UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2002
                                       or
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from ____ to ____.
                         Commission file number 1-12108.

                              GulfWest Energy Inc.
             (Exact name of registrant as specified in its charter)

Texas                                                        87-0444770
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                              Identification No.)

480 N. Sam Houston Parkway East, Suite 300
              Houston, Texas                                     77060
(Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code: (281) 820-1919.

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

                               Title of Each Class
                               -------------------

               Class A Common Stock, par value of $.001 per share

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

                               Title of Each Class
                               -------------------

               Class A Common Stock, par value of $.001 per share

     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
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
                                  Yes X No ____

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or informational  statements
incorporated  by reference  in Part III of this Form 10-K/A or any  amendment to
this Form 10-K/A. [X]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12-b2 of the Act).
                                  Yes _ No X

     The  aggregate  market  value of  voting  stock of the  Registrant  held by
non-affiliates, computed by reference to the closing price of such stock on June
28, 2002, was approximately  $3,543,451.  For purposes of this computation,  all
executive  officers,  directors and ten percent (10%)  beneficial  owners of the
Registrant are deemed to be affiliates.  Such determination should not be deemed
an admission  that such  executive  officers,  directors  and ten percent  (10%)
beneficial owners are affiliates.

     Indicate  the  number of  shares  outstanding  of each of the  Registrant's
classes of common stock: Class A Common Stock $.001 par value: 18,492,541 shares
on April 9, 2003.

                      DOCUMENTS INCORPORATED BY REFERENCE:

The  registrant's  definitive  Proxy  Statement  pertaining  to the 2003  Annual
Meeting of  Shareholders  (the "Proxy  Statement")  and filed or to be filed not
later than 120 days after the end of the fiscal year pursuant to Regulation  14A
is incorporated herein by reference into Part III.




                                     PART I

ITEM 1. Business.

Our Business.

     We are primarily engaged in the acquisition,  development, exploitation and
production of crude oil and natural gas. Our focus is on  increasing  production
from our existing  properties  through  further  exploitation,  development  and
exploration,  and on acquiring additional interests in crude oil and natural gas
properties.

     Since  we  made  our  first  significant   acquisition  in  1993,  we  have
substantially  increased our ownership in producing  properties and the value of
our crude oil and natural gas reserves through a combination of acquisitions and
the further  exploitation  and  development of our  properties.  At December 31,
2002, our part of the estimated  proved  reserves these  properties  contain was
approximately  5.5 million  barrels  (MBbl) of oil and 34.1  billion  cubic feet
(Bcf) of  natural  gas with a Present  Value  discounted  10%  (PV-10)  of $98.9
million.  At  present,  all of our  properties  are  located  on land in  Texas,
Colorado,  Louisiana  and  Oklahoma,  except  for the  property  on Grand  Lake,
Louisiana.  In the future, we plan to expand by acquiring additional  properties
in those areas, and in similar  properties  located in other areas of the United
States.

     Our gross revenues are derived from the following sources:

     1. Oil and gas  sales  that  are  proceeds  from the sale of crude  oil and
        natural gas production to midstream purchasers;

     2. Operating  overhead  and other  income that  consists of earnings  from
        operating  crude oil and  natural  gas  properties  for other  working
        interest owners, and marketing and transporting  natural gas. This also
        includes earnings from other miscellaneous activities.

     3. Well  servicing  revenues  that are earnings  from the operation of well
        servicing equipment under contract to other operators.

     Our operations are  considered to fall within a single  industry  segment,
which is the acquisition, development, production and servicing of crude oil and
natural gas  properties.  See Item 7. " Management's  Discussion and Analysis of
Financial  Condition  and Results of  Operations."  Certain  industry  terms are
italicized and defined in the Glossary beginning on page 28.

     Our common stock is traded over-the-counter (OTC) under the symbol "GULF".

Our Company.

     We were formed as a corporation under the laws of the State of Utah in 1987
as  Gallup  Acquisitions,  Inc.,  and  subsequently  changed  our  name to First
Preference  Fund,  Inc.  and then to  GulfWest  Energy,  Inc.  We became a Texas
corporation by a merger effected in July 1992, in which our name became GulfWest
Oil Company. On May 21, 2001, we changed our name to GulfWest Energy Inc.

     Our  principal  office is located at 480 North Sam  Houston  Parkway  East,
Suite 300, Houston, Texas 77060 and our telephone number is (281) 820-1919.

                                       2


     GulfWest Energy Inc. has nine wholly owned subsidiaries:

          1.   GulfWest Oil and Gas Company, a Texas corporation,  was organized
               February  18,  1999 and is the owner of record  of  interests  in
               certain crude oil and natural gas properties  located in Colorado
               and Texas.

          2.   SETEX Oil and Gas Company,  a Texas  corporation,  was  organized
               August 11, 1998 and is the  operator of crude oil and natural gas
               properties in which we own the majority working interest.

          3.   LTW Pipeline Co., a Texas  corporation,  was organized  April 19,
               1999, is the owner and operator of certain  natural gas gathering
               systems and  pipelines  that we own,  and markets the natural gas
               produced from our properties.

          4.   RigWest Well Service,  Inc., a Texas  corporation,  was organized
               September 5, 1996 and operates  well  servicing  equipment for us
               and under contract for other operators.

          5.   Southeast Texas Oil and Gas Company, L.L.C., a Texas company, was
               acquired by us on September 1, 1998 and is the owner of record of
               interests in certain crude oil and natural gas properties located
               in three Texas counties.

          6.   DutchWest Oil Company,  a Texas  corporation,  was organized July
               28, 1997 and is the owner of record of interests in certain crude
               oil and natural gas  properties  located  along the Gulf Coast of
               Texas.

          7.   GulfWest Development Company, a Texas corporation,  was organized
               November  9,  2000 and is the owner of  record  of  interests  in
               certain  crude oil and natural gas  properties  located in Texas,
               Oklahoma and Mississippi.

          8.   GulfWest  Texas  Company,  a  Texas  corporation,  was  organized
               September  23,  1996 and was the owner of  interests  in  certain
               crude oil and natural gas properties located in the Vaughn Field,
               Crockett County, Texas. Effective April 1, 2000, these properties
               were  assigned  to  GulfWest  Oil and Gas  Company to  facilitate
               financing.

          9.   GulfWest  Oil  and  Gas  Company  (Louisiana)  LLC,  a  Louisiana
               company,  was formed  July 31, 2001 and is the owner of record of
               interests  in certain  crude oil and  natural gas  properties  in
               Louisiana. Our Business Strategy.

Our Business Strategy

          We have pursued a business  strategy of  acquiring  interests in crude
     oil and natural gas producing  properties where production and reserves can
     be  increased  through   engineering  and  development   activities.   Such
     activities  include   workovers,   development   drilling,   recompletions,
     replacement  or addition of equipment  and  waterflood  or other  secondary
     recovery  techniques.  We have  expanded  our  business  plan to include an
     increased but controlled  emphasis on  development  drilling for additional
     crude oil and natural gas reserves.  Key elements of our business  strategy
     include:

          Continued  Acquisition  Program.  We acquired properties in four crude
     oil and  natural  gas fields in Texas and  Louisiana  in the year 2001.  We
     intend  to  continue  to pursue  interests  in crude  oil and  natural  gas
     properties  (i) held by small,  under-capitalized  operators and (ii) being
     divested by larger independent and major oil and gas companies.

