UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K/A

Amendment No. 1

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

or

o		TRANSITION REPORT PURSUANT OT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 000-18774

SPINDLETOP OIL & GAS CO.

(Exact name of registrant as specified in its charter)

Texas		75-2063001
(State or other jurisdiction		(IRS Employer
of incorporation or organization)		Identification No.)
12850 Spurling Rd., Suite 200, Dallas, TX		75230
(Address of principal executive offices)		(Zip Code)

(972) 644-2581
(Registrant’s telephone number, including area code)

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

Title of Each Class None		Name of each exchange on which registered N/A

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§2293405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes o No þ

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

$9,351,430 based upon a total of 1,700,260 shares held as of June 29, 2007 by persons believed to be non-affiliates of the Registrant; the basis of the calculation does not constitute a determination by the Registrant as defined in Rule 405 of the Securities Act of 1933, as amended, that such calculation, if made as of a date within 60 days of this filing, would yield a different value.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes o No o

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the issuer’s classes of common, as of the latest practicable date.

Common Stock, $0.01 par value		7,610,803
(Class)		(Outstanding at April 14, 2008)

DOCUMENTS INCORPORATED BY REFERENCE

None

 

 

EXPLANATORY NOTE

We are filing this Amendment No. 1 on Form 10-K/A to the Spindletop Oil & Gas Co. Annual Report on Form 10-K for the year ended December 31, 2007 in response to comments received by us from the Securities and Exchange Commission’s staff pursuant to its review of our Form 10-K for the year ended December 31, 2007. Pursuant to the Commission’s comments, we have amended our 2007 Form 10-K as follows:

1. Included the following paragraph in Item 9A(T) Controls and Procedures:

Management of the Company has assessed the effectiveness of its internal control over financial reporting at December 31, 2007. To make this assessment, the Company used the criteria for effective internal control over financial reporting described in Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management of the Company concluded that as of December 31, 2007, the internal control system over financial reporting met those criteria and was effective.

2. Inserted additional comments in Footnote 2 to the Financial Statements (Summary of Significant Accounting Policies), concerning newly issued accounting standards “Fair Value Measurements” (“SFAS No. 157”), “The Fair Value Option for Financial Assets and Financial Liabilities-including an amendment of FASB Statement No. 115” (SFAS No. 159”), “Business Combinations” (“SFAS 141R”), and “Noncontrolling Interests in Consolidated Financial Statements” (SFAS No. 160”).

3. Revised Footnote 2 to the Financial Statements under “Investments in Real Estate and Oil and Gas Properties, to remove wording that indicates oil and gas properties are included in this paragraph.

4. Revised Footnote 2 to the Financial Statements under “Oil and Gas Properties” to expand the definition of costs included in the base for computation of amortization.

5. Revised Footnote 3 to the Financial Statements to include a definition of “Accrued receivable”.

6. Revised Footnote 2 to the Financial Statements (Summary of Significant Accounting Policies), to include a description as to the Company’s accounting policy for revenue recognition.

7. Footnote 7 to the Financial Statements (Common Stock) was revised to remove reference to the discounting of the common stock issued. The amount of discount was immaterial to the fair presentation of the financial statements and the financial statements were not amended.

8. Under Item 2 “Properties”, added a table setting forth the number of the Company’s productive oil and gas wells, both gross and net.

9. Under Item 2 “Properties”, added a table setting forth the Company’s undeveloped and developed gross and net leasehold acreage.

All other information contained in the original Form 10-K remains unchanged. However, the entire report with all Items is included in this Form 10-K/A for the convenience of the reader. This Amendment No. 1 on Form 10-K/A does not reflect events occurring after the filing of our Annual Report on Form 10-K on April 14, 2008 or include, or otherwise modify or update, the disclosures contained therein in any way except as expressly indicated above.

PART I

Item 1. Description of Business

GENERAL

Spindletop Oil & Gas Co. is an independent oil and gas company engaged in the exploration, development and production of oil and natural gas; the rental of oilfield equipment; and through one of its subsidiaries, the gathering and marketing of natural gas. The terms the “Company”, “We”, “Us” or Spindletop are used interchangeably herein to refer to Spindletop Oil & Gas Co. and its wholly owned subsidiaries, Prairie Pipeline Co. (“PPC”) and Spindletop Drilling Company (“SDC”).

The Company has focused its oil and gas operations principally in Texas, although we operate properties in six states including: Texas, Oklahoma, New Mexico, Louisiana, Alabama and Arkansas. We operate a majority of our projects through the drilling and production phases. Our staff has a great deal of experience in the operations arena. We have traditionally leveraged the risks associated with drilling by obtaining industry partners to share in the costs of drilling. However, we typically retain a controlling interest in the prospects we drill.

In addition, the Company, through PPC, owns approximately 26.1 miles of pipelines located in Texas, which are used for the gathering of natural gas. These gathering lines are located in the Fort Worth Basin and are being utilized to transport the Company’s natural gas as well as natural gas produced by third parties.

Website Access to Our Reports

We make available free of charge through our website, www.spindletopoil.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. Information on our website is not a part of this report.

Operating Approach

We believe that a major attribute of the Company is its long history with, and extensive knowledge of, the Fort Worth Basin of Texas. Our technical staff has an average of over 28 years oil and gas experience, most of it in the Fort Worth Basin.

One of our strengths has been the ability of the Company to look at cost effective ways to grow our production. We have traditionally increased our reserve base in one of two ways. Initially, in the 1970’s and 1980’s, the Company obtained its production through an exploration and development drilling program focused principally in Texas. Today, the Company has retained many of these wells as producing properties and holds a large amount of acreage by production.

From the 1990’s through 2003, the Company took advantage of the lower product prices by cost effectively adding to its reserve base through value-priced acquisitions. We found that through selective purchases we could make producing property acquisitions that were more cost effective than drilling.

During this time period, the Company acquired a large number of operated and non-operated oil and gas properties in various states.

From 2003 to the present, we have returned our focus to a strategy of development drilling. With higher product prices, we believe that it has been more cost effective to drill on the Company’s leasehold acreage rather than to purchase production with escalated acquisition costs.

Our strategic focus in our drilling program is currently on the Barnett Shale play located in the Fort Worth Basin of North Texas. The organic rich Barnett Shale has been the source rock for the producing formations in the Fort Worth Basin. As an unconventional fractured reservoir, the Barnett Shale itself has become an attractive target due to technological advances in the drilling and stimulation of tight gas formations. This technology driven play has the potential of long life wells with the opportunity for multiple re-stimulations which can significantly increase the commercial life of Barnett Shale wells.

Strategic Business Plans

One of our key strategies is to enhance shareholder value through implementation of plans for controlled growth and development. The Company’s long-term focus is to grow its oil and gas production through a strategic combination of selected property acquisitions, to the extent feasible, and an exploration and development program primarily based on developing its leasehold acreage. Additionally, the Company will continue to rework existing wells to increase production and reserves.

The Company’s primary area of operation has been and will continue to be in Texas with an emphasis in the geological province known as the Fort Worth Basin. The Company is beginning to drill and develop its Fort Worth Basin producing properties into the Barnett Shale formation. We want to capitalize on our strengths which include an extensive knowledge of the Fort Worth Basin, experience in operations in this geographic area, development of lease holdings, and utilization of existing infrastructure to minimize costs.

The Company will continue to generate and evaluate prospects using its own technical staff. The Company intends to fund operations primarily from cash flow generated by operations.

The Company will attempt to expand its pipeline system. Expansion will be dependent upon success in its exploration programs, since the majority of its existing pipelines are connected to wells that the Company operates.

Significant Project Areas

The Company owns various interests in wells located in 16 states and the Company’s operations are currently located in six of those states which include Alabama, Arkansas, Louisiana, Oklahoma, New Mexico and Texas.

The Company has approximately 21,969 gross acres under lease in six states. The majority of the leases are held by production. A breakout of the Company’s leasehold acreage by geographic area is as follows:

North Texas Including the Fort Worth Basin		9,857 gross acres					44.87	%
Arkansas		2,936 gross acres					13.36	%
East Texas		2,592 gross acres					11.80	%
Gulf Coast Texas		2,341 gross acres					10.65	%
Alabama		1,480 gross acres					6.74	%
West Texas		748 gross acres					3.41	%
Louisiana		723 gross acres					3.29	%
Texas Panhandle		640 gross acres					2.91	%
New Mexico		415 gross acres					1.89	%
Oklahoma		237 gross acres					1.08	%
Total		21,969 gross acres					100.00	%

The majority of our wells are located within a two-hour drive from our corporate headquarters, located in Dallas, Texas which provides for more effective oversight of operations.

The majority of the Company’s net reserves (76.27%) are located in Texas.

A breakout of the Company’s most significant reserves by geographic area is as follows:

North Texas Including the Fort Worth Basin		1,926,404 BOE					70.32	%
West Texas		233,909 BOE					8.53	%
East Texas		166,239 BOE					6.07	%
Oklahoma		107,448 BOE					3.92	%
Gulf Coast Texas		72,348 BOE					2.64	%
Louisiana		57,319 BOE					2.09	%
Alabama		53,383 BOE					1.95	%
New Mexico		48,169 BOE					1.76	%
Arkansas		38,979 BOE					1.42	%
Panhandle Texas		18,316 BOE					0.67	%
North Dakota		8,406 BOE					0.31	%
Wyoming		4,990 BOE					0.18	%
Montana		3,430 BOE					0.13	%
Michigan		232 BOE					0.01	%
Total		2,739,572 BOE					100.00	%

Fort Worth Basin/Bend ArchProvince

The Fort Worth Basin has been the focal point of the Company since its inception. Our technical personnel have an average of 28 years of exploration, drilling and production experience in the Basin. We also have an extensive collection of geologic and engineering data.

The Fort Worth Basin is a gas prone region with multiple pay zones ranging in depth from 1000-9000 feet. The basin is currently experiencing a drilling boom due to increased natural gas prices and advances in fracturing technology that have unlocked natural gas reserves from the Barnett Shale Formation.

The Barnett Shale is a thick blanket type formation covering the entire basin. The natural gas reserves in place are significant; however, due to the extremely low permeability of the shale, it has been technically difficult to recover these reserves. Recent advances in hydraulic fracturing and horizontal well technology have enabled economic recovery of natural gas reserves in the Fort Worth Basin.

According to the U.S. Geological Survey, it is estimated that there is approximately 26.7 trillion cubic feet (TCF) of undiscovered natural gas, 98.5 million barrels of undiscovered oil, and 1.1 billion barrels of undiscovered natural gas liquids (condensate) in the Bend Arch-Fort Worth Basin Province and more than 98 percent, or 26.2 TCF, of the undiscovered natural gas is located in the Barnett Shale.

The Company has 9,204 gross acres under lease in the Bend Arch and Fort Worth Basin the majority of it held by production from shallower producing zones. We are planning to drill new into the Barnett Shale Formation on some of these leases. We are also actively seeking and acquiring new leases in the Barnett Shale trend.

Joint Drilling Development of North Texas Barnett Shale Leasehold

The Company along with Giant Energy Corp. (a related entity), entered into a joint Barnett Shale horizontal drilling development program with an unrelated company (“the Agreement”) during the third quarter of 2006. Under the terms of the Agreement, two Barnett Shale horizontal wells were drilled on the Company’s Springtown Block located in the northeast quarter of Parker County, Texas during the fourth quarter of 2006. The Hutcheson # 2H and # 3H wells were drilled off the same surface site and were drilled to a total measured depth of 9,750 ft. and 8,351 ft., respectively. Both wells were fraced and completed during the first quarter of 2007. The Hutcheson # 2H well was placed in production on February 21, 2007 at a rate of 1,177 Mcf of gas per day. The Hutcheson # 3H well was placed in production on March 15, 2007 at a rate of 1,057 Mcf gas per day. These two Barnett Shale wells drilled on the Company’s Springtown Block have produced 0.162 Bcf of gas through March 31, 2008 and have a current average combined flow rate of 230 Mcf of gas per day.

During the second quarter of 2007, the third Barnett Shale horizontal well was drilled on the Company’s acreage under the terms of the Agreement. The Harms #4H well is located in the northeast quarter of Parker County, Texas on the Company’s Springtown block. It was drilled to a total measured depth of 9,526 ft. During the third quarter of 2007, the well was fraced and flowed back with gas volumes in excess of 1,000 Mcf of gas per day, however, the gas production was erratic because of downhole fluid loading. The well was subsequently placed on a gas lift system but it was later removed after it was determined that the well could not be produced economically due to the large volume of salt water produced with the natural gas. It was concluded that frac stimulation reached the underlying Ellenburger Formation and that the large amount of salt water was coming from that formation. On November 1, 2007, the Company acquired the remainder of the working interest and it now owns 100% working interest in this well. The Company believes that the well could produce gas in commercial quantities if the salt water was re-injected in the ground rather than trucked away for disposal. The Company is looking at the feasibility of converting an existing wellbore on the lease to a salt water disposal well. The Harms #4H well is currently shut in.

During the second quarter of 2007, Wilson-Harris #2H well located on our Cresson Block in the southeast quarter of Parker County, Texas, was drilled to a measured depth of 9,150 ft. The well was fraced and completed in the Barnett Shale and was placed in production in September 2007. The daily gas production peaked at 4,070 Mcf gas per day after continuing to clean up for several days.

During the third quarter of 2007, three other wells were drilled on our Cresson Block in the southeast quarter of Parker County, Texas. The Wilson-Harris #3H well was drilled to a measured depth of 8,755 ft. The well was fraced and completed in the Barnett Shale and was placed in production in September 20, 2007. The daily gas production peaked at 3,977 Mcf gas per day after continuing to clean up for several days. The Wilson-Harris #4H well was drilled to a measured depth of 7,040 ft. The well was fraced and completed in the Barnett Shale and was placed in production in September 27, 2007. The daily gas production peaked at 2,722 Mcf gas per day after continuing to clean up for several days. The Fitzwilliam #2H well was drilled to a measured depth of 9,350 ft. The well was fraced and completed in the Barnett Shale and was placed in production in October 2007. The daily gas production peaked at 1,553 Mcf gas per day after continuing to clean up for several days. The Company holds a 50% working interest in all three wells. These four Barnett Shale wells drilled on the Company’s Cresson Block have produced 0.883 Bcf of gas and 1,331 bbls of oil through March 31, 2008 and have an average current combined flow rate of 3,560 Mcf of gas per day and 7 bbls of oil per day.

