)        (2,541,846)

Provision for income taxes                                        --                 --
                                                        ------------       ------------

                                                        ------------       ------------
                  Net loss                              $ (1,297,285)      $ (2,541,846)
                                                        ============       ============

Net loss per share - basic and diluted:                 $       (.10)      $       (.20)
                                                        ============       ============
</TABLE>

          See accompanying notes to the condensed financial statements.


                                       4
<PAGE>


BLACK WARRIOR WIRELINE CORP.
----------------------------
CONDENSED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2003 and March 31, 2002

<TABLE>
<CAPTION>
                                                                   MARCH 31,         MARCH 31,
                                                                      2003              2002
                                                                  (Unaudited)       (Unaudited)
<S>                                                               <C>               <C>
Cash flows from operating activities:                             $ 1,917,393       $(1,305,535)
                                                                  -----------       -----------

Cash flows from investing activities:
     Acquisitions of property, plant and equipment                   (767,778)       (2,284,286)
     Proceeds from sale of property, plant and equipment              645,689            18,333
                                                                  -----------       -----------
                    Cash used in investing activities                (122,089)       (2,265,953)
                                                                  -----------       -----------
Cash flows from financing activities:
     Proceeds from bank and other borrowings                        2,264,058         2,843,471
     Principal payments on long-term debt, notes payable and
        capital lease obligations                                  (1,597,795)         (946,757)
     Proceeds from working revolver, net                              550,962           101,544
                                                                  -----------       -----------
                    Cash provided by financing activities           1,217,225         1,998,258
                                                                  -----------       -----------

                    Net increase (decrease) in cash and cash
                        equivalents                                 3,012,529        (1,573,230)
Cash and cash equivalents, beginning of period                      2,388,866         2,819,236
                                                                  -----------       -----------
Cash and cash equivalents, end of period                          $ 5,401,395       $ 1,246,006
                                                                  -----------       -----------

Supplemental disclosure of cash flow information:
     Cash paid during the period for:
        Interest                                                  $   408,071       $   402,931
                                                                  -----------       -----------
</TABLE>

          See accompanying notes to the condensed financial statements.


                                       5
<PAGE>


                          BLACK WARRIOR WIRELINE CORP.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

1.       GENERAL

         The accompanying condensed financial statements reflect all adjustments
that, in the opinion of management, are necessary for a fair presentation of the
financial position of Black Warrior Wireline Corp. (the "Company"). Such
adjustments are of a normal recurring nature. The results of operations for the
interim period are not necessarily indicative of the results to be expected for
the full year. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002 should be read in conjunction with this document.

         Business of the Company. The Company is an oil and gas service company
currently providing various services to oil and gas well operators primarily in
the continental United States and in the Gulf of Mexico. The Company's principal
lines of business include (a) wireline services, and (b) directional oil and gas
well drilling and downhole surveying services. In July 2001, the Company sold
its workover and completion line of business.

         Liquidity. The Company reported net income (loss) for the three months
ended March 31, 2003 of approximately ($1,300,000) and for the years ended
December 31, 2002, 2001, and 2000 of approximately ($7,600,000), $5,000,000 and
($4,000,000), respectively. Cash flows provided by (used in) operations were
approximately $1,900,000 for the three months ended March 31, 2003 and
$5,400,000, $16,350,000 and ($2,900,000) for the years ended December 31 2002,
2001, and 2000, respectively. The Company is highly leveraged. The Company's
outstanding indebtedness includes primarily senior indebtedness aggregating
approximately $21.6 million at March 31, 2003, other indebtedness of
approximately $2.9 million and approximately $36.0 million (including
approximately $11.7 million of accrued interest) owing to St. James Merchant
Bankers, L.P. ("SJMB") and St. James Capital Partners, L.P. ("SJCP")
(collectively "St. James") and its affiliates and directors, who are related
parties. The Company's debt and accrued interest owed to related parties is
convertible into common stock and is subordinate to its Senior Credit Facility
with General Electric Capital Corporation ("GECC"). In addition, no repayments
of the related party debt or accrued interest can be made until the Senior
Credit Facility is completely extinguished.

         As discussed in Note 9 to the Company's financial statements for the
year ended December 31, 2002, prior to June 10, 2002, the Senior Credit Facility
was subject to affirmative and general covenants and certain financial
covenants. The Company was in violation of certain of these covenants as of
December 31, 2001, resulting in an event of default. These covenant violations
also resulted in violations and events of default of the subordinated debt under
the cross default provisions of the subordinated debt agreements. All covenant
violations and events of default were waived as of June 10, 2002 by the
respective debt-holders.

         Through April 14, 2003, the Company has amended the terms of its Senior
Credit Facility with GECC on five occasions, the principal effects of which were
to relax certain of the terms of the financial covenants so as to be more
favorable to the Company. In connection with the April 2003 amendment to the
Credit Facility, the Company is required to maintain a cumulative operating cash
flow commencing with the month ended March 31, 2003 (see Note 9 for specified


                                       6
<PAGE>


amounts by month and period); limit capital expenditures to $8.0 million in 2003
and $5.0 million during the six-months ended June 30, 2004; and comply with
certain fixed charges, interest coverage and senior funded debt to EBITDA ratios
as detailed further in Note 9.

         Strong and stable market conditions and the Company's ability to meet
intense competitive pressures are essential to the Company's maintaining a
positive liquidity position and meeting debt covenant requirements. Decreases in
market conditions or failure to mitigate competitive pressures could result in
non-compliance with its debt covenants and the triggering of the prepayment
clauses of the Company's debt. The Company believes that if market conditions
remain stable throughout 2003, the Company will be able to generate sufficient
cash flow to meet its working capital needs and comply with its debt covenants.
If market conditions decline significantly, the Company may be required to
obtain additional amendments to its Senior Credit Facility, or obtain capital
through equity contributions or financing, including a possible merger or sale
of assets, or other business combination. The Company can give no assurances
that adequate financing could be obtained or that a suitable business
combination or asset sale could be consummated.