                                       3


          Development  and  Exploitation  of Existing  Properties.  We intend to
     increase the  development  of properties in which we currently own interest
     by expanding our engineering and geological field studies. Our intent is to
     increase  crude oil and natural gas production and reserves of our existing
     assets  through  relatively  low-risk  development   activities,   such  as
     workovers,  recompletions,  horizontal drilling from existing wellbores and
     infield  drilling,  as  well  as  the  more  efficient  use  of  production
     facilities and the expansion of existing waterflood operations.

          Significant Operating Control.  Currently,  we are the operator of all
     the wells,  except two, in which we own working  interests.  This operating
     control  enables  us to  better  manage  the  nature,  timing  and costs of
     development of such wells, and the marketing of the resulting production.

          Ownership of Workover  Rigs. We currently own three  workover  service
     rigs and one  swabbing  unit that we operate  for our own account and under
     contract for other parties. By owning and operating this equipment,  we are
     better able to control  costs,  quality of operations and  availability  of
     equipment and services.  We intend to purchase  additional  service rigs as
     needed to accommodate our acquisition and development programs.

          Greater Natural Gas Ownership. At December 31, 2002, our reserves were
     comprised of 49% crude oil and 51% natural gas. We will  continue to expand
     our role in the domestic  natural gas industry by (i) acquiring  additional
     interests in natural gas  properties,  (ii)  increasing  the production and
     reserve base of our existing  natural gas  properties,  and (iii) acquiring
     ownership  of more  natural gas  gathering  systems and  pipelines.  We are
     presently  focusing our workover and development  efforts on both crude oil
     and natural gas  reserves to take  advantage  of the higher  prices of both
     commodities.  We are also seeking to expand our  ownership of gas gathering
     systems and pipelines  located in our main field areas. Our goal is to have
     greater  control of our natural gas  transportation  and marketing,  and an
     expanded  role in the  transportation  of  natural  gas  produced  by other
     parties in our area of operations.

          Expanded Exploration and Exploitation Role. Historically,  we have not
     drilled exploratory wells due to the cost and risk associated with drilling
     prospective  locations.  However,  since the end of 1998,  we have acquired
     producing properties that have included significant acreage for prospective
     oil and gas  exploration.  These  include  producing  wells and  acreage in
     Crockett,  Grimes, Hardin, Jim Wells, Kimble, Madison, Palo Pinto, Refugio,
     Sutton,  Wharton and Zavala,  Counties,  Texas; Adams, Arapaho,  Elbert and
     Weld Counties,  Colorado;  Creek County,  Oklahoma;  and,  Cameron  Parish,
     Louisiana. These acquisitions have added existing natural gas and crude oil
     production  to our asset base and, as  importantly,  have  provided us with
     immediate geological databases for drilling opportunities. We have expanded
     our  evaluation  efforts  in  these  fields  and  intend  to  increase  our
     development of reserves,  not only through workovers of existing wells, but
     by drilling additional wells.


Our Employees.

     At December 31, 2002, we had 44 full time salaried and contract  employees,
of whom 32 were field personnel.

Our Executive Officers.

     See Item 10 of this report,  which  information is  incorporated  herein by
reference.

                                       4


ITEM 2. Our Properties.

     At December 31, 2002, we owned an average 92% working interest in 291 gross
wells (269 net wells). Gross wells are the total wells in which we own a working
interest.  Net wells are the sum of the fractional  working  interests we own in
gross wells. Our part of the estimated proved reserves these properties  contain
was  approximately 5.5 million barrels (MBbl) of oil and 34.1 billion cubic feet
(Bcf) of natural gas.  Substantially all of our properties are located in Texas,
Colorado, Louisiana and Oklahoma.

Proved Reserves.

     The following  table reflects our estimated  proved reserves at December 31
for each of the preceding three years.



                                               2002           2001        2000
                                               ----           ----        ----

                        Crude Oil (MBbl)
                               Developed      4,026          3,940       2,884
                             Undeveloped      1,496          1,932       1,692
                                            ---------      --------    --------
                                   Total      5,522          5,872       4,576
                                            =========      ========    ========
                      Natural Gas (MMcf)
                               Developed     25,374         21,204      15,142
                             Undeveloped      8,785         18,054       9,670
                                            ---------      --------    --------
                                   Total     34,159         39,258      24,812
                                            =========      ========    ========
                            Total (MBOE)     11,215         12,415       8,711
                                            =========      ========    ========

          (a)  Approximately 74% of our total proved reserves were classified as
               proved developed at December 31, 2002.

          (b)  Barrel of Oil Equivalent (BOE) is based on a ratio of 6,000 cubic
               feet of natural gas for each barrel of oil.

                                       5


Standardized Measure of Discounted Future Net Cash Flows.

     The following  table sets forth as of December 31 for each of the preceding
three years, the estimated future net cash flow from and standardized measure of
discounted future net cash flows of our proved reserves,  which were prepared in
accordance  with the  rules and  regulations  of the SEC.  Future  net cash flow
represents  future  gross  cash  flow  from the  production  and sale of  proved
reserves,  net  of  crude  oil  and  natural  gas  production  costs  (including
production   taxes,  ad  valorem  taxes  and  operating   expenses)  and  future
development  costs. The  calculations  used to produce the figures in this table
are based on current  cost and price  factors at December  31 for each year.  We
cannot  assure you that the proved  reserves  will all be  developed  within the
periods used in the calculations or that prices and costs will remain constant.

                                                            2002                  2001                  2000
                                                     --------------------  --------------------  -------------------

Future cash inflows                                  $     308,381,837     $     199,162,921     $    318,504,931

Future production and development costs-
  Production                                               105,629,872            77,526,278           97,465,972
  Development                                               23,350,811            23,610,596           13,400,359
                                                     --------------------  --------------------  -------------------
Future net cash flows before income taxes                  179,401,154            98,026,047          207,638,600
Future income taxes                                        (38,611,577)          (13,281,358)         (56,466,527)
                                                     --------------------  --------------------  -------------------

Future net cash flows after income taxes                   140,789,577            84,744,689          151,172,073
10% annual discount for estimated timing
  of cash flows                                            (63,165,742)          (35,895,306)         (60,790,946)
                                                    --------------------  --------------------  -------------------
Standardized measure of discounted
 Future net cash flows(1)                           $       77,623,835    $       48,849,383    $      90,381,127
                                                    ====================  ====================  ===================

(1)  The average prices of our proved reserves were $28.72 per Bbl and $4.43 per
     Mcf, $17.67 per Bbl and $2.43 per Mcf, and $23.81 per Bbl and $8.45 per Mcf
     at December 31, 2002, 2001 and 2000, respectively.

Significant Properties.

     Summary  information  on our properties  with proved  reserves is set forth
below as of December 31, 2002.

                        Productive Wells                            Proved Reserves                            Present
                 ------------------------------   ------------------------------------------------------ ----------------
                     Gross            Net                                                                  Value (1)
                   Productive      Productive         Crude               Natural
                     Wells           Wells             Oil                  Gas             Total             Amount
                 --------------  --------------   ----------------     --------------  ----------------   ---------------
                                                      (MBbl)              (MMcf)            (MBOE)             ($M)

Texas                 206           199.76           3,401                19,356            6,627          $     56,425
Colorado               39            26.57             355                 6,180            1,385                 9,101
Oklahoma               27            27.00             146                   -                146                 1,159
Louisiana              17            16.88           1,614                 8,623            3,051                32,152
Mississippi             1              .38               6                   -                  6                    62
                 --------------  --------------   ----------------    ---------------  ----------------   --------------
          Total       290           270.59           5,522                34,159           11,215          $     98,899
                 ==============  ==============   ================    ===============  ================   ==============

(1)  The average prices of our proved reserves were $28.72 per Bbl and $4.43 per
     Mcf at December 31, 2002.

