SAN ANTONIO, Aug. 3 /PRNewswire/ -- Dawson Production Services, Inc.
(NYSE: DPS) today announced results for the fiscal first quarter ended
June 30, 1998.  Revenues for the first quarter of fiscal 1999 were $51,798,000
compared to revenues of $54,732,000 recorded for the fiscal 1998 first
quarter.  1999 first quarter operating cash flow, defined as earnings before
interest, taxes, depreciation and amortization, or EBITDA was $10,628,000,
compared to EBITDA of $11,050,000 recorded for the 1998 first quarter.  1999
first quarter net income was $1,087,000, compared to net income of $1,876,000
reported for the 1998 first quarter.  1999 first quarter basic and diluted
earnings per share were $0.10, compared to basic and diluted earnings per
share of $0.17 recorded for the 1998 first quarter.
    Dawson also today announced that it has signed a letter of intent to
acquire the companies comprising the HSI Group:  Hellums Services II, Inc.;
Superior Completion Services, Inc.; South Texas Disposal, Inc.; and Elsik II,
Inc.; all headquartered in Freer, Texas.  The companies comprising the HSI
Group have trailing twelve month revenues of approximately $23.3 million.
They specialize in liquid services, which is comprised of vacuum truck
services, frac tank rentals and salt water injection services that provide an
integrated mix of liquid services to well site customers.  They also provide
workover services as well as camp equipment rental services.  No terms were
disclosed.
    "While our top and bottom line results for the first quarter of 1999 were
impacted by reduced utilization directly related to lower oil prices, our
gross margin actually increased 170 basis points sequentially over the fourth
quarter of 1998," stated Michael E. Little, Chairman, President and Chief
Executive Officer.  "Our focus on cost reductions and operating efficiencies
enabled us to post a first quarter gross margin of 31.8 percent, compared to
30.1 percent in the fourth quarter.
    "Also, we are pleased to announce today a letter of intent for the
companies comprising the HSI Group, our largest single acquisition since we
acquired the U.S. land-based workover rig fleet of Pride Petroleum Services,
Inc. in February 1997," continued Mr. Little.  "We expect this acquisition to
be immediately accretive to earnings and would complement Dawson's expansion
into the liquid services business in our South Texas operating region.  HSI
operates from five locations in the region and would add 220 employees,
64 liquid services trucks, 14 winch trucks, 146 frac tanks, 110 open top
tanks, eight workover rigs and related equipment plus six salt water disposal
wells to our asset base.
    "We continue to focus on our mission of delivering value to our
shareholders through strategic acquisitions and their successful integration.
Dawson is able to thrive in today's oil services environment and is
strategically positioned for significant growth given any market recovery,"
concluded Mr. Little.
    Dawson Production Services, Inc. is a San Antonio, Texas-based diversified
energy services company providing workover rig services, liquid services, and
production services to oil and gas operators.  The Company operates from
37 locations concentrated primarily in the Texas and Louisiana Gulf Coasts,
the Permian Basin areas of West Texas and New Mexico, and California.
    Statements made in this press release, including those related to the
integration and utilization of assets, additional cost savings, improved
margins, continued growth, operating cash flows, EBITDA, net income, and
earnings per share are forward-looking and are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Among other things, the utilization of assets can be impaired by adverse
weather conditions and customer demand; cost savings efforts can be negated by
increases in labor rates and production costs; margins are subject to
unpredictable fluctuations in commodity oil prices; and continued growth is
dependent upon purchasing decisions by present and potential customers as well
as increased competition from new and existing competitors.  In addition to
the factors set forth in this release, the environmental, governmental,
technological, economic, competitive, and other factors identified in the
Company's filings with the Securities and Exchange Commission could affect the
forward-looking statements contained in this press release.

                         DAWSON PRODUCTION SERVICES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                     (In Thousands, Except Per Share Amounts)
                                   (unaudited)

                                                 Three Months Ended June 30,
                                                 1998      1997      % Change

    Revenues                                  $  51,798  $  54,732       (5)
    Costs and expenses:
      Operating                                  35,336     36,104       (2)
      General and administrative                  5,834      7,578      (23)
      Depreciation and amortization               6,362      5,181       23
        Total costs and expenses                 47,532     48,863       (3)
        Operating income                          4,266      5,869      (27)

    Other income and expenses:
      Interest expense                            3,469      3,324        4
      Other expense (income), net                  (994)      (556)      79
        Total other income & exp.                 2,475      2,768      (11)

    Income before income taxes                    1,791      3,101      (42)

    Provision for income taxes                      704      1,225      (43)

    Net income                                 $  1,087  $   1,876      (42)

    Earnings per common share:
      Basic                                    $   0.10  $    0.17      (41)
      Diluted                                  $   0.10  $    0.17      (41)

    Weighted average common and common equivalent
    shares outstanding:
      Basic                                      11,099     11,126      ---
      Diluted                                    11,235     11,245      ---

    EBITDA                                     $ 10,628  $  11,050       (4)

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