SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

X        Quarterly  Report  pursuant  to Section  13 or 15(d) of the  Securities
         Exchange Act of 1934 for the quarterly period ended September 30, 1997;
         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 Small Business Issuer as Specified in its Charter)

               DELAWARE                               11-2904094

      (State or Other Jurisdiction of              (I.R.S. Employer
       Incorporation or Organization)             Identification No.)

               3748 HIGHWAY 45 NORTH, COLUMBUS, MISSISSIPPI 39701
            --------------------------------------------------------
                    (Address of Principal Executive Offices)
                                   (Zip Code)
                                 (601) 329-1047
                -----------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

         Check whether the Issuer (1) has filed all Reports required to be filed
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
proceeding 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
                        ----                         ----


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

                                                  Outstanding at
                 Class                            November 19, 1997
         ---------------------                    ------------------------

COMMON STOCK, PAR VALUE
     $.0005 PER SHARE

                  Transitional Small Business Disclosure Format

                  YES                             NO  X
                     ----                           ----


<PAGE>


                          BLACK WARRIOR WIRELINE CORP.
                         QUARTERLY REPORT ON FORM 10-QSB
                                      INDEX

PART I -- FINANCIAL INFORMATION

                                                                       Page
                                                                       ----

Item 1.  Consolidated Financial Statements

            Financial Information                                        2

            Consolidated Balance Sheets -- September 30, 1997
            and December 31, 1996                                        3

            Condensed Consolidated Statements of Operations --
            Three Months Ended September 30, 1997 and
            September 30,1996                                            4

            Condensed Consolidated Statements of Operations--
            Nine Months Ended September 30, 1997 and
            September 30, 1996                                           5

            Condensed Consolidated Statements of Cash Flows --
            Nine Months Ended September 30, 1997 and
            Period Ended September 30, 1996                              6

            Notes to Condensed Consolidated Financial Statements --      7

Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                          9

PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings                                              17

Item 4.  Submission of Matters to a Vote of Security Holders            18

Item 6.  Exhibits and Reports on Form 8-K                               19

SIGNATURES                                                              20

                                       1


<PAGE>


PART I -- FINANCIAL INFORMATION


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

         With the exception of historical matters, the matters discussed in this
         Quarterly  Report on Form 10-QSB are  "forward-looking  statements"  as
         defined under the  Securities  Exchange Act of 1394,  as amended,  that
         involve risks and uncertainties.  Forward-looking  statements  include,
         but are not limited  to,  statements  under the  heading  "Management's
         Discussion   and  Analysis  of   Financial   Condition  ad  Results  of
         Operations."  Such  forward-looking  statements relate to the Company's
         ability  to  attain  and  maintain  profitability  and cash  flow,  the
         stability of and future prices for oil and gas,  pricing in the oil and
         gas services  industry and the ability of the Company to compete in the
         premium services  market,  the ability of the Company to expand through
         acquisitions  and to redeploy its equipment among regional  operations,
         the  ability  of the  Company  to  upgrade,  modernize  and  expand its
         equipment,  including its wireline fleet, the ability of the Company to
         expand its tubing  conveyed  perforating  services,  the ability of the
         Company to raise  additional  capital to meet its  requirements  and to
         obtain additional financing,  its ability to successfully implement its
         business  strategy,  and its  ability to maintain  compliance  with the
         covenants of its various loan documents and other  agreements  pursuant
         to which  securities have been issued.  The inability of the Company to
         meet these  objectives or the  consequences on the Company from adverse
         developments in general economic conditions,  adversed  developments in
         the oil and gas  industry,  and other  factors  could  have a  material
         adverse  effect on the  Company.  The  Company  cautions  readers  that
         various  risk  factors  referred to herein  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.

                                       2

<PAGE>


<TABLE>
<CAPTION>

         ITEM 1.  FINANCIAL STATEMENTS
                  BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                                                          SEPTEMBER 30           DECEMBER 31
                                                                              1997                     1996
                                    ASSETS
<S>                                                                    <C>                        <C>         
Current Assets:
Cash and cash equivalents                                              $   1,016,632              $    727,454
Accounts receivable, less allowance for                                                                       
   doubtful accounts of $230,038 at September                                                                 
   30,1997 and $136,959 at December 31,1996                                4,511,686                 1,369,306
Inventories                                                                  354,880                   183,467
Prepaid expenses                                                             285,070                    53,424
Deferred tax asset                                                           138,071                   138,071
Federal income tax receivable                                                      0                    14,636
                                                                        ------------               -----------
                  Total current assets                                     6,306,339                 2,486,358
Land and building, held for sale                                             400,000                   400,000
Property, plant & equipment, less accumulated
   depreciation of $4,334,286 and $3,729,370 at
   September 30, 1997 and December 31, 1996                                6,858,272                 2,194,591
Goodwill, less amortization of $98,262 and $0 at September 30, 1997        8,192,475                   224,305
    and December 31, 1996
Other assets                                                                 160,471                     5,420
                                                                       -------------           ---------------
                  Total assets                                         $  21,917,557           $     5,310,674