                                       6


     All information set forth herein relating to our proved reserves, estimated
future  net cash flows and  present  values is taken from  reports  prepared  by
Pressler Petroleum Consultants,  independent petroleum engineers.  The estimates
of these  engineers  were based upon their review of  production  histories  and
other  geological,  economic,  ownership  and  engineering  data provided by and
relating  to us. No reports  on our  reserves  have been filed with any  federal
agency.  In  accordance  with the  SEC's  guidelines,  our  estimates  of proved
reserves and the future net revenues from which  present  values are derived are
made  using  year end  crude oil and  natural  gas sales  prices  held  constant
throughout  the  life  of the  properties  (except  to  the  extent  a  contract
specifically provides otherwise). Operating costs, development costs and certain
production-related  taxes were  deducted  in arriving  at  estimated  future net
revenues, but such costs do not include debt service, general and administrative
expenses and income taxes.

     There are  numerous  uncertainties  inherent  in  estimating  crude oil and
natural  gas  reserves  and their  values,  including  many  factors  beyond our
control.  The reserve  data set forth in this  report are based upon  estimates.
Reservoir  engineering is a subjective  process,  which involves  estimating the
sizes of underground  accumulations  of crude oil and natural gas that cannot be
measured in an exact manner.  The accuracy of any reserve estimate is a function
of the quality of available data,  engineering and geological  interpretation of
that  data,  and  judgment.  As a  result,  estimates  of  different  engineers,
including  those used by us, may vary.  In  addition,  estimates of reserves are
subject to revision based upon actual production, results of future development,
exploitation  and exploration  activities,  prevailing crude oil and natural gas
prices,  operating  costs and other  factors.  Such  revisions  may be material.
Accordingly,  reserve estimates are often different from the quantities of crude
oil and natural gas that are ultimately  recovered and are highly dependent upon
the accuracy of the assumptions  upon which they are based. We cannot assure you
that the  estimates  contained  in this report are accurate  predictions  of our
crude oil and natural gas reserves or their  values.  Estimates  with respect to
proved reserves that may be developed and produced in the future are often based
upon  volumetric  calculations  and upon  analogy to similar  types of  reserves
rather than upon actual production history. Estimates based on these methods are
generally  less  reliable  than  those  based  on  actual  production   history.
Subsequent  evaluation of the same reserves based upon  production  history will
result in potentially substantial variations in the estimated reserves.

                                       7


Production, Revenue and Price History.

     The  following  table sets forth  information  (associated  with our proved
reserves)  regarding  production  volumes of crude oil and natural gas, revenues
and expenses  attributable  to such  production  (all net to our  interests) and
certain price and cost  information  for the years ended December 31, 2002, 2001
and 2000.

                                              2002                2001                2000
                                         ----------------    ----------------    ----------------

Production
    Oil (Bbl)                                  278,374             294,276             165,031
    Natural gas (Mcf)                        1,487,048           1,594,899           1,111,639
        Total (BOE)                            526,215             560,092             350,304
                                         ----------------    ----------------    ----------------
Revenue
    Oil production                       $   5,859,568       $   6,690,338       $   4,320,943
    Natural gas production                   4,587,601           5,735,765           4,124,989
                                         ----------------    ----------------    ----------------
         Total                           $  10,447,169       $  12,426,103       $   8,445,932

Operating Expenses                       $   5,430,205       $   5,155,500       $   3,377,583

Production Data
    Average sales price
        Per barrel of oil                $      21.05        $      22.73        $       26.18
        Per Mcf of natural gas                   3.09                3.60                 3.71
        Per BOE                                 19.85               22.19                24.11

    Average expenses per BOE
        Lease operating                         10.32                9.20                 9.64
        Depreciation, depletion and
        amortization                             5.13                4.45                 3.83
        General and administrative       $       3.28        $       3.05        $        4.53

Productive Wells at December 31, 2002:

     The  following  table  shows  the  number  of  productive  wells  we own by
location:

                       Gross            Net            Gross             Net
                     Oil Wells       Oil Wells       Gas Wells        Gas Wells
                    ------------    ------------    -------------   ------------

Texas                       118          116.11               88           85.65
Colorado                     18           11.42               21           15.15
Oklahoma                     27           27.00                -               -
Louisiana                    14           13.88                3            3.00
Mississippi                   1             .38                -               -
                    ------------    ------------    -------------    -----------
     Total                  178          168.79              112          103.80
                    ============    ============    =============    ===========

                                       8



Developed Acreage at December 31, 2002.

     The following  table shows the developed  acreage that we own, by location,
which is acreage  spaced or assigned to  productive  wells.  Gross acres are the
total  acres in which we own a  working  interest.  Net acres are the sum of the
fractional working interests we own in gross acres.

                                           Gross Acres                 Net Acres
                                           -----------                ----------

         Texas                                19,260                     14,826
         Colorado                              5,000                      2,700
                                           ----------                 ----------
         Louisiana                             1,695                      1,256
         Oklahoma                                900                        684
                                           ----------                 ----------

                  Total                       26,855                     19,466
                                           ==========                 ==========

Undeveloped Acreage at December 31, 2002.

     The following table shows the undeveloped acreage that we own, by location.
Undeveloped acreage is acreage on which wells have not been drilled or completed
to a point that would permit the  production of  commercial  quantities of crude
oil and natural gas.

                                          Gross Acres                 Net Acres
                                          -----------                ----------

         Texas                               22,910                      17,800
         Colorado                            10,000                       6,000
         Louisiana                              440                         314
         Oklahoma                               900                         684
                                          -----------                -----------
                  Total                      34,250                      24,798
                                          ===========                ===========

Drilling Results.

     In 2002,  we drilled  one  exploratory  well,  in which we own 18%  working
interest,  that resulted in a dry hole and one development well, in which we own
100% working  interest,  that is productive.  We drilled three wells in 2001 and
six in 2000, all of which were development  wells and are currently  productive.
These  development  wells included six horizontal  wells drilled by sidetracking
from existing wellbores in the Madisonville  Field, Texas, two new wells drilled
on our  Colorado  acreage;  and one well that was  deepened  in our Leona  River
Field, Texas.

                                       9


Risk Factors.

     Our success  depends  heavily  upon our ability to market our crude oil and
natural gas production at favorable prices.

     In recent decades, there have been both periods of worldwide overproduction
and  underproduction  of crude oil and natural gas, and periods of increased and
relaxed energy  conservation  efforts.  Such  conditions have resulted in excess
supply  of, and  reduced  demand  for,  crude oil on a  worldwide  basis and for
natural gas on a domestic basis. At other times, there has been short supply of,
and increased demand for, crude oil and, to a lesser extent,  natural gas. These
changes have resulted in dramatic price fluctuations.