         Management may in the future seek to raise additional capital, which
may be either debt or equity capital or a combination thereof or enter into
another material transaction involving the Company, including a possible sale of
the Company. As of March 31, 2003, no specific plans or proposals have been made
with regard to any additional financing or any other transaction. The Company
may engage in other material corporate transactions.

         In November 2001, the Company retained Simmons & Company International
("Simmons") as its financial advisor in connection with examining various
alternative means to maximize shareholder value including a possible merger,
sale of assets or other business combination involving the Company. At the
Company's request, Simmons intends to intensify its efforts in this connection
and it intends, during the second quarter of 2003, to renew its efforts in this
regard and will be soliciting the interest of persons with a strategic or other
possible interest in entering into a business combination transaction with the
Company. Any such transaction can be expected to result in a change of control
of the Company. At March 31, 2003, the Company had not entered into any
agreements or letters of intent regarding any such business combination and it
was not engaged in any substantive negotiations with any person in that regard.
Any such transaction will be dependent upon the ability of the Company to reach
an agreement on terms acceptable to its Board of Directors and principal
stockholders. There can be no assurance that the Company will enter into such a
transaction and no representation is made as to the terms on which any such a
transaction may be entered into or that such a transaction will occur.

         In the event the Company should seek or be required to raise additional
equity capital, there can be no assurance that such a transaction can be
effected in the light of the Company's existing capital structure or that such a
transaction will not dilute the interests of the Company's existing security
holders. Fluctuations in interest rates may adversely affect the Company's
ability to raise capital.


                                       7
<PAGE>


2.       EARNINGS PER SHARE

The calculation of basic and diluted earning per share ("EPS") is as follows:

<TABLE>
<CAPTION>
                                                FOR THE THREE MONTHS                   FOR THE THREE MONTHS
                                                ENDED MARCH 31, 2003                   ENDED MARCH 31, 2002
                                                --------------------                   --------------------

                                        Loss          Shares        Per Share   Income        Shares        Per Share
                                        Numerator     Denominator   Amount      Numerator     Denominator   Amount
                                        ---------     -----------   ---------   ---------     -----------   ---------
<S>                                     <C>           <C>           <C>         <C>           <C>           <C>
Net loss                                $(1,297,285)                            $(2,541,846)
                                        ============                            ============

BASIC AND DILUTED EPS
Loss available to common shareholders   $(1,297,285)  12,499,528    $(0.10)     $(2,541,846)  12,491,788    $(0.20)
</TABLE>

         Options and warrants to purchase 90,810,464 and 81,480,519 shares of
common stock at prices ranging from $0.75 to $8.01 were outstanding during the
three months ended March 31, 2003 and 2002, respectively, but were not included
in the computation of diluted EPS because the effect would be anti-dilutive (see
Note 9.).

          Convertible debt instruments, including convertible interest, which
would result in the issuance of 48,008,424 and 43,231,134 shares of common
stock, if the conversion features were exercised, were outstanding during the
three months ended March 31, 2003 and 2002, respectively, but were not included
in the computation of the diluted EPS because the effect would be anti-dilutive.
The conversion price of these instruments is $0.75 per share as of March 31,
2003 (see Note 9).

3.       INVENTORIES OF TOOL COMPONENTS AND SUB-ASSEMBLIES, NET

         Inventories consist of tool components, subassemblies and expendable
parts used in directional oil and gas well drilling activities. Components,
subassemblies and expendable parts are capitalized as long-term inventory and
expensed based on a per hour of motor use calculation and then adjusted to
reflect physical inventory counts. The Company's classification and treatment is
consistent with industry practice.

4.       COMMITMENTS AND CONTINGENCIES

         The Company is a defendant in various legal actions in the ordinary
course of business. Management does not believe the ultimate outcome of these
actions will have a materially adverse effect on the financial position, results
of operations or cash flows of the Company.


                                       8
<PAGE>


5.     SEGMENT AND RELATED INFORMATION

         At March 31, 2003, the Company is organized into, and manages its
business based on the performance of two business units. The business units have
separate management teams and infrastructures that offer different oil and gas
well services. The business units have been aggregated into two reportable
segments: wireline and directional drilling, since the long-term financial
performance of these reportable segments is affected by similar economic
conditions.

         WIRELINE - This segment consists of two business units that perform
various procedures to evaluate and modify downhole conditions at different
stages of the process of drilling and completing oil and gas wells as well as
various times thereafter until the well is depleted and abandoned. This segment
engages in onshore and offshore servicing, as well as other oil and gas well
service activities including renting and repairing equipment. The principal
markets for this segment include all major oil and gas producing regions of the
United States. Major customers of this segment for the quarter ended March 31,
2003 included Burlington Resources, Chevron and Anadarko.

         DIRECTIONAL DRILLING - This segment performs procedures to enter
hydrocarbon producing zones directionally, using specialized drilling equipment,
and expand the area of interface of hydrocarbons and thereby greatly enhancing
recoverability. It also engages in oil and gas well downhole surveying
activities. The principal markets for this segment include all major oil and gas
producing regions of the United States. Major customers of this segment for the
quarter ended March 31, 2003 included Encore Operating, Anadarko and Peoples
Energy.