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
         Accounts payable                                              $    2,161,696          $       808,832
         Accounts payable, related party                                       54,098                   89,733
         Accrued salaries and vacation pay                                     61,108                   25,085
         Income tax payable                                                   558,943                   52,548
         Accrued interest payable                                             149,110                   29,530
         Other accrued expenses                                               750,275                  381,396
         Mortgage note payable, related party                                 550,549                  150,000
         Notes payable to bank                                                163,595                   18,272
         Bridge loan payable, related party                                 3,000,000                  
         Current maturities of long-term debt and
            capital lease obligations                                         538,868                  307,806
                                                                       --------------          ---------------
                  Total current liabilities                                 7,988,242                1,863,202
         Deferred tax liability                                               214,355                  214,355
         Note payable to bank, less current maturities                         99,027                   31,486
         Mortgage payable, related party                                            0                  230,000
         Long-term debt and capital lease obligations,
         less current maturities                                            8,915,318                  713,873
                                                                       --------------          ---------------
                  Total liabilities                                        17,216,942                3,052,916
Common stock, par value $.0005 per share,
         12,500,000 shares authorized, 2,250,216 and 2,185,216
         shares issued at September 30, 1997 and December 31, 1996              1,516                    1,093
Additional paid-in capital                                                  7,369,162                5,133,087
Common stock to be issued in connection with acquisition                      280,000 
         (133,333 shares)
Accumulated deficit                                                        (2,366,670)              (2,293,029)
Treasury stock, at cost, 814,626 shares                                      (583,393)                (583,393)
                                                                        -------------           --------------
         Total stockholders' equity                                         4,700,615                2,257,758
                                                                        -------------           --------------
         Total liabilities and stockholders' equity                     $  21,917,557           $    5,310,674
                                                                        =============           ==============
</TABLE>
            See Notes to Condensed Consolidated financial Statements

                                       3
<PAGE>


                  BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                         THREE MONTHS ENDED
                                                                         ------------------
                                                             SEPTEMBER 30,              SEPTEMBER 30,
                                                                   1997                     1996

<S>                                                  <C>                        <C>               
Net revenues                                         $       4,565,840          $        2,053,346
                                                     ----------------------------------------------

Operating costs and expenses                                (4,093,563)                 (1,632,245)

Depreciation and amortization expense                         (467,455)                   (145,042)
                                                     ----------------------------------------------

         Operating income (loss)                                 4,822                     276,059

Interest expense and amortization
         of debt discount                                     (154,476)                   (107,249)

Other income                                                    32,258                       7,280
                                                     ----------------------------------------------
       Income (loss) before provision
       (benefit)for income taxes                              (117,396)                    176,090

Provision(benefit) for income taxes                                  0                    (595,713)
                                                     ----------------------------------------------
Income before extraordinary                                    771,803                  
       gain on extinguishment of debt                                            

Extraordinary gain on extinguishment of
debt, net of taxes                                                   0                   1,014,758
                                                     ----------------------------------------------

       Net income (loss)                             $        (117,396)         $        1,786,561
                                                     ======================      ==================


Net income (loss) per common share                   $            (.05)         $             1.23

Weighted average common
        shares outstanding                                   2,466,072                   1,448,427
</TABLE>

            See Notes to Condensed Consolidated Financial Statements

                                       4
<PAGE>


                  BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                        NINE  MONTHS ENDED
                                                                        ------------------
                                                              SEPTEMBER 30,                     SEPTEMBER 30,
                                                                   1997                              1996

<S>                                                  <C>                                <C>                 
Net revenues                                         $           9,218,909              $          5,200,094
                                                     -------------------------------------------------------

Operating costs and expenses                                    (8,034,800)                       (4,611,439)

Depreciation and amortization expense                             (931,969)                         (420,313)

                                                     -------------------------------------------------------

         Operating income (loss)                                   252,140                           168,342

Interest expense and amortization
         of debt discount                                         (408,149)                         (312,364)

Other income                                                        82,374                            84,861

                                                     -------------------------------------------------------

         Income (loss) before provision
         (benefit)for income taxes                                 (73,635)                          (59,161)

Provision (benefit)for income taxes                                      0                          (595,713)

                                                     -------------------------------------------------------

          Income before extraordinary
          gain on extinguishment of debt                                                             536,552

Extraordinary gain on extinguishment
of debt, net of taxes                                                    0                         1,014,758

                                                     -------------------------------------------------------
         Net income (loss)                           $             (73,635)               $        1,551,310
                                                     =====================                ==================

Net income (loss) per common share                   $                (.03)               $             1.07

Weighted average common
         shares outstanding                                      2,313,324                         1,448,427
</TABLE>

            See Notes to Condensed Consolidated Financial Statements

                                       5

<PAGE>


BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED:
<TABLE>
<CAPTION>

                                                               September 30, 1997            September 30, 1996
<S>                                                            <C>                            <C>            
Cash flows from operating activities:
         Net income(loss)                                      $       (73,641)               $     1,551,310
         Adjustments to reconcile net income(loss) to
         cash provided by operations:
                  Depreciation                                         833,110                        420,313
                  Amortization                                          88,756
         Allowance for doubtful accounts                                93,079
                  Net gain on disposal of  plant, property
                  and equipment                                        (26,570)                       (76,045)
                  Gain on extinguishment of debt                                                   (1,014,757)
                  Deferred tax benefit                                                               (595,713)
                  Change in:
                  Accounts receivable                               (1,079,489)                      (467,376)
                   Inventories                                        (128,860)                         8,314
                    Prepaid expenses                                   (95,145)                        87,870
                  Income/other receivable                               14,636                           (178)
                   Other assets                                         34,950                           (366)
                    Accounts payable and other liabilities              96,980                        266,091
                                                                  -------------             -----------------
                              Cash(used in)provided
                              by operations                           (242,194)                       179,463
                                                                  -------------             -----------------
Cash flow from investing activities:
         Acquisitions of plant,
          property, and equipment                                   (1,358,015)                      (154,416)
         Proceeds from sale of  plant, property
          and equipment                                                 68,548                         94,463
         Acquisition of business, net of cash acquired                 (98,427)
                                                                  -------------             -----------------
                  Cash used in
                   investing activities                             (1,387,894)                       (59,953)
                                                                  -------------             -----------------
Cash flow from financing activities:
         Debt issuance costs                                          (190,000)
         Proceeds from debt                                          2,471,018
         Principal payments on debt and
          lease obligations                                           (361,752)                      (241,190)
                                                                  -------------             -----------------
                  Cash(used in) provided by
                  financing activities                               1,191,266                       (241,190)
                                                                  -------------             -----------------
                           Net increase(decrease)                      289,178                       (121,680)
                             in cash and cash equivalents
Cash and cash equivalents, beginning of period                         727,454                        284,825
                                                                  -------------             -----------------
Cash and cash equivalents, end of period                       $     1,016,632               $        163,145
                                                                  -------------             -----------------
Supplemental disclosure of cash flow information:
                  Taxes paid                                   $        51,750             $                0
                  Interest paid                                         90,907                         57,582
Supplemental schedule of noncash investing and financing:
   Acquisition of plant, property and equipment financed under
    capital leases and notes payable                                 1,370,565
Common stock issued for consulting                                     136,500
Business acquisition, net of cash acquired:
   Current assets                                                    2,198,523
   Current liabilities                                              (4,901,126)
   Property, plant, and equipment                                    2,810,189
   Assets, noncurrent                                                7,958,499
   Long term liabilities                                            (5,686,086)
   Equity                                                           (2,379,999)
</TABLE>