During the fourth quarter of 2007, two other wells were drilled, the Buxton G.U. #1H well, located on our Weatherford, W block and the Fuller G.U. #1H well located on our Weatherford, SW block. Both wells are located in the southwest quarter of Parker County, Texas. The Buxton #1H well was drilled to a total measured depth of 8,850 ft. and the Fuller G.U. #1H was drilled to a measured depth of 9,076 ft. Both wells were sand fraced in February 2008 and are currently being flowed back. The flow back frac water is monitored and the high chlorides measured, infer that the frac stimulations of both wells may have penetrated into the underlying Ellenburger Formation. The flow back of both wells will continue until it is determined whether or not these wells will be able to produce gas in commercial quantities. The Company holds a 50% working interest in both of these wells.

In the first quarter of 2008, the McKeon G.U. #1H well, located on our Peaster, SW block in the northwest quarter of Parker County, Texas, was spud and is currently being drilled. The Company holds a 50% working interest in this well.

Additionally, two wells were drilled on leasehold acreage owned by Giant Energy Corp. under the terms of the Agreement in 2007. The Company anticipates that up to eight additional Barnett Shale horizontal wells will be drilled during the next twelve months under the Agreement. To date eleven (11) wells have been drilled and one (1) well is currently being drilled. Nine (9) of those wells were drilled on the Company’s leasehold and two (2) wells were drilled on the Giant Energy leasehold. It is anticipated that 8 additional wells may be drilled within the next twelve months. Under the terms of the Agreement, the unrelated company acting as Operator of the new wells has full control of the selection of the drill sites and the drilling and completion phases of the new wells including selecting the landing points of the horizontal wells and the completion and fracing techniques utilized for these wells. The Company will obtain operations of the wells within ninety days of the date of first sales and will then operate them thereafter.

Company’s Development of North Texas Barnett Shale Leasehold outside of the Joint Drilling Development Project

The Company drilled two vertical Barnett Shale wells in Denton County, Texas during the last quarter of 2006. The Olex U.S. # 7 well was drilled to a depth of 8,840 ft. and completed and placed into production in March 2007 at a rate of 1,253 Mcf of gas per day and 15 bbls of oil per day from the Upper and Lower Barnett Shale. The Olex U.S. # 6 well was drilled to a depth of 8,870 ft. and completed and placed into production in April 2007 at an initial rate of 1,769 Mcf gas per day and 35 bbls of oil per day from the Upper and Lower Barnett Shale. The company owns a 53% and 52.5% working interest in the Olex U.S. #6 and #7 wells, respectively. The Olex U.S. lease is surrounded by productive Barnett Shale gas wells and with existing field spacing rules, an additional 27 vertical wells could be drilled on this lease. These two Barnett Shale wells drilled on the Company’s Krum Block have produced 0.306 Bcf of gas and 6,978 bbls of oil through March 31, 2008 and have a current average combined flow rate of 550 Mcf of gas per day and 6 bbls of oil per day.

In addition to the Company’s Barnett Shale development drilling activities, the Company has worked on or participate in the following projects:

West Texas

SDC recompleted one of its existing wells in Ward Co., TX on its Pyote Block. The company deepened its University “17-40” well #1 to a depth of 13,926 ft. The Atoka Formation was perforated from 13,622 ft to13,739 ft. and the well was placed into production in November 2007 producing dry gas. As of March 2008, the well is flowing at an average rate of 625 Mcf of gas per day from the Atoka. SDC owns 75% working interest in this well.

East Texas

The Company has participated in the drilling and completion of six 10,300 ft. development wells in the Blocker (Cotton Valley) field of Harrison County, Texas during 2007. The Lenora Allen Gas Unit #3, #4, #5, #6, #7 and #8 were all completed as gas wells from the Cotton Valley Formation. The Company holds a 2.6% working interest in each well.

Oklahoma

SDC participated in the drilling of a well in Roger Mills Co., Oklahoma. The Chamberlain #5-2 well was drilled to a depth 13,350 ft. and was cased and completed in the Cherokee/Redfork Formation. The well had an initial potential of 1,751 Mcfgpd and 7 bbls of oil per day. The well was placed into production in the first quarter of 2007. SDC owns a 0.00628 % working interest in this well. SDC has elected to participate in a recently proposed offset well, the Chamberlain #6-2 well which is currently being cased.

The Company participated in the drilling of two wells in Canadian County, Oklahoma during 2007. The Virginia #1-30 well drilled to a total depth of 11,325 ft. The well was completed in the Mississippian, Hunton, Viola and Simpson with an initial potential of 1,429 Mcfgpd and 18 bbls of oil per day and was placed into production in the third quarter of 2007. The second well, the Betty #1-30 was drilled to a total depth of 11,475 ft. The well was completed in the Mississippian, Hunton and Viola and had an initial potential of 1,234 Mcfgpd and 18 bbls of oil per day and was placed into production during the first quarter of 2008. The Company owns a 2.2 % working interest in both wells.

Oil and Natural Gas Reserves

The net crude oil and gas reserves of the Company as of December 31, 2007 were 345,154 barrels of oil and condensate and 14.367 BCFG (billion cubic feet) of natural gas. Based on SEC guidelines, the reserves were classified as follows:

Proved Developed Producing		292,548 BO and				10.205 BCFG
Proved Developed Non-Producing		41,665 BO and				0.741 BCFG
Proved Undeveloped		10,941 BO and				3.419 BCFG
Total Proved Reserves		345,154 BO and				14.367 BCFG

Only reserves that fell within the Proved classification were considered. Other categories such as Probable or Possible Reserves were not considered. No value was given to the potential future development of behind pipe reserves, untested fault blocks, or the potential for deeper reservoirs (other than Barnett Shale proved undeveloped reserves directly offset by producing wells) underlying the Company’s properties. Shut-in uneconomic wells and insignificant non-operated interests were excluded.

On a barrel of oil equivalent basis (6MCF/BOE), the net reserves are

Natural Gas Reserves		2,394,461 BOE					87	%
Oil Reserves		345,154 BOE					13	%
Total Reserves		2,739,615 BOE					100	%
Proved Developed Producing		1,993,420 BOE					73	%
Proved Developed Non-Producing		165,373 BOE					6	%
Proved Undeveloped		580,822 BOE					21	%
Total Proved Reserves		2,739,615 BOE					100	%

The Company has operational control over the majority of these reserves and can therefore to a large extent control the timing of development and production.

The Company’s Operated Wells		2,544,536 BOE					93	%
Non Operated Wells		195,079 BOE					7	%
Total		2,739,615 BOE					100	%

Financial Information Relating to Industry Segments

The Company has three identifiable business segments: exploration, development and production of oil and natural gas, gas gathering, and commercial real estate investment. Footnote 15 to the Consolidated Financial Statements filed herein sets forth the relevant information regarding revenues, income from operations and identifiable assets for these segments.

Narrative Description of Business

The Company is engaged in the exploration, development and production of oil and natural gas, and the gathering and marketing of natural gas. The Company is also engaged in commercial real estate leasing through the acquisition and partial occupancy of its corporate headquarters office building.

Principal Products, Distribution and Availability

The principal products marketed by the Company are crude oil and natural gas which are sold to major oil and gas companies, brokers, pipelines and distributors, and oil and gas properties which are acquired and sold to oil and gas development entities. Reserves of oil and gas are depleted upon extraction, and the Company is in competition with other entities for the discovery of new prospects.

The Company is also engaged in the gathering and marketing of natural gas through its subsidiary PPC, which owns 26.1 miles of pipelines and currently gathers approximately 1,112 Mcf of gas per day. Natural gas is gathered for a fee. Substantially all of the gas gathered by the Company is gas produced from wells that the Company operates and in which it owns a working interest.

In December, 2004, the Company purchased land and a two story commercial office building in Dallas, Texas, which it has moved into and uses as its principal headquarters office. The Company leases the remainder of the building to non-related third party commercial tenants at prevailing market rates.

Patents, Licenses and Franchises

Oil and gas leases of the Company are obtained from the owner of the mineral estate. The leases are generally for a primary term of 1 to 5 years, and in some instances as long as 10 years, with the provision that such leases shall be extended into a secondary term and will continue during such secondary term as long as oil and gas are produced in commercial quantities or other operations are conducted on such leases as provided by the terms of the leases. It is generally required that a delay rental be paid on an annual basis during the primary term of the lease unless the lease is producing. Delay rentals are normally $1.00 to $25.00 per net mineral acre.

The Company currently holds interests in producing and non-producing oil and gas leases. The existence of the oil and gas leases and the terms of the oil and gas leases are important to the business of the Company because future additions to reserves will come from oil and gas leases currently owned by the Company, and others that may be acquired, when they are proven to be productive. The Company is continuing to purchase oil and gas leases in areas where it currently has production, and also in other areas.

Dependence on Customers

The following is a summary of significant purchasers from oil and natural gas produced by the Company for the three-year period ended December 31, 2007:

		Year Ended December 31, (1)
Purchaser		2007				2006				2005
Enbridge North Texas			36	%			38	%			39	%
Crosstex Energy Services, LP			26	%			3	%			5	%
Shell Trading (US) Company			6	%			8	%			7	%
Teppco Crude Oil, LP			5	%			3	%			—	%
Targa Midstream Service, LIM (formerly Dynegy Midstream Services, LIM			3	%			—	%			—	%
Navajo Refining Co.			2	%			—	%			—	%
Devon Gas Services, L.P			2	%			4	%			6	%
ETC Texas Pipeline			2	%			5	%			—	%
Eastex Crude Company			2	%			—	%			—	%
Empire Pipeline Corp			1	%			3	%			—	%
Duke Energy Field Services			1	%			—	%			—	%
Plains Marketing, LP.			1	%			6	%			6	%
Dynegy Midstream Services, LIM			—	%			—	%			5	%

Oil and gas is sold to approximately 108 different purchasers under market sensitive, short-term contracts computed on a month to month basis.

Except as set forth above, there are no other customers of the Company that individually accounted for more than 5% of the Company’s oil and gas revenues during the three years ended December 31, 2007.

The Company currently has no hedged contracts.

Development Activities

The Company’s primary oil and gas prospect acquisition efforts have been in known producing areas in the United States with emphasis devoted to Texas.

The Company intends to use a portion of its available funds to participate in drilling activities. Any drilling activity is performed by independent drilling contractors. The Company does not refine or otherwise process its oil and gas production.

Exploration for oil and gas is normally conducted with the Company acquiring undeveloped oil and gas prospects, and carrying out exploratory drilling on the prospect with the Company retaining a majority interest in the prospect. Interests in the property are sometimes sold to key employees and associated companies at cost. Also, interests may be sold to third parties with the Company retaining an overriding royalty interest, carried working interest, or a reversionary interest.

A prospect is a geographical area designated by the Company for the purpose of searching for oil and gas reserves and reasonably expected by it to contain at least one oil or gas reservoir. The Company utilizes its own funds along with the issuance of common stock and options to purchase common stock in some cases, to acquire oil and gas leases covering the lands comprising the prospects. These leases are selected by the Company and are obtained directly from the landowners, as well as from land men, geologists, other oil companies, some of whom may be affiliated with the Company, and by direct purchase, farm-in, or option agreements. After an initial test well is drilled on a property, any subsequent development of such prospect will normally require the Company’s participation for the development of the discovery.

Special Tax Provisions

See Footnote 8 to Consolidated Financial Statements regarding the accounting for income taxes.

Employees

The Company, on its own account and through a management contract with Giant Energy Corp, employs or contracts for the services of a total of approximately 60 people. Twenty-five are full-time employees or contractors. The remainder are part-time contractors or employees. We believe that our relationships with our employees are good.

In order to effectively utilize our resources in respect to our development program, we employ the services of independent consultants and contractors to perform a variety of professional and technical services, including in the areas of lease acquisition, land-related documentation and contracts, drilling and completion work, pumping, inspection, testing, maintenance and specialized services. We believe that it can be more cost effective to utilize the services of consultants and independent contractors for some of these services.

We depend to a large extent on the services of certain key management personnel and officers, and the loss of any these individuals could have a material adverse effect on our operations. The Company does not maintain key-main life insurance policies on its employees.

Financial information about foreign and domestic operations and export sales

All of the Company’s business is conducted domestically, with no export sales.

Compliance with Environmental Regulations

Our oil and natural gas operations are subject to numerous U.S. Federal, state and local laws and regulations relating to the protection of the environment, including those governing the discharge of materials into the water and air, the generation, management and disposal of hazardous substances and wastes and clean-up of contaminated science. We could incur material costs, including clean-up costs, fines and civil and criminal sanctions and third party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations. Such laws and regulations not only expose us to liability for our own activities, but may also expose us to liability for the conduct of others or for actions by us that were in compliance with all applicable laws at the time those actions were taken. In addition, we could incur substantial expenditures complying with environmental laws and regulations, including future environmental laws and regulations which may be more stringent.

On June 21, 2007, the acting United States attorney for the Eastern District of Texas filed an Information against Spindletop Drilling Company, a subsidiary of the registrant in a case styled The United States of America v. Spindletop Drilling Company, Case No. 5:07CR16 filed in the United States District Court for the Eastern District of Texas, Texarkana Division. The Information alleges a violation of Title 16, USC § 703 (unlawful taking of migratory birds), charges Spindletop Drilling Company with a Class B misdemeanor petty offense advising that on or about September 6, 2006 in Titus County, Texas allegedly took migratory birds including approximately twelve (12) Northern Mockingbirds (Mimus Polyglottos) and one (1) Mourning Dove (Zenaida Macroura), all in violation of 16 USC § 703 and 707(a). Spindletop Drilling Company owns and operates an oil pit located on the “Pewitt D” lease located in Titus County, Texas. Although Spindletop Drilling Company had netting in place, several small birds were found in the pit in early September, 2006.