         The accounting policies of the reportable segments are the same as
those described in Note 3 of the Company's Annual Report of Form 10-K for the
fiscal year ended December 31, 2002. The Company evaluates the performance of
its operating segments based on earnings before interest, taxes, depreciation,
and amortization (EBITDA), which is derived from revenues less operating
expenses and selling, general, and administrative expenses. Segment information
for the three months ended March 31, 2003 and 2002 is as follows:

         Three months ended March 31, 2003

                                                    DIRECTIONAL
                                    WIRELINE        DRILLING           TOTAL
                                   -----------      ------------    -----------
           Segment revenues        $10,369,814      $5,212,872      $15,582,686
           Segment EBITDA          $ 1,280,981      $  468,687      $ 1,749,668

         Three months ended March 31, 2002

                                                    DIRECTIONAL
                                    WIRELINE        DRILLING          TOTAL
                                   -----------      ------------    -----------
           Segment revenues        $7,598,054       $5,051,549      $12,649,603
           Segment EBITDA          $1,049,335       $  347,668      $ 1,397,003


                                       9
<PAGE>


While segment EBITDA from wireline services increased in total from $1.0 million
in the first quarter of 2002 to $1.3 million in 2003, the percentage of
contribution from the wireline segment decreased from 75.1% in the first quarter
of 2002 to 73.2% for the same period of 2003 as a result in the method of
allocation of corporate expenses.

The Company has certain expenses that are not allocated to the individual
operating segments. A reconciliation of total segment EBITDA to loss from
operations for the three months ended March 31, 2003 and 2002 is presented as
follows:

Three months ended March 31:

                                              2003                    2002
          Total segment EBITDA             $ 1,749,668             $ 1,397,003
          Depreciation and amortization     (1,985,901)             (1,948,060)
          Unallocated corporate expense             --                (721,324)
                                           ----------              -----------
               Loss from operations        $  (236,233)            $(1,272,381)
                                           ===========             ===========

6.       RELATED PARTY TRANSACTIONS

         On June 17, 1999, the Company sold approximately $329,000 of trade
accounts receivable, which was fully reserved due to the customer declaring
bankruptcy, to RJ Air, LLC, an entity affiliated with a former member of the
Company's Board of Directors, for $200,000. As of March 31, 2003, the Company
has collected $100,000 of the sale price and the remaining $100,000 is included
in deferred revenue.

         During 2000, the Company entered into three capital leases totalling
$918,000 with MWD Technology Company ("MWD"). The principal owners of MWD
include employees of the Company. The outstanding balance of $136,000 of the
leases was paid in full in connection with the GECC refinancing in September
2001.

         On November 20, 2000, the Company entered into a capital lease
agreement for approximately $539,000 with Big Foot Tool Rental Service, LLC,
which is partially owned by an officer and an employee of the Company. The
outstanding balance of $393,000 of the lease was paid in full in connection with
the GECC refinancing.

         In February 2001, the Company issued to a Director of the Company and
SJCP five-year warrants to purchase 700,000 and 400,000 shares, respectively, of
the Company's Common Stock at exercise prices of $0.75 per share. The warrants
were issued in consideration of guarantees extended to Coast Business Credit by
the Director and SJCP in connection with the Company's borrowings from Coast
Business Credit in 2000.

         The Company has executed notes payable to SJMB and SJCP, whose chairman
and chief financial officer both serve on the Company's Board of Directors, in
connection with acquisitions and to provide funding for operations. At March 31,
2003 and 2002, notes due to SJMB, SJCP, their principal partners and affiliates
totalled $24,566,882 and $24,566,882, respectively. The notes bear interest at
15% and permit conversion to equity under certain conditions, which would result
in substantial dilutions to existing shareholders.


                                       10
<PAGE>


         In connection with the five year employment agreement effective January
1, 2002 entered into with Mr. Jenkins to remain as the Company's President and
Chief Executive Officer, the Company agreed to loan Mr. Jenkins $190,000,
bearing interest at the applicable federal rate, to be repaid at the rate of
one-third of the principal, plus accrued interest on October 1 of each of the
years 2002, 2003 and 2004. If Mr. Jenkins remains employed by the Company on
September 30 preceding the date annual principal and interest is due on the
loan, the sum due and owing the following day is forgiven. In the event of a
Change of Control, as defined, the death or permanent disability of Mr. Jenkins
or in the event his employment is terminated without cause, the entire amount
owing by Mr. Jenkins is forgiven. The Company is amortizing the loan balance
into compensation cost over the life of the loan. Compensation expense for the
quarter ended March 31, 2003 was approximately $20,600.

7.       ISSUANCE OF COMMON STOCK

         During the first quarter of 2000, the Company executed a Compromise
Agreement With Release with Bendover Company whereby Bendover agreed to return
to the Company promissory notes aggregating $3,200,000 principal amount and
receive in exchange 2,666,667 shares of the Company's common stock and a
promissory note in the principal amount of $1,182,890 due on January 15, 2001,
bearing interest at 10% per annum. The maturity of the promissory note was
subsequently extended to June 15, 2001 at an interest rate of 20% per annum with
10% per annum paid monthly and the balance deferred until maturity. In September
2001, the Company paid $1.1 million to Bendover out of the proceeds of the GECC
financing in full payment of all outstanding principal and interest obligations
owing to Bendover.

         The Company has outstanding at March 31, 2003 common stock purchase
warrants, options and convertible debt securities entitled to purchase or to be
converted into an aggregate 138,818,888 shares of the Company's common stock at
exercise and conversion prices ranging from $0.75 to $6.63. Accordingly, if all
such securities were exercised or converted, the 12,499,528 shares of Common
Stock issued and outstanding on March 31, 2003, would represent 8.3% of the
shares outstanding on a fully diluted basis.