                                       6

<PAGE>


                  BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       GENERAL

         The  accompanying   consolidated   financial   statements  reflect  all
         adjustments  which,  in the opinion of management,  are necessary for a
         fair  presentation  of the  consolidated  financial  position  of Black
         Warrior   Wireline  Corp.  and  subsidiaries   (the  "Company").   Such
         adjustments are of a normal recurring nature. The consolidated  results
         of operations for the interim periods are not necessarily indicative of
         the  results  to be  expected  for  the  full  year.  The  consolidated
         financial  statements  and notes thereto  should be read in conjunction
         with the consolidated financial statements and notes as of December 31,
         1996 and for the years ended December 31, 1996, 1995, and 1994 included
         in the Company's 1996 Annual Report on form 10-KSB.  Operating  results
         of the Company for the nine and three months ended  September 30, 1997,
         are not  necessarily  indicative of the result that may be expected for
         the entire year ended December 31, 1997.

2.       DEBT RESTRUCTURING

         In November 1995, the Company executed  Reorganization  Agreements with
         the  holders  of  an  aggregate  of  $1,922,130   principal  amount  of
         outstanding   debentures  and   indebtedness   pursuant  to  which  the
         debentures  and  indebtedness  were  agreed  to  be  exchanged  for  an
         aggregate of 961,065 shares of the Company's Common Stock. In addition,
         pursuant to such  agreements,  Common  Stock  Purchase  Warrants of the
         Company were to be  exchanged  with the  debenture  holders for two new
         classes of Common Stock Purchase  Warrants.  Each class of new warrants
         was to represent  the right to purchase an aggregate of 183,750  shares
         of Common Stock.  The Class A warrants were to be  exercisable at $3.00
         per share for a period of four (4) years and the Class B warrants  were
         to be exercisable at prices  increasing in annual  increments  over the
         first three (3) years after  issuance from $3.00 per share to $5.00 per
         share and were to expire five (5) years after  issuance.  Through March
         31, 1996, an aggregate of $1,353,380 principal amount of debentures and
         indebtedness  was exchanged for 648,151  shares of Common Stock and the
         remaining  $568,750  of  debentures  to be  exchanged  pursuant  to the
         agreements  executed in November 1995 was subject to the fulfillment of
         certain closing conditions.  Issuance of the warrants was not completed
         in 1995.  In September  and October,  1996 the holders of an additional
         $800,000  principal  amount  of  Debentures   executed   Reorganization
         Agreements and the  Reorganization  Agreements entered into in November
         1995 were  amended so as to provide that in lieu of the issuance of the
         Class A warrants,  an aggregate of 101,250 shares of Common Stock would
         be  issued  and the  exercise  price of the Class B  warrants  would be
         reduced  to $2.00  per  share  throughout  the  five-year  term of such
         warrants.  During 1996, $1,368,750 principal amount of indebtedness was
         exchanged  for an  aggregate  of 712,914  shares of Common Stock and an
         aggregate  of 303,750  Class B warrants  were issued.  In addition,  an
         aggregate of 101,250 shares of Common Stock were issued in exchange for
         the Company's obligation to issue the Class A warrants. Pursuant to all
         such  agreements,  an aggregate of $2,071,357  of

                                       7

<PAGE>

         accrued interest and penalties were waived by the debenture holders. In
         connection  with the foregoing  restructuring,  the Company  effected a
         1-for-200 reverse stock split on October 30,1995.

3.       BUSINESS COMBINATIONS

         Effective  June 6, 1997,  the  Company  completed  the  acquisition  of
         Production Well Services,  Inc.  (PWS).  PWS is engaged in the wireline
         and oil and gas well services business in southern Alabama and southern
         Mississippi.  The purchase  price was  financed  with the proceeds of a
         $2,000,000,  9% Convertible Promissory Note and the issuance of 133,333
         shares of the  Company's  common  stock.  In addition to providing  the
         funds to complete the PWS acquisition, a portion of the funds were used
         to purchase and improve equipment.  For financial  statement  purposes,
         the acquisition was accounted for as a purchase and accordingly,  PWS's
         results are included in the consolidated financial statements since the
         date of acquisition.  The  acquisition  resulted in excess of cost over
         fair market  value of net assets  acquired of  approximately  $610,000,
         which will be amortized  over ten years.  The following is a summary of
         assets  acquired,   liabilities  assumed,  and  consideration  paid  in
         connection with the acquisition:

            Fair value of assets acquired,  including goodwill      $ 1,146,478
            Cash paid for assets acquired, net of cash received             836
            Common stock issued in connection with acquisition         (279,999)
                                                                    -----------
            Liabilities assumed or incurred                         $   867,315
                                                                    -----------

