Prepared and filed by St Ives Burrups

Warrior Energy Services Corporation

Notes to Financial Statements

For the Years Ended December 31, 2005, 2004 and 2003


	•	2.25:1.00 for the fiscal months ending on January 31, 2006 through March 31, 2006;
	•	2.25:1.00 for the fiscal months ending on April 30, 2006 through June 30, 2006;
	•	2.00:1.00 for the fiscal months ending on July 31, 2006 through September 30, 2006;
	•	2.00:1.00 for the fiscal months ending on October 31, 2006 through December 31, 2006;
	•	2.00:1.00 for the fiscal months ending on January 31, 2007 through March 31, 2007; and
	•	1.75:1.00 for each fiscal month ending thereafter.

The Company is required to have, at the end of each fiscal month, EBITDA for the 12-month period then ended of not less than the following:

	•	$33,000,000 for the fiscal months ending on January 31, 2006 through March 31, 2006;
	•	$33,000,000 for the fiscal months ending on April 30, 2006 through June 30, 2006;
	•	$34,000,000 for the fiscal months ending on July 31, 2006 through September 30, 2006;
	•	$34,000,000 for the fiscal months ending on October 31, 2006 through December 31, 2006; and
	•	$35,000,000 for each fiscal month ending thereafter.

Events of Default. Events of default under the Senior Secured Credit Agreement include, among others and subject to certain limitations, (a) the failure to make any payment of principal, interest, or fees when due and payable or to pay or reimburse GECC for any expense reimbursable under the Senior Secured Credit Agreement within ten days of demand for payment, (b) the failure to perform the covenants under the Senior Secured Credit Agreement relating to use of proceeds, maintenance of a cash management system, maintenance of insurance, delivery of certificates of title for equipment, delivery of certain post-closing documents, and maintenance of compliance with the Senior Secured Credit Agreement’s negative covenants, (c) the failure to deliver to the lenders monthly un-audited, quarterly un-audited and annual audited financial statements, an annual operating plan, and other reports, certificates and information as required by the Senior Secured Credit Agreement, (d) the failure to perform any other provision of the Senior Secured Credit Agreement (other than those set forth in (b) above) which nonperformance remains un-remedied for 20 days or more, (e) a default or breach under any other agreement or instrument to which we are a party beyond any grace period that involves the failure to pay in excess of $250,000 or causes or permits to cause indebtedness in excess of $250,000 to become due prior to its stated maturity, (f) any information in a borrowing base certificate or any representation or warranty or certificate or in any written statement report, or financial statement delivered to GECC being untrue or incorrect in any material respect, (g) a change of control, as defined, of the Company, (h) the occurrence of an event having a material adverse effect, (i) the initiation of insolvency, bankruptcy or liquidation proceedings, (j) any final judgment for the payment of money in excess of $250,000 is outstanding against the Company and is not within thirty days discharged, stayed or bonded pending appeal, (k) any material provision of or lien under any document relating to the Senior Secured Credit Agreement ceases to be valid, (l) the attachment, seizure or levy upon of the Company’s assets which continues for 30 days or more, and (m) William Jenkins ceases to serve as the Company’s chief executive officer, unless otherwise agreed by GECC. Upon the occurrence of a default, which is defined as any event that with the passage of time or notice or both would, unless waived or cured, become an event of default, or event of default, the lenders may discontinue making revolving loans and capital expenditure loans to the Company and increase the interest rate on all loans. Upon the occurrence of an event of default, the lenders may terminate the Senior Secured Credit Agreement, declare all indebtedness outstanding under the Senior Secured Credit Agreement due and payable, and exercise any of their rights under the Senior Secured Credit Agreement which includes the ability to foreclose on our assets. In the event of a bankruptcy or liquidation proceeding, all borrowings under the Senior Secured Credit Agreement are immediately due and payable.

Second Lien Credit Agreement

The Term Loan. On December 16, 2005, the Company entered into the Second Lien Credit Agreement with GECC, providing for a term loan $25.0 million.

Interest Rate. The annual interest rate on borrowings under the term loan is 6.0% above the index rate. The index rate is a floating rate equal to the higher of (i) the rate publicly quoted from time to time by the Wall Street Journal as the prime rate, or (ii) the average of the rates on overnight Federal funds transactions among members of the

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Warrior Energy Services Corporation

Notes to Financial Statements

For the Years Ended December 31, 2005, 2004 and 2003

Federal Reserve System plus 0.5%. Subject to the absence of an event of default and fulfillment of certain other conditions, we can elect to borrow or convert any loan and pay the annual interest at the LIBOR rate plus a margin of 7.5%. If an event of default in the nature of a failure to make any payment of principal of, interest on or fees owing in respect to loans when due and payable or the commencement of bankruptcy proceedings involving us has occurred, the annual interest rate is increased by 2% and, if any other default or event of default has occurred and is continuing, GECC may elect to increase the interest rate by that amount.

Collateral. The loan under the Second Lien Credit Agreement is collateralized by a junior lien against substantially all of the Company’s assets, subordinate to the lien under the Senior Secured Credit Agreement.

Use of Proceeds. Initial borrowings under the Second Lien Credit Agreement advanced on December 16, 2005 of $25.0 million were used to pay a portion of the Bobcat acquisition purchase price.

Maturity of Loan. Outstanding borrowings under the Second Lien Credit Agreement are due and payable on March 16, 2009, unless previously repaid.