8.       STOCK-BASED COMPENSATION

         The Company applies principles from SFAS No. 123 in accounting for its
stock option plan. In accordance with SFAS No. 123, the Company has elected not
to report the impact of the fair value of its stock options in the statements of
operations but, instead, to disclose the pro forma effect and to continue to
apply APB Opinion No. 25 and related interpretations in accounting for its stock
options. Accordingly, no compensation expense has been recognized for stock
options issued to employees with an exercise price at fair market value or
above. Compensation expense for options issued to non-employees of the Company
are excluded from the pro forma effect below, as compensation expense has been
recognized in the accompanying financial statements. Had compensation cost for
all of the Company's stock options issued been determined based on the fair
value at the grant dates for awards consistent with the method prescribed in
SFAS No. 123, the Company's net loss and loss per share would have been
increased to the pro forma amounts indicated as follows:


                                       11
<PAGE>


<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                            MARCH 31,         MARCH 31,
                                                              2003              2002
                                                           -----------       -----------
<S>                                                        <C>               <C>
Net loss - as reported                                     $(1,297,285)      $(2,541,846)

Less: Total stock-based employee compensation expense
   determined under fair value method for all awards,
   net of related tax effects                                   (3,219)          (50,322)
                                                           -----------       -----------
Net loss - pro forma                                       $(1,300,504)      $(2,592,168)
                                                           -----------       -----------
Loss per share - as reported (basic and diluted):          $      (.10)      $      (.20)
                                                           -----------       -----------
Loss per share - pro forma (basic and diluted):            $      (.10)      $      (.21)
                                                           -----------       -----------
</TABLE>

         ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

         The Company's results of operations are affected primarily by the
extent of utilization and rates paid for its services and equipment. The energy
services sector is completely dependent upon the upstream spending of the
exploration and production side of the industry. A recovery in the energy
industry began in the latter half of 1999 and continued throughout 2000 and into
early 2001 due mainly to strong oil and natural gas prices. These prices
declined throughout most of 2001. As a consequence, North American drilling
activity declined as well. The Company's strong revenues and income from
operations, experienced in the first three quarters of 2001, did not continue
into the fourth quarter of 2001 and into 2002. While oil and natural gas
commodity prices improved throughout much of 2002, the improved pricing did not
result in revenues and income to the Company in amounts as favorable as were
experienced in 2001. Revenues and income did, however, improve in the latter
half of 2002. There can be no assurance that the Company will experience
continued improvement in revenues and income from operations in 2003 that were
realized in the latter half of 2002. There can be no assurance that the Company
will continue to experience any material increase in the demand for and
utilization of its services and its revenues and return to profitability.

         Management may in the future seek to raise additional capital, which
may be either debt or equity capital or a combination thereof or enter into
another material transaction involving the Company, including a possible sale of
the Company. As of March 31, 2003, no specific plans or proposals have been made
with regard to any additional financing or any other transaction. The Company
may engage in other material corporate transactions.

         In November 2001, the Company retained Simmons & Company International
("Simmons") as its financial advisor in connection with examining various
alternative means to maximize shareholder value including a possible merger,
sale of assets or other business combination involving the Company. At the
Company's request, Simmons intends to intensify its efforts in this connection
and it intends, during the second quarter of 2003, to further its efforts in
this regard by soliciting the interest of persons with a strategic or other
possible interest in entering into a business combination transaction with the
Company. Any such transaction can be expected to result in a change of control
of the Company. At March 31, 2003, the Company had not entered into any


                                       12
<PAGE>


agreements or letters of intent regarding any such business combination and it
was not engaged in any substantive negotiations with any person in that regard.
Any such transaction will be dependent upon the ability of the Company to reach
an agreement on terms acceptable to its Board of Directors and principal
stockholders. There can be no assurance that the Company will enter into such a
transaction and no representation is made as to the terms on which any such a
transaction may be entered into or that such a transaction will occur.

         In the event the Company should seek or be required to raise additional
equity capital, there can be no assurance that such a transaction can be
effected in the light of the Company's existing capital structure or that such a
transaction will not dilute the interests of the Company's existing security
holders. Fluctuations in interest rates may adversely affect the Company's
ability to raise capital.

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE
MONTHS ENDED MARCH 31, 2002

         The following table sets forth the Company's revenues from its two
principal lines of business for the three months ended March 31, 2003 and 2002,
respectively:

                                        THREE MONTHS ENDED
                                     3/31/03          3/31/02
         Wireline                  $10,369,814      $ 7,598,054
         Directional Drilling        5,212,872        5,051,549
                                   -----------      -----------
                                   $15,582,686      $12,649,603

         Total revenues increased by approximately $2.9 million to approximately
$15.6 million for the three months ended March 31, 2003 as compared to total
revenues of approximately $12.6 million for the three months ended March 31,
2002. Wireline services revenues increased by approximately $2.8 million in 2003
primarily due to the increased demand for the Company's services. Directional
drilling revenues increased by approximately $161,000 as a consequence of the
general increased level of oil and natural gas well drilling activity.

         Operating costs increased by approximately $2.0 million for the three
months ended March 31, 2003, as compared to the same period of 2002. Operating
costs were 71.6% of revenues for the three months ended March 31, 2003 as
compared with 72.2% of revenues in the same period in 2002. The increase in
operating costs was primarily the result of the higher overall level of
activities in the three months ended March 31, 2003 compared with 2002 while the
slight decrease in operating costs as a percentage of revenues reflect the
variable nature of operating costs. Salaries and benefits increased by
approximately $460,000 for the three months ended March 31, 2003, as compared to
the same period in 2002, with a corresponding increase in the total number of
employees from 327 at March 31, 2002 to 369 at March 31, 2003. The increase in
salaries and benefits is primarily due to the increase in employee levels over
2002.

         Selling, general and administrative expenses decreased by approximately
$154,000 to $2.7 million in the three months ended March 31, 2003 from $2.8
million in the three months ended March 31, 2002. As a percentage of revenues,
selling, general and administrative expenses decreased to 17.2% in the three


                                       13
<PAGE>


months ended March 31, 2003 from 22.4% in 2002, primarily as a result of the
elimination of outside sales consultants and lower accounting expenses.

         Depreciation and amortization increased to approximately $1,986,000 in
the three months ended March 31, 2003, or 12.7% of revenues, from approximately
$1,948,000, or 15.4% of revenues for 2002.

         Interest expense and amortization of debt discount increased by
approximately $11,000 for the three months ended March 31, 2003 as compared to
the same periods in 2002. See "Note 9 of Notes to Financial Statements" in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2002.