         Effective  June 9, 1997,  the  Company  completed  the  acquisition  of
         Petro-Log,  Inc. (Petro-Log).  Petro-Log is engaged in the wireline and
         oil and gas well  services  business  in  Wyoming,  Montana,  and South
         Dakota.  The  purchase  price was  financed  from the  proceeds  of the
         $3,000,000, 10% Bridge Loan Note. In addition to providing the funds to
         complete the Petro-Log acquisition, a portion of the funds were used to
         purchases and improve equipment.  For financial statement purposes, the
         acquisition   was  accounted   for  as  a  purchase  and   accordingly,
         Petro-Log's   results  are  included  in  the  consolidated   financial
         statements since the date of acquisition. The following is a summary of
         assets  acquired,   liabilities  assumed,  and  consideration  paid  in
         connection with the acquisition:

                  Fair value of assets acquired                     $ 2,402,739
                  Cash paid for assets acquired                        (265,239)
                                                                    -----------
                  Liabilities assumed or incurred                   $ 2,137,500
                                                                    -----------

         On October 9, 1997, the Company completed the acquisition, effective as
         of September 1, 1997, of Diamondback  Directional,  Inc .(DDI).  DDI is
         engaged in providing  oil and gas well  drilling  services,  horizontal
         drilling as well as  conventional  directional  drilling.  The business
         will  be  operated  as a  division  of the  Company  under  the  name "
         Diamondback Directional". The purchase price for the business an assets
         acquired was approximately  $8,920,000, of which $2,750,000 was paid in
         cash , $3,170,549 by issuance of the

                                       8

<PAGE>



         Company's  promissory notes bearing interest at 6.5% per annum, payable
         quarterly,  and due on August 31, 1999,  and  $3,000,000 by issuance of
         647,569  shares of the Company's  Common Stock.  The purchase  price is
         subject to  adjustment,  by  reduction of the  principal  amount of the
         notes, to the extent the gross receipts from the  Diamondback  Division
         operations  for the twelve  months ended August 31, 1998 and August 31,
         1999 fail to meet a  specified  performance  standard.  The Company has
         agreed that in the event it files a  registration  statement  under the
         Securities Act of 1933 relating to an  underwritten  public offering of
         its shares,  the holder of the shares  issued in the  transaction  will
         have  certain  rights to have the shares  included in the  registration
         statement.  The  acquisition  resulted  in an  excess of cost over fair
         market value of net assets acquired of approximately $7,450,000,  which
         will be amortized over twenty-five years. The following is a summary of
         assets  acquired,   liabilities  assumed,  and  consideration  paid  in
         connection with the acquisition:

            Fair value of assets acquired,  including goodwill      $ 9,531,668
            Cash paid for assets  acquired,  net of cash received       165,976
            Common stock issued in connection with acquisition       (2,100,000)
                                                                    -----------
            Liabilities assumed or incurred                         $ 7,597,644
                                                                    -----------


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

INDUSTRY OVERVIEW AND ECONOMIC FACTORS IMPACTING COMPANY OPERATIONS

         The overall  level of activity  and  profitability  experienced  by the
         Company and the oil and gas well service  industry is directly  related
         to the demand for the  Company's  services by the  domestic oil and gas
         industry.  The principal  factors  driving the demand for the Company's
         services  are market  price of oil and natural  gas and the  continuing
         technological  advances in the industry.  In recent  years,  there have
         been some periods of relative  price  stability but only isolated areas
         of real growth. In 1996, however, most of the industry experienced some
         growth in demand and pricing.  Management of the Company  believes that
         the continuing stability of domestic oil prices and relatively high gas
         prices  should  help  continue  this  trend  through  1997 and  beyond.
         Advances in seismic  technology  and drilling  practices have increased
         success rates,  lowered finding costs and increased  production  rates,
         which in turn have allowed  operators to conduct more stable and active
         programs even in periods of lower energy prices.

         Increased  demand for the  services  provided  by the  Company  and its
         competitors coupled with a general  consolidation in the service sector
         has reduced downward  pressure on pricing.  This has led to a reduction
         in "predatory" pricing used by some companies to increase market share.
         The Company's  continuing  upgrading of technological  capabilities has
         enabled the Company to compete in the premium services market which has
         better margins and lower discounts. The Company believes that continued
         improvements  will be seen in the  remainder of 1997 and beyond as this
         trend continues.

                                       9

<PAGE>



CORPORATE OPERATIONAL AND EXPANSION STRATEGY

         The Company's  strategy is to continue to  aggressively  expand through
         acquisitions and to take advantage of improving  market  conditions and
         the benefits of these acquisitions.  The Company also intends to expand
         its  operations   through  the  redeployment  of  equipment  among  the
         Company's existing regional operations.  The Company seeks acquisitions
         of companies  with existing  operations,  established  reputations  and
         equipment that can be assimilated into the Company's operations.

         During the year ended December 31, 1996 and through September 30, 1997,
         the Company acquired the following companies. On November 19, 1996, the
         acquisition of Dyna-Jet,Inc.,  a Wyoming corporation ("Dyna-Jet"),  was
         completed.  Dyna-Jet  is engaged in the  wireline  and oil and gas well
         services  business in the Gillette,  Wyoming area. On June 6, 1997, the
         Company  acquired   Production  Well  Services,   Inc.,  a  Mississippi
         corporation  ("PWS").  PWS is engaged in the  wireline  and oil and gas
         services  business  southern  Mississippi and southern Alabama area. On
         June 9, 1997 the Company acquired  Petro-Log,  Incorporated,  a Wyoming
         corporation ("Petro-Log"). Petro-Log is engaged in the wireline and oil
         and gas well  services  business in Wyoming,  Montana and South Dakota.
         The Company has  consolidated  the management of Dyna Jet and Petro Log
         and is  operating  the  combined  business  as Petro  Log in the  Rocky
         Mountains.  Effective  September  1, 1997,  the  business and assets of
         Diamondback  Directional,  Inc.  were  acquired by the Company.  DDI, a
         Texas corporation  located in Conroe,  was engaged in providing oil and
         gas well drilling services, horizontal drilling as well as conventional
         directional  drilling.  The Company will continue the operations of DDI
         as Diamondback  Directional,  a division of the Company. The Company is
         committed to expend  $4,000,000.00 on new equipment for its Diamondback
         Directional  division during 1998 and 1999. The Company  anticipates it
         will fund these  expenditures from its anticipated cash flow as well as
         from the proceeds of public or private debt or equity from arrangements
         that may be entered into. Herein, Dyna-Jet, PWS, Petro-Log, and DDI are
         referred to as the "Acquired Companies".