     The  degree  to  which  we are  leveraged  could  possibly  have  important
consequences to our shareholders, including the following:

     (i)  Our indebtedness,  acquisitions, working capital, capital expenditures
          or other purposes may be impaired;

     (ii) Funds available for our operations and general  corporate  purposes or
          for capital expenditures will be reduced as a result of the dedication
          of a substantial portion of our consolidated cash flow from operations
          to the payment of the principal and interest on our indebtedness;

     (iii)We may be more  highly  leveraged  than  certain  of our  competitors,
          which may place us at a competitive disadvantage;

     (iv) The agreements governing our long-term indebtedness and bank loans may
          contain restrictive financial and operating covenants;

     (v)  An  event of  default  (not  cured  or  waived)  under  financial  and
          operating  covenants contained in our debt instruments could occur and
          have a material adverse effect;

     (vi) Certain of the  borrowings  under our debt  agreements  have  floating
          rates of interest,  which causes us to be  vulnerable  to increases in
          interest rates; and,

     (vii)Our substantial  degree of leverage could make us more vulnerable to a
          downturn in general economic conditions.

     Our  ability  to make  principal  and  interest  payments  under  long-term
indebtedness and bank loans will be dependent upon our future performance, which
is subject to financial,  economic and other  factors,  some of which are beyond
our control.

     We cannot  assure you that our  current  level of  operating  results  will
continue or improve.  We believe that we will need to access capital  markets in
the  future in order to  provide  the  funds  necessary  to repay a  significant
portion of our indebtedness. We cannot assure you that any such refinancing will
be possible or that we can obtain any additional financing, particularly in view
of our  anticipated  high levels of debt. If no such  refinancing  or additional
financing were available, we could default on our debt obligations.

                                       10


     We have incurred net losses in the past and there can be no assurance  that
we will be profitable in the future.

     Our future operating results may fluctuate  significantly  depending upon a
number  of  factors,  including  industry  conditions,  prices  of crude oil and
natural gas, rates of production,  timing of capital  expenditures  and drilling
success.  These variables could have a material  adverse effect on our business,
financial  condition,  results of operations  and the market price of our common
stock.

     Estimates of crude oil and natural gas reserves depend on many  assumptions
that may turn our to be inaccurate.

     Estimates  of our proved  reserves  for crude oil and  natural  gas and the
estimated  future net revenues  from the  production  of such reserves rely upon
various  assumptions,  including  assumptions  as to crude oil and  natural  gas
prices,  drilling  and  operating  expenses,  capital  expenditures,  taxes  and
availability  of funds.  The  process of  estimating  crude oil and  natural gas
reserves is complex and imprecise.

     Actual  future  production,  crude oil and natural  gas  prices,  revenues,
taxes,   development   expenditures,   operating   expenses  and  quantities  of
recoverable crude oil and natural gas reserves may vary  substantially  from the
estimates we obtain from reserve  engineers.  Any significant  variance in these
assumptions could materially  affect the estimated  quantities and present value
of reserves we have set forth.  In addition,  our proved reserves may be subject
to downward or upward revision due to factors that are beyond our control,  such
as production history, results of future exploration and development, prevailing
crude oil and natural gas prices and other factors.

     Approximately  26% of our total  estimated  proved reserves at December 31,
2002 were proved undeveloped reserves, which are by their nature less certain.

     Recovery of such reserves  requires  significant  capital  expenditures and
successful  drilling  operations.  The  reserve  data set  forth in the  reserve
engineer reports assumes that substantial  capital  expenditures are required to
develop such reserves.  Although cost and reserve estimates  attributable to our
crude oil and  natural  gas  reserves  have been  prepared  in  accordance  with
industry  standards,  we cannot be sure that the  estimated  costs are accurate,
that development will occur as scheduled or that the results of such development
will be as estimated.

     You should not interpret  the present  value  referred to in this report or
documents  incorporated  herein by reference as the current  market value of our
estimated crude oil and natural gas reserves.

     In accordance with SEC  requirements,  the estimated  discounted future net
cash flows from proved  reserves are  generally  based on prices and costs as of
the date of the  estimate.  Actual  future  prices  and costs may be  materially
higher or lower.

     The estimates of our proved reserves and the future net revenues from which
the present  value of our  properties  is derived were  calculated  based on the
actual  prices of our  various  properties  on a  property-by-property  basis at
December 31, 2002. The average  prices of all properties  were $28.72 per barrel
of oil and $4.43 per thousand cubic feet (Mcf) of natural gas at that date.

     Actual  future  net cash  flows  will  also be  affected  by  increases  or
decreases in  consumption by crude oil and natural gas purchasers and changes in
governmental  regulations or taxation. The timing of both the production and the
incurring of expenses in connection with the development and production of crude
oil and natural gas properties affect the timing of actual future net cash flows
from proved reserves. In addition, the 10% discount factor, which is required by

                                       11


the SEC to be used in calculating discounted future net cash flows for reporting
purposes, is not necessarily the most appropriate discount factor. The effective
interest rate at various times and the risks associated with our business or the
oil and gas  industry in general  will affect the  accuracy of the 10%  discount
factor.

     Except to the extent that we acquire properties  containing proved reserves
or  conduct  successful  development  or  exploitation  activities,  our  proved
reserves will decline as they are produced.

     In  general,  the  volume of  production  from  crude oil and  natural  gas
properties  declines as reserves are depleted.  Our future crude oil and natural
gas  production  is highly  dependent  upon our success in finding or  acquiring
additional reserves.

     The  business of  acquiring,  enhancing  or  developing  reserves  requires
considerable capital.

     Our ability to make the necessary capital  investment to maintain or expand
our asset base of crude oil and  natural gas  reserves  could be impaired to the
extent that cash flow from operations is reduced and external sources of capital
become limited or  unavailable.  In addition,  we cannot be sure that our future
acquisition and development activities will result in additional proved reserves
or that we will be able to drill productive wells at acceptable costs.

     Crude oil and natural gas drilling and production activities are subject to
numerous risks, many of which are beyond our control.

     These risks include (i) the possibility that no commercially productive oil
or gas  reservoirs  will  be  encountered;  and,  (ii)  that  operations  may be
curtailed,  delayed  or  canceled  due to title  problems,  weather  conditions,
governmental requirements, mechanical difficulties, or delays in the delivery of
drilling rigs and other equipment that may limit our ability to develop, produce
and market our  reserves.  We cannot  assure you that new wells we drill will be
productive or that we will recover all or any portion of our  investment in such
new wells.

     Drilling for crude oil and natural gas may not be profitable.

     Any wells that we drill may be dry wells or wells that are not sufficiently
productive  to be  profitable  after  drilling.  Such wells will have a negative
impact on our profitability.  In addition,  our properties may be susceptible to
drainage from production by other operators on adjacent properties.

     Our industry  experiences  numerous  operating risks that could cause us to
suffer substantial losses.

     Such  risks  include   fire,   explosions,   blowouts,   pipe  failure  and
environmental  hazards,  such as oil  spills,  natural  gas leaks,  ruptures  or
discharges of toxic gases.  We could also suffer losses due to personnel  injury
or loss of life;  severe damage to or destruction of property;  or environmental
damage that could result in clean-up responsibilities, regulatory investigation,
penalties or suspension of our operations. In accordance with customary industry
practice, we maintain insurance policies against some, but not all, of the risks
described  above. Our insurance  policies may not adequately  protect us against
loss or liability. There is no guarantee that insurance policies that protect us
against the many risks we face will  continue  to be  available  at  justifiable
premium levels.

