The accompanying condensed consolidated financial statements are unaudited but, in the opinion of the Company's management, include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of its financial position at September 30, 2009,March 31, 2010, its results of operations for the three months ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 and its cash flows for the ninethree months ended September 30, 2009March 31, 2010 and 2008.2009. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations.  The impact on the accompanying financial statements of events occurring after September 30, 2009March 31, 2010 has been evaluated through November 13, 2009.the date of issuance of th ese financial statements.

Although the Company believes the disclosures made are adequate to make the information presented not misleading, it is suggested that these consolidated financial statements be read in conjunction with the financial statements, and the notes thereto, included in the Company's latest annual report on Form 10-K. The interim statement of operations is not necessarily indicative of results to be expected for a full year.

The Company is engaged in the business of crude oil, natural gas and petroleum products marketing, as well as tank truck transportation of liquid chemicals and oil and gas exploration and production.  Its primary area of operation is within a 1,000 mile radius of Houston, Texas.  The accompanying consolidated financial statements include the accounts of Adams Resources & Energy, Inc., a Delaware corporation, and its wholly owned subsidiaries (the "Company") after elimination of all significant intercompany accounts and transactions.

Cash and cash equivalents include any Treasury bill, commercial paper, money market funds or federal funds with maturity of 90 days or less.  Depending on cash availability and market conditions, investments in municipal bonds may also be made from time to time.  The Company investsmay invest in tax-free municipal securities in order to enhance the after-tax rate of return from short-term investments of cash.  The Company had no investments in municipal bonds at September 30, 2009March 31, 2010 or December 31, 2008.2009.  Cash and cash equivalents are maintained with major financial institutions and such deposits may exceed the amount of federally backed insurance provided.  While the Company regularly monitors the financial stability of such institutions, cash and cash equivalents ultimately remain at risk subject to the financially viability of such institutions.

Expenditures for major renewals and betterments are capitalized, and expenditures for maintenance and repairs are expensed as incurred.  Interest costs incurred in connection with major capital expenditures are capitalized and amortized over the lives of the related assets. When properties are retired or sold, the related cost and accumulated depreciation, depletion and amortization ("DD&A") is removed from the accounts and any gain or loss is reflected in earnings.

Oil and gas exploration and development expenditures are accounted for in accordance with the successful efforts method of accounting.  Direct costs of acquiring developed or undeveloped leasehold acreage, including lease bonus, brokerage and other fees, are capitalized. Exploratory drilling costs are initially capitalized until the properties are evaluated and determined to be either productive or nonproductive.  Such evaluations are made on a quarterly basis.  If an exploratory well is determined to be nonproductive, the costs of drilling the well are charged to expense. Costs incurred to drill and complete development wells, including dry holes, are capitalized.  As of September 30, 2009,March 31, 2010, the Company had no unevaluated or suspended exploratory drilling costs except for a single well that was spud in December 2008 and reached total depth in February 2009.  The operator of the well has been content to allow the well to remain idle pending installation of a gas lift system in order to establish production.  The Company’s total capitalized cost for this well is $328,000.  Management believes the cost of the well will not be fully recovered through future production.  Therefore a $164,000 impairment valuation was applied to these property costs.

ProducingDepreciation, depletion and amortization of the cost of proved oil and gas leases,properties is calculated using the unit-of-production method.  The reserve base used to calculate depreciation, depletion and amortization for leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves.  For lease and well equipment, development costs and intangiblesuccessful exploration drilling costs, are depleted or amortized over the estimatedreserve base includes only proved reserves using the units-of-production method.  Otherdeveloped reserves.  All other property and equipment is depreciated using the straight-line method over the estimated average useful lives of three to fifteen years for marketing, three to fifteen years for transportation and ten to twenty years for all others.years.

The Company periodically reviews its long-lived assets for impairment whenever there is evidence that the carrying value of such assets may not be recoverable.  Any impairment recognized is permanent and may not be restored.  Producing oil and gas properties are reviewed quarterly for impairment triggers on a field-by-field basis. For properties requiring impairment, the fair value is estimated based on an internal discounted cash-flow model.model that uses market based inputs.  Cash flows are developed based on estimated future production and prices and then discounted using an internal rate of return consistent with that used by the Company in evaluating cash flows for other assets of a similar nature.  For the nine-monththree-month periods ended September 30,March 31, 2010 and 2009 and 2008 there were $517,000$5,700 and zero impairment provisionsp rovisions on producing oil and gas properties, respectively.  Such provisions also totaled $295,000 and zero for the three-month periods ended September 30, 2009 and 2008, respectively.

Commodity purchase and sale contracts utilized by the Company’s marketing businesses qualify as derivative instruments.  Further, allAll natural gas as well asand certain specifically identified crude oil purchase and sale contracts are designated as trading activities.  From the time of contract origination, such trading activity contracts are marked-to-market and recorded on a net revenue basis in the accompanying financial statements.

Transportation customers are invoiced, and the related revenue is recognized, as the service is provided.  Oil and gas revenue from the Company’s interests in producing wells is recognized as title and physical possession of the oil and gas passes to the purchaser.