         The  Company  also  intends to expand its tubing  conveyed  perforating
         services.  The  Company  is  providing  this  service  in  Alabama  and
         Mississippi  and  plans  to  introduce  this  service   throughout  its
         operational areas.

         The Company has  purchased  state of the art downhole  tools  including
         segmented bond tools, and magnetic and 40-arm casing  inspection tools.
         These tools were placed  into  service in the second  quarter and third
         quarters of 1997 and their impact  should be felt during the  remainder
         of the year.  These tools are expected to enable the Company to provide
         services  unavailable  from smaller  wireline  competitors  and thereby
         enable  the  Company to provide  services  in a less price  competitive
         environment.

         The ongoing modernization and expansion of the Company's wireline fleet
         continued in the third  quarter with new and  refurbished  trucks being
         delivered  to  all  regions.   The

                                       10

<PAGE>



         Company plans to accelerate its production of wireline units to two per
         month by the second  quarter of 1998.  The Company  expects to fund the
         production of wireline units out of available cash flow and/or from the
         proceeds of additional borrowing.

RESULTS OF OPERATIONS

                  Revenues by division  for the  quarters  and nine months ended
                  September  30,  1997 and  September  30,  1996 are  summarized
                  below:
<TABLE>
<CAPTION>

                                          NINE MONTHS ENDED                           THREE MONTHS ENDED
                                      SEPTEMBER         SEPTEMBER                 SEPTEMBER         SEPTEMBER
                                      30,  1997        30,  1996                  30,  1997        30,  1996
                                      ---------------------------                 ---------------------------

Wireline services
<S>                        <C>                   <C>                   <C>                     <C>           
(logging, perforating)     $        6,548,856    $    3,681,558        $        2,815,176      $    1,544,453

Directional drilling                1,282,086                 0                 1,282,086                   0
services

Completion (workover
services)                           1,180,922         1,294,715                   406,164             449,000


Tools and Packers                     207,045           223,821                    62,414              59,893
(sales and rentals of
bridge plugs)

                          -----------------------------------------------------------------------------------
                 Total    $         9,218,909         5,200,094        $        4,565,840           2,053,346
                          ===================         =========        ==================           =========
</TABLE>


THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 1996

         The Company had a loss,  before provision for income taxes, of $117,396
         for the third quarter of 1997 as compared with income, before provision
         for income taxes,  of $1,786,561  for the same period of 1996. The loss
         before  provision  for income  taxes of $117,396 can be  attributed  to
         several factors.  The costs of tools and supplies increased $156,000 as
         compared  with the same period  ended  September  30,  1996.  Equipment
         rental  increased  $116,000 as  compared  with the three  months  ended
         September  30,  1996,  primarily  as a result of the rental of steering
         tools used in  conjunction  with providing  directional  and horizontal
         drilling  services.  Tools were rented on an interim  basis in order to
         determine the market of these services. Salaries increased $929,182 for
         the three  months  ended  September  30,  1997.  This  increase  can be
         attributed to the increased personnel of the Acquired Companies as well
         as increased salary levels.  Depreciation  and  amortization  increased
         $322,412 for the three month ended September 30, 1997,

                                       11

<PAGE>


         primarily  because  of  the  larger  asset  base  and  amortization  of
         goodwill.  Operating costs and expenses  increased by $2,461,319 in the
         third  quarter of 1997 as compared  with the same period in 1996.  This
         was  primarily  due to  the  Company's  expanding  volume  of  business
         resulting  from  the  various   acquisitions  and  increased  costs  of
         materials in the industry.

         Interest  expense  increased by $47,227 in the third quarter of 1997 as
         compared with the same period in 1996. Interest expense relating to the
         issuance of the St. James  Capital debt for the third  quarter  totaled
         $117,377 and interest related to the DDI debt totaled $16,939.

         Net  revenues  increased  by  $2,512,494  to  $4,565,840  for the third
         quarter of 1997  compared  with net revenues of  $2,053,346 in the same
         period in 1996.  While  completion  services  and sales and  rentals of
         tools  and  packers  declined,  there  was a  substantial  increase  in
         wireline  service  revenues.  A  substantial  portion of this  increase
         resulted from revenues from the PWS and Petro Log acquisitions. The DDI
         acquisition  contributed $1,282,086 in revenues for September 1997. The
         Company  expects  a  continued  increase  in  demand  from  most of the
         Company's customers during 1997.


NINE MONTHS ENDED  SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED  SEPTEMBER
30, 1996

         The Company had a loss,  before  provision for income taxes, of $73,635
         for the nine months ended  September  30, 1997 as compared with income,
         before provision for income taxes, of $1,551,311 for the same period of
         1996.  The loss  before  provision  for income  taxes of $73,635 can be
         attributed  to  several  factors.  The  costs  of  tools  and  supplies
         increased $294,392 as compared with the same nine month ended September
         30, 1996. Equipment rental increased $226,125 as compared with the nine
         month ended September 30, 1996,  primarily as a result of the rental of
         steering  tools used in  conjunction  with  providing  directional  and
         horizontal drilling services.  Tools were rented on an interim basis in
         order to determine  the market of these  services.  Salaries  increased
         $1,320,139 for the nine months ended  September 30, 1997 with the total
         number of employees  increasing to 176 at September 30, 1997 from 98 at
         September  30,  1996.  This  increase  can be  attributed  to increased
         personnel of the Acquired Companies as well as increased salary levels.
         DDI increased the number of salaried employees and contract drillers by
         40 persons during the nine month period.  Depreciation and amortization
         increased  $511,655  for the nine  months  ended  September  30,  1997,
         primarily  because  of  the  larger  asset  base  and  amortization  of
         goodwill.  Operating costs and expenses  increased by $3,423,362 in the
         nine month ended September 30, 1997 as compared with the same period in
         1996. This was due to the Company's  expanding  volume of business with
         the  various  acquisitions  and  increased  costs of  materials  in the
         industry.