Mandatory and Voluntary Prepayments. Borrowings under the Second Lien Credit Agreement are subject to certain mandatory pre-payments including, among other requirements, pre-payment out of a portion of the net proceeds of any sale of stock by the Company in a public offering in a manner substantially identical to the mandatory repayment provisions out of a portion of the net proceeds of any sale of stock by the Company in a public offering under the terms of the Senior Secured Credit Agreement described above.

If the Company issues any shares of common stock, other than as described above in a public offering of our securities, or any debt at any time, the Company is required to prepay the loans outstanding under the Second Lien Credit Agreement in an amount equal to all such proceeds, net of underwriting discounts and commissions and other reasonable costs.

Any mandatory prepayments made as provided above are to be applied substantially as follows: first, to any fees then due and payable to GECC, second, to interest then due and payable on the loan and, third, to prepay the principal of the loan.

The Company may at any time prepay all or part of the loan or capital expenditure loan, subject to the payment of certain pre-payment fees declining from 2.0% during the first year, 1.0% during the second year, and 0.5% in the event the termination or reduction occurs during the third year of the term of the Second Lien Credit Agreement. The Company is required to use, subject to certain exceptions, the net proceeds from the sale of any assets or the stock of any subsidiary to prepay all borrowings under the facilities.

Closing Conditions. Initial borrowings under the Second Lien Credit Agreement were subject to the fulfillment at or before the closing of closing conditions substantially identical to the conditions to be fulfilled in connection with the closing under the Senior Secured Credit Agreement described above.

Affirmative and Negative Covenants. Under the Second Lien Credit Agreement, the Company is obligated to maintain compliance with a number of affirmative and negative covenants, including financial covenants that are substantially identical to the covenants we are obligated to comply with under the terms of the Senior Secured Credit Agreement described above.

Events of Default. Events of default under the Second Lien Credit Agreement are substantially identical to events of default under the Senior Secured Credit Agreement described above.

Credit Agreements - General

There can be no assurance that the Company will be able to remain in compliance with the financial and other covenants of the Senior Secured Credit Agreement and the Second Lien Credit Agreement or be able to obtain such amendments, consents or waivers with respect to potential violations of these covenants when required. The Company’s inability to do so may result in it being placed in violation of those financial and other covenants. The Company can make no assurances that it will remain in compliance with our debt covenants or generate sufficient cash flows to service its debt and fund operations. Failure to comply with these debt covenants and or generate sufficient cash flow from operations could significantly impair its liquidity position and could result in GECC exercising mandatory prepayment options under the Senior Secured Credit Agreement and Second

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Warrior Energy Services Corporation

Notes to Financial Statements

For the Years Ended December 31, 2005, 2004 and 2003

Lien Credit Agreement. Should the Company be unable to borrow funds under the Senior Secured Credit Agreement or Second Lien Credit Agreement if prepayment of those borrowings were required, the Company can make no assurances that alternative funding could be obtained. Reference is made to the Senior Secured Credit Agreement and the Second Lien Credit Agreement, filed as exhibits to the Company’s Current Report on Form 8-K for a complete statement of the terms and conditions.

Subordinated Secured Indebtedness - Note Extensions

In connection with the Company entering into the GECC refinancing in November 2004, the Company agreed with the holders of its outstanding subordinated secured notes to extend the maturity date of the notes from December 31, 2004 to February 13 and February 14, 2008 on $23.0 million of the total $23.9 million principal amount of the notes then outstanding. The remainder of the outstanding principal was repaid. Concurrently with the borrowings under the Senior Secured Credit Agreement and Second Lien Credit Agreement, the maturity date of approximately $21.9 million principal amount of the Company’s outstanding subordinated secured promissory notes was extended to June 15, 2009 and $2.1 million of such subordinated secured notes, including accrued interest, was repaid. The notes bear interest at 15% per annum and are convertible into shares of the Company’s common stock at a conversion price of $7.50 per share, subject to an 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, in which event the conversion price is reduced to the lower price at which the shares were issued. As a condition to extend the maturity date of the notes in connection with the GECC refinancing in November 2004, the Company extended the expiration date of our 6.6 million outstanding common stock purchase warrants to December 31, 2009.

All of the debt and interest owed under the subordinated secured promissory notes is subordinated to the Senior Credit Agreement and the Second Lien Credit Agreement and cannot be repaid until all the amounts owed pursuant to the Credit Facility have been repaid.

Substantially all of the Company’s assets are pledged as collateral for the indebtedness outstanding under the Secured Credit Agreement and the Second Lien Credit Agreement and subordinated secured promissory notes.

Maturities of debt are as follows:

Fiscal Year

2006	$	5,168,880
2007		4,602,717
2008		4,506,778
2009		64,045,232
2010		—
Thereafter		—

	$	78,323,607

Note 10 - Commitments

The Company leases land, office space and equipment under various operating leases. The leases expire at various dates through 2010. Rent expense from continuing operations was approximately $3,168,000, $1,760,000 and $1,648,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

The future minimum lease payments required under noncancelable leases with initial or remaining terms of one or more years at December 31, 2005 were as follows:

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Warrior Energy Services Corporation

Notes to Financial Statements

For the Years Ended December 31, 2005, 2004 and 2003

Fiscal Year	Operating Leases

2006	$	785,992
2007		507,397
2008		398,373
2009		240,025
2010		76,446
Thereafter		—

Total minimum lease payments	$	2,008,233

Pursuant to employment contracts, the Company expects to make success bonus payments to certain key employees concurrently with the closing of its public offering in the aggregate amount of approximately $2.6 million of which $1.5 million is accrued as of December 31, 2005.