Although the incident was inadvertent, on June 26, 2007, in order to resolve the matter, Spindletop Drilling Company entered into a plea agreement agreeing to one count of the Information which charged a violation of 16 USC § 703 and stipulated and agreed that two years probation, $10,000 in restitution payable to the National Fish and Wildlife Foundation, no fine, and a $25 special assessment would best advance the objectives under the law. The court gave final approval of this agreement on October 4, 2007.

During the three months ended March 31, 2007, Spindletop Drilling Company corrected the netting on the property and implemented other safeguards to further protect the migratory birds and property in question.

Glossary of Oil and Gas Terms

The following are abbreviations and definitions of terms commonly used in the oil and gas industry that are used in this Report. The terms defined herein may be found in this report in both upper and lower case or a combination of both.

“BBL” means a barrel of 42 U.S. gallons.

“BCF” or “BCFG” means billion cubic feet.

“BOE” means barrels of oil equivalent; converting volumes of natural gas to oil equivalent volumes using a ratio of six Mcf of natural gas to one Bbl of oil.

“BTU” means British Thermal Units. British Thermal Unit means the quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

“Completion” means the installation of permanent equipment for the production of oil or gas.

“Development Well” means a well drilled within the proved area of an oil or gas reservoir to the depth of a strata graphic horizon known to be productive.

“Dry Hole” or “Dry Well” means a well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.

“Exploratory Well” means a well drilled to find and produce oil or gas reserves not classified as proved, to find a new production reservoir in a field previously found to be productive of oil or gas in another reservoir or to extend a known reservoir.

“Farm-Out” means an agreement pursuant to which the owner of a working interest in an oil and gas lease assigns the working interest or a portion thereof to another party who desires to drill on the leased acreage. Generally, the assignee is required to drill one or more wells in order to earn its interest in the acreage. The assignor usually retains a royalty or reversionary interest in the lease. The interest received by an assignee is a “farm-in” and the assignor issues a “farm-out.”

“Farm-In” see “Farm-Out” above.

“Gas” means natural gas.

“Gross” when used with respect to acres or wells, refers to the total acres or wells in which we have a working interest.

“Infill Drilling” means drilling of an additional well or wells provided for by an existing spacing order to more adequately drain a reservoir.

“MCF” or “MCFG” means thousand cubic feet.

“MCFE” means MCF of natural gas equivalent; converting volumes of oil to natural gas equivalent volumes using a ratio of one BBL of oil to six MCF of natural gas.

“MCFG/D” means thousand cubic feet of gas per day.

“MMBTU” means ones million BTUs.

“Net” when used with respect to acres or wells, refers to gross acres or wells multiplied, in each case, by the percentage working interest owned by the Company.

“Net Production” means production that is owned by the Company less royalties and production due others.

“Operator” means the individual or company responsible for the exploration, development and production of an oil or gas well or lease.

“Overriding Royalty” means a royalty interest which is usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner.

“Present Value” (“PV”) when used with respect to oil and gas reserves, means the estimated future gross revenues to be generated from the production of proved reserves calculated in accordance with the guidelines of the SEC, net of estimated production and future development costs, using prices and costs as of the date of estimation without future escalation (except to the extent a contract specifically provides otherwise), without giving effect to non-property related expenses such as general and administrative expenses, debt service, future income tax expense and depreciation, depletion and amortization, and discounted using an annual discount rate of 10%.

“Productive Wells” or “Producing Wells” consist of producing wells and wells capable of production, including wells waiting on pipeline connections.

“Proved Developed Reserves” means reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery will be included as “proved developed reserves” only after testing by a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved.

“Proved Reserves” means the estimated quantities of crude oil and natural gas which upon analysis of geological and engineering data appear with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions.

(i) Reservoirs are considered proved if either actual production or conclusive formation tests support economic producibility. The area of a reservoir considered proved includes (A) that portion delineated by drilling and defined by gas-oil and/or oil-water contacts, if any; and (B) the immediately adjoining portions not yet drilled, but which can be reasonably judged as economically productive on the basis of available geological and engineering data. In the absence of information on fluid contacts, the lowest known structural occurrence of hydrocarbons controls the lower proved limit of the reservoir.

(ii) Reserves which can be produced economically through application of improved recovery techniques (such as fluid injection) are included in the “proved” classification when successful testing by a pilot project, or the operation of an installed program in the reservoir, provides support for the engineering analysis on which the project or program was based.

(iii) Estimates of proved reserves do not include the following: (A) oil that may become available from known reservoirs but is classified separately as “indicated additional reserves”; (B) crude oil and natural gas, the recovery of which is subject to reasonable doubt because of uncertainty as to geology, reservoir characteristics or economic factors; (C) crude oil and natural gas that may occur in undrilled prospects; and (D) crude oil and natural gas that may be recovered from oil shales, coal, gilsonite and other such resources.

“Proved Undeveloped Reserves” means reserves that are recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for completion. Reserves on undrilled acreage shall be limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Under no circumstances should estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir.

“Recompletion” means the completion for production of an existing well bore in another formation from that in which the well has been previously completed.

“Reserves” means proved reserves.

“Reservoir” means a porous and permeable underground formation containing a natural accumulation of producible oil and/or gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.

“Royalty” means an interest in an oil and gas lease that gives the owner of the interest the right to receive a portion of the production from the leased acreage (or of the proceeds of the sale thereof), but generally does not require the owner to pay any portion of the costs of drilling or operating the wells on the leased acreage. Royalties may be either landowner’s royalties, which are reserved by the owner of the leased acreage at the time the lease is granted, or overriding royalties, which are usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner.

“2-D Seismic” means an advanced technology method by which a cross-section of the earth’s subsurface is created through the interpretation of reflecting seismic data collected along a single source profile.

“3-D Seismic” means an advanced technology method by which a three dimensional image of the earth’s subsurface is created through the interpretation of reflection seismic data collected over a surface grid. 3-D seismic surveys allow for a more detailed understanding of the subsurface than do conventional surveys and contribute significantly to field appraisal, development and production.

“Working Interest” means an interest in an oil and gas lease that gives the owner of the interest the right to drill for and produce oil and gas on the leased acreage and requires the owner to pay a share of the costs of drilling and production operations. The share of production to which a working interest owner is entitled will always be smaller than the share of costs that the working interest owner is required to bear, with the balance of the production accruing to the owners of royalties.

“Workover” means operations on a producing well to restore or increase production.

Item 1A. Risk Factors

Risks related directly to our Company

You should carefully consider the following risk factors, in addition to the other information set forth in this Report, before investing in shares of our common stock. Each of these risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock. Some information in this Report may contain “forward-looking” statements that discuss future expectations of our financial condition and results of operation. The risk factors noted in this section and other factors could cause our actual results to differ materially from those contained in any forward-looking statements.

We face significant competition, and many of our competitors have resources in excess of our available resources.

The oil and gas industry is highly competitive. We encounter competition from other oil and gas companies in all areas of our operations, including the acquisition of producing properties and sale of crude oil and natural gas. Our competitors include major integrated oil and gas companies and numerous independent oil and gas companies, individuals and drilling and income programs. Many of our competitors are large, well established companies with substantially larger operating staffs and greater capital resources than us. Such companies may be able to pay more for productive oil and gas properties and exploratory prospects and to define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. Our ability to acquire additional properties and to discover reserves in the future will depend upon our ability to evaluate and select suitable properties and to consummate transactions in this highly competitive environment.

Exploratory drilling is a speculative activity that may not result in commercially productive reserves and may require expenditures in excess of budgeted amounts.

Drilling activities are subject to many risks, including the risk that no commercially productive oil or gas reservoirs will be encountered. There can be no assurance that new wells drilled by us will be productive or that we will recover all or any portion of our investment. Drilling for oil and gas may involve unprofitable efforts, not only from dry wells, but also from wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs. The cost of drilling, completing and operating wells is often uncertain. Our drilling operations may be curtailed, delayed or canceled as a result of a variety of factors, many of which are beyond our control, including economic conditions, mechanical problems, pressure or irregularities in formations, title problems, weather conditions, compliance with governmental requirements and shortages in or delays in the delivery of equipment and services. In today’s environment, shortages make drilling rigs, labor and services difficult to obtain and could cause delays or inability to proceed with our drilling and development plans. Such equipment shortages and delays sometimes involve drilling rigs where inclement weather prohibits the movement of land rigs causing a high demand for rigs by a large number of companies during a relatively short period of time. Our future drilling activities may not be successful. Lack of drilling success could have a material adverse effect on our financial condition and results of operations.

Our operations are also subject to all the hazards and risks normally incident to the development, exploitation, production and transportation of, and the exploration for, oil and gas, including unusual or unexpected geologic formations, pressures, down hole fires, mechanical failures, blowouts, explosions, uncontrollable flows of oil, gas or well fluids and pollution and other environmental risks. These hazards could result in substantial losses to us due to injury and loss of life, severe damage to and destruction of property and equipment, pollution and other environmental damage and suspension of operations. We participate in insurance coverage maintained by the operator of its wells, although there can be no assurances that such coverage will be sufficient to prevent a material adverse effect to us in such events.

The vast majority of our oil and gas reserves are classified as proved reserves. Recovery of the Company’s future proved undeveloped reserves will require significant capital expenditures. Our management estimates that aggregate capital expenditures of approximately $4,601,000 will be required to fully develop some of these reserves in the next twenty-four months. No assurance can be given that our estimates of capital expenditures will prove accurate, that our financing sources will be sufficient to fully fund our planned development activities or that development activities will be either successful or in accordance with our schedule. Additionally, any significant decrease in oil and gas prices or any significant increase in the cost of development could result in a significant reduction in the number of wells drilled and/or reworked. No assurance can be given that any wells will produce oil or gas in commercially profitable quantities.

We are subject to uncertainties in reserve estimates and future net cash flows.

This annual report contains estimates of our oil and gas reserves and the future net cash flows from those reserves, which have been prepared by Netherland, Sewell & Associates, Inc., independent petroleum engineers. There are numerous uncertainties inherent in estimating quantities of reserves of oil and gas and in projecting future rates of production and the timing of development expenditures, including many factors beyond our control. The reserve estimates in this annual report are based on various assumptions, including, for example, constant oil and gas prices, operating expenses, capital expenditures and the availability of funds, and, therefore, are inherently imprecise indications of future net cash flows. Actual future production, cash flows, taxes, operating expenses, development expenditures and quantities of recoverable oil and gas reserves may vary substantially from those assumed in the estimates. Any significant variance in these assumptions could materially affect the estimated quantity and value of reserves set forth in this prospectus. Additionally, our reserves may be subject to downward or upward revision based upon actual production performance, results of future development and exploration, prevailing oil and gas prices and other factors, many of which are beyond our control.

The present value of future net reserves discounted at 10% (the “PV-10”) of proved reserves referred to in this annual report should not be construed as the current market value of the estimated proved reserves of oil and gas attributable to our properties. In accordance with applicable requirements of the SEC, the estimated discounted future net cash flows from proved reserves are generally based on prices and costs as of the date of the estimate, whereas actual future prices and costs may be materially higher or lower. Actual future net cash flows also will be affected by: (i) the timing of both production and related expenses; (ii) changes in consumption levels; and (iii) governmental regulations or taxation. In addition, the calculation of the present value of the future net cash flows using a 10% discount as required by the SEC is not necessarily the most appropriate discount factor based on interest rates in effect from time to time and risks associated with our reserves or the oil and gas industry in general. Furthermore, our reserves may be subject to downward or upward revision based upon actual production, results of future development, supply and demand for oil and gas, prevailing oil and gas prices and other factors. See “Properties — Oil and Gas Reserves.”

We are subject to various operating and other casualty risks that could result in liability exposure or the loss of production and revenues.

Our oil and gas business involves a variety of operating risks, including, but not limited to, unexpected formations or pressures, uncontrollable flows of oil, gas, brine or well fluids into the environment (including groundwater contamination), blowouts, fires, explosions, pollution and other risks, any of which could result in personal injuries, loss of life, damage to properties and substantial losses. Although we carry insurance at levels that we believe are reasonable, we are not fully insured against all risks. We do not carry business interruption insurance. Losses and liabilities arising from uninsured or under-insured events could have a material adverse effect on our financial condition and operations.

From time to time, due primarily to contract terms, pipeline interruptions or weather conditions, the producing wells in which we own an interest have been subject to production curtailments. The curtailments range from production being partially restricted to wells being completely shut-in. The duration of curtailments varies from a few days to several months. In most cases, we are provided only limited notice as to when production will be curtailed and the duration of such curtailments. We are not currently experiencing any material curtailment of our production.

We intend to increase our development and, to a lesser extent, exploration activities. Exploration drilling and, to a lesser extent, development drilling of oil and gas reserves involve a high degree of risk that no commercial production will be obtained and/or that production will be insufficient to recover drilling and completion costs. The cost of drilling, completing and operating wells is often uncertain. Our drilling operations may be curtailed, delayed or canceled as a result of numerous factors, including title problems, weather conditions, compliance with governmental requirements and shortages or delays in the delivery of equipment. Furthermore, completion of a well does not assure a profit on the investment or a recovery of drilling, completion and operating costs.

We depend to a large extent on the services of Chris G. Mazzini, our President, Chairman of the Board, and Chief Executive Officer. The loss of the services of Mr. Mazzini would have a material adverse effect on our operations. We have not entered into any employment contracts with our executive officer and have not obtained key personnel life insurance on Mr. Mazzini.