     As owners and operators of crude oil and natural gas properties,  we may be
liable under federal,  state and local environmental  regulations for activities
involving water pollution, hazardous waste transport, storage, disposal or other
activities.

                                       12


     Our past growth has been  attributable  to  acquisitions of producing crude
oil and natural gas properties  with proved  reserves.  There are risks involved
with such acquisitions.

     The  successful   acquisition  of  properties  requires  an  assessment  of
recoverable reserves,  future crude oil and natural gas prices, operating costs,
potential  environmental  and other  liabilities,  and other factors  beyond our
control.  Such assessments are necessarily inexact and their accuracy uncertain.
In  connection  with such an  assessment,  we  perform  a review of the  subject
properties that we believe to be generally  consistent with industry  practices.
Such a review,  however, will not reveal all existing or potential problems, nor
will it  permit  us, as the  buyer,  to become  sufficiently  familiar  with the
properties  to fully  assess  their  capabilities  or  deficiencies.  We may not
inspect every well and, even when an inspection is  undertaken,  structural  and
environmental problems may not necessarily be observable.

     When  we  acquire  properties,  in  most  cases,  we are  not  entitled  to
contractual indemnification for pre-closing liabilities, including environmental
liabilities.

     We  generally  acquire  interests  in  properties  on an "as is" basis with
limited  remedies  for  breaches of  representations  and  warranties.  In those
circumstances   in  which  we  have  contractual   indemnification   rights  for
pre-closing  liabilities,  we cannot  assure you that the seller will be able to
fulfill its  contractual  obligations.  In addition,  the competition to acquire
producing crude oil and natural gas properties is intense and many of our larger
competitors have financial and other resources  substantially greater than ours.
We cannot  assure  you that we will be able to acquire  producing  crude oil and
natural  gas  properties  that  have  economically   recoverable   reserves  for
acceptable prices.

     We  may  acquire  royalty,  overriding  royalty  or  working  interests  in
properties that are less than the controlling interest.

     In such  cases,  it is likely  that we will not  operate,  nor  control the
decisions affecting the operations,  of such properties. We intend to limit such
acquisitions  to  properties  operated by  competent  parties  with whom we have
discussed their plans for operation of the properties.

     We will need  additional  financing  in the future to  continue to fund our
developmental and exploitation activities.

     We have made and will continue to make substantial capital  expenditures in
our  exploitation and development  projects.  We intend to finance these capital
expenditures with cash flow from operations,  existing financing arrangements or
new  financing.  We cannot  assure you that such  additional  financing  will be
available.  If it is not available,  our development and exploitation activities
may have to be curtailed,  which could adversely affect our business,  financial
condition and results of operations.

     The  marketing of our natural gas  production  depends,  in part,  upon the
availability, proximity and capacity of natural gas gathering systems, pipelines
and processing facilities.

     We could be  adversely  affected by changes in existing  arrangements  with
transporters  of our  natural  gas  since  we do not own  most of the  gathering
systems and pipelines  through which our natural gas is delivered to purchasers.
Our  ability to  produce  and market  our  natural  gas could also be  adversely
affected  by   federal,   state  and  local   regulation   of   production   and
transportation.

                                       13


     The crude oil and natural gas industry is highly  competitive in all of its
phases.

     Competition  is  particularly  intense with respect to the  acquisition  of
desirable  producing  properties,  the  acquisition of crude oil and natural gas
prospects  suitable  for  enhanced  production   efforts,   and  the  hiring  of
experienced personnel. Our competitors in crude oil and natural gas acquisition,
development,  and  production  include the major oil  companies,  in addition to
numerous independent crude oil and natural gas companies, individual proprietors
and drilling programs.

     Many of these  competitors  possess  and  employ  financial  and  personnel
resources  substantially  in excess of those which are  available to us and may,
therefore,  be able to pay more for desirable producing properties and prospects
and to define,  evaluate,  bid for, and  purchase a greater  number of producing
properties and prospects than our financial or personnel  resources will permit.
Our ability to generate  reserves in the future will be dependent on our ability
to  select  and  acquire  suitable  producing  properties  and  prospects  while
competing with these companies.

     The domestic oil industry is extensively  regulated at both the federal and
state levels.  Although we believe we are presently in compliance with all laws,
rules and regulations,  we cannot assure you that changes in such laws, rules or
regulations,  or the  interpretation  thereof,  will not have a material adverse
effect on our financial condition or the results of our operations.

     Legislation affecting the oil and gas industry is under constant review for
amendment or  expansion,  frequently  increasing  the  regulatory  burden on the
industry.  There are numerous  federal and state  agencies  authorized  to issue
rules  and  regulations  affecting  the oil and gas  industry.  These  rules and
regulations are often difficult and costly to comply with and carry  substantial
penalties for noncompliance.

     State statutes and  regulations  require  permits for drilling  operations,
drilling  bonds,  and  reports  concerning  operations.  Most  states  also have
statutes  and  regulations  governing   conservation   matters,   including  the
unitization or pooling of properties,  and the establishment of maximum rates of
production from wells. Some states have also enacted statutes  prescribing price
ceilings for natural gas sold within their states.

     Our industry is also  subject to numerous  laws and  regulations  governing
plugging and  abandonment of wells,  discharge of materials into the environment
and other matters  relating to  environmental  protection.  The heavy regulatory
burden on the oil and gas industry  increases the costs of our doing business as
an oil and gas company, consequently affecting our profitability.

     Our board of directors is authorized,  without further  shareholder action,
to issue  preferred  stock in one or more series and to  designate  the dividend
rate, voting rights and other rights,  preferences and restrictions of each such
series.

     As of  April  9,  2003,  we had a total of  8,000  shares  of our  Series D
Preferred  Stock and 9,000  shares of our Series E  Preferred  Stock  issued and
outstanding, both par value $.01 and liquidation value $500 per share. The 8,000
shares of Series D Preferred Stock are held by Steven M. Morris, a director, and
the 9,000 shares of Series E Preferred Stock are held by J. Virgil  Waggoner,  a
director.  The Series D and E  Preferred  Stock are  senior to our common  stock
regarding  liquidation.  The holders of the  preferred  stock do not have voting
rights  or  preemptive  rights  nor are  they  subject  to the  benefits  of any
retirement or sinking fund.

     The  Series D  Preferred  Stock is not  entitled  to  dividends,  nor is it
redeemable,  however it is  convertible  to common  stock at  anytime  following
December 31, 2002,  the third  anniversary  of the issue date.  Thereafter,  the
holder may convert  any or all of the shares of the Series D Preferred  Stock to
common stock.  The total number of shares of common stock to be issued upon such
conversion shall be 500,000.

                                       14


     The Series E Preferred  Stock is entitled to receive  dividends at the rate
of $12.50 per share per annum,  payable quarterly.  The Series E Preferred Stock
is redeemable in whole or in part at any time, at our option, at a price of $500
per share,  plus all accrued and  undeclared or unpaid  dividends;  except that,
after two years from the date of the original  issuance and prior to  redemption
of  remaining  shares by the  Company,  the  holders of record  shall be given a
60-day written notice of our intent to redeem and the opportunity to convert the
Series E Preferred Stock to common stock.  The conversion price for the Series E
Preferred Stock shall be $2.00 per share of common stock. At April 9, 2003, none
of the 9,000 outstanding shares of Series E Preferred Stock had been redeemed or
converted.  On a fully converted  basis,  the 9,000 shares of Series E Preferred
Stock would convert to 2,250,000 shares of common stock.