         The Company's net loss for the quarter ended March 31, 2003 was $1.3
million, compared with a net loss of $2.5 million for the quarter ended March
31, 2002. The improvement in operating results for the quarter ended March 31,
2003 was the result of the general increase in demand for the Company's services
that commenced in the latter half of 2002.

LIQUIDITY AND CAPITAL RESOURCES

         Cash provided from the Company's operating activities was approximately
$1.9 million for the three months ended March 31, 2003 as compared to cash used
of approximately $1.3 million for the same period in 2002. Investing activities
used cash of approximately $768,000 during the three months ended March 31, 2003
for the acquisition of property, plant and equipment and was largely offset by
$646,000 of proceeds from the sale of assets. During the three months ended
March 31, 2002, investing activities used cash of approximately $2.3 million for
the acquisition of property, plant and equipment. Financing activities provided
cash of approximately $2.8 million from proceeds from bank and other borrowings
and net draws on working capital revolving loans offset by principal payments on
debt and capital lease obligations of approximately $1.6 million. For the same
period in 2002, financing activities provided cash of approximately $2.9 million
from proceeds from bank and other borrowings and net draws on working capital
revolving loans offset by principal payments on debt and capital lease
obligations of approximately $0.9 million.

         The Company's outstanding indebtedness includes primarily senior
secured indebtedness aggregating approximately $21.6 million at March 31, 2003,
owed to GECC, other indebtedness of approximately $2.9 million, and $36.0
million (inclusive of accrued interest) owed to St. James and its affiliates.

GECC LOAN DESCRIPTION

         On September 14, 2001, the Company entered into the Credit Facility
with GECC providing for the extension of revolving, term and capex credit
facilities to the Company aggregating up to $40.0 million. The Company and GECC
entered into amendments to the Credit Facility in January 2002, June 2002,
October 2002, February 2003 and April 2003. As amended, the Credit Facility
includes a revolving loan of up to $15.0 million, but not exceeding 85% of
eligible accounts receivable, a term loan of $17.0 million, and a capex loan of
up to $8.0 million, but not exceeding a borrowing base of the lesser of 70% of
the hard costs of acquired eligible equipment, 100% of its forced liquidation


                                       14
<PAGE>


value and the Company's EBITDA for the month then ended, less certain principal,
interest and maintenance payments. Eligible accounts are defined to exclude,
among other items, accounts outstanding of debtors that are more than 60 days
overdue or 90 days following the original invoice date and of debtors that have
suspended business or commenced various insolvency proceedings and accounts with
reserves established against them to the extent of such reserves as GECC may set
from time to time in its reasonable credit judgment. Borrowings under the capex
loan are at the sole and exclusive discretion of GECC. The interest rate on
borrowings under the revolving loan is 1.75% above a base rate and on borrowings
under the term loan and capex loan is 2.5% above the base rate. The base rate is
the higher of (i) the rate publicly quoted from time to time by the Wall Street
Journal as the base rate on corporate loans posted by at least 75% of the
nation's thirty largest banks, or (ii) the average of the rates on overnight
Federal funds transactions by members of the Federal Reserve System, plus 0.5%.
Subject to the absence of an event of default and fulfillment of certain other
conditions, , the Company can elect to borrow or convert any loan and pay
interest at the LIBOR rate plus applicable margins of 3.25% on the revolving
loan and 4.0% on the term loan and capex loan. If an event of default has
occurred, the interest rate is increased by 2%. Advances under the Credit
Facility are collateralized by a senior lien against substantially all of the
Company's assets. The Credit Facility expires on September 14, 2004.

         Initial borrowings under the Credit Facility advanced on September 14,
2001 aggregated $21.6 million. Proceeds of the initial borrowings were used to
repay outstanding indebtedness aggregating $21.4 million to Coast Business
Credit, Bendover Company and certain other indebtedness. At March 31, 2003,
borrowings outstanding under the Credit Facility aggregated $21.6 million, of
which $6.8 million was outstanding under the revolving loan, $11.9 million was
outstanding under the term loan and $2.9 was outstanding under the capex loan.
Borrowings under the revolving loan are able to be repaid and re-borrowed from
time to time for working capital and general corporate needs, subject to the
Company's continuing compliance with the terms of the agreement, with the
outstanding balance of the revolving loan to be paid in full at the expiration
of the Credit Facility on September 14, 2004. The term loan is to be repaid in
35 equal monthly installments of $283,333 with a final installment of $7,083,333
due and payable on September 14, 2004. The capex loan is available to be
borrowed through September 14, 2003, at the discretion of GECC, and is to be
repaid in equal monthly installments of 1/60th of each of the amounts borrowed
from time to time with the remaining outstanding balance of the entire capex
loan due and payable on September 14, 2004

         Borrowings under the Credit Facility may be prepaid or the facility
terminated or reduced by the Company at any time subject to the payment of an
amount equal to 2% of the prepayment or reduction occurring before September 14,
2003, and 1% of the prepayment or reduction occurring thereafter but before
September 14, 2004. In the event all the stock or substantially all the assets
of the Company are sold prior to September 14, 2003, and in connection
therewith, the Company pre-pays the Credit Facility, the amount of such payment
is reduced to 1%. The Company is required to prepay borrowings out of the net
proceeds from the sale of any assets, subject to certain exceptions, or the
stock of any subsidiary, the net proceeds from the sale of any stock or debt
securities by the Company, and any borrowings in excess of the applicable
borrowing availability, including borrowings under the term loan and capex loan
in excess of 50% of the forced liquidation value of the eligible capex and term


                                       15
<PAGE>


loan equipment and borrowings under the term loan in excess of 70% of the forced
liquidation value of eligible term loan equipment. The value of the term loan
equipment is established by appraisal.