                                       12

<PAGE>



         Revenues  contributed  by the  Acquired  Companies  for the nine  month
         period ended September 30, 1997, were  $2,672,687.  DDI had revenues of
         $1,282,086,   PWS  had  revenues  of  $480,058  and  Petro-Log/Dyna-Jet
         contributed  $910,543  for the nine month period  ended  September  30,
         1997.  The Company's  revenues also  increased as a consequence  of the
         increased  utilization of its previously owned oil and gas well service
         operations as well as improved pricing for the Company's services.

         In  conjunction  with the  financing of the  acquisitions,  the Company
         entered into an agreement with Southwick  Investments and incurred fees
         totaling  $190,000  that  will  be  expensed  over  the  life  of  a 9%
         Convertible  Promissory  Note and the 10%  Bridge  Loan  issued in June
         1997. The fee was paid from the proceeds of the two notes. In addition,
         a total of 65,000  shares of the  Company's  common stock was issued to
         Swartwood,  Hesse Inc.,  and  Pangaea  Investment  Consultants,  LTD in
         consideration of two year consulting  agreements between such firms and
         the Company.  The total cost of $136,500 will be expensed over the term
         of  the  consulting   agreements.   Interest  expense  related  to  the
         Diamondback Purchase Promissory Note was $16,939.

         Interest expense increased by $95,784 in the nine month ended September
         30, 1997 as compared with the same period in 1996.

         Notes  with three to five year  maturities  were used to  purchase  new
         vehicles  and  equipment  during  the first  nine  months  of 1997.  An
         aggregate  of $361,750 in  principal  payments was paid during the nine
         months ended  September 30, 1997.  This amount  reduced notes  payable.
         Additional   note  payables  issued  during  the  nine  months  totaled
         $1,370,565.  Other debt  increased  during the first nine months in the
         amount of $7,900,000  from the St. James  financing and $3,000,000 from
         the DDI acquisition. Interest resulting from the debt ranged from prime
         to 12.00%.

LIQUIDITY AND CAPITAL RESOURCES

         Cash used by the Company's  operating  activities  was $590,712 for the
         nine months ended  September 30, 1997 as compared with cash provided of
         $179,363 for the nine month period ended September 30, 1996.  Investing
         activities of the Company used cash of $1,358,015 during the nine month
         period  ended  September  30, 1997 for the  acquisitions  of  property,
         plant,  and  equipment,  and  acquisition  of new  business  offset  by
         proceeds from the sale of fixed assets of $68,548. Financing activities
         provided cash of $361,750 to pay principal  payments of long-term notes
         and capital lease obligations.

         The  acquisitions  of PWS and Petro-Log were financed with the proceeds
         of borrowing  from St. James  Capital  Partners,  L.P.  ("St.  James").
         Pursuant to an Agreement  for Purchase and Sale dated June 6, 1997 (the
         "June Agreement") between the Company and St. James, the Company agreed
         to issue  and sell and St.  James  agreed  to  purchase  the  Company's
         promissory notes aggregating $5,000,000.  Of such amount, $2,000,000 is
         represented by the Company's 9% Convertible Promissory Note due June 6,
         2002,  and 

                                       13

<PAGE>


         $3,000,000  is  represented  by the  Company's  10%  Bridge  Loan  Note
         originally due September 4, 1997, which was extended November 30, 1997.
         The $2,000,000 note is convertible  into shares of the Company's Common
         Stock at an initial conversion price of $2.75 per share, increasing one
         year after issuance to $3.25 per share and further increasing two years
         after issuance to $3.75 per share, subject to anti-dilution  adjustment
         for certain  issuances of securities by the Company at prices per share
         of Common Stock less than the conversion price then in effect.  Payment
         of  principal  and interest on both of the notes is  collateralized  by
         substantially all the assets of the Company.  The Company is seeking to
         refinance  the Bridge Note with the  proceeds of a senior  secured loan
         not yet obtained.  St. James has agreed to subordinate the indebtedness
         owing to it to up to  $4,000,000  of  indebtedness  of the Company to a
         senior lender out of which, if borrowed prior to its maturity date, the
         Bridge  Note must be paid,  and up to  $2,000,000  of  working  capital
         financing.  St. James was also issued warrants to purchase an aggregate
         of 666,000 shares of Common Stock at an initial exercise price of $2.75
         per share,  increasing  one year after  issuance to $3.25 per share and
         further increasing two years after issuance to $3.75 per share, subject
         to anti-dilution  adjustment for certain issuances of securities by the
         Company  at prices  per share of Common  Stock  less than the  exercise
         price then in effect. The shares issuable on conversion of the note and
         exercise of the warrants have demand and piggy-back registration rights
         under the Securities Act of 1933.

         Of the $5,000,000  proceeds from the sale of the notes,  $2,000,000 was
         advanced  concurrently  with the  acquisition of PWS and $3,000,000 was
         advanced concurrently with the acquisition of Petro-Log. In addition to
         providing the funds to complete the PWS and Petro-Log acquisitions, the
         proceeds  were used to purchase and improve  equipment,  including  the
         purchase of four additional wireline trucks, and for working capital.