In August 2009, theThe Company entered intomaintains a Credit and Security Agreement with Wells Fargo Bank to provide a $40 million letter of credit facility.  Pursuant to the Wells Fargo agreement, the Company discontinued its previous working capital lines of credit with Bank of America.  The Wells Fargo facility provides for the issuance of up to $40 million of letters of credit to support the Company’s crude oil and natural gas marketing businesses based on the eligible accounts receivable within those operations.  Letters of credit outstanding totaled $19.9$33.9 million as of September 30, 2009.March 31, 2010.  The letter of credit facility places certain restrictions on the Company’s Gulfmark Energy, Inc. and Adams Resources Marketing, Ltd. subsidiaries.  Such restrictions included the maintenance of a combined 1.1 to 1.0 current ratio and the maintenance of positive net earnings as defined among other restrictions.  Management believes the Company is currently in compliance with all such covenants.

Interest paid totaled $23,000$31,000 and $136,000$6,000 during the nine-monththree-month periods ended September 30,March 31, 2010 and 2009, and 2008, respectively.  Income taxes paid during these same periods totaled $549,000$56,000 and $2,319,000,$24,000, respectively.  The Company also received a $2,000,000 income tax refund during the first nine months of 2009.  Non-cash investing activities for property and equipment in accounts payable were $439,000$1,047,000 and $267,000$530,000 as of September 30,March 31, 2010 and 2009, respectively and 2008, respectively$440,000 and $561,000 as of December 31, 2008.2009 and 2008, respectively.  There were no significant non-cash financing activities in any of the periods reported.

Earnings per share are based on the weighted average number of shares of common stock and potentially dilutive common stock shares outstanding during the period. The weighted average number of shares outstanding was 4,217,596 for 20092010 and 2008.2009.  There were no potentially dilutive securities during those periods.

During the periods presented herein, the Company had no stock-based employee compensation plans, nor any other share-based payment arrangements.

The Company’s marketing segment is involved in the purchase and sale of crude oil and natural gas.  The Company seeks to make a profit by procuring such commodities as they are produced and then delivering such products to the end users or intermediate use marketplace.  As is typical for the industry, such transactions are made pursuant to the terms of forward month commodity purchase and/or sale contracts.  These contracts meet the definition of a derivative instrument and therefore, the Company accounts for such contracts at fair value, unless the normal purchase and sale exception is elected.  The Company’s objective of entering into commodity contracts is not to manage commodity price risk nor is the objective to trade or speculate on commodity prices.  Rather, such underlyingund erlying contracts are standard for the industry and are the governing document for the Company’s crude oil and natural gas wholesale distribution businesses.  The accounting methodology utilized by the Company for its commodity contracts is further discussed below under the caption “Fair Value Measurements”.

The Company only enters into commodity contracts with credit worthy counterparties or obtains collateral support for such activities.  No credit loss provision applies to the Company’s forward commodity contract valuations.  As of September 30,March 31, 2010 and December 31, 2009, the Company iswas not holding nor has it posted any collateral to support its forward month fair value derivative activity. The Company is not subject to any credit-risk related trigger events.

When determining fair value measurements, the Company makes credit valuation adjustments to reflect both its own nonperformance risk and its counterparty’s nonperformance risk.  When adjusting the fair value of derivative contracts for the effect of nonperformance risk, the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, and guarantees are considered.  Credit valuation adjustments utilize Level 3 inputs, such as credit scores to evaluate the likelihood of default by the Company or its counterparties.  As of September 30,March 31, 2010 and December 31, 2009, credit valuation adjustments were not significant to the overall valuation of the Company’s fair value contracts.  As a result, applicable fair value assets and liabilities in their entirety area re classified in Level 2 of the fair value hierarchy.

Intersegment sales are insignificant.  Other identifiable assets are primarily corporate cash, and assets not identified with any specific segment of the Company’s business.  All sales by the Company occurred in the United States.

Mr. K. S. Adams, Jr., Chairman and Chief Executive Officer, and certain of his family partnerships and affiliates have participated as working interest owners with the Company’s subsidiary, Adams Resources Exploration Corporation.  Mr. Adams and such affiliates participate on terms similar to those afforded other non-affiliated working interest owners. In recent years, such related party transactions generally result after the Company has first identified oil and gas prospects of interest.  Typically the available dollar commitment to participate in such transactions is greater than the amount management is comfortable putting at risk.  In such event, the Company first determines the percentage of the transaction it wants to obtain, which allows a related party to participate in the investment to theth e extent there is excess available.  In those instances where there was no excess availability there has been no related party participation.  Similarly, related parties are not required to participate, nor is the Company obligated to offer any such participation to a related or other party.  When such related party transactions occur, they are individually reviewed and approved by the Audit Committee comprised of the independent directors on the Company’s Board of Directors.  For the first ninethree months of 20092010 and 2008,2009, the Company’s investment commitments totaled approximately $5.3$2.3 million and $5.5$3.3 million, respectively, in those oil and gas projects where a related party was also participating in such investments.  As of September 30, 2009March 31, 2010 and December 31, 2008,2009, the Company owed a combined net total of $83,000$85,000 and $89,000,$75,000, respectively, to these related parties.  In connection with the operation of certain oil and gas properties, the CompanyComp any also charges such related parties for administrative overhead primarily as prescribed by the Council of Petroleum Accountants Society (“COPAS”) Bulletin 5.  Such overhead recoveries totaled $111,000$39,000 and $99,000$34,000 in the nine-monththree-month periods ended September 30,March 31, 2010 and 2009, and 2008, respectively.