Note 11 - Common Stock Transactions and Warrants

In October 2005, the Company initiated a series of steps undertaken for the purpose of recapitalizing the Company through the elimination of the substantial amount of derivative securities it has outstanding, among other steps intended to be undertaken. These derivative securities include common stock purchase warrants to purchase 7,076,119 shares of the Company’s common stock and $35,019,173 of principal amount and accrued interest, as of December 31, 2005, of the Company’s outstanding convertible subordinated notes which, as of that date, are convertible at a conversion price of $7.50 per share into an aggregate of 4,669,223 shares of the Company’s common stock.

On October 6, 2005, the Company entered into agreements with the holders of 5,269,369 of the 7,076,119 warrants outstanding to exchange those warrants for 1,756,456 shares of the Company’s common stock. Of the 5,269,369 warrants, an aggregate of 4,075,528 are held by the SJCP and SJMB, and 1,193,841 were held by the Underbrink Family Entities, which include Mr. Charles E. Underbrink. Mr. Underbrink is one of the Company’s directors and is the Chairman of the general partner of SJMB and, in October 2005, was the Chairman of the general partner of SJCP. The exchange of warrants for shares of the Company’s common stock by the Underbrink Family Entities was completed on October 6, 2005 resulting in the issuance of 397,947 shares, and the warrants to purchase 4,075,527 shares held by SJCP and SJMB are to be repurchased in connection with the Company’s proposed public offering.

On October 7, 2005, the Company commenced an offer to exchange shares of its common stock for its remaining outstanding 1,806,750 common stock purchase warrants. The Company offered to exchange one share of our common stock for each three warrants. Each warrant represents the right to purchase one share of the Company’s common stock at an exercise price of $7.50 per share. The offer to exchange shares of the Company’s common stock for warrants expired on November 14, 2005, and the Company issued 503,167 shares of its common stock in exchange for 1,509,500 common stock purchase warrants.

The agreements with SJCP, SJMB and the Underbrink Family Entities provide that such persons will convert an aggregate of $20,277,374 of principal and all accrued interest (which amounted to $16,734,434 through December 31, 2005) on the Company’s outstanding convertible subordinated notes into shares of our common stock and, provided the price they are to receive is not less than $7.50 per share, sell those shares to the Company, along with their remaining warrants, the shares issued in exchange for certain of their warrants, the shares issued on conversion of accrued interest in November 2005 and an additional 501,748 shares held by SJMB, at the closing time of the Company’s proposed public offering. The purchase price paid by the Company for such shares will be the price per share it receives in the public offering less commissions and expenses of the underwriters in the offering. In addition, under the terms of a Registration Rights Agreement, the holders of $3,041,361 principal amount and accrued interest (as of December 31, 2005) on outstanding convertible subordinated notes have the right to have included 405,515 shares issuable on conversion of the principal and interest on the notes, as well as the shares of the Company’s common stock issued in exchange for their warrants, in the registration statement relating to the Company’s proposed public offering.

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Warrior Energy Services Corporation

Notes to Financial Statements

For the Years Ended December 31, 2005, 2004 and 2003

As of December 31, 2005, the Company’s certificate of incorporation permits it to issue up to 35,000,000 shares of common stock, of which 2,342,125 shares were issued and outstanding at December 31, 2005 and 1,250,415 shares were issued and outstanding at December 31, 2004. The Company has outstanding as of December 31, 2005 and 2004 common stock purchase warrants, options and convertible debt securities entitled to purchase or be converted into an aggregate of 8,019,484 and 13,382,167 shares, respectively, of the Company’s common stock at exercise and conversion prices ranging from $7.50 to $26.30.

During 2004, the Company became obligated to issue five-year warrants to purchase 802,856 shares of common stock to SJMB and related parties of SJMB exercisable at $7.50 per share in connection with the extension of their indebtedness (see Note 9). These warrants were issued in 2005.

During 2003, the Company issued five-year warrants to purchase 518,766 of common stock to SJMB and related parties of SJMB exercisable at $7.50 per share in connection with the extension of their indebtedness (see Note 9).

During 2002, the Company issued five-year warrants to purchase 250,000 shares of common stock to William L. Jenkins, President and Chief Executive Officer exercisable at $7.50 per share pursuant to his amended employment agreement effective January 1, 2002 and expiring December 31, 2005 and extended in March 2005 through January 1, 2008.

During 2002, the Company issued five-year warrants to purchase 242,209 to SJMB and affiliates of SJMB exercisable at $7.50 per share in connection with the extension of their indebtedness (see Note 9).

During 2001, the Company issued to the Chairman of SJMB, L.L.C. and to SJCP five-year warrants to purchase 70,000 and 400,000 shares, respectively, of the Company’s Common Stock at exercise prices of $7.50 per share. The warrants were issued in consideration of guarantees extended to a lender by the Chairman of SJMB, L.L.C. and SJCP in connection with the Company’s borrowings in 2000 and the guarantees of the Chairman of SJMB, L.L.C. and SJCP of that indebtedness.