Certain of our affiliates control a majority of our outstanding common stock, which may affect your vote as a shareholder.

Our executive officers, directors and their affiliates hold approximately 77% of our outstanding shares of common stock. As a result, officers, directors and their affiliates and such shareholders have the ability to exert significant influence over our business affairs, including the ability to control the election of directors and results of voting on all matters requiring shareholder approval. This concentration of voting power may delay or prevent a potential change in control.

Certain of our affiliates have engaged in business transactions with the Company, which may result in conflicts of interest.

Certain officers, directors and related parties, including entities controlled by Mr. Mazzini, the President and Chief Executive Officer, have engaged in business transactions with the Company which were not the result of arm’s length negotiations between independent parties. Our management believes that the terms of these transactions were as favorable to us as those that could have been obtained from unaffiliated parties under similar circumstances. All future transactions between us and our affiliates will be on terms no less favorable than could be obtained from unaffiliated third parties and will be approved by a majority of the disinterested members of our Board of Directors.

Our common stock is traded on the Over-the-Counter Bulletin Board (“OTC BB”), symbol “SPND”.

The liquidity of our common stock may be adversely affected, and purchasers of our common stock may have difficulty selling our common stock, if our common stock does not continue to trade in that or another suitable trading market.

There is presently only a limited public market for our common stock, and there is no assurance that a ready public market for our securities will develop. It is likely that any market that develops for our common stock will be highly volatile and that the trading volume in such market will be limited. The trading price of our common stock could be subject to wide fluctuations in response to quarter-to-quarter variations in our operating results, announcements of our drilling results and other events or factors. In addition, the U.S. stock market has from time to time experienced extreme price and volume fluctuations that have affected the market price for many companies and which often have been unrelated to the operating performance of these companies. These broad market fluctuations may adversely affect the market price of our securities.

We do not intend to declare dividends in the foreseeable future.

Our Board of Directors presently intends to retain all of our earnings for the expansion of our business. We therefore do not anticipate the distribution of cash dividends in the foreseeable future. Any future decision of our Board of Directors to pay cash dividends will depend, among other factors, upon our earnings, financial position and cash requirements.

Our company employees and contract land professionals have reviewed title records or other title review materials relating to substantially all of our producing properties. The title investigation performed by us prior to acquiring undeveloped properties is thorough, but less rigorous than that conducted prior to drilling, consistent with industry standards. We believe we have satisfactory title to all our producing properties in accordance with standards generally accepted in the oil and gas industry. Our properties are subject to customary royalty interests, liens incident to operating agreements, liens for current taxes and other burdens, which we believe do not materially interfere with the use of or affect the value of such properties. At December 31, 2007, our leaseholds for some of our net acreage were being kept in force by virtue of production on that acreage in paying quantities. The remaining net acreage was held by lease rentals and similar provisions and requires production in paying quantities prior to expiration of various time periods to avoid lease termination.

We expect to make acquisitions of oil and gas properties from time to time subject to available resources. In making an acquisition, we generally focus most of our title and valuation efforts on the more significant properties. It is generally not feasible for us to review in-depth every property we purchase and all records with respect to such properties. However, even an in-depth review of properties and records may not necessarily reveal existing or potential problems, nor will it permit us to become familiar enough with the properties to assess fully their deficiencies and capabilities. Evaluation of future recoverable reserves of oil and gas, which is an integral part of the property selection process, is a process that depends upon evaluation of existing geological, engineering and production data, some or all of which may prove to be unreliable or not indicative of future performance. To the extent the seller does not operate the properties, obtaining access to properties and records may be more difficult. Even when problems are identified, the seller may not be willing or financially able to give contractual protection against such problems, and we may decide to assume environmental and other liabilities in connection with acquired properties.

Our business is highly capital-intensive requiring continuous development and acquisition of oil and gas reserves. In addition, capital is required to operate and expand our oil and gas field operations and purchase equipment. At December 31, 2007, we had working capital of $5,241,000. We anticipate that we will be able to meet our cash requirements for the next 12 months. However, if such plans or assumptions change or prove to be inaccurate, we could be required to seek additional financing sooner than currently anticipated.

We have funded our operations, acquisitions and expansion costs primarily through the generation of our internally generated cash flow. Our success in obtaining the necessary capital resources to fund future costs associated with our operations and expansion plans is dependent upon our ability to: (i) increase revenues through acquisitions and recovery of our proved producing and proved developed non-producing oil and gas reserves; and (ii) maintain effective cost controls at the corporate administrative office and in field operations. However, even if we achieve some success with our plans, there can be no assurance that we will be able to generate sufficient revenues to achieve significant profitable operations or fund our expansion plans.

We have substantial capital requirements necessary for undeveloped properties for which we may not be able to obtain adequate financing.

Development of our properties will require additional capital resources. We have no commitments to obtain any additional debt or equity financing and there can be no assurance that additional financing will be available, when required, on favorable terms to us. The inability to obtain additional financing could have a material adverse effect on us, including requiring us to curtail significantly our oil and gas acquisition and development plans or farm-out development of our properties. Any additional financing may involve substantial dilution to the interests of our shareholders at that time.

Oil and natural gas prices fluctuate widely and low prices could have a material adverse impact on our business and financial results.

Our revenues, profitability and the carrying value of its oil and gas properties are substantially dependent upon prevailing prices of, and demand for, oil and gas and the costs of acquiring, finding, developing and producing reserves. Our ability to obtain borrowing capacity, to repay future indebtedness, and to obtain additional capital on favorable terms is also substantially dependent upon oil and gas prices. Historically, the markets for oil and gas have been volatile and are likely to continue to be volatile in the future. Prices for oil and gas are subject to wide fluctuations in response to: (i) relatively minor changes in the supply of, and demand for, oil and gas; (ii) market uncertainty; and (iii) a variety of additional factors, all of which are beyond our control. These factors include domestic and foreign political conditions, the price and availability of domestic and imported oil and gas, the level of consumer and industrial demand, weather, domestic and foreign government relations, the price and availability of alternative fuels and overall economic conditions. Furthermore, the marketability of our production depends in part upon the availability, proximity and capacity of gathering systems, pipelines and processing facilities. Volatility in oil and gas prices could affect our ability to market our production through such systems, pipelines or facilities. As of December 31, 2007, approximately 78% of our gas production is currently sold to eight gas purchasing firms on a month-to-month basis at prevailing spot market prices. Oil prices remained subject to unpredictable political and economic forces during 2007, 2006 and 2005, and experienced fluctuations similar to those seen in natural gas prices for the year. We believe that oil prices will continue to fluctuate in response to changes in the policies of the Organization of Petroleum Exporting Countries (“OPEC”), changes in demand from many Asian countries, current events in the Middle East, security threats to the United States, and other factors associated with the world political and economic environment. As a result of the many uncertainties associated with levels of production maintained by OPEC and other oil producing countries, the availabilities of worldwide energy supplies and competitive relationships and consumer perceptions of various energy sources, we are unable to predict what changes will occur in crude oil and natural gas prices.

We may be responsible for additional costs in connection with abandonment of properties.

We are responsible for payment of plugging and abandonment costs on its oil and gas properties pro rata to our working interest. Based on our experience, we anticipate that in most cases, the ultimate aggregate salvage value of lease and well equipment located on our properties should equal to the costs of abandoning such properties. There can be no assurance, however, that we will be successful in avoiding additional expenses in connection with the abandonment of any of our properties. In addition, abandonment costs and their timing may change due to many factors, including actual production results, inflation rates and changes in environmental laws and regulations.

Risks that Involve the Oil & Gas Industry in General.

We are subject to various governmental regulations which may cause us to incur substantial costs.

Our operations are affected from time to time in varying degrees by political developments and federal, state and local laws and regulations. In particular, oil and gas production related operations are or have been subject to price controls, taxes and other laws and regulations relating to the oil and gas industry. Failure to comply with such laws and regulations can result in substantial penalties. The regulatory burden on the oil and gas industry increases our cost of doing business and affects our profitability. Although we believe we are in substantial compliance with all applicable laws and regulations, because such laws and regulations are frequently amended or reinterpreted, we are unable to predict the future cost or impact of complying with such laws and regulations.

Sales of natural gas by us are not regulated and are generally made at market prices. However, the Federal Energy Regulatory Commission (“FERC”) regulates interstate natural gas transportation rates and service conditions, which affect the marketing of natural gas produced by us, as well as the revenues received by us for sales of such production. Sales of our natural gas currently are made at uncontrolled market prices, subject to applicable contract provisions and price fluctuations that normally attend sales of commodity products.

Since the mid-1980’s, the FERC has issued a series of orders, culminating in Order Nos. 636, 636-A and 636-B (“Order 636”), that have significantly altered the marketing and transportation of natural gas. Order 636 mandated a fundamental restructuring of interstate pipeline sales and transportation service, including the unbundling by interstate pipelines of the sale, transportation, storage and other components of the city-gate sales services such pipelines previously performed. One of the FERC’s purposes in issuing the orders was to increase competition within all phases of the natural gas industry. Order 636 and subsequent FERC orders issued in individual pipeline restructuring proceedings have been the subject of appeals, and the courts have largely upheld Order 636. Because further review of certain of these orders is still possible, and other appeals may be pending, it is difficult to exactly predict the ultimate impact of the orders on us and our natural gas marketing efforts. Generally, Order 636 has eliminated or substantially reduced the interstate pipelines’ traditional role as wholesalers of natural gas, and has substantially increased competition and volatility in natural gas markets.

While significant regulatory uncertainty remains, Order 636 may ultimately enhance our ability to market and transport our natural gas, although it may also subject us to greater competition, more restrictive pipeline imbalance tolerances and greater associated penalties for violation of such tolerances.

The FERC has announced several important transportation-related policy statements and proposed rule changes, including the appropriate manner in which interstate pipelines release capacity under Order 636 and, more recently, the price which shippers can charge for their released capacity. In addition, in 1995, the FERC issued a policy statement on how interstate natural gas pipelines can recover the costs of new pipeline facilities. In January 1997, the FERC issued a policy statement and a request for comments concerning alternatives to its traditional cost-of-service rate making methodology. A number of pipelines have obtained FERC authorization to charge negotiated rates as one such alternative. While any additional FERC action on these matters would affect us only indirectly, these policy statements and proposed rule changes are intended to further enhance competition in natural gas markets. We cannot predict what the FERC will take on these matters, nor can we predict whether the FERC’s actions will achieve its stated goal of increasing competition in natural gas markets. However, we do not believe that we will be treated materially differently than other natural gas producers and marketers with which we compete.

The price we receive from the sale of oil is affected by the cost of transporting such products to market. Effective January 1, 1995, the FERC implemented regulations establishing an indexing system for transportation rates for oil pipelines, which, generally, would index such rates to inflation, subject to certain conditions and limitations. These regulations could increase the cost of transporting oil by interstate pipelines, although the most recent adjustment generally decreased rates. These regulations have generally been approved on judicial review. We are not able to predict with certainty the effect, if any, of these regulations on its operations. However, the regulations may increase transportation costs or reduce wellhead prices for oil.

The State of Texas and many other states require permits for drilling operations, drilling bonds and reports concerning operations and impose other requirements relating to the exploration for and production of oil and gas. Such states also have statutes or regulations addressing conservation matters, including provisions for the unitization or pooling of oil and gas properties, the establishment of maximum rates of production from wells and the regulation of spacing, plugging and abandonment of such wells. The statutes and regulations of certain states limit the rate at which oil and gas can be produced from our properties. However, we do not believe we will be affected materially differently by these statutes and regulations than any other similarly situated oil and gas company.

We are subject to various environmental risks which may cause us to incur substantial costs.

Our operations and properties are subject to extensive and changing federal, state and local laws and regulations relating to environmental protection, including the generation, storage, handling and transportation of oil and gas and the discharge of materials into the environment, and relating to safety and health. The recent trend in environmental legislation and regulation generally is toward stricter standards, and this trend will likely continue. These laws and regulations may require the acquisition of a permit or other authorization before construction or drilling commences and for certain other activities; limit or prohibit construction, drilling and other activities on certain lands lying within wilderness and other protected areas; and impose substantial liabilities for pollution resulting from our operations. The permits required for our various operations are subject to revocation, modification and renewal by issuing authorities. Governmental authorities have the power to enforce compliance with their regulations, and violations are subject to fines, penalties or injunctions. In the opinion of management, we are in substantial compliance with current applicable environmental laws and regulations, and we have no material commitments for capital expenditures to comply with existing environmental requirements. Nevertheless, changes in existing environmental laws and regulations or in interpretations thereof could have a significant impact on us. The impact of such changes, however, would not likely be any more burdensome to us than to any other similarly situated oil and gas company.

The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), also known as the “Superfund” law, and similar state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons that are considered to have contributed to the release of a “hazardous substance” into the environment. These persons include the owner or operator of the disposal site or sites where the release occurred and companies that disposed or arranged for the disposal of the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources. Furthermore, neighboring landowners and other third parties may file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.

We generate typical oil and gas field wastes, including hazardous wastes that are subject to the federal Resources Conservation and Recovery Act and comparable state statutes. The United States Environmental Protection Agency and various state agencies have limited the approved methods of disposal for certain hazardous and non-hazardous wastes. Furthermore, certain wastes generated by our oil and gas operations that are currently exempt from regulation as “hazardous wastes” may in the future be designated as “hazardous wastes,” and therefore be subject to more rigorous and costly operating and disposal requirements.

The Oil Pollution Act (“OPA”) imposes a variety of requirements on responsible parties for onshore and offshore oil and gas facilities and vessels related to the prevention of oil spills and liability for damages resulting from such spills in waters of the United States. The “responsible party” includes the owner or operator of an onshore facility or vessel or the lessee or permittee of, or the holder of a right of use and easement for, the area where an onshore facility is located. OPA assigns liability to each responsible party for oil spill removal costs and a variety of public and private damages from oil spills. Few defenses exist to the liability for oil spills imposed by OPA. OPA also imposes financial responsibility requirements. Failure to comply with ongoing requirements or inadequate cooperation in a spill event may subject a responsible party to civil or criminal enforcement actions.