     We do not pay dividends on our common stock.

     Our board of directors  presently intends to retain all of our earnings for
the expansion of our business,  therefore we do not anticipate distributing cash
dividends on our common  stock in the  foreseeable  future.  Any decision of our
board of  directors  to pay  cash  dividends  will  depend  upon  our  earnings,
financial position, cash requirements and other factors.

     The  holders  of our common  stock do not have  cumulative  voting  rights,
preemptive rights or rights to convert their common stock to other securities.

     We are  authorized to issue  40,000,000  shares of common stock,  $.001 par
value per share.  As of April 9, 2003,  there were  18,492,541  shares of common
stock issued and outstanding.  Since the holders of our common stock do not have
cumulative  voting  rights,  the holder(s) of a majority of the shares of common
stock present,  in person or by proxy,  will be able to elect all of the members
of our board of directors. The holders of shares of our common stock do not have
preemptive rights or rights to convert their common stock into other securities.
At December 31, 2002, we had  outstanding  warrants and options for the purchase
of  3,248,754  shares of common  stock at prices  ranging from $.75 to $6.00 per
share,  including  employee stock options to purchase 1,067,000 shares at prices
ranging  from  $.75 to $1.81  per  share.  If we issue  additional  shares,  the
existing  shareholders'  percentage  ownership  of the  Company  may be  further
diluted.

     Actual results may differ from forward-looking statements.

     We make  forward-looking  statements  throughout this report.  Whenever you
read a statement that is not simply a statement of historical fact, such as when
we describe what we "believe,"  "expect" or "anticipate"  will occur,  and other
similar statements,  you must remember that our expectations may not be correct,
even though we believe they are  reasonable.  These  forward-looking  statements
generally relate to our plans and objectives for future operations and are based
upon our management's  reasonable  estimates of future results and trends. We do
not  guarantee  that the  transactions  and  events  described  will  happen  as
described (or that they will happen at all). In connection with  forward-looking
statements,  you should  carefully  review the  factors set forth in this report
under "Risk Factors."

ITEM 3. Legal Proceedings.

     From time to time, we are involved in litigation relating to claims arising
out of our  operations  or from  disputes  with vendors in the normal  course of
business. As of April 9, 2003, we were not engaged in any legal proceedings that
are  expected,  individually  or in the  aggregate,  to have a material  adverse
effect on us.

ITEM 4. Submission of Matters to a Vote of Security Holders.

     We did not submit any matters to a vote of our security  holders during the
fourth quarter of the fiscal year ended December 31, 2002.

                                       15


                                     PART II

ITEM 5. Market for Our Common Stock and Related Stockholder Matters.

     Our common stock is traded  over-the-counter  under the symbol "GULF".  The
high and low trading prices for the common stock for each quarter in 2002,  2001
and 2000 are set forth  below.  The  trading  prices  represent  prices  between
dealers,  without  retail  mark-ups,  mark-downs,  or  commissions,  and may not
necessarily represent actual transactions.

                                                         High              Low
                                                         ----              ---
                  2002
                  ----
                  First Quarter                          $.66             $.55
                  Second Quarter                          .60              .46
                  Third Quarter                           .51              .20
                  Fourth Quarter                          .44              .32

                  2001
                  ----
                  First Quarter                         $1.46             $.39
                  Second Quarter                         1.01              .53
                  Third Quarter                           .96              .48
                  Fourth Quarter                          .72              .58

                  2000
                  ----
                  First Quarter                         $1.81             $.75
                  Second Quarter                         2.00             1.25
                  Third Quarter                          1.63             1.13
                  Fourth Quarter                         1.69              .88

     We are authorized to issue  40,000,000  shares of Class A common stock, par
value  $.001 per share (the  "common  stock").  As of April 9, 2003,  there were
18,492,541   shares  of  common  stock  issued  and   outstanding  and  held  by
approximately 580 beneficial owners. Our common stock is traded over-the-counter
(OTC)  under the  symbol  "GULF".  Fidelity  Transfer  Company,  1800 South West
Temple,  Suite 301, Box 53, Salt Lake City,  Utah 84115,  (801)  484-7222 is the
transfer agent for the common stock.

     Holders of common stock are entitled,  among other things,  to one vote per
share on each matter  submitted to a vote of  shareholders  and, in the event of
liquidation,  to share ratably in the  distribution  of assets  remaining  after
payment of liabilities (including preferential  distribution and dividend rights
of holders of  preferred  stock).  Holders  of common  stock have no  cumulative
rights, and, accordingly, the holders of a majority of the outstanding shares of
the common stock have the ability to elect all of the directors.

     Holders of common stock have no preemptive or other rights to subscribe for
shares.  Holders  of  common  stock are  entitled  to such  dividends  as may be
declared by the Board out of funds legally  available  therefore.  We have never
paid cash  dividends on the common stock and do not  anticipate  paying any cash
dividends in the foreseeable future.

Preferred Stock.

     Our board of directors is authorized,  without further  shareholder action,
to issue  preferred  stock in one or more series and to  designate  the dividend
rate, voting rights and other rights,  preferences and restrictions of each such
series.  As of April 9, 2003, we had a total of 17,000 shares of preferred stock
issued and outstanding,  including 8,000 of our Series D and 9,000 of our Series

                                       16


E Preferred  Stock.  The Series D and E Preferred Stock are senior to our common
stock  regarding  liquidation.  The holders of the  preferred  stock do not have
voting rights or  preemptive  rights nor are they subject to the benefits of any
retirement or sinking fund.

     The  Series D  Preferred  Stock is not  entitled  to  dividends,  nor is it
redeemable,  however it is  convertible  to Common  Stock at  anytime  following
December 31, 2002, the third anniversary of the date of issue.  Thereafter,  the
holder may convert  any or all of the shares of the Series D Preferred  Stock to
Common Stock.  The total number of shares of Common Stock to be issued upon such
conversion shall be 500,000.

     The Series E Preferred  Stock is entitled to receive  dividends at the rate
of $12.50 per share per annum,  payable quarterly.  The Series E Preferred Stock
is redeemable in whole or in part at any time, at our option, at a price of $500
per share,  plus all accrued and  undeclared or unpaid  dividends;  except that,
after two years from the date of the original  issuance and prior to  redemption
of  remaining  shares by the  Company,  the  holders of record  shall be given a
60-day written notice of our intent to redeem and the opportunity to convert the
Series E Preferred Stock to common stock.  The conversion price for the Series E
Preferred Stock shall be $2.00 per share of common stock. At April 9, 2003, none
of the 9,000 outstanding shares of Series E Preferred Stock had been redeemed or
converted.  On a fully converted  basis,  the 9,000 shares of Series E Preferred
Stock would convert to 2,225,000 shares of common stock.

Outstanding Options and Warrants.


     At April 9, 2003, we had outstanding  warrants and options for the purchase
3,398,754 shares of common stock at prices ranging from $.75 to $6.00 per share,
including  employee stock options to purchase 1,067,000 shares at prices ranging
from $.75 to $1.81 per share.

Recent Sales of Unregistered Securities.