The warrants issued during 2004, 2003, 2002, 2001, 2000 and 1999 are subject to “Full Ratchet” anti-dilution provisions. In December of 1999, the Company issued the 14,350,000 warrants at an exercise price of $7.50. Consequently, the anti-dilution provisions on all warrants subject to the provision were triggered. Upon each adjustment of the exercise price, the holder of the warrant shall thereafter is entitled to purchase, at the exercise price resulting from the adjustment, the number of shares of common stock obtained by multiplying the exercise price in effect immediately prior to the adjustment by the number of shares purchasable prior to the adjustment and dividing the product thereof by the exercise price resulting from the adjustment. The following table summarizes information about warrants outstanding at December 31, 2005:

	SJCP Expires 12/31/09			SJMB Expires 12/31/09			Guarantor affiliated with SJCP Expires 12/31/09			Lenders affiliated with SJMB Expires 12/31/09			Falcon Seaboard Expires 12/31/09		Harris Webb & Garrison Expires 3/15/03			W. L. Jenkins Employment Agreement Expires 12/31/06			Total

Balance, 12/31/02		732,028			2,756,250			70,000			2,570,841			180,000		38,462			250,000			6,597,580
issuance					146,250						372,516											518,766

Balance, 12/31/03		732,028			2,902,500			70,000			2,943,357			180,000		38,462			250,000			7,116,347
expirations/cancelled											(1,245,623	)				(38,462	)					(1,284,084	)
issuance											802,856											802,856

Balance, 12/31/04		732,028			2,902,500			70,000			2,500,591			180,000		—			250,000			6,635,118
exchange commitment		(488,018	)		(1,788,000	)																(2,276,019	)
tender offer exchange								(70,000	)		(2,383,341	)							(250,000	)		(2,703,341	)

Balance, 12/31/05		244,009			1,114,500			—			117,250			180,000		—			—			1,655,759

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Warrior Energy Services Corporation

Notes to Financial Statements

For the Years Ended December 31, 2005, 2004 and 2003

Note 12 - Income Taxes

The (benefit)/provision for income taxes consists of the following for the years ended December 31, 2005, 2004, and 2003:

	2005		2004		2003

Federal:
Current	$	163,442	$	—	$	—
Deferred		—		—		—

		163,442		—		—

State:
Current		11,885		—		—
Deferred		—		—		—

		11,885		—		—

Total	$	175,327	$	—	$	—

The (benefit)/provision for federal income taxes differs from the amount computed by applying the federal income tax statutory rate of 34% to the Company’s income/(loss) before income taxes, as follows:

	2005			2004			2003

Provision (benefit) at federal statutory rate	$	2,850,736		$	(600,587	)	$	(1,409,979	)
State income taxes, net of federal benefit		276,689			(58,292	)		(136,851	)
Nondeductible expenses		86,728			103,137			105,180
Accrued liabilities and other		—			(522,358	)		(117,993	)
Increase (decrease) in valuation allowance		(3,038,826	)		1,078,100			1,559,643

Provision (benefit) for federal income taxes	$	175,327		$	—		$	—

At December 31, 2005 and 2004, the Company has available federal tax net operating loss carryforwards (NOL’s) of approximately $29,304,631 and $35,556,000, respectively, that unless previously utilized, expire at various dates beginning 2011 through 2024. The Company’s utilization of NOL’s is subject to a number of uncertainties, including the ability to generate future taxable income. In addition, the Company has been subject to a number of “ownership changes” as defined under Internal Revenue Code Section 382. As a result, Section 382 imposes additional limitations on utilization of certain of the Company’s NOL’s. Subsequent to the Company’s proposed public offering it expects to begin paying income taxes on its taxable income.

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Warrior Energy Services Corporation

Notes to Financial Statements

For the Years Ended December 31, 2005, 2004 and 2003

Deferred income taxes reflect the impact of temporary differences between amounts of assets and liabilities recorded for financial reporting purposes and such amounts as measured in accordance with tax laws. The items, which comprise a significant portion of the deferred tax assets and liabilities, are as follows:

	2005			2004

Gross deferred tax assets:
Allowance for doubtful accounts receivable	$	159,198		$	177,342
Accrued bonuses and other		696,034			227,694
Operating loss and tax credit carryforwards		11,142,902			13,293,059
Goodwill		1,958,940			2,904,108
Valuation allowance		(6,441,690	)		(14,627,450	)

Gross deferred tax asset		7,515,384			1,974,753

Gross deferred tax liabilities:
Property, plant and equipment		(6,193,290	)		(1,862,085	)
Other		(112,669	)		(112,668	)
Intangible assets		(10,165,015	)

Gross deferred tax liability		(16,470,974	)		(1,974,753	)

Net deferred tax asset (liability)	$	(8,955,590	)	$	—

The Company is required to record a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2005 and 2004, the Company has recorded a valuation allowance of $6,441,690 and $14,627,450 against the gross deferred tax asset.

In assessing the realizability of deferred tax assets, management considers future reversals of existing deferred tax liabilities, projected future taxable income exclusive of temporary differences and available tax planning strategies. In 2005, the Company recorded a decrease in the valuation allowance of $8.2 million. The decrease was recorded as a $3.0 million reduction of the provision for income taxes and as a $5.2 million reduction of the deferred tax liability and goodwill associated with the acquisition of Bobcat (see Note 2).