         Initial borrowings under the Credit Facility were subject to the
fulfillment at or before the closing of a number of closing conditions,
including among others, the accuracy of the representations and warranties made
by the Company in the loan agreement, delivery of executed loan documents,
officers' certificates, an opinion of counsel, repayment of the Coast senior
secured loan, the extension of the maturity date of $24.6 million principal
amount of the Company's outstanding subordinated notes to December 31, 2004 with
no payments of principal or interest to be made prior to that date, and the
completion of due diligence. Future advances are subject to the continuing
accuracy of the Company's representations and warranties as of such date (other
than those relating expressly to an earlier date), the absence of any event or
circumstance constituting a "material adverse effect," as defined, the absence
of any default or event of default under the Credit Facility, and the borrowings
not exceeding the applicable borrowing availability under the Credit Facility,
after giving effect to such advance. A "material adverse effect" is defined to
include an event having a material adverse effect on the Company's business,
assets, operations, prospects or financial or other condition, on the Company's
ability to pay the loans, or on the collateral and also includes a decline in
the "Average Rig Count" (excluding Canada and international rigs) published by
Baker Hughes, Inc. falling below 675 for 12 consecutive weeks.

         Under the Credit Facility, the Company is obligated to maintain
compliance with a number of affirmative and negative covenants. Affirmative
covenants the Company must comply with include requirements to maintain its
corporate existence and continue the conduct of its business substantially as
now conducted, promptly pay all taxes and governmental assessments and levies,
maintain its corporate records, maintain insurance, comply with applicable laws
and regulations, provide supplemental disclosure to the lenders, conduct its
affairs without violating the intellectual property of others, conduct its
operations in compliance with environmental laws and provide a mortgage or deed
of trust to the lenders granting a first lien on the Company's real estate upon
the request of the lenders, provide certificates of title on newly acquired
equipment with the lender's lien noted.

         Negative covenants the Company may not violate include, among others,
(i) forming or acquiring a subsidiary, merging with, acquiring all or
substantially all the assets or stock of another person, (ii) making an
investment in or loan to another person, (iii) incurring any indebtedness other
than permitted indebtedness, (iv) entering into any transaction with an
affiliate except on fair and reasonable terms no less favorable than would be
obtained from a non-affiliated person, (v) making loans to employees in amounts
exceeding $50,000 to any employee and a maximum of $250,000 in the aggregate,
(vi) making any change in its business objectives or operations that would
adversely affect repayment of the loans or in its capital structure, including
the issuance of any stock, warrants or convertible securities other than (A) on
exercise of outstanding securities or rights, (B) the grant of stock in exchange
for extensions of subordinated debt, (C) options granted under an existing or
future incentive option plan, or (D) in its charter or by-laws that would
adversely affect the ability of the Company to repay the indebtedness, (vii)
creating or permitting to exist any liens on its properties or assets, with the
exception of those granted to the lenders or in existence on the date of making
the loan, (viii) selling any of its properties or other assets, including the
stock of any subsidiary, except inventory in the ordinary course of business and


                                       16
<PAGE>


equipment or fixtures with a value not exceeding $100,000 per transaction and
$250,000 per year, (ix) failing to comply with the various financial covenants
in the loan agreement, (x) making any restricted payment, including payment of
dividends, stock or warrant redemptions, repaying subordinated debt, rescission
of the sale of outstanding stock, (xi) making any payments to stockholders of
the Company other than compensation to employees and payments of management fees
to any stockholder or affiliate of the Company, or (xii) amending or changing
the terms of the Company's subordinated debt.

         As amended through April 2003, the financial covenants the Company is
required to comply with include (a) limitations on capital expenditures to $7.7
million during the year 2002 with an exclusion on the amount spent to replace
and restore plug and abandonment equipment lost due to weather in 2002, to $8.0
million during the year 2003 and to $5.0 million during the six-months ended
June 30, 2004, (b) having a fixed charge coverage ratio at the end of each
quarter, commencing with the quarter ended March 31, 2004, of not less than
1.3:1.0 for the preceding twelve-month period, (c) having an interest coverage
ratio at the end of each quarter, commencing with the quarter ended March 31,
2004, of not less than 3.0:1.0 for the preceding twelve-month period, and (d)
commencing with the quarter ending March 31, 2004, having a ratio of senior
funded debt to EBITDA, minus capital expenditures paid in cash, of not more than
2:0:1.0 for the four fiscal quarters then ended. The Company is required to
maintain a cumulative operating cash flow at the end of each month, commencing
with the month ended March 31, 2003, increasing as follows:

                      FISCAL MONTH                CUMULATIVE OPERATING CASH FLOW
                      ------------                ------------------------------

         For the 3 Months Ending March 31, 2003                $  800,000

         For the 4 Months Ending April 30, 2003                $1,350,000

         For the 5 Months Ending May 31, 2003                  $2,000,000

         For the 6 Months Ending June 30, 2003                 $2,700,000

         For the 7 Months Ending July 31, 2003                 $3,500,000

         For the 8 Months Ending August 31, 2003               $4,200,000

         For the 9 Months Ending September 30, 2003            $5,000,000

         For the 10 Months Ending October 31, 2003             $6,000,000

         For the 11 Months Ending November 30, 2003            $7,100,000

         For the 12 Months Ending December 31, 2003            $8,200,000

         For the 12 Months Ending January 31, 2004             $8,900,000

         For the 12 Months Ending February 28, 2004            $9,500,000


                                       17
<PAGE>


         Cumulative operating cash flow is defined, for the period March 1, 2003
through December 31, 2003, as the sum of EBITDA for such month minus capital
expenditures paid in cash for such month plus EBITDA for each preceding month
commencing on January 1, 2003 minus capital expenditures paid in cash for each
preceding month commencing January 1, 2003. Subsequent to December 31, 2003,
cumulative operating cash flow is defined to include the sum of EBITDA for such
month minus capital expenditures paid in cash for such month plus EBITDA for the
preceding eleven months minus capital expenditures paid in cash for the
preceding eleven months.

