ESOA

Business Context and Reporting Period

Company: Energy Services Acquisition Corp. (a Delaware corporation and "blank check" company).

Reporting Period: Quarterly period ended March 31, 2008 (Six months ended March 31, 2008).

Business Model: The Company was formed to effect a merger, capital stock exchange, or asset acquisition with an operating business. It has no active operations other than identifying and analyzing potential acquisition targets. As of the filing date, the Company is actively pursuing a merger with C.J. Hughes Construction Company, Inc.

Key Financial Metrics

Note: The Company generates no operating revenue. Income is derived solely from interest on trust fund investments.

Material Changes vs. Prior Period

• Net Income Decline: Net income for the three months ended March 31, 2008, was $184,780, a decrease from $368,480 in the same period of 2007. This was primarily due to lower interest income from the trust fund ($463,425 vs. $641,784) and higher operating expenses ($140,645 vs. $86,204).
• Asset Growth: Total assets increased from $51,526,659 (Sept 30, 2007) to $51,989,254 (Mar 31, 2008), driven by interest accumulation in the trust account.
• Liability Reduction: Total liabilities decreased slightly from $1,349,564 to $1,272,593 due to the paydown of accrued expenses.
• Redemption Value Increase: The value of common stock subject to possible redemption increased to $10,245,048, reflecting the growth in the per-share value of the trust fund.

Outlook, Risks, and Unusual Items

Acquisition Activity

• Terminated Deal: On February 12, 2008, the Company's agreement to acquire GasSearch Drilling Services (GDS) was terminated after a third party (COG Finance Corporation) exercised an option to acquire GDS.
• Active Merger: On February 21, 2008, the Company entered into a merger agreement to acquire C.J. Hughes Construction Company, Inc. for a total consideration of $34.0 million (split between $17.0 million cash and $17.0 million stock). The transaction requires shareholder approval.

Liquidity and Capital Resources

• The Company holds approximately $51.25 million in a trust account, invested in U.S. Government Securities and money market funds.
• Working capital is funded by interest income from the trust, limited to $1.2 million net of taxes.
• Management anticipates sufficient funds to operate until the liquidation deadline (24 months from IPO) without raising additional capital, unless a business combination requires it.

Risks and Contingencies

• Liquidation Risk: The Company must consummate a business combination within 24 months of its IPO (by September 2008) or it will be liquidated.
• Third-Party Claims: Funds in the trust account may not be protected from third-party claims if vendors or target businesses do not execute waiver agreements.
• Related Party Transaction: The proposed acquisition of C.J. Hughes involves related parties (Company officers and directors are shareholders of C.J. Hughes).

Investor Verification Checklist

• Merger Approval: Verify the status of the shareholder vote required to approve the C.J. Hughes Construction merger.
• Trust Fund Status: Confirm the current balance of the trust account and the per-share redemption value as the liquidation deadline approaches.
• Related Party Conflicts: Review the specific terms of the C.J. Hughes merger to ensure the valuation ($34M) is fair given the related-party nature of the transaction.
• Working Capital Sufficiency: Assess if the remaining interest income in the trust is sufficient to cover operating expenses and taxes until the merger closes or liquidation occurs.
• Warrant Exercise: Note that 17.2 million warrants are outstanding (public and private) with an exercise price of $5.00, which could dilute shareholders if exercised post-merger.