We own or lease properties that for many years have produced oil and gas. We also own natural gas gathering systems. It is not uncommon for such properties to be contaminated with hydrocarbons. Although we or previous owners of these interests may have used operating and disposal practices that were standard in the industry at the time, hydrocarbons or other wastes may have been disposed of or released on or under the properties or on or under other locations where such wastes have been taken for disposal. These properties may be subject to federal or state requirements that could require us to remove any such wastes or to remediate the resulting contamination. All of our properties are operated by third parties over whom we have limited control. Notwithstanding our lack of control over properties operated by others, the failure of the previous owners or operators to comply with applicable environmental regulations may, in certain circumstances, adversely impact us.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

OIL AND GAS PROPERTIES

The following table sets forth pertinent data with respect to the Company-owned oil and gas properties, all located within the continental United States, as estimated by the Company:

		Year Ended December 31,
		2007				2006				2005
Gas and Oil Properties, net (1):
Proved developed gas reserves-Mcf (2)			10,948,000				7,353,000				7,110,000
Proved undeveloped gas reserves-Mcf (3)			3,419,000				6,033,000				7,672,000
Total proved gas reserves-Mcf			14,367,000				13,386,000				14,782,000
Proved Developed Crude Oil and Condensate reserves-Bbls (2)			334,000				341,000				434,000
Proved Undeveloped crude oil and Condensate reserves-Bbls (3)			11,000				16,000				50,000
Total proved crude oil and condensate Reserves-Bbls			345,000				357,000				484,000

Productive Wells

The following table sets forth our domestic productive wells at July 31, 2008.

Gas										Oil								Total
Gross						Net				Gross				Net				Gross				Net
			279				67.33				83				18.97				362				86.30

Acreage

The following table sets forth our undeveloped and developed gross and net leasehold acreage at July 31, 2008. Undeveloped acreage includes leased acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and gas, regardless of whether or not such acreage contains proved reserves.

Undeveloped										Developed								Total
Gross						Net				Gross				Net				Gross				Net
			2,060				2,054				122,410				21,701				124,470				23,755

All the leases for the undeveloped acreage summarized in the preceding table will expire at the end of their respective primary terms unless prior to that date, the existing leases are renewed or production has been obtained from the acreage subject to the lease, in which event the lease will remain in effect until the cessation of production. As is customary in the industry, we generally acquire oil and gas acreage without any warranty of title except as to claims made by, through or under the transferor. Although we have title to developed acreage examined prior to acquisition in those cases in which the economic significance of the acreage justifies the cost, there can be no assurance that losses will not result from title defect or from defects in the assignment of leasehold rights.

Wells Drilled and Completed

The Company’s working interests in exploration and development wells completed during the years indicated were as follows:

		Year Ended December 31,
		2007								2006								2005
		Gross				Net				Gross				Net				Gross				Net
Exploratory Wells (1):
Productive			—				—				—				—				—				—
Non-Productive			—				—				—				—				—				—
Total			—				—				—				—				—				—
Development Wells (2):
Productive			17.000				4.714				10.000				0.627				14.000				1.639
Non-Productive			—				—				1.000				0.006				—				—
Total			17.000				4.714				11.000				0.633				14.000				1.639
Total Exploration & Development Wells:
Productive			17.000				4.714				10.000				0.627				14.000				1.639
Non-Productive			—				—				1.000				0.006				—				—
Total			17.000				4.714				11.000				0.633				14.000				1.639

The following tables set forth additional data with respect to production from Company-owned oil and gas properties, all located within the continental United States:

		For the years ended December 31,
		2007				2006				2005				2004				2003
Oil and Gas Production, net:
Natural Gas (Mcf)			880,662				671,527				655,568				577,099				540,799
Crude Oil & Condensate (Bbl)			24,472				25,443				21,323				23,098				28,747
Average Sales Price per Unit Produced:
Natural Gas ($/Mcf)		$	6.63			$	5.55			$	6.74			$	5.44			$	4.33
Crude Oil & Condensate($/Bbl)		$	65.17			$	53.14			$	52.50			$	38.90			$	25.14
Average Production Cost per Equivalent Barrel (1) (2)		$	14.36			$	15.14			$	13.38			$	11.69			$	10.41

The Company owns producing royalties and overriding royalties under properties located in Texas. The revenue from these properties is not significant.

The Company is not aware of any major discovery or other favorable or adverse event that is believed to have caused a significant change in the estimated proved reserves since December 31, 2007.

The Company currently has leases covering in excess of 9,204 gross acres, mostly held by existing production, in Clay, Denton, Eastland, Erath, Hood, Palo Pinto, Parker, and Tarrant Counties, Texas, that the Company believes may have drilling locations for the Barnett Shale Formation. The Company has included some of these potential locations in its calculation of proven undeveloped oil and gas reserves but the Company has not included any of its probable or possible locations. See Footnote 18 to the Financial Statement for an expanded description of this activity.

OFFICE SPACE

On December 27, 2004, the Company acquired a commercial office building. The property acquired is a two story multi-tenant, garden office building with a sub-grade parking garage. The 26 year old building contains approximately 46,286 rentable square feet and sits on a 1.4919 acre block of land situated in north Dallas, Texas in close proximity to hotels, restaurants and shopping areas (the Galleria/Valley View Mall) with easy access to Interstate Highway 635 (LBJ Freeway) and Dallas Parkway (North Dallas Toll Road). The Company occupies approximately 8,668 rentable square feet of the building as its primary office headquarters, and leases the remaining space in the building to non-related third party commercial tenants at prevailing market rates.

On March 17, 2008, the Company entered into an agreement with an existing tenant to take back 1,649 RSF of office space. The Company is currently expanding its current office space to accommodate its growing staff and will occupy 10,317 RSF after the expansion project is completed.

The address of the Company’s principal executive offices is One Spindletop Centre, 12850 Spurling Road, Suite 200, Dallas, Texas 75230. The telephone number is (972) 644-2581.

PIPELINES

The Company owns, through its subsidiary, PPC, 26.1 miles of natural gas pipelines in Parker, Palo Pinto and Eastland Counties, Texas. These pipelines are steel and polyethylene and range in size from 2 inches to 4 inches. These pipelines primarily gather natural gas from wells operated by the Company and in which the Company owns a working interest, but also for other parties.

The Company normally does not purchase and resell natural gas, but gathers gas for a fee. The fees charged in some cases are subject to regulations by the State of Texas and the Federal Energy Regulatory Commission. Average daily volumes of gas gathered by the pipelines owned by the Company were 1,112, 714, and 821 MCF per day for 2007, 2006, and 2005 respectively.

Oilfield Production Equipment

The Company owns various natural gas compressors, pumping units, dehydrators and various other pieces of oil field production equipment.

Substantially all of the equipment is located on oil and gas properties operated by the Company and in which it owns a working interest. The rental fees are charged as lease operating fees to each property and each owner.

Chris G. Mazzini and Michelle H. Mazzini, through a limited partnership in which they are limited partners, started an oil field service company which provides roustabout, swabbing and completion services at rates which are at or below market to the Company. The oil field service company plans to expand equipment and services they provide. This oil field services company does work exclusively for the Company and its related company Giant Energy Corp. The Company benefits by having immediate access to services in a tight market.

Item 3. Legal Proceedings

Neither the Registrant nor its subsidiaries nor any officers or directors is a party to any material pending legal proceedings for or against the Company or its subsidiary nor are any of their properties subject to any proceedings.

During the fourth quarter of the fiscal year covered by this report, no proceeding previously reported was terminated.

Item 4. Submission Of Matters Of Security Holders To A Vote

During the fourth quarter of the registrant’s fiscal year covered by this report, no matter was submitted to a vote of security holders of the registrant.

PART II

Item 5. Market For The Company’s Common Stock, Related Stockholder Matters And
Issuer Purchases Of Equity Securities

The Company’s common stock trades over-the-counter under the symbol “SPND”.

Prior to 2004, no significant public trading market had been established for the Company’s common stock. The Company does not believe that listings of bid and asking prices for its stock are indicative of the actual trades of its stock, since trades are made infrequently. However during 2004, there was a material increase in the number of shares traded and a material increase in the stock price. The following table shows high and low trading prices for each quarter in 2005, 2006 and 2007.

		Price Per Share
		High				Low
2005
First Quarter			5.50				2.00
Second Quarter			3.55				2.05
Third Quarter			4.20				1.90
Fourth Quarter			4.80				3.11
2006
First Quarter			5.15				3.26
Second Quarter			6.00				4.57
Third Quarter			6.25				4.95
Fourth Quarter			7.00				4.50
2007
First Quarter			6.10				5.00
Second Quarter			6.10				4.05
Third Quarter			5.55				5.00
Fourth Quarter			5.70				5.15

During the First Quarter of 2008, subsequent to year end, the following high and low prices were recorded for the Company’s common stock.

		Price Per Share
		High				Low
2008
First Quarter			6.50				5.00

There is no amount of common stock that is subject to outstanding warrants to purchase, or securities convertible into, common stock of the Company.

As of March 31, 2008, there were approximately 566 record holders of the Company’s Common Stock.

The following chart compares the yearly percentage change in the cumulative total stockholder return on the Company’s Common Stock during the five years ended December 31, 2007 with the cumulative total return of the Standard and Poor’s 500 Stock Index and of the Dow Jones U.S. Exploration and Production Index (formerly Dow Jones Secondary Oil Stock Index). The comparison assumes $100 was invested on December 31, 2003 in the Company’s Common Stock and in each of the foregoing indices and assumes reinvestment of dividends. The Company paid no dividends on its Common Stock during the five-year period.

Stock Performance Chart

The Company has not paid any dividends since its reorganization and it is not contemplated that it will pay any dividends on its Common Stock in the foreseeable future. The Business Loan Agreement entered into between the Company and JPMorgan Chase Bank for the purpose of acquiring the commercial office building contains restrictions on the payment of dividends in the event a default under terms of the Business Loan Agreement has occurred and is continuing or would result from the payment of such dividends or distributions.

The Registrant currently serves as its own stock transfer agent and registrar.

During the fourth quarter of the fiscal year ended December 31, 2007, the Company did not repurchase any of its equity securities. The Board of Directors has not approved nor authorized any standing repurchase program.

Item 6. Selected Financial Data

The selected financial information presented should be read in conjunction with the consolidated financial statements and the related notes thereto.

		For the years ended December 31,
		2007				2006				2005				2004				2003
Total Revenue		$	8,707,000			$	6,174,000			$	6,395,000			$	4,515,000			$	2,458,000
Net Income (Loss)			1,808,000				920,000				1,417,000				1,266,000				987,000
Earnings per Share		$	0.24			$	0.12			$	0.19			$	0.16			$	0.13

		As of December 31,
		2007				2006				2005				2004				2003
Total Assets		$	15,631,000			$	13,024,000			$	11,387,000			$	9,715,000			$	5,395,000
Long-Term Debt			1,200,000				1,320,000				1,440,000				—				—

Item 7. Management’s Discussion And Analysis Of Financial Condition And
Results Of Operations

Liquidity and Capital Resources

The Company’s operating capital needs, as well as its capital spending program are generally funded from cash flow generated by operations. Because future cash flow is subject to a number of variables, such as the level of production and the sales price of oil and natural gas, the Company can provide no assurance that its operations will provide cash sufficient to maintain current levels of capital spending. Accordingly, the Company may be required to seek additional financing from third parties in order to fund its exploration and development programs.

Results of Operations:

2007 Compared to 2006

Oil revenues increased in 2007 over 2006 by approximately $243,000 an increase of 18%. This was due to an increase in average oil prices from $53.14 per bbl in 2006 to $65.17 per bbl in 2007 offset slightly by a decrease in production from approximately 25,400 bbls in 2006 to approximately 24,500 bbls in 2007. Decreased production of approximately 900 bbls or 3.5% came primarily from mechanical issues associated with some of the Companies operated wells.

Gas revenue increased in 2007 from 2006 by approximately $2,118,000, an increase of 56.9%. This was due primarily to an increase in average gas prices from $5.55 per Mcf in 2006 to $6.63 per Mcf in 2007, combined with an increase in production from approximately 672,000 Mcf in 2006 to approximately 881,000 Mcf in 2007, an increase of 31.1%. The majority of the increase in gas production was from our new Barnett Shale horizontal gas wells. Approximately $495,000 of the increase was from our Olex wells in Denton County, Texas. Our new Barnett Shale horizontal gas wells accounted for approximately $1,414,000 of the increase over 2006 sales. Gas sales from non-operated wells decreased by approximately $345,000 as compared with 2006.

Interest income is up approximately $24,000 due to the Company’s policy of investing excess cash funds in higher earning money market accounts and certificates of deposit as opposed to checking accounts, as well as the higher level of cash balances earning interest during 2007 as compared to 2006. Interest rates were also slightly higher than in the previous year.

Lease operating expenses were $353,000 (17%) higher in 2007 because costs to operate have increased. As oil and gas prices have escalated, the costs of oil field services and equipment have also increased.

Amortization of the full cost pot (depletion) increased by approximately $183,000 in 2007. This increase was due to the undepleted basis of the full cost pot increasing from an estimated $8.6 million in 2006 to an estimated 10.5 million in 2007, with the depletion rate increasing from 5.041% in 2006 to 5.883% in 2007.

General and administrative expenses increased approximately $687,000 between years. Almost all of the increase was due to direct and indirect personnel costs of salary, contract labor, payroll taxes, benefits and associated expenses associated with the increased number of technical and professional personnel added to the Company’s staff during 2007. Additionally, a portion of the increase is attributable to the outsourcing of the Company’s payroll and benefits to Administaff, a Professional Employer Organization.

The decrease in other revenues is due mainly to receipt of approximately $24,000 more received in 2006 over the amounts received in 2007 for farm-outs of leasehold interests held by the Company.