         On October 9, 1997, the Company  entered into an Agreement for Purchase
         and Sale  (the  "October  Note  Purchase  Agreement")  with St.  James,
         whereby  St.  James  purchased  and the Company  sold its $2.9  million
         convertible promissory note (the "October Note") bearing interest at 7%
         per annum due on October 9, 1999.  Payment of principal and interest on
         the October Note is  collateralized  by substantially all the assets of
         the  Company.  The  October  Note is  convertible  into  shares  of the
         Company's  Common  Stock at a  conversion  price of $4.6327  per share,
         subject to anti-dilution adjustment for certain issuances of securities
         by the  Company  at  prices  per share of  Common  Stock  less than the
         conversion  price then in effect.  St. James has agreed to  subordinate
         its  security  interests  and rights to the  indebtedness  and security
         interests of the lenders  providing  up to $4.5  million  pursuant to a
         term loan and $3.0  million  pursuant to a revolving  credit  facility,
         neither of which financings have yet been arranged.  St. James was also
         issued in  consideration  of a payment of $36,250 a warrant to purchase
         an aggregate of 725,000  shares of Common Stock  exercisable at a price
         of $4.6327 per share,  subject to anti-dilution  adjustment for certain
         issuance  of  securities  by the  Company at prices per share of Common
         Stock  less  than the  conversion  price  then in  effect.  The  shares
         issuable on  conversion of the October Note and exercise of the warrant
         have demand and piggy-back registration rights under the securities Act
         of 1933.  The Company  agreed that one person 

                                       14

<PAGE>


         designated  by  St.  James  would  be  nominated  for  election  to the
         Company's Board of Directors.  The October  Agreement  grants St. James
         certain preferential rights to provide future financing to the Company,
         subject to certain exceptions.

         The notes issued to St. James contain various  affirmative and negative
         covenants,  including a prohibition against the Company  consolidating,
         merging or entering  into a share  exchange with another  person,  with
         certain exceptions, without the consent of St. James. Events of default
         under the notes  include,  among  other  events,  (i) a default  in the
         payment  of  principal  or  interest:  (ii) a breach  of the  Company's
         covenants,  representations, and warranties under the October Agreement
         or the  June  Agreement;  (iii) a breach  under  the  other  agreements
         between the Company and St. James, subject to certain exceptions;  (iv)
         any  person or group of  persons  acquiring  40% or more of the  voting
         power of the Company's outstanding shares who was not the owner thereof
         as of October 10, 1997,  a merger of the Company  with another  person,
         its  dissolution or liquidation or a sale of all or  substantially  all
         its assets;  and (v) certain  events of  bankruptcy.  In the event of a
         default  under any of the notes issued to St.  James,  it could seek to
         foreclose  against the collateral for the Notes.  St. James received an
         origination fee of $36,250 in connection with the October transaction.

         Of the proceeds  from the $2.9 million  October Note ,  $2,750,000  was
         applied to the  purchase  of the DDI assets and the balance was used to
         purchase additional equipment and for transaction expenses.

         The Company is engaged in negotiations with an institutional  lender to
         borrow $4.5 million. If consummated, the proceeds of the borrowing will
         be  used  to  repay  the  St.  James  Bridge  Note  as  well  as  other
         indebtedness and to provide working  capital.  The borrowing would bear
         interest  at a rate of  equal to 2.75%  over the  yield on US  Treasury
         Notes having like term at the time of closing and would be amortized in
         equal  monthly  installments  over an  84-month  period  with a balloon
         payment of the  remaining  outstanding  principal due at the end of the
         60th month. The borrowing would be  collateralized by a senior security
         interest in  substantially  all of the  Company's  wireline  trucks and
         other  equipment.  Such  borrowing  is expected to be  completed in the
         fourth quarter of 1997.

         The  Company  may,  if in the  opinion of  management  market and other
              conditions are favorable,  seek to raise additional equity capital
              by a public or private offering of its securities. The Company has
              not entered into any  agreements in principal or other  agreements
              relating  thereto and there can be no  assurance  the Company will
              raise addtional capital from any such sources.  Management believs
              that the  Company's  exisitng and  anticipated  cash flows will be
              adequate to mmet the Comany's current requirments for funds.

         St. James has agreed to convert the $2,000,000  Note into shares of the
         Company's  Common  Stock  at  such  time  as the  Company  has  filed a
         registration statement under the Securities Act of 1933 relating to the
         shares issuable on conversion of that note, and the

                                       15

<PAGE>


         October Note,  and on exercise of the Warrants  issued to St. James and
         such registration statement has been declared effective.

         By the end of 1998, the Company expects that its various administrative
         and  well  servicing  systems  will  have  the  capability  to  process
         transactions  dated beyond  1999.  The costs to complete its efforts to
         modify or replace such systems are not expected to be material.

RECENTLY ISSUED ACCOUNTING STANDARDS

         In February  1997,  the  Financial  Accounting  Standards  Board issued
         Statement of Financial Accounting Standards No. 128, Earnings Per Share
         (SFAS 128). SFAS 128 supersedes  existing generally accepted accounting
         principles  relative  to the  calculation  of  earnings  per share,  is
         effective  for  years  ending  after  December  15,  1997 and  requires
         restatement  of all prior period  earnings per share  information  upon
         adoption.  Generally, SFAS 128 requires a calculation of basic earnings
         per share,  which takes into  consideration  income (loss) available to
         common   shareholders   and  the  weighted  average  of  common  shares
         outstanding.  SFAS 128  also  requires  the  calculation  of a  diluted
         earnings  per  share,  which  takes  into  effect  the  impact  of  all
         additional  common  shares  that  would  have been  outstanding  if all
         dilutive  potential  common shares relating to options , warrants,  and
         convertible  securities  had been  issued,  as long as their  effect is
         dilutive,  with a  related  adjustment  of income  available  to common
         shareholders,  as appropriate.  SFAS 128 requires dual  presentation of
         basic and diluted  earnings  per share on the face of the  statement of
         operation   and  requires  a   reconciliation   of  the  numerator  and
         denominator  of the basic earnings per share  computation.  The Company
         does not expect the effect of its adoption of SFAS 128 to be material.