         For the period ended March 31, 2003, the Company is in compliance with
all financial covenants.

         Events of default under the Credit Facility include (a) the failure to
pay when due principal or interest or fees owing under the Credit Facility, (b)
the failure to perform the covenants under the Credit Facility relating to use
of proceeds, maintenance of a cash management system, maintenance of insurance,
delivery of certificates of title, delivery of required consents of holders of
outstanding subordinated notes, maintenance of compliance with the financial
covenants in the loan agreement and compliance with any of the loan agreement's
negative covenants, (c) the failure, within specified periods of 3 or 5 days of
when due, to deliver monthly unaudited and annual audited financial statements,
annual operating plans, and other reports, notices and information, (d) the
failure to perform any other provision of the loan agreement which remains
un-remedied for 20 days or more, (e) a default or breach under any other
agreement to which the Company is a party beyond any grace period that involves
the failure to pay in excess of $250,000 or causes or permits to cause in excess
of $250,000 of indebtedness to become due prior to its stated maturity, (f) any
representation or warranty or certificate delivered to the lenders being untrue
or incorrect in any material respect, (g) a change of control of the Company,
(h) the occurrence of an event having a material adverse effect, and (i) the
attachment, seizure or levy upon of assets of the Company which continues for 30
days or more and various other bankruptcy and other events. Upon the occurrence
of a default or event of default, the lenders may discontinue making loans to
the Company. Upon the occurrence of an event of default, the lenders may
terminate the Credit Facility, declare all indebtedness outstanding under the
Credit Facility due and payable, and exercise any of their rights under the
Credit Facility which includes the ability to foreclose on the Company's assets.

         The Company has amended the terms of its Credit Facility with GECC on
five occasions the principal effects of which were to relax certain of the terms
of the financial covenants so as to be more favorable to the Company. There can
be no assurance that the Company will be able to obtain further amendments to
these financial covenants if required or that the failure to obtain such
amendments when requested may not result in the Company being placed in
violation of those financial covenants. Before reflecting amendments to the
Credit Facility made in June 2002, the Company was in violation of the financial
covenants relating to its fixed charge coverage ratio, minimum interest coverage
ratio, and ratio of senior funded debt to EBITDA. By amendment to the Credit


                                       18
<PAGE>


Facility entered into as of June 10, 2002, GECC waived these defaults as well as
violations relating to the Company's failure to timely deliver its financial
statements for the year ended December 31, 2001 as required by the Credit
Facility and selling certain assets in violation of the terms of the Credit
Facility. The Company agreed to pay GECC a fee of $100,000 in connection with
entering into the amendment.

         In connection with the April 2003 amendment to the Credit Facility, the
Company is required to provide GECC with weekly reports setting forth an aging
of its accounts payable and weekly cash budgets for the immediately following
thirteen week period. Also in connection with entering into that amendment, the
Company agreed to pay GECC an amendment fee of $100,000, of which $50,000 is
payable in June 2003 and $50,000 is payable on December 31, 2003, and a fee of
$300,000 in the event of a sale of all the assets or stock of the Company or
other event that results in a change of control of the Company. GECC consented
to a capex loan of $1.0 million to the Company at the time of entering into the
amendment.

         Reference is made to the Credit Agreement, filed as an Exhibit to the
Company's Current Report on Form 8-K for September 14, 2001, the First and
Second Amendments thereto, filed as exhibits to the Company's Annual Report on
Form 10-K for the year ended December 31, 2001, the Third Amendment thereto,
filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2002, and the Fourth Amendment and Fifth Amendment,
filed as Exhibits to the Annual Report on Form 10-K for the year ended December
31, 2002, for a complete statement of the terms and conditions.

         The Company continues to be highly leveraged and has an accumulated
deficit of $38.9 million. The Company is subject to certain debt covenants
requiring minimal operational and cash flow levels. Failure to comply with these
debt covenants and or generate sufficient cash flow from operations, could
significantly impair the Company's liquidity position and could result in the
lender exercising prepayment options under the Company's credit facility. While
the Company believes that it will have adequate borrowing base and cash flows,
it can make no assurances that it will comply with its debt covenants or
generate sufficient cash flows to service its debt and fund operations. Should
the Company be unable to borrow funds under its current credit facility or if
prepayment of those borrowings were required, it can make no assurances that
alternative funding could be obtained.

INFLATION

         The Company's revenues have been and are expected to continue to be
affected by fluctuations in the prices for oil and gas. Inflationary pressures
did not have a significant effect on the Company's operations in the three
months ended March 31, 2003.


                                       19
<PAGE>


SIGNIFICANT ACCOUNTING POLICIES

         The Company's Discussion and Analysis of Financial Condition and
Results of Operations is based upon its consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosures of
contingent assets and liabilities. On an on-going basis, the Company evaluates
its estimates, including those related to the allowance for bad debts,
inventory, long-lived assets, intangibles and goodwill. The Company bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

         The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
If the financial condition of the Company's customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.

         The Company's inventory consists of tool components, sub-assemblies and
expendable parts used in directional oil and gas well drilling activities.
Components, sub-assemblies and expendable parts are capitalized as long-term
inventory and expensed based on a per hour of motor use calculation and then
adjusted to reflect physical inventory counts. The Company's classification and
treatment is consistent with industry practice.

         The Company assesses the impairment of identifiable intangibles,
long-lived assets and related goodwill whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. When the
Company determines that the carrying value of intangibles, long-lived assets and
related goodwill may not be recoverable, any impairment is measured based on a
projected net cash flows expected to result from that asset, including eventual
disposition.