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		Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
		For the fiscal year ended December 31, 2005; or

		Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from __________ to __________.

Delaware		11-2904094

(State or other jurisdiction of Incorporation or organization)		(IRS Employer Identification No.)

100 Rosecrest, Columbus, Mississippi		39701

(Address of Principal Executive Offices)		(Zip Code)

Item Number		Page

	Part I

Item 1.	Business	3

Item 1A.	Risk Factors	10

Item 1B.	Unresolved Staff Comments	21

Item 2.	Properties	21

Item 3.	Legal Proceedings	21

Item 4.	Submission of Matters to a Vote of Security Holders	22

	Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23

Item 6.	Selected Financial Data	25

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	44

Item 8.	Financial Statements and Supplementary Data	45

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	45

Item 9A.	Controls and Procedures	45

Item 9B.	Other Information	46

	Part III

Item 10.	Directors and Executive Officers of the Registrant	47

Item 11.	Executive Compensation	50

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54

Item 13.	Certain Relationships and Related Transactions	56

Item 14.	Principal Accountant Fees and Services	60

	Part IV

Item 15.	Exhibits and Financial Statement Schedules	61

		produced to the surface. The Company primarily deploys its perforation gun by a conventional wireline cable, if appropriate, or using conventional tubing or drill pipe, which is called tubing conveyed perforating or “TCP.”

	•	Mechanical Services. Cased-hole wireline equipment is often used to set plugs, packers, dump cement and make other physical changes to a well bore. The mechanical tools (such as plug setting tools) are usually combined with a logging tool to ensure proper placement of the plug or packer in the well. Mechanical services are often provided along with logging or perforating services on the same trip to the well site and are an integral part of the drilling and completion process.

	•	Plugging and Abandonment. Cased-hole wireline equipment, pumping equipment and hydraulic jacks are used in the process of permanently closing natural gas and oil wells no longer capable of producing in economic quantities at the end of their productive life. A typical P&A job will include cutting the tubing and/or casing with wireline explosives or other cutters, removing the salvageable tubing with hydraulic jacks and then setting plugs and cementing the well bore. The P&A process generally takes several days to complete. Plugging and abandonment work can provide favorable operating margins and is less sensitive to natural gas and oil pricing than drilling and workover activity since well operators must plug a well in accordance with state or federal regulations when it is no longer productive.

		temporary and nondamaging technology often used with other services, such as hot tapping. It is quickly deployed and applied for fast response, does not damage installations and does not require kill fluids. Freezing technology applications include changing or repairing damaged valves, entire wellheads and controlling pressure in tubing or pipelines.

	•	Hot Tapping Services. The Company’s hot tapping services are used to access a contained area that is or may be holding pressure. The procedure can be designed to release the pressure and contents, or in the case of a loaded pipeline, provide access through a valve. Hot tapping is used in a variety of applications, including coiled tubing, wellheads, valves, tubing, drill pipe and drill collars. The Company’s experienced well service personnel can be dispatched 24 hours a day with hot tap drills and the related equipment. The Company’s hot tap equipment can be easily transported by truck, in well service freeze units, or by third-party helicopter.

	•	Rental Tool Services. The Company rents specialized equipment and tools for the drilling, completion and workover of onshore and offshore natural gas and oil wells. Natural gas and oil producers and drilling contractors often find it more economical to supplement their inventories of tools, drillpipe and other specialized equipment with rental equipment. The Company offers a broad range of rental tools, including:

	Class: Common Stock, par value $.0005 per share
	Outstanding at March 21, 2006: 2,379,464 shares

	•	Logging Services. The truck or skid-mounted wireline logging services are used to evaluate downhole well conditions such as production patterns, the cement bonding effectiveness between the casing and the formation and formation characteristics such as lithology and porosity. These logging services are provided at various stages of the process of drilling and completing natural gas and oil wells as well as at various times thereafter until the well is depleted, plugged and abandoned. Such services are provided using a wireline unit equipped with an armored cable that is lowered by winch into an existing well. The cable lowers instruments and tools into the well to perform a variety of services and tests. The wireline unit’s instrument cab contains electronic equipment to supply power to the downhole instruments, to receive and record data from those instruments in order to produce the “logs” which define specific characteristics of each formation and to display the data received from downhole. Each of the Company’s wireline units is equipped with a top-of-the-line computer system.

	•	Pipe Recovery Services. Experienced pipe recovery specialists use specialized “free-point” wireline tools to find the point at which the tubing or drill pipe is stuck in a well. Once the “free-point” (the lowest point in the well where the pipe is still free to move) is located, then the pipe recovery specialist uses his judgment and experience to determine how best to free the pipe. Generally the pipe will be “backed off” (un-screwed) at the joint just above the free-point or the pipe may be cut with explosives, chemical or mechanical cutters just above the free point. Once the pipe is cut it can be removed from the well, allowing the rig crew to go back to “fish” the remaining portion of the tubing or drillpipe with grapples, jars and other specially made tools.