     During  2002  and  to  April  9,  2003,  we  granted  warrants  or  options
exercisable  for shares of common stock not registered  under the Securities Act
of 1933, as amended,  and exempt under Section 4(2) of the Act. All the grantees
were current employees,  consultants or accredited investors not affiliated with
the  company.  No  underwriters  were used,  and no  underwriting  discounts  or
commissions were paid in connection with the grants.

                                            Exercisable  Exercise
                                            -----------  --------
Date        Derivative    Grantee(s)           Shares    Price  Consideration
----        ----------    ----------           ------    -----  -------------

02/25/02    Warrant       Director(1)         270,000   $ .75   Compensation
04/30/02    Warrant       Employee            100,000   $ .75   Compensation
07/15/02    Warrant       Accredited Investor  75,000   $ .75   Loan transaction
10/31/02    Option        Employee             35,000   $ .75   Compensation
11/06/02    Warrant       Director            625,000   $ .75   Loan transaction
12/02/02    Warrant       Accredited Investor  75,000   $ .75   Loan transaction
01/24/03    Warrant       Accredited Investor 100,000   $ .75   Loan transaction
02/12/03    Warrant       Accredited Investor  50,000   $ .75   Loan transaction

     (1)  200,000,   50,000  and  20,000  warrants   originally   issued  to  an
          officer/director  (currently a director) in 1996 at exercise prices of
          $3.00,  $5.00 and  $5.75,  respectively,  were  re-priced  to $.75 per
          share.

                                       17


ITEM 6. Selected Financial Data.

     The following  table sets forth selected  historical  financial data of our
company as of December 31, 2002,  2001, 2000, 1999 and 1998, and for each of the
periods then ended. See "Item 1. Business" and "Item 7. Management's  Discussion
and  Analysis of  Financial  Condition  and Results of  Operations."  The income
statement  data for the years ended  December  31,  2002,  2001 and 2000 and the
balance  sheet data at December  31, 2002 and 2001 are derived  from our audited
financial  statements  contained elsewhere herein. The income statement data for
the  years  ended  December  31,  1999 and 1998 and the  balance  sheet  data at
December 31, 2000, 1999 and 1998 are derived from our Annual Report on Form 10-K
for  those  periods.   You  should  read  this  data  in  conjunction  with  our
consolidated  financial  statements  and the notes  thereto  included  elsewhere
herein.

                                                               Year Ended December 31,
                                    --------------------------------------------------------------------------------------------

                                          2002               2001               2000               1999              1998
                                    -----------------  -----------------  -----------------  ----------------- -----------------

Income Statement Data
---------------------
Operating Revenues                  $  10,839,797      $  12,990,581      $    8,984,175     $     2,812,639   $    2,403,553

Net income (loss) from
operations                                927,655          3,451,875           2,464,017          (1,464,094)      (6,329,884)

Net income (loss)                      (4,502,313)         1,044,291             352,774          (2,269,506)      (8,387,060)

Dividends on preferred stock             (112,500)           (56,250)               -               (450,684)

Net income (loss) available to
Common Shareholders                    (4,614,813)           988,401             352,774          (2,720,190)      (8,814,233)

Net income (loss), per share
of common stock                     $        (.25)     $         .05      $          .02     $          (.34)           (3.68)

Weighted average number of
shares of common stock
outstanding                            18,492,541         18,464,343          17,293,848           7,953,147        2,394,866

Balance Sheet Data
------------------

Current assets                      $   2,353,046      $   2,205,862      $    2,934,804     $     1,357,465   $       820,984

Total assets                            53,088,941        51,379,209          32,374,128          20,009,793         8,058,827

Current liabilities                     43,998,566        12,492,365           7,594,986           4,650,691         6,559,393

Long-term obligations                    1,266,801        26,541,957          18,077,371          11,304,318         3,401,371

Stockholders' Equity
(Deficit)                           $    7,823,574     $  12,344,887      $    6,701,771     $     4,054,784    $   (1,901,937)

                                       18


ITEM 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

Overview.

     We are engaged  primarily in the  acquisition,  development,  exploitation,
exploration  and  production  of crude  oil and  natural  gas.  Our  focus is on
increasing  production  from our existing  crude oil and natural gas  properties
through  the  further   exploitation,   development  and  exploration  of  those
properties,  and on acquiring  additional interests in crude oil and natural gas
properties. Our gross revenues are derived from the following sources:

     1.   Oil and gas  sales  that are  proceeds  from the sale of crude oil and
          natural gas production to midstream purchasers;

     2.   Operating  overhead  and other income that  consists of earnings  from
          operating  crude oil and  natural  gas  properties  for other  working
          interest owners, and marketing and transporting natural gas. This also
          includes earnings from other miscellaneous activities.

     3.   Well  servicing  revenues that are earnings from the operation of well
          servicing equipment under contract to other operators.

     The  following is a discussion  of our  consolidated  financial  condition,
results of  operations,  liquidity and capital  resources.  You should read this
discussion in  conjunction  with the  Consolidated  Financial  Statements of the
Company  and the  Notes  thereto  contained  elsewhere  herein.  See  "Financial
Statements."

Results of Operations.

     The factors which most  significantly  affect our results of operations are
(1) the sales price of crude oil and natural  gas,  (2) the level of total sales
volumes of crude oil and natural gas, (3) depletion and  depreciation of oil and
gas property costs and related  equipment (4) the level of and interest rates on
borrowings and, (5) the level and success of new acquisitions and development of
existing properties.

     We  consider  depletion  and  depreciation  of oil and gas  properties  and
related  support  equipment  to be  critical  accounting  estimates,  based upon
estimates of oil and gas reserves.

     The  estimates  of oil and gas  reserves  utilized  in the  calculation  of
depletion  and   depreciation   are  estimated  in  accordance  with  guidelines
established  by  the  Securities  and  Exchange  Commission  and  the  Financial
Accounting  Standards  Board,  which require that reserve  estimates be prepared
under existing economic and operating conditions with no provision for price and
cost  escalations  over  prices  and  costs  existing  at year  end,  except  by
contractual arrangements.

     We emphasize that reserve estimates are inherently imprecise.  Accordingly,
the  estimates  are  expected  to change  as more  current  information  becomes
available.  Our policy is to amortize  capitalized oil and gas costs on the unit
of  production  method,  based upon these  reserve  estimates.  It is reasonably
possible the estimates of future cash inflows, future gross revenues, the amount
of oil  and gas  reserves,  the  remaining  estimated  lives  of the oil and gas
properties,  or any  combination of the above may be increased or reduced in the
near term. If reduced, the carrying amount of capitalized oil and gas properties
may be reduced materially in the near term.

                                       19


     Comparative  results of operations for the periods  indicated are discussed
below.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Revenues

     Oil and Gas Sales.  Our  operating  revenues from the sale of crude oil and
natural gas decreased by 16% from  $12,426,000  in 2001 to  $10,447,000 in 2002.
This  decrease  resulted  from normal oil and gas  production  declines  and the
inability  to offset  those  declines  through  development  efforts  because of
limited development capital.

     Well  Servicing  Revenues.  Revenues  from  our well  servicing  operations
decreased by 77% from $169,000 in 2001 to $39,000 in 2002. This decrease was due
to  performing  less work for third  parties and the sale of one of our workover
rigs.

     Operating  Overhead  and  Other  Income.  Revenues  from  these  activities
decreased 10% from  $395,000 in 2001 to $354,000 in 2002,  primarily as a result
of the termination of a gas transportation sales contract with a local utility.