         The Board has issued SFAS No.  130,  "Reporting  Comprehensive  Income"
         which establishes  standards for reporting and display of comprehensive
         income and its components  (revenues,  expenses,  gains, and losses) in
         the financial statements. Comprehensive income is defined as the change
         in equity of a business  enterprise  during a period from  transactions
         and other events and circumstances  from nonowner sources.  It includes
         all  changes in equity  during a period  except  those  resulting  from
         investments by owners and distributions to owners.  This Statement does
         not require a specific  format for the  presentation  of  comprehensive
         income but requires an amount representing total  comprehensive  income
         for the period.  This Statement is effective for fiscal years beginning
         after  December  15,  1997 with  reclassification  of  earlier  periods
         required.  Other than the additional presentation  requirements of this
         Statement,  the Company does not  anticipate  a material  impact on the
         financial position,  results of operations,  earnings per share or cash
         flows.

         The Board has issued SFAS No. 131,  "Disclosures  about  Segments of an
         Enterprise and Related  Information",  which establishes  standards for
         the way that  public  business  enterprises  report  information  about
         operating segments in annual financial statements and requires selected
         information about operating segments in interim financial reports.

                                       16

<PAGE>


         This  Statement  requires  that a  public  business  enterprise  report
         financial and descriptive  information  about its reportable  operating
         segments.  Operating  segments are  components of an  enterprise  about
         which  separate  financial  information  is available that is evaluated
         regularly  by the chief  operating  decision  maker in deciding  how to
         allocate resources and in assessing performance.  Generally,  financial
         information  is  required  to be  reported on the basis that it is used
         internally  for  evaluating  segment  performance  and  deciding how to
         allocate resources to segments.

         The financial information required includes a measure of segment profit
         or loss, certain specific revenue and expense items, segment assets and
         reconciliation  of each category to the general  financial  statements.
         The  descriptive   information  required  includes  the  way  that  the
         operating segments were determined,  the products and services provided
         by the operating segments, differences between the measurements used in
         reporting  segment  information  and those used in the general  purpose
         financial statements, and changes in the measurement of segment amounts
         from period to period.

         This  Statement  is  effective  for  financial  statements  for periods
         beginning  after December 15, 1997 with  restatement of earlier periods
         required in the initial year of application. This Statement need not be
         applied to interim  financial  statements  in the  initial  year of its
         application,  but  comparative  information  for interim periods in the
         initial year of application  is to be reported in financial  statements
         for interim periods in the second year of  application.  The Company is
         currently  determining  if these  disclosures  will be applicable  and,
         therefore, required in future periods.

PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On October 1, 1997 an arbitration  proceeding was commenced  before the
         American  Arbitration  Association,  New  York,  New York  against  the
         Company by Monetary Advancement International ("MAI"). MAI alleges that
         the dispute arises out of a breach of a consulting  agreement allegedly
         entered  into in November  1995.  MAI is seeking the  issuance to it of
         160,000  shares if the  Company's  Common  Stock and  compensatory  and
         punitive  damages.  Management  of the  Company  believes  that  it has
         substantial  and  meritorious  defenses  to the claim  asserted by MAI,
         intends to defend itself  vigorously in the arbitration  proceeding and
         intends to assert  counterclaims.  Management  of the Company  believes
         that it will not incur any material liability to MAI in connection with
         the arbitration  proceeding and that the claim will not have a material
         adverse  effect on the  consolidated  financial  position,  results  of
         operations or cash flows of the Company.

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

         The Company held an annual meeting of stockholders on July 21, 1997. At
         the  meeting,  the  following  persons were elected as Directors of the
         Company to serve  until the 1998 

                                       17

<PAGE>


         annual meeting of stockholders and until the election and qualification
         of their successors.


                                            William L. Jenkins
                                           John A. McNiff, Sr.
                                               Michael Brod
                                             John L. Thompson


         In  addition,  the  following  matters  were  voted  upon at the annual
         meeting.  The number of votes cast for,  against or  withheld,  and the
         number of abstentions or non-votes is stated.

           Proposal to approval the adoption of the 1997 Omnibus Incentive Plan.
                         In Favor                  1,034,168
                         Against                      64,359
                         Abstained                    23,054


           Proposal  to approve  the  adoption  of the 1997  Non-Employee  Stock
                      Option.

                         In Favor                  1,069,093
                         Against                      32,224
                         Abstained                    20,009

           Proposal   to amend the Certificate of  Incorporation  to decease the
                      number  of  shares  of  Common   Stock   authorized   from
                      50,000,000 to 12,500,000.

                          In Favor                 1,702,043
                          Against                      1,362
                          Abstained                   20,209

           Proposal   to amend the Certificate of Incorporation to authorize the
                      issuance of up to 2,500,000 shares of Preferred Stock.

                           In Favor                1,115,620
                           Against                    25,650
                           Abstained                  20,016

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                    3.1 Certificate of Amendment filed July 22, 1997 
                    3.2 Certificate of Amendment  filed October 31, 1997 
                   10.1 1997 Omnibus  Incentive  Plan 
                   10.2 1997  Non-Employee Stock Option Plan

                                       18

<PAGE>


                   27.  Financial Data Schedule

         (b)      Reports on Form 8-K

                  The Company filed a Current Report on Form 8-K/A on August 21,
                  1997, with respect to Item 7 of Form 8-K.

         No other  Items of Part II are  applicable  to the  Registrant  for the
         period covered by this Quarterly Report on Form 10-QSB.

                                       19

<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: November      19th   , 1997
             -------------        
                                               William L. Jenkins
                                         ---------------------------------------
                                         President and Chief Operating Officer
                                         (Principal Executive, Financial and
                                         Accounting Officer)

                                       20