The increase in interest expense for 2007 was due to approximately $48,000 of interest expense paid to interest owners on funds that had been suspended awaiting the completion of title work to determine and verify the ownership of the respective interests.

2006 Compared to 2005

Oil revenues increased in 2006 over 2005 by approximately $233,000, an increase of 20.8%. This was due to an increase in average oil prices from $52.50 per bbl in 2005 to $53.14 per bbl in 2006 combined with an increase in production from approximately 21,300 bbls in 2005 to approximately 25,400 bbls in 2006. Increased production of approximately 4,000 bbls came primarily from the King-Lowe, Peters #1, Pope 1&2 and Sharp 1-18 wells, all operated wells.

Gas revenue decreased in 2006 from 2005 by approximately $698,000, a decrease of 15.7%. This was due primarily to a decrease in average gas prices from $6.74 per mcf in 2005 to $5.55 per mcf in 2006. The decrease in price was offset by an increase in production from approximately 656,000 mcf in 2005 to approximately 672,000 mcf in 2006. Approximately 25,800 mcf of the increase was due to the following non-operated wells; three new Tuit Draw wells in Wyoming (12,200 mcf), the Giant Energy Porter #2 a new well (4,622 mcf), and the Strauch #1, a new well (14,700 mcf). Several operated wells in Texas and Louisiana had decreased production in 2006 of approximately 9,800 mcf as compared with 2005. These wells were shut for a portion of 2006, due to pipeline problems, salt water disposal well issues and other mechanical problems that will be addressed as soon as practicable.

Interest income is up due to the Company’s policy of investing excess cash funds in higher earning money market accounts and certificates of deposit as opposed to checking accounts, as well as the higher level of cash balances earning interest in 2006 as compared to 2005. Interest rates were also slightly higher than in the previous year.

Lease operating expenses were higher in 2006 because costs to operate have increased. As oil and gas prices have escalated, operating cost, costs of oil field services and equipment have also increased.

Amortization of the full cost pot (depletion) decreased by approximately $267,000 in 2006. This decrease was due to a decrease in the calculated basis of the full-cost pot for the cost to develop undeveloped reserves from an estimated $13 million in 2005 to an estimated $5 million in 2006. The decrease in the estimated future development cost more than offset the depletion rate increase from 4.2% in 2005 to 5.04% in 2006.

General and administrative expenses increased approximately $400,000 between years. Almost all of the increase was due to direct and indirect personnel costs of salary, contract labor, payroll taxes, benefits and associated expenses associated with the increased number of technical and professional personnel added to the Company’s staff during 2006. Additionally, a portion of the increase is attributable to the outsourcing of the Company’s payroll and benefits to Administaff.

The decrease in other revenues is due mainly to receipt of approximately $24,000 more received in 2005 over the amounts received in 2006 for farm-outs of leasehold interests held by the Company.

The increase in interest expense for 2006 was due to approximately $48,000 of interest expense paid to interest owners on funds that had been suspended awaiting the completion of title work to determine and verify the ownership of the respective interests.

Certain Factors That Could Affect Future Operations

Certain information contained in this report, as well as written and oral statements made or incorporated by reference from time to time by the Company and its representatives in other reports, filings with the Securities and Exchange Commission, press releases, conferences, teleconferences or otherwise, may be deemed to be ‘forward-looking statements’ within the meaning of Section 21E of the Securities Exchange Act of 1934 and are subject to the ‘Safe Harbor’ provisions of that section.

Forward-looking statements include statements concerning the Company’s and management’s plans, objectives, goals, strategies and future operations and performance and the assumptions underlying such forward-looking statements. When used in this document, the words “anticipates”, “estimates”, “expects”, “believes”, “intends”, “plans”, and similar expressions are intended to identify such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to these and other factors.

Item 8. Consolidated Financial Statements And
Schedules Index At Page 48

Item 9. Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure

None

Item 9A(T). Controls And Procedures

Evaluation of Disclosure Controls and Procedures.

A review and evaluation was performed by management under the supervision and with the participation of the Principal Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures, as required by Rule 13a-15(b) of the Securities Exchange Act of 1934 as of December 31, 2007. Based upon that most recent evaluation, which was completed as of the end of the period covered by this Form 10-K, the Principal Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at December 31, 2007 to ensure that information required to be disclosed in reports that the Company files submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and timely reported as provided in the Securities and Exchange Commission (“SEC”) rules and forms. As a result of this evaluation, there were no changes in the Company’s internal control over financial reporting during the three months ended December 31, 2007 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Management Report on Internal Control Over Financial Reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(b) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of the Company’s principal executive and principal financial officers and effected by the Company’s board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States (“GAAP, US”) and includes those policies and procedures that:

	•		pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company;
	•		provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, US and that receipts and expenditures of a company are being made only in accordance with authorization of management and directors of a company; and
	•		provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of human error and the circumvention or overriding of controls, material misstatements may not be prevented or detected on a timely basis. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes and conditions or that the degree of compliance with policies or procedures may deteriorate. Accordingly, even internal controls determined to be effective can provide only reasonable assurance that information required to be disclosed in and reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and represented within the time periods required.

Management of the Company has assessed the effectiveness of its internal control over financial reporting at December 31, 2007. To make this assessment, the Company used the criteria for effective internal control over financial reporting described in Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management of the Company concluded that as of December 31, 2007, the internal control system over financial reporting met those criteria and was effective.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting.

There has been no change in the Registrant’s internal control over financial reporting during the fourth fiscal quarter ended December 31, 2007, that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 9B. Other Information

Not Applicable

PART III

Item 10. Directors And Executive Officers Of The Registrant

The Directors and Executive Officers of the Company and certain information concerning them is set forth below:

Name		Age		Position
Chris G. Mazzini		50		Chairman of the Board, Director and President
Michelle H. Mazzini		46		Director, Vice President, Secretary, Treasurer
David E. Allard		49		Director

On April 2, 2008, Mr. David E. Allard, was appointed as a member of the Board of Directors of Spindletop Oil & Gas Co.

All directors hold offices until the next annual meeting of the shareholders or until their successors are duly elected and qualified. Officers of the Company serve at the discretion of the board of directors.

Business Experience

Chris Mazzini, Chairman of the Board of Directors and President, graduated from the University of Texas at Arlington in 1979 with a Bachelor of Science degree in geology. He started his career in the oil and gas industry in 1978, and began as a petroleum geologist with Spindletop in 1979, working the Fort Worth Basin of North Texas. He became Vice President of Geology at Spindletop in 1982, and served in that capacity until he left the Company in 1985 when he founded Giant Energy Corp. (“Giant”). Mr. Mazzini has served as President of Giant since then. He rejoined the Company in December 1999 when he, through Giant, purchased controlling interest. Mr. Mazzini has been Chairman of the Board of Directors and President of the Company since 1999 and is a Certified and Licensed Petroleum Geologist. Mr. Mazzini has worked numerous geological basins throughout the United States with an emphasis on the Fort Worth Basin. He is responsible for several new field discoveries in the Fort Worth Basin.

Michelle Mazzini, Vice President and General Counsel, received her Bachelor of Science Degree in Business Administration (Major: Accounting) from the University of Southwestern Louisiana (now named University of Louisiana at Lafayette) where she graduated magna cum laude in 1985. She earned her law degree from Louisiana State University where she graduated Order of the Coif in 1988. Ms. Mazzini began her career with Thompson & Knight, a large law firm in Dallas, where she focused her practice on general corporate and finance transactions. She also worked as Corporate Counsel for Alcatel USA, a global telecommunications manufacturing corporation where her practice was broad-based. Ms. Mazzini serves as Vice President and General Counsel of the Company.

David E. Allard, Director, has served as Chief Financial Officer (since February 2005) of Digital Witness Surveillance, a Dallas, Texas based development stage software provider; Executive Vice President and Secretary (April 2003 to February 2, 2005) of Internet America, Inc. Mr. Allard was Chief Operating Officer (2000-2002) of Primedia Workplace Learning, a workplace training business; Executive Vice President and Chief Financial Officer (1999-2000) of E-Train, Inc., a provider of online job training and seminars; Special Advisor (1998-1999) of Thayer Capital Partners; Chief Operating Officer (1997-1998) of Career Track, Inc. (a TCI subsidiary); Senior Vice President and Vice President—Business Development (1992-1996) of Westcott Communications, Inc.; Partner (1985-1992) of Farmer and Allard, P.C. (a CPA firm); Audit Manager/CPA (1983-1985) of Grant Thornton LLP (a CPA firm). Mr. Allard is a Director (since February 20, 2004) and Chairman of the Audit Committee of the Board of Income Opportunity Realty Investors, Inc. a Dallas, Texas based real estate company which has its common stock listed and traded on the American Stock Exchange. Mr. Allard has been a Certified Public Accountant since 1983.

Key Employees

In addition to the services provided through the management contract with Giant by Mr. Mazzini, Ms. Mazzini (both of whom have biographies listed above) and the services of another Giant employee, the Company also relies extensively on the key employees identified below.

Robert E. Corbin, Controller, has been a full-time employee of Spindletop since April 2002. From May 2001 until April 2002, Mr. Corbin was an independent accounting consultant and devoted substantially all of his time to Spindletop. He has been active in the oil and gas industry for over 33 years, during which time he has served as financial officer of a publicly-held company as well as several private oil and gas companies and partnerships. Mr. Corbin graduated from Texas Tech University in 1969 with a BBA degree in accounting and began his accounting career as an auditor with Arthur Andersen & Co. in 1970. Mr. Corbin is a Certified Public Accountant.

Mark Cook, Petroleum Geologist, joined the Company in November 2006. He has over 29 years experience in the oil and gas industry. Mr. Cook graduated from The University of Texas at San Antonio in 1983 with a Bachelor of Science in Geology. He has extensive experience in the Continental United States with a focus in the Fort Worth Basin and Bend Arch region. Mr. Cook has worked as Chief Geologist for Raw Energy Corp, in Weatherford, Texas; McClymond, LTD of Breckenridge, Texas, and as a personal Geologist for Mr. Tex Moncrief, in Fort Worth, Texas. Mr. Cook is a Licensed Professional Geoscientist in the state of Texas.

Mike Keen, Operations Manager, joined the Company in March, 2006. Mr. Keen has over 27 years experience in the oil and gas industry. He graduated magna cum laude from Rose-Hulman Institute of Technology in May 1975 with a Bachelor of Science degree in Mechanical Engineering. Mr. Keen started his career with Texaco, Inc. in Great Bend, Kansas working primarily in the mid-continent area. Mr. Keen then moved to North Texas and went to work for Mitchell Energy Corporation primarily focusing on the Fort Worth Basin. He also worked for Huffco in Indonesia, Aminoil in South Texas and most recently for Envirogas, primarily in the Appalachian and Illinois Basins, before switching to the “downstream” side of the industry to work for Indiana Gas Company the largest gas utility in Indiana at the time.

Dick A. Mastin, Petroleum Landman, has been a full-time employee of the Company since February, 2006. Mr. Mastin graduated cum laude from Stephen F. Austin State University in 1980 with a Bachelor of Science in Forestry and a minor in General Business. From September of 1980 until December of 1985, Mr. Mastin worked for Spindletop Oil & Gas Co. as a Petroleum Landman. He received his Masters of Science in Management and Administrative Sciences from the University of Texas at Dallas in 1990. In January of 1987, he took a position with the Dallas office of the Federal Bureau of Investigation. After a year with the Bureau, he accepted a position with the Internal Revenue Service as a Revenue Agent. Fifteen of his eighteen years with the Service were spent in the Large and Mid-Sized Business unit auditing tax returns of the largest business entities.

Glenn E. Sparks is the Land Director and also acts as Associate General Counsel to the Company. Mr. Sparks was previously employed as a Landman by the Company from 1982 through 1986, prior to attending law school. Mr. Sparks holds a B.B.A. with a concentration in Finance from the University of Texas at Arlington, and a J.D. from Texas Tech University School of Law. From 1990 to 2005, Mr. Sparks practiced law in a private practice focusing primarily on oil and gas law and real estate, as a partner in the law firm of Logan & Sparks, PLLC, and has acted as outside legal counsel for the Company in numerous oil and gas transactions during his years in private practice. Mr. Sparks left his private law practice and joined the Company again as an employee in his current position in 2005. Mr. Sparks is Board Certified in Oil & Gas Mineral Law by the Texas Board of Legal Specialization.

Family Relationships

Michelle Mazzini, Vice President, Secretary and General Counsel is the wife of Chris Mazzini, Chairman of the Board and President.

Involvement in Certain Legal Proceedings

None of the directors or executive officers of the Registrant, during the past five years, has been involved in any civil or criminal legal proceedings, bankruptcy filings or has been the subject of an order, judgment or decree of any Federal or State authority involving Federal or State securities laws.

Item 11. Executive Compensation

Cash Compensation

For the years ended December 31, 2007, 2006 and 2005, neither Mr. Mazzini nor Ms. Mazzini received any salary from the Company. None of the executive officers were paid cash compensation by the Company at an annual rate in excess of $100,000. Mr. Mazzini and Ms. Mazzini are both employed by Giant. Management fees the Company paid to Giant are used to reimburse a portion of Mr. Mazzini’s, Ms. Mazzini’s and other Giant employees’ salaries for time spent working on matters for the Company.

The Company has no stock option or incentive plan, does not grant any plan-based awards or awards of equity securities. The Company has no pension plan for its employees.

Compensation Pursuant to Plan

None

Other Compensation

Key employees and officers of the Company may sometimes be assigned overriding royalty interests and/or carried working interests in prospects acquired by or generated by the Company. These interests normally vary from less than one percent to three percent for each employee or officer. There is no set formula or policy for such program, and the frequency and amounts are largely controlled by the economics of each particular prospect. We believe that these types of compensation arrangements enable us to attract, retain and provide additional incentives to qualified and experienced personnel.