         Property and equipment are carried at original cost less applicable
depreciation. Depreciation is recognized on the straight line basis over lives
ranging from two to ten years. Major renewals and improvements are capitalized
and depreciated over each asset's estimated remaining useful life. Maintenance
and repair costs are charged to expense as incurred. When assets are sold or
retired, the remaining costs and related accumulated depreciation are removed
from the accounts and any resulting gain or loss is included in income. Property
and equipment held and used by the Company are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amounts may not be
recoverable. The Company estimates the future undiscounted cash flows of the
affected assets to determine the recoverability of carrying amounts. Warrants
are valued based upon an independent valuation. The difference between the face
value of the warrant issued and the value per the valuation is amortized into
income through interest expense over the life of the related debt instrument.


                                       20
<PAGE>


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

         With the exception of historical matters, the matters discussed in this
Report are "forward-looking statements" as defined under the Securities Exchange
Act of 1934, as amended, that involve risks and uncertainties. The Company
intends that the forward-looking statements herein be covered by the safe-harbor
provisions for forward-looking statements contained in the Securities Exchange
Act of 1934, as amended, and this statement is included for the purpose of
complying with these safe-harbor provisions. Forward-looking statements include,
but are not limited to, the matters described herein, including Management's
Discussion and Analysis of Financial Condition and Results of Operations. Such
forward-looking statements relate to the Company's ability, to generate revenues
and attain and maintain profitability and cash flow, the improvement in,
stability and level of prices for oil and natural gas, pricing in the oil and
gas services industry and the willingness of customers to commit for oil and
natural gas well services, the ability of the Company to implement any of the
possible alternative means to maximize shareholder value in conjunction with its
agreement retaining Simmons & Company International, including any possible
merger, sale of assets or other business combination transaction involving the
Company or raising additional debt or equity capital, to maintain, the Company's
ability to implement and, if appropriate, expand a cost-cutting program, the
ability of the Company to compete in the premium services market, the ability of
the Company to meet or refinance its debt obligations as they come due or to
obtain extensions of the maturity dates for the payment of principal, the
ability of the Company to re-deploy its equipment among regional operations as
required, the ability of the Company to provide services using state of the art
tooling, the ability of the Company to raise additional capital to meet its
requirements and to obtain additional financing when required, and its ability
to maintain compliance with the covenants of its various loan documents and
other agreements pursuant to which securities have been issued and obtain
waivers of violations that occur and consents to amendments as required. The
inability of the Company to meet these objectives or the consequences on the
Company from adverse developments in general economic conditions, adverse
developments in the oil and gas industry, declines and fluctuations in the
prices for oil and natural gas and the absence of any material decline in those
prices, and other factors could have a material adverse effect on the Company.
The Company cautions readers that the various risk factors referred to above
could cause the Company's operating results, and financial condition to differ
materially from those expressed in any forward-looking statements made by the
Company and could adversely affect the Company's financial condition and its
ability to pursue its business strategy and plans. The Company cautions readers
that various risk factors described in the Company's Annual Report on Form 10-K
for the year ended December 31, 2002 could cause the Company's operating results
to differ materially from those expressed in any forward-looking statements made
by the Company and could adversely affect the Company's financial condition and
its ability to pursue its business strategy. Readers should refer to the Annual
Report on Form 10-K and the risk factors discussed therein.

         ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

         From time to time, the Company holds financial instruments comprised of
debt securities and time deposits. All such instruments are classified as
securities available for sale. The Company does not invest in portfolio equity
securities, or commodities, or use financial derivatives for trading or hedging
purposes. The Company's debt security portfolio represents funds held
temporarily pending use in its business and operations. The Company manages
these funds accordingly. The Company seeks reasonable assuredness of the safety
of principal and market liquidity by investing in rated fixed income securities
while, at the same time, seeking to achieve a favorable rate of return. The


                                       21
<PAGE>


Company's market risk exposure consists of exposure to changes in interest rates
and to the risks of changes in the credit quality of issuers. The Company
typically invests in investment grade securities with a term of three years or
less. The Company believes that any exposure to interest rate risk is not
material.

         Under the Credit Facility with GECC, the Company is subject to market
risk exposure related to changes in the prime interest rate. Assuming the
Company's level of borrowings from GECC at March 31, 2003 remained unchanged
throughout 2003, if a 100 basis point increase in interest rates under the
Credit Agreement from rates in existence at December 31, 2002 prevailed
throughout the year 2003, it would increase the Company's 2003 interest expense
by approximately $216,000.

         ITEM 4. CONTROLS AND PROCEDURES

         Under the supervision and with the participation of the Company's
management, including William Jenkins, its President and Chief Executive
Officer, and Ronald Whitter, its Chief Financial Officer, the Company has
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures within 90 days of the filing date of this annual report,
and, based on their evaluation, Mr. Jenkins and Mr. Whitter have concluded that
these controls and procedures are effective. There were no significant changes
in the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

         Disclosure controls and procedures are the Company's controls and other
procedures that are designed to ensure that information required to be disclosed
by it in the reports that it files or submits under the Exchange Act are
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the Company's management, including Mr. Jenkins and Mr. Whitter, as
appropriate to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

             99.1       Certification of President and Chief Executive Officer
                        Pursuant to Rule 13a-14(a)
             99.2       Certification of Chief Financial Officer Pursuant to
                        Rule 13a-14(a)
             99.3       Certification of President and Chief Executive Officer
                        Pursuant to Section 1350
             99.4       Certification of Chief Financial Officer Pursuant to
                        Section 1350


                                       22
<PAGE>


         (b) Reports on Form 8-K

                        None




                                       23
<PAGE>


                                   SIGNATURES

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


                                      BLACK WARRIOR WIRELINE CORP.
                                      ----------------------------
                                              (Registrant)


Date: May 14,  2003                   /S/  William L. Jenkins
                                           -------------------------------------
                                           William L. Jenkins
                                           President and Chief Executive Officer

                                      /S/  Ronald Whitter
                                           -------------------------------------
                                           Ronald Whitter
                                           Chief Financial Officer


                                       24