	•	Perforating Services. Perforating involves positioning a perforation “gun” that contains explosive jet charges down the wellbore next to a productive zone. A detonator is fired and primer cord is ignited, which then detonates the jet charges. The resulting explosion creates holes through the casing and cement and into the formation, thus allowing the formation fluid to flow into the wellbore and be

	•	Snubbing Services. Snubbing services use specialized hydraulic well service units that permit an operator to complete underbalanced wells and repair damaged casing, production tubing and downhole production equipment in high-pressure, “live-well” environments. A snubbing unit makes it possible to remove and replace downhole equipment while maintaining pressure in the well. Customers benefit because these operations can be performed without killing the well with heavy fluids, which can damage the productive formations, and because a snubbing rig can perform many applications at a lower cost than other alternatives. Since snubbing is difficult to perform, the snubbing segment of the natural gas and oil services industry is limited to a relatively few operators who have the experience and knowledge required to perform such services safely and efficiently. Applications for snubbing units include “live-well” completions and workovers, underground blowout control, underbalanced completions, underbalanced drilling and the running of tubing, casing or drillpipe into or out of pressurized wellbore.

	•	Freezing Services. Freezing technology provides wellhead and pipe operations with pressure control and isolation for service and maintenance. Freezing technology involves setting a bentonite gel plug by freezing it in place. Freezing is an economic,

	•	pressure control equipment;

	•	drill string equipment;

	•	pipe handling equipment;

	•	fishing and downhole tools;

	•	stabilizers;

	•	power swivels;

	•	bottom-hole assemblies;

	•	handling tools;

	•	test pumps;

	•	tubular handling tools; and

	•	hydraulic torque wrenches.

	•	Fishing Services. The Company provides highly skilled downhole services, including fishing, milling and cutting services, which consist of removing or otherwise eliminating “fish” or “junk” (a piece of equipment, a tool, a part of the drill string or debris) in a well that is causing an obstruction.

	•	Coiled Tubing, Nitrogen Pumping and Fluid Pumping. The Company is also planning to enter complimentary well intervention product lines in 2006, including coiled tubing, nitrogen pumping and fluid pumping. Coiled tubing units compliment the Company’s snubbing units, providing an alternative conveyance system to deliver completion and workover services. The addition of nitrogen and fluid pumping

	•	the supply of and demand for natural gas and oil;

	•	the current and expected level of domestic and foreign prices for natural gas and oil;

	•	the cost of exploring for, developing, producing and delivering natural gas and oil;

	•	the decline rates of current production;

	•	the discovery rates of new natural gas and oil reserves;

	•	available pipeline and other transportation capacity;

	•	weather conditions, including tropical storms and hurricanes that can affect natural gas and oil operations over a wide area;

	•	domestic and worldwide economic conditions;

	•	political instability in natural gas- and oil-producing countries;

	•	hostilities, strikes and other disruptions affecting the production and delivery of natural gas and oil;

	•	variations in governmental regulations and tax laws or the imposition of new governmental requirements on the industry;

	•	technical advances affecting energy consumption;

	•	the price and availability of alternative fuels;

	•	the ability of natural gas and oil producers to raise equity capital and debt financing; and

	•	merger and divestiture activity among natural gas and oil producers.

	•	operating a significantly larger combined company with operations in natural gas and oil well services in which the Company has not previously been involved;

	•	managing relationships with new customers;

	•	integrating personnel with diverse backgrounds and organizational cultures;

	•	experiencing operational interruptions or the possible loss of key employees, customers or suppliers;

	•	establishing the internal controls and procedures that the combined company will be required to maintain under the Sarbanes-Oxley Act of 2002; and

	•	consolidating other corporate and administrative functions.

	•	retaining and attracting key employees;

	•	retaining and attracting new customers;

	•	increased administrative burden;

	•	developing the Company’s sales and marketing capabilities;

	•	managing its growth effectively;

	•	integrating operations;

	•	operating a new line of business; and

	•	increased logistical problems common to large, expansive operations.

	•	shortages of necessary raw materials or equipment;

	•	construction delays;

	•	cost overruns;

	•	lack of customer demand for the services the Company intends to provide with this new equipment;

	•	inability to obtain financing;

	•	difficulties associated with entering into new product lines, including competition from existing service providers and integration with existing operations; and

	•	shortages of qualified personnel.


Yes	No


Yes	No


Yes	No


Yes	No

	•	on or after March 31, 2006, June 30, 2006 and September 30, 2006, for the 3-, 6- and 9-month periods, respectively, then ended of not less than 1.5:1.0; and

	•	on or after December 31, 2006, for the 12-month period then ended of not less than 1.5:1.0.

	•	issuance of administrative, civil and criminal penalties;

	•	denial or revocation of permits or other authorizations;

	•	imposition of limitations on the Company’s operations; and

	•	performance of site investigatory, remedial or other corrective actions.

	•	the prohibition of stockholder action by written consent, other than by unanimous written consent;

	•	the ability of the Company’s board of directors to issue up to 2.5 million shares of preferred stock with voting and liquidation rights superior to common stock; and

	•	limitations on the ability of the Company’s stockholders to call special meetings.