Effective March 22, 2007, the Company issued 5,000 shares of restricted common stock to a key employee pursuant to an employment package. The shares were valued at $2.12 per share, a 60% discount from the believed market value for free trading shares at the time of issue of $5.30 per share. The discount was determined based in part on the fact that the shares were restricted and could not be sold or traded for at least one year from date of issue. The amount was expensed as general and administrative expense. The shares of common stock were issued out of Treasury Stock and reduced the amount of the Company’s common stock held in Treasury from 81,668 to 76,668 shares. This transaction was recorded in accordance with FAS 123-R that became effective January 1, 2006.

Effective August 15, 2007, the Company issued 10,000 shares of restricted common stock to a key employee pursuant to an employment package. The shares were valued at $2.10 per share, a 60% discount from the believed market value for free trading shares at the time of issue of $5.25 per share. The discount was determined based in part on the fact that the shares were restricted and cannot be sold or traded for at least one year from date of issue. The amount was expensed as general and administrative expense. The shares of common stock were issued out of Treasury Stock and reduced the amount of the Company’s common stock held in Treasury from 76,668 to 66,668 shares. This transaction was recorded in accordance with FAS 123-R that became effective January 1, 2006.

During 2006, the Company issued 10,000 shares of restricted common stock out of Treasury Stock to a key employee, and during 2005, the Company issued 20,000 shares of restricted stock out of Treasury Stock to the same employee pursuant to an employment package. See Footnote No. 7, to the Financial Statements for further detail.

Compensation of Directors

Directors who are employees of either Giant or the Company are not currently compensated for their services on the board. In 2008, Mr. Allard was paid a director’s fee of $10,000 to compensate him for his position as the Board of Directors’ Financial Expert. Mr. Allard will also receive $2,500 for each board of directors meeting during the year. In each of 2007 and 2006, Mr. Paul E. Cash (a director who resigned on October 31, 2007) was paid a director’s fee of $10,000 to compensate him for his position as the Board of Directors’ Financial Expert.

Termination of Employment and Change of Control Arrangement

There are no plans or arrangements for payment to officers or directors upon resignation or a change in control of the Registrant.

Item 12. Security Ownership Of Certain Beneficial Owners And Management

Security Ownership of Certain Beneficial Owners and Managers

The table below sets forth the information indicated regarding ownership of the Registrant’s common stock, $.01 par value, the only outstanding voting securities, as of December 31, 2007 with respect to: (i) any person who is known to the Registrant to be the owner of more than five percent (5%) of the Registrant’s common stock; (ii) the common stock of the Registrant beneficially owned by each of the directors of the Registrant and, (iii) by all officers and directors as a group. Each person has sole investment and voting power with respect to the shares indicated, except as otherwise set forth in the footnotes to the table.

										Pct Based On
						Nature of				Outstanding
Name and Address		Number				Beneficial				Percent of
Of Beneficial Owner		of Shares				Ownership				Class
Chris Mazzini and Michelle Mazzini 12850 Spurling Rd., Suite 200 Dallas, Texas 75230			5,900,543				(1	)			77	%
All officers and directors as a group			5,900,543								77	%
West Coast Asset Management, Inc. Paul J. Orfalea Lance W. Helfert R. Atticus Lowe 2151 Alessandro Drive, #100 Ventura, CA 93001			624,612				(2	)			8	%

Changes in control

The Company is not aware of any arrangements or pledges with respect to its securities that may result in a change in control of the Company.

Item 13. Certain Relationships And Related Transactions

Transactions with management and others

Certain officers, directors and related parties, including entities controlled by Mr. Mazzini, the President and Chief Executive Officer, have engaged in business transactions with the Company which were not the result of arm’s length negotiations between independent parties. Our management believes that the terms of these transactions were as favorable to us as those that could have been obtained from unaffiliated parties under similar circumstances. All future transactions between us and our affiliates will be on terms no less favorable than could be obtained from unaffiliated third parties and will be approved by a majority of the disinterested members of our Board of Directors.

There is a management services agreement between Giant Energy Corp. (“Giant”) and the Company. Details of the agreement are shown below under Certain Business Relationships.

During 2005 the Company participated in the drilling of the Giant Energy Corp. Porter #2 well, a vertical Barnett Shale well in Parker County, Texas, which was completed in June 2005 with an initial production of 128 thousand cubic feet of gas per day (“MCFG/D”) and 1 barrel of oil per day (“BO/D”). The Company owns a 35% working interest and a 26.25% net revenue interest in the Porter #2 well. Giant owns a 19% working interest (15.2% net revenue interest) and Chris Mazzini owns a 3.9% overriding royalty interest in the well.

Chris G. Mazzini and Michelle H. Mazzini, through a limited partnership in which they are limited partners, own M-R Oilfield Services, LP (“MRO”), an oil field service company which provides roustabout, swabbing and completion services at rates which are at or below market to the Company. This oil field services company does work exclusively for the Company and its parent company Giant Energy Corp. The Company benefits by having immediate access to services in a tight market.

The Company and Giant have entered into a joint Barnett Shale horizontal drilling and development program dated August 22, 2006, and later amended on October 20, 2006 (the “Agreement”) with an unrelated third party company. (See “Joint Drilling Development of North Texas Barnett Shale Leasehold” on page 6).

Certain Business Relationships

The long-term debt, which is secured by the commercial office building, is also guaranteed individually by Chris G. Mazzini and Michelle H. Mazzini, related parties.

There is a management services agreement between Giant and the Company which has been in effect since 1999. This agreement provides monthly payments from the Company to Giant in the amount of $20,000 in exchange for several of Giant’s personnel providing management, administrative and other services to the Company and for the use of certain Giant assets. We believe the management services agreement described above was made on terms no less favorable than if we had entered into the transaction with an unrelated party.

The Company has entered into a management services agreement with MRO whereby MRO makes monthly payments in the amount of $1,000 per month to the Company in exchange for the Company providing administrative services to MRO. The Company has entered into a similar arrangement with Peveler Pipeline, LP (“Peveler”), whereby Peveler pays the Company a monthly charge of $200 in exchange for the Company providing administrative services to Peveler. Chris and Michelle Mazzini are the owners of Peveler Pipeline, LP, a limited partnership which owns a pipeline gathering system servicing wells owned by Giant, another related entity, described elsewhere in this report.

Item 14. Principal Accounting Fees And Services

The following table sets forth the aggregate fees for professional services rendered to Spindletop Oil & Gas Co. and Subsidiaries for the years 2007, 2006 and 2005 by accounting firm, Farmer, Fuqua, & Huff, P.C.

Type of Fees		2007				2006				2005
Audit Fees		$	33,000			$	14,000			$	14,000
Audit related fees			—				—				—
Tax fees			—				—				—
All other fees			—				—				—

Members of the Board of Directors (the “Board”) fulfill the responsibilities of an audit committee and have established policies and Procedures for the approval and pre-approval of audit services and permitted non-audit services. The Board has the responsibility to engage and terminate Farmer, Fuqua, & Huff, P.C. independent auditors, to pre-approve their performance of audit services and permitted non-audit services, to approve all audit and non-audit fees, and to set guidelines for permitted non-audit services and fees. All the fees for 2007, 2006 and 2005 were pre-approved by the Board or were within the pre-approved guidelines for permitted non-audit services and fees established by the Board, and there were no instances of waiver of approved requirements or guidelines during the same periods.

PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

The following documents are filed as a part of this report:

(1) FINANCIAL STATEMENTS: The following financial statements of the Registrant and Report of Independent Registered Public Accounting Firm therein are filed as part of this Report on Form 10-K:

		Page
Report of Farmer, Fuqua & Huff, P.C
Independent Registered Public Accounting Firm			51
Consolidated Balance Sheets			52
Consolidated Statement of Income			54
Consolidated Statement of Changes in Stockholders’ Equity			55
Consolidated Statements of Cash Flows			56
Notes to Consolidated Financial Statements			57

(2) FINANCIAL STATEMENT SCHEDULES: Other financial statement schedules have been omitted because the information required to be set forth therein is not applicable, is immaterial or is shown in the consolidated financial statements or notes thereto.

(3) EXHIBITS

The following documents are filed as exhibits (or are incorporated by reference as indicated) into this Report:

Exhibit
Designation				Description
	3.1			Articles of Incorporation of Spindletop Oil & Gas Co. (previously filed with our General Form for Registration of Securities on Form 10, filed with the Commission on August 14, 1990)
	3.2			Bylaws of Spindletop Oil & Gas Co. (previously filed with our General Form for Registration of Securities on Form 10, filed with the Commission on August 14, 1990)
	14			Code of Ethics for Senior Financial Officers (Incorporated by reference to Exhibit 14 to the registrant’s annual report Form 10-K for the fiscal year ended December 31, 2005).
	21	*		Subsidiaries of the Registrant
	31.1	*		Rule 13a-14(a) Certification of Chief Executive Officer
	31.2	*		Rule 13a-14(a) Certification of Chief Financial Officer
	32	*		Officers’ Section 1350 Certifications

(b)		The Index of Exhibits is included following the Financial Statement Schedules beginning at page 71 of this Report.
(c)		The Index to Consolidated Financial Statements and Supplemental Schedules is included following the signatures, beginning at page 42 of this Report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following on behalf of the Registrant and in the capacities and on the dates indicated.

Signatures
Principal Executive Officers:				Capacity				Date
/s/ Chris Mazzini   Chris Mazzini				President, Director (Chief Executive Officer)				April 14, 2008
/s/ Michelle Mazzini   Michelle Mazzini				Vice President, Secretary, Treasurer, Director				April 14, 2008
/s/ David E. Allard   David E. Allard				Director				April 14, 2008
/s/ Robert E. Corbin   Robert E. Corbin				Controller (Principal Financial and Accounting Officer)				April 14, 2008

EXHIBIT INDEX

Exhibit
Number				Description
	3.1			Articles of Incorporation of Spindletop Oil & Gas Co. (previously filed with our General Form for Registration of Securities on Form 10, filed with the Commission on August 14, 1990)
	3.2			Bylaws of Spindletop Oil & Gas Co. (previously filed with our General Form for Registration of Securities on Form 10, filed with the Commission on August 14, 1990)
	14			Code of Ethics for Senior Financial Officers (Incorporated by reference to Exhibit 14 to the registrant’s annual report Form 10-K for the fiscal year ended December 31, 2005).
	21	*		Subsidiaries of the Registrant
	31.1	*		Rule 13a-14(a) Certification of Chief Executive Officer
	31.2	*		Rule 13a-14(a) Certification of Chief Financial Officer
	32	*		Officers’ Section 1350 Certifications

SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules

		Page
Report of Independent Registered Public Accounting Firm			51
Consolidated Balance Sheets — December 31, 2007 and 2006			52
Consolidated Statements of Income for the years Ended December 31, 2007, 2006 and 2005			54
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2007, 2006, and 2005			55
Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005			56
Notes to Consolidated Financial Statements			57
Schedules for the years ended December 31, 2007, 2006 and 2005
II — Valuation and Qualifying Accounts			79
III — Real Estate and Accumulated Depreciation			80

All other schedules have been omitted because they are not applicable, not required, or the information has been supplied in the consolidated financial statements or notes thereto.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of Spindletop Oil & Gas Co.

We have audited the accompanying consolidated balance sheets of Spindletop Oil & Gas Co. (A Texas Corporation) and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2007. Spindletop Oil & Gas Co.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Spindletop Oil & Gas Co. and subsidiaries as of December 31, 2007 and 2006, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedules listed in the index of the consolidated financial statements are presented for purposes of complying with the Securities and Exchange Commission’s rules and are not part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly state, in all material respects, the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.

/s/ Farmer, Fuqua and Huff, P.C.

Plano, Texas
April 14, 2008

SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		As of December 31
		2007				2006
ASSETS
Current Assets
Cash and cash equivalents		$	6,325,000			$	5,759,000
Accounts receivable, trade			1,413,000				1,173,000
Prepaid expenses, related party			—				60,000
Prepaid income tax			—				426,000
Total current assets			7,738,000				7,418,000
Property and Equipment, at cost
Oil and gas properties (full cost method)			11,041,000				8,102,000
Rental equipment			399,000				399,000
Gas gathering systems			145,000				145,000
Other property and equipment			183,000				141,000
			11,768,000				8,787,000
Accumulated depreciation and amortization			(5,902,000	)			(5,257,000	)
Total property and equipment, net			5,866,000				3,530,000
Real Estate Property, at cost
Land			688,000				688,000
Commercial office building			1,542,000				1,508,000
Accumulated depreciation			(204,000	)			(120,000	)
Total real estate property, net			2,026,000				2,076,000
Other Assets			1,000				—
Total Assets		$	15,631,000			$	13,024,000

The accompanying notes are an integral part of these statements.

SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — (Continued)

		As of December 31
		2007				2006
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable, current portion		$	120,000			$	120,000
Accounts payable and accrued liabilities			2,272,000				2,237,000
Income tax payable			8,000				—
Tax savings benefit payable			97,000				97,000
Total current liabilities			2,497,000				2,454,000
Non-current Liabilities
Notes payable, long-term portion			1,200,000				1,320,000
Asset Retirement Obligation			564,000				251,000
Total non-current liabilities			1,764,000				1,571,000
Deferred income tax payable			1,855,000				1,324,000
Shareholders’ Equity
Common stock, $.01 par value; 100,000,000 Shares authorized; 7,677,471 shares issued and 7,610,803 shares outstanding at December 31, 2007; 7,677,471 shares issued and 7,595,803 shares outstanding at December 31, 2006			77,000				77,000
Additional paid-in capital			874,000				850,000
Treasury Stock at cost			(32,000	)			(40,000	)
Retained earnings			8,596,000				6,788,000
Total shareholders’ equity			9,515,000				7,675,000
Total Liabilities and Shareholders’ Equity		$	15,631,000			$	13,024,000

The accompanying notes are an integral part of these statements.

SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

		Years Ended December 31,
		2007				2006				2005
Revenues
Oil and gas revenue		$	7,437,000			$	5,076,000			$	5,541,000
Revenue from lease operations			212,000				154,000				120,000
Gas gathering, compression and Equipment rental			179,000				140,000				167,000
Real estate rental income			512,000				430,000				302,000
Interest income			299,000				275,000				132,000
Other			68,000				99,000				133,000
Total revenue			8,707,000				6,174,000				6,395,000
Expenses
Lease operations			2,459,000				2,106,000				1,747,000
Pipeline and rental operations			49,000				50,000				29,000
Real estate operations			365,000				330,000				484,000
Depreciation and amortization			728,000				528,000				795,000
Accretion of asset retirement obligation			24,000				34,000				—
General and administrative			2,221,000				1,534,000				1,125,000
Interest expense			86,000				142,000				105,000
Total expenses			5,932,000				4,724,000				4,285,000
Income before income tax			2,775,000				1,450,000				2,110,000
Current tax provision			436,000				—				360,000
Deferred tax provision			531,000				530,000				333,000
			967,000				530,000				693,000
Net income		$	1,808,000			$	920,000			$	1,417,000
Earnings per Share of Common Stock
Basic		$	0.24			$	0.12			$	0.19
Diluted		$	0.24			$	0.12			$	0.19
Weighted Average Shares Outstanding			7,604,269				7,589,995				7,573,365
Diluted Shares Outstanding			7,604,269				7,589,995				7,573,365

The accompanying notes are an integral part of these statements.

SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2007, 2006 and 2005

										Additional
		Common Stock								Paid-In				Treasury Stock								Retained
		Shares				Amount				Capital				Shares				Amount				Earnings
Balance at December 31, 2004			7,677,471				77,000				806,000				111,668				(45,000	)			4,451,000
Issuance of 20,000 shares of Common Stock out of Treasury Stock as part of an employee compensation package			—				—				25,000				(20,000	)			3,000				—
Net Income			—				—				—				—				—				1,417,000
Balance at December 31, 2005			7,677,471			$	77,000			$	831,000				91,668			$	(42,000	)		$	5,868,000
Issuance of 10,000 shares of Common Stock out of Treasury Stock as part of an employee compensation package			—				—				19,000				(10,000	)			2,000				—
Net Income			—				—				—				—				—				920,000
Balance at December 31, 2006			7,677,471			$	77,000			$	850,000				81,668			$	(40,000	)		$	6,788,000
Issuance of 5,000 shares of Common Stock out of Treasury Stock as part of an employee compensation package			—				—				9,000				(5,000	)			2,000				—
Issuance of 10,000 shares of Common Stock out of Treasury Stock as part of an employee compensation package			—				—				15,000				(10,000	)			6,000				—
Net Income			—				—				—				—				—				1,808,000
Balance at December 31, 2007			7,677,471			$	77,000			$	874,000				66,668			$	(32,000	)		$	8,596,000

The accompanying notes are an integral part of these statements.

SPINDLETOP OIL & GAS CO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Years Ended December 31,
		2007				2006				2005
Cash Flows from Operating Activities
Net Income		$	1,808,000			$	920,000			$	1,417,000
Reconciliation of net income to net cash provided by Operating Activities
Depreciation and amortization			728,000				528,000				795,000
Non-cash employee compensation			32,000				21,000				—
Changes in prepaid expenses to related party			60,000				(60,000	)			—
Changes in accounts receivable			(240,000	)			55,000				(611,000	)
Changes in prepaid income tax			427,000				(426,000	)			190,000
Changes in accounts payable			35,000				293,000				(125,000	)
Changes in current taxes payable			8,000				(20,000	)			20,000
Changes in deferred taxes payable			531,000				530,000				333,000
Changes in asset retirement obligation			313,000				—				—
Changes in other assets			(1,000	)			1,000				—
Net cash provided by operating activities			3,701,000				1,842,000				2,019,000
Cash flows from Investing Activities
Capitalized acquisition, exploration and development costs			(2,940,000	)			(1,271,000	)			(619,000	)
Purchase of property and equipment			(42,000	)			10,000				(55,000	)
Capitalized tenant improvements			(33,000	)			(210,000	)			—
Proceeds from sale of properties			—				—				23,000
Net cash used for investing activities activities			(3,015,000	)			(1,471,000	)			(651,000	)
Cash Flows from Financing Activities
Repayment of note payable to a bank			(120,000	)			(120,000	)			(240,000	)
Sale of common stock			—				—				28,000
Net cash used for financing activities			(120,000	)			(120,000	)			(212,000	)
Increase in cash			566,000				251,000				1,156,000
Cash at beginning of period			5,759,000				5,508,000				4,352,000
Cash at end of period		$	6,325,000			$	5,759,000			$	5,508,000

The accompanying notes are an integral part of these statements.

SPINDLETOP OIL & GAS CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND ORGANIZATION

Merger and Basis of Presentation

On July 13, 1990, Prairie States Energy Co., a Texas corporation, (the Company) merged with Spindletop Oil & Gas Co., a Utah corporation (the Acquired Company). The name of Prairie States Energy Co. was changed to Spindletop Oil & Gas Co., a Texas corporation at the time of the merger.

Organization and Nature of Operations

The Company was organized as a Texas corporation in September 1985, in connection with the Plan of Reorganization (“the Plan”), effective September 9, 1985, of Prairie States Exploration, Inc., (“Exploration”), a Colorado corporation, which had previously filed for Chapter 11 bankruptcy. In connection with the Plan, Exploration was merged into the Company, with the Company being the surviving corporation. After giving effect to a stock split, up to a total of 166,667 of the Company’s common shares may be issued to Exploration’s former shareholders. As of December 31, 2007, 2006, and 2005, 122,436 shares have been issued to former shareholders in connection with the Plan.

Spindletop Oil & Gas Co. is engaged in the exploration, development and production of oil and natural gas; and through one of its subsidiaries, the gathering and marketing of natural gas.

On December 27, 2004, the Company purchased a commercial office building and related land. The building contains approximately 46,286 of rentable square feet, of which the Company occupies approximately 10,317 rentable square feet as its corporate office headquarters. The Company leases the remaining space in the building to non-related third party commercial tenants at prevailing market rates.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows:

Consolidation

The consolidated financial statements include the accounts of Spindletop Oil & Gas Co. and its wholly owned subsidiaries, Prairie Pipeline Co. and Spindletop Drilling Company. All significant inter-company transactions and accounts have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less to be cash equivalents.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible portion of accounts receivable. This estimate is based on historical collection experience and a review of the current status of accounts receivable.

Oil and Gas Properties

The Company follows the full cost method of accounting for its oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves are capitalized and accounted for in cost centers, on a country-by-country basis. If unamortized costs within a cost center exceed the cost center ceiling (as defined), the excess is charged to expense during the year in which the excess occurs.

Depreciation and amortization for each cost center are computed on a composite unit-of-production method, based on estimated proven reserves attributable to the respective cost center. All costs associated with oil and gas properties are currently included in the base for computation and amortization. Such costs include all acquisition, exploration, development costs and estimated future expenditures for proved undeveloped properties as well as estimated dismantlement and abandonment costs as calculated under the asset retirement obligation category, net of salvage value. All of the Company’s oil and gas properties are located within the continental United States.

Gains and losses on sales of oil and gas properties are treated as adjustments of capitalized costs. Gains or losses on sales of property and equipment, other than oil and gas properties, are recognized as part of operations. Expenditures for renewals and improvements are capitalized, while expenditures for maintenance and repairs are charged to operations as incurred.

Property and Equipment

The Company, as operator, leases equipment to owners of oil and gas wells, on a month-to-month basis.

The Company, as operator, transports gas through its gas gathering systems, in exchange for a fee.

Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives (5 to 10 years for rental equipment and gas gathering systems, 4 to 5 years for other property and equipment). The straight-line method of depreciation is used for financial reporting purposes, while accelerated methods are used for tax purposes.

Real Estate Property

The Company owns land along with a two-story commercial office building which is situated thereon. The Company occupies a portion of the building as its primary corporate headquarters, and leases the remaining space in the building to non-related third party commercial tenants at prevailing market rates. The Company depreciates the commercial office using the straight-line method of depreciation for financial statement and income tax purposes.

Investments in Real Estate

All investments in real estate holdings are stated at cost or adjusted carrying value. Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), requires that a property be considered impaired if the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the property. If impairment exists, an impairment loss is recognized by a charge against earnings equal to the amount by which the carrying amount of the property exceeds fair market value less cost to sell the property. If impairment of a property is recognized, the carrying amount of the property is reduced by the amount of the impairment, and a new cost for the property is established. Depreciation is provided over the properties estimated remaining useful life. There was no charge to earnings during 2007 due to impairment of real estate holdings.

Accounting for Asset Retirement Obligations

The Company adopted Statement of Financial Accounting Standards No. 143 (“SFAS 143”) “Accounting for Asset Retirement Obligations” on December 31, 2005. The adoption of SFAS 143 on December 31, 2005 resulted in a cumulative effect adjustment to record a $239,000 increase in the carrying value of oil and gas properties, and an asset retirement obligation liability of the same amount. This statement requires the recording of a liability in the period in which an asset retirement obligation (“ARO”) is incurred, in an amount equal to the discounted estimated fair value of the obligation that is capitalized. Thereafter, each quarter, this liability is accreted up to the final retirement cost. The determination of the ARO is based on an estimate of the future cost to plug and abandon our oil and gas wells. The actual costs could be higher or lower than current estimates.

The following table reflects the changes of the asset retirement obligations during the period ending December 31;

		2007				2006
Carrying amount of asset retirement obligation		$	251,000			$	239,000
Liabilities added			374,000				27,000
Liabilities divested or settled			(85,000	)			(49,000	)
Current period accretion expenses			24,000				34,000
Carrying amount as of December 31,		$	564,000			$	251,000

Revenue Recognition

The Company follows the “sales” (takes or cash) method of accounting for oil and gas revenues. Under this method, we recognize revenues on oil and gas production as it is taken and delivered to the purchasers. The volumes sold may be more or less than the volumes we are entitled to take based on our ownership in the property. These differences result in a condition known as a production imbalance. Our crude oil and natural gas imbalances are insignificant.

Income Taxes

In June, 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No..48, “Accounting for Uncertainty in Income Taxes , an Interpretation of SFAS No.109” (“FIN 48”). The interpretation creates a single model to address accounting for uncertainty in tax positions. Specifically, the pronouncement prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition of certain tax positions.

The Company adopted the provisions of FIN 48 effective January 1, 2007. The adoption of this accounting principle did not have an effect on the Company’s consolidated financial statements at, and for the three years ended December 31, 2007.

The Company accounts for income taxes pursuant to Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” (SFAS 109), which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse. The temporary differences primarily relate to depreciation, depletion and intangible drilling costs.

Use of Estimates

The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Share-Based Payments

Effective January 1, 2006, the Company adopted the Financial Accounting Standards Board’s revised Statement of Financial Accounting Standards No. 123 (FAS 123R), “Share-Based Payment”. FAS 123R requires compensation costs related to share-based payments to be recognized in the income statement over the requisite service period. The amount of the compensation cost is to be measured based on the grant-date fair value of the instrument issued. FAS 123R is effective for awards granted or modified after the date of adoption and for awards granted prior to that date that have not vested. FAS 123R does not materially change the Company’s existing accounting practices or the amount of share-based compensation recognized in earnings.

Newly issued accounting standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” (“SFAS No. 157”). SFAS No. 157 defines fair value and establishes a framework for measuring fair value, which includes a hierarchy based on the quality of inputs used to measure fair value. SFAS No. 157 also expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements. SFAS No. 157 requires the categorization of financial assets and liabilities, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. SFAS No. 157 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The levels of the SFAS No. 157 fair value hierarchy are described as follows:

• Level 1—Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

• Level 2—Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

• Level 3—Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

SFAS No. 157 became effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB deferred the effective date of SFAS No. 157 for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. The FASB also removed certain leasing transactions from the scope of SFAS No. 157. On January 1, 2008, the Company adopted SFAS No. 157. The Company currently does not have any non-financial assets or non-financial liabilities that are required to be measured under SFAS No. 157.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115.” (“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses shall be reported on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 became effective for fiscal years beginning after November 15, 2007. On January 1,2008, the Company adopted SFAS No. 159 and has currently not elected to measure any financial instruments or other items (not currently required to be measured at fair value) at fair value.

In December 2007, the FASB issued SPAS No. 141 (revised 2007) (“SFAS l4lR”), “Business Combinations.” SFAS l4lR establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combinations. SFAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008. Accordingly, any business combinations the Company engages in will be recorded and disclosed following existing accounting principles until January 1, 2009. The Company expects SFAS 141R will affect the Company’s consolidated financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, term and size of the acquisitions, if any, the Company consummates after the effective date.

In December 2007, the FASB issued SPAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements.” effective for financial statements issued for fiscal years beginning after December 15, 2008. SFAS No. 160 states that accounting and reporting for minority interests will be recharacterized as noncontrolling interests and classified as a component of equity. SFAS No. 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, and will impact the recording of minority interest. The Company is currently evaluating the effects the adoption of SFAS No. 160 will have on its financial position and results of operations.

3. ACCOUNTS RECEIVABLE

		December 31,
		2007				2006
Trade		$	370,000			$	530,000
Accrued receivable			1,057,000				657,000
			1,427,000				1,187,000
Less: Allowance for losses			(14,000	)			(14,000	)
		$	1,413,000			$	1,173,000

Accrued receivables are receivables from purchasers of oil and gas. These revenues are booked from check stub detail after receipt of the check for sales of oil and gas products. These payments are for sales of oil and gas produced in the reporting period, but for which payment has not yet been received until after the closing date of the reporting period. Therefore these sales are accrued as receivables as of the balance sheet date. Revenues for oil and gas production that has been sold but for which payment has not yet been received is accrued in the period sold.