	•	adverse developments in general economic conditions;
	•	changes in capital markets;
	•	adverse developments in the natural gas and oil industry;
	•	developments in international relations;
	•	the commencement or expansion of hostilities by the United States or other governments;
	•	events of terrorism; and
	•	declines and fluctuations in the prices for natural gas and oil;

	Bid Prices

2004	High		Low

First Quarter	$	3.90	$	2.50
Second Quarter		4.00		1.00
Third Quarter		2.00		1.00
Fourth Quarter		2.00		1.00

	Bid Prices

2006	High		Low

First Quarter (through March 30, 2006)	$	19.00	$	10.01

	December 31,

	2005		2004			2003			2002			2001

Revenues(1)	$	73,667	$	53,687		$	45,757		$	34,094		$	39,682
Income (loss) from continuing operations	$	15,413	$	4,630		$	1,386		$	(4,173	)	$	4,064
Net income (loss) per common share – basic	$	5.75	$	(1.41	)	$	(4.43	)	$	(6.06	)	$	4.03
Net income (loss) per common share – diluted	$	4.41	$	(1.41	)	$	(4.43	)	$	(6.06	)	$	4.03
Current assets	$	23,106	$	15,665		$	16,035		$	16,117		$	17,366
Total assets	$	101,634	$	30,109		$	41,401		$	49,671		$	50,481
Current liabilities	$	16,944	$	8,789		$	64,439		$	20,176		$	16,829
Total liabilities(2)	$	117,205	$	55,318		$	64,905		$	67,720		$	61,128
Cash dividends		-0-		-0-			- 0 -			- 0 -			- 0 -

	Payments Due By Period

Contractual Obligations	Total		Prior to December 31, 2006		January 1, 2007 to December 31, 2008		January 1, 2009 to December 31, 2011		January 1, 2012 and thereafter

Long Term Debt(1)	$	78,343,883	$	5,568,880	$	8,729,771	$	64,045,232		—
Capital Leases		—		—		—		—		—
Purchase Obligations		—		—		—		—		—
Change of Control Payment	$	1,535,388	$	1,535,388		—		—		—
Other Long-term Liabilities		—		—		—		—		—


(1)	Does not reflect planned use of proceeds from the Company’s proposed public offering.

	•	a revolving credit facility of up to $15.0 million, but not exceeding a borrowing base of 85% of the book value of eligible accounts receivable, less any reserves GECC may establish from time to time,

	•	a term loan of $30.0 million, and

	•	a one-year capital expenditure loan facility of up to $5.0 million, but not exceeding the lesser of 80% of the hard costs of eligible capital equipment and 75% of the forced liquidation value of eligible capital equipment, subject to adjustment by GECC.

	(A) 100% of the first $50.0 million in net proceeds received are to be applied to prepay or redeem the Junior Capital;

	(B) net proceeds in excess of $50.0 million and up to $75.0 million are to be allocated 40% to prepay or redeem the Junior Capital, 30% to prepay loans outstanding under the Company’s Senior Secured Credit Agreement and 30% to prepay loans outstanding under the Company’s Second Lien Credit Agreement;

	(C) net proceeds in excess of $75.0 million and up to $100.0 million are to be allocated 60% to prepay or redeem the Junior Capital, 20% to prepay loans outstanding under the Company’s Senior Secured Credit Agreement and 20% to prepay loans outstanding under the Company’s Second Lien Credit Agreement; and

	(D) net proceeds in excess of $100.0 million are to be allocated 80% to prepay or redeem the Junior Capital, 10% to prepay loans outstanding under the Company’s Senior Secured Credit Agreement and 10% to prepay loans outstanding under the Company’s Second Lien Credit Agreement.

	Report of Independent Registered Public Accounting Firm	F-1

	Balance Sheets as of December 31, 2005, and 2004	F-2

	Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003	F-3

	Statements of Stockholders Deficit for the Years Ended December 31, 2005, 2004, and 2003	F-4

	Statements of Cash Flows for the Years Ended December 31, 2005, 2004, and 2003	F-5

	Notes to Financial Statements	F-7

Name	Age	Position

William L. Jenkins	52	Chairman, President and Chief Executive Officer
Robert J. McNally	35	Director, Executive Vice President of Operations and Finance
Ron E. Whitter	44	Chief Financial Officer
Charles E. Underbrink⁽¹⁾	51	Director
James H. Harrison⁽¹⁾	37	Director

Proposed Directors:
Gerald M. Hage⁽²⁾	58
Robert L. Hollier⁽²⁾	63
John T. McNabb, II⁽²⁾	61


(1)	Expected to resign from the Company’s board prior to the closing of the Company’s proposed public offering.
(2)	Expected to be elected to the Company’s board prior to the closing of the Company’s proposed public offering. The Company expects these directors to be deemed “independent directors” by the Company’s board of directors as defined under the rules of the Nasdaq Stock Market.


Name and Principal Position	Annual Compensation								Long-Term Compensation				All Other Compensation

	Year		Salary		Bonus		Other Annual Compensation		Securities Underlying Options		Long-Term Incentive Payouts

William L. Jenkins		2005	$	350,000	$	171,699		—		—		—	$	1,536,604	⁽¹⁾⁽²⁾
President		2004	$	350,000	$	147,544		—		—		—	$	66,384	⁽¹⁾⁽³⁾
		2003	$	361,667	$	73,555		—		—		—	$	86,607	⁽¹⁾⁽³⁾
Ron E. Whitter		2005	$	135,000		—		—		—		—	$	134,000	⁽⁴⁾⁽⁵⁾
Chief Financial		2004	$	128,333		—		—		—		—	$	9,000	⁽⁴⁾
Officer		2003	$	102,042	$	16,667		—		—		—	$	9,000	⁽⁴⁾


(1)	Includes the premiums paid by the Company on a $1,000,000 insurance policy on the life of Mr. Jenkins which names his wife as beneficiary and owner of the policy.
(2)	Includes “change of control” (as defined in the agreement) payment of $1.5 million under the terms of Mr. Jenkins’ employment agreement, which was accrued during 2005 and is expected to be paid immediately prior to or concurrently with the closing of the Company’s proposed public offering.
(3)	Includes loans forgiven under Mr. Jenkins’ January 1, 2002 employment agreement.
(4)	Includes automobile allowance paid to Mr. Whitter.
(5)	Includes “change of control” (as defined in the agreement) payment of $125,000 under the terms of Mr. Whitter’s employment agreement.

					Number of Unexercised Options at December 31, 2005				Value of Unexercised In-the-Money Options At December 31, 2005 ⁽¹⁾
Name	Shares Acquired on Exercise		Value Realized
Name	Shares Acquired on Exercise		Value Realized		Exercisable		Unexercisable		Exercisable		Unexercisable

William L. Jenkins		-0-		-0-		300,000		-0-	$	1,344,000		-0-
Ron E. Whitter		-0-		-0-		40,000		-0-	$	179,200		-0-


(1)	Based on the closing sales price on December 31, 2005 of $11.98.

Name and Address ⁽¹⁾⁽²⁾	Number of Shares Owned		Percentage of Outstanding Shares⁽³⁾

William L. Jenkins⁽⁴⁾		370,825		13.8%
Robert J. McNally		—		—
Ron E. Whitter⁽⁵⁾		40,000		1.7%
Charles E. Underbrink⁽⁶⁾c/o St. James Capital Corp. 4299 San Felipe Suite 120 Houston, TX 77027		8,106,670		86.4%
James H. Harrison⁽⁷⁾c/o St. James Capital Corp. 4299 San Felipe - Suite 120 Houston, TX 77027		7,266,750		79.5%
SJMB, L.P. ⁽⁸⁾c/o SJMB, L.L.C., general partner 4299 San Felipe - Suite 120 Houston, Texas 77027		7,266,750		79.5%
Samuel J. Brown, IV⁽⁹⁾St. James Capital Partners, L.P. c/o Overcup Capital, L.L.C., general partner 12202 Overcup Houston, Texas 77024		2,072,749		46.5%
Bendover Company⁽¹⁰⁾Alan W. Mann M. Dale Jowers 1053 The Cliffs Blvd. Montgomery, TX 77356		331,424		13.9%
All Directors and Officers as a Group (5 persons)		8,517,496		87.6%


(1)	This tabular information is intended to conform with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, relating to the determination of beneficial ownership of securities. The tabular information gives effect to the exercise of warrants or options exercisable within 60 days of the date of this table owned in each case by the person or group whose percentage ownership is set forth opposite the respective percentage and is based on the assumption that no other person or group exercise their option.
(2)	Unless otherwise indicated, the address for each of the above is c/o Warrior Energy Services Corporation, 100 Rosecrest Lane, Columbus, Mississippi 39701.
(3)	The percentage of outstanding shares calculation is based upon 2,379,464 shares outstanding as of March 31, 2006, except as otherwise noted.
(4)	Includes 300,000 shares issuable on exercise of options.
(5)	Includes 40,000 shares issuable on exercise of options.
(6)	Mr. Underbrink is Chairman of SJMB, L.L.C., which is the general partner of SJMB, L.P. (“SJMB”). Includes an aggregate of 501,748 shares held directly by SJMB and 191,833 shares held directly or indirectly by Mr. Underbrink. Also includes 3,421,502 shares issuable on conversion of notes and accrued interest through March 31, 2006 and 3,343,500 shares issuable on exercise of warrants deemed held beneficially by Mr. Underbrink because of his relationships with SJMB. Also includes 237,574 shares issuable on conversion of notes and accrued interest through March 31, 2006 held directly or indirectly by Mr. Underbrink. Also includes 410,514 shares and 131,880 shares issuable on conversion of notes and accrued interest through March 31, 2006 held by the Underbrink Family Entities (excluding Mr. Underbrink).
(7)	Mr. Harrison is Chief Financial Officer of SJMB, L.L.C., which is the general partner of SJMB. Includes shares issuable to SJMB on exercise of warrants and conversion of notes and accrued interest through March 31, 2006 that may be deemed held beneficially by Mr. Harrison because of his relationships with SJMB. Mr. Harrison disclaims beneficial ownership of such securities. Other than the holdings of SJMB in which Mr. Harrison disclaims beneficial ownership, Mr. Harrison does not directly or indirectly own any shares.
(8)	Includes 501,748 shares held by SJMB, as well as an aggregate of 3,421,502 shares issuable to SJMB on conversion of notes and accrued interest through March 31, 2006 and 3,343,500 shares issuable to SJMB on exercise of warrants. See “Item 13. Certain Relationships and Related Transactions.”
(9)	The general partner of St. James Capital Partners L.P. is Overcup Capital, L.L.C. and Mr. Brown is the Manager of Overcup Capital, L.L.C. Includes an aggregate of 1,340,721 shares of the Company’s common stock issuable to St. James Capital Partners, L.P. on conversion of notes and accrued interest through March 31, 2006 and 732,028 shares on exercise of warrants. See “Item 13. Certain Relationships and Related Transactions.”
(10)	The Company has relied on the information set forth in Amendment No. 3 to the Schedule 13D filed jointly by such persons on February 3, 2000.