Costs and Expenses

     Lease  Operating  Expenses.  Lease  operating  expenses  increased  5% from
$5,155,000 in 2001 to $5,430,000 in 2002 due to increased vendor prices.

     Cost of Well Servicing  Operations.  Well servicing  expenses decreased 69%
from  $182,000  in 2001 to $56,000 in 2002 due to less work  under  contract  to
third parties and the sale of one workover rig.

     Depreciation,  Depletion and Amortization (DD and A). DD and A increased 8%
from  $2,491,000 in 2001 to $2,698,000 in 2002, due to our proved reserves being
calculated slightly lower at the end of 2001.

     General and  Administrative (G and A) Expenses.  G and A expenses increased
only slightly from $1,710,000 in 2001 to $1,728,000 in 2002.

     Interest Income and Expense. Interest expense increased 15% from $2,757,000
in 2001 to $3,159,000 in 2002 due to increased debt  associated with the funding
of acquisitions  in August,  2001,  capital used in our development  program and
issuance of warrants associated with working capital loans.

     Unrealized Gain (Loss) on Derivative Instruments. The estimated future fair
value of derivative  instruments  at December 31, 2002 resulted in an unrealized
loss of $1,596,000 in 2002 compared to an unrealized gain of $4,215,000 in 2001.
Also in 2001, an unrealized  loss of  $3,747,000,  resulting from the cumulative
effect of adopting SFAS No. 133 "Accounting for Derivative Instruments and Other
Hedging Activities," was recorded.

     Dry Holes, Abandoned Property,  Impaired Assets. The costs of a dry hole in
Louisiana of $339,000,  abandoned  property in Oklahoma of $223,500 and impaired
assets in  Mississippi of $54,900  totaled  $617,400 in 2002 compared to none in
2001.

     Dividends  on  preferred  stock due was  $112,500  and paid was $112,500 in
2002. Dividends on preferred stock due was $56,250 and paid was $28,125 in 2001.

                                       20


Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Revenues

     Oil and Gas Sales.  Our  operating  revenues from the sale of crude oil and
natural gas increased by 47% from $8,446,000 in 2000 to $12,426,000 in 2001, due
to increased oil and gas production from  development  projects and acquisitions
of additional properties.

     Well  Servicing  Revenues.  Revenues  from  our well  servicing  operations
decreased by 10% from  $188,000 in 2000 to $169,000 in 2001.  This  decrease was
due to higher rig  utilization  on  operated  properties  where the  Company has
working interest partners and less work for third parties.

     Operating  Overhead  and  Other  Income.  Revenues  from  these  activities
increased 13% from $350,000 in 2000 to $395,000 in 2000. Major components of the
increase included operating overhead $81,800,  gathering and marketing $210,900,
sale of exploratory leases $96,300 and miscellaneous income $6,000.

Costs and Expenses

     Lease  Operating  Expenses.  Lease  operating  expenses  increased 53% from
$3,378,000 in 2000 to $5,155,000  in 2001.  This increase in operating  expenses
was due to the  acquisitions  of  additional  properties,  expanded  oil and gas
production, and increased vendor prices.

     Cost of Well Servicing  Operations.  Well servicing  expenses decreased 14%
from $212,000 in 2000 to $182,000 in 2001.  This decrease in expenses was due to
less utilization of our equipment under contract to third parties.

     Depreciation, Depletion and Amortization (DD and A). DD and A increased 86%
from  $1,342,000  in 2000 to  $2,491,000 in 2001,  due to  significantly  higher
production   resulting  from  successful   field   development   activities  and
acquisitions.

     General and  Administrative (G and A) Expenses.  G and A expenses increased
8% from $1,588,000 in 2000 to $1,710,000 in 2001 due to the increased  number of
properties being managed.

     Interest  Expense  and  Dividends  on  Preferred  Stock.  Interest  expense
increased  29% from  $2,135,000  in 2000 to  $2,757,000 in 2001 due to increased
debt  associated  with the funding of our  additional  acquisitions  and capital
development program.

     Unrealized Gain (Loss) on Derivative Instruments. The estimated future fair
value of derivative  instruments  at December 31, 2001 resulted in an unrealized
gain of $4,215,000 in 2001.  Also in 2001,  an  unrealized  loss of  $3,747,000,
resulting from the cumulative  effect of adopting SFAS No. 133  "Accounting  for
Derivative Instruments and Other Hedging Activities," was recorded. There was no
unrealized gain or loss in 2000.

     Dividends on preferred  stock due was $56,250 and paid was $28,125 in 2001.
No dividends were due or paid in 2000.

                                       21


Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Revenues

     Oil and Gas Sales.  Our  operating  revenues from the sale of crude oil and
natural gas increased by 233% from $2,533,000 in 1999 to $8,446,000 in 2000, due
to increased oil and gas production from  development  projects,  higher oil and
gas prices, and acquisitions of additional properties.

     Well  Servicing  Revenues.  Revenues  from  our well  servicing  operations
increased by 61% from  $117,000 in 1999 to $188,000 in 2000.  This  increase was
due to higher rig  utilization  on  operated  properties  where the  Company has
working interest partners and increased work for third parties.

     Operating  Overhead  and  Other  Income.  Revenues  from  these  activities
increased  115% from $163,000 in 1999 to $350,000 in 2000.  Major  components of
the change  included a decrease of $38,000 in revenues we received for operating
properties for other parties (due to our acquiring  additional working interests
in the operated  properties);  an increase of $117,000 in natural gas  marketing
and transportation; $52,000 received in damages from a drilling contractor; and,
$20,000  received for the  assignment of certain deep drilling  rights on one of
our leases.

Costs and Expenses

     Lease  Operating  Expenses.  Lease operating  expenses  increased 141% from
$1,400,000 in 1999 to $3,378,000  in 2000.  This increase in operating  expenses
was due to the  acquisitions  of  additional  properties,  expanded  oil and gas
production, and the costs related to such production.

     Cost of Well Servicing  Operations.  Well servicing  expenses increased 12%
from $190,000 in 1999 to $212,000 in 2000.  This increase in expenses was due to
less work under contract to third parties.

     Depreciation, Depletion and Amortization (DD and A). DD and A increased 91%
from  $704,000  in 1999 to  $1,342,000  in  2000,  due to  significantly  higher
production   resulting  from  successful   field   development   activities  and
acquisitions.

     General and  Administrative (G and A) Expenses.  G and A expenses decreased
20%  from   $1,983,000   for  1999  to  $1,588,000  in  2000.  The  Company  had
non-recurring  expenses consisting of costs associated with the consolidation of
its offices to Houston and non-cash  charges of $232,000 related to the issuance
of stocks and warrants in 1999 compared to $2,000 in 2000.

     Interest  Expense  and  Dividends  on  Preferred  Stock.  Interest  expense
increased 140% from $890,000 in 1999 to $2,135,000 in 2000 due to increased debt
associated with additional acquisitions and our capital development program, and
higher borrowing rates.

     Preferred dividends decreased $451,000 from year-end 1999, since all of the
preferred  stock  entitled to receive  dividends  had been  converted  to common
stock.

Financial Condition and Capital Resources.

     At December 31, 2002, our current  liabilities  exceeded our current assets
by  $41,645,520.  We had a loss available to common  shareholders  of $4,614,813
compared to income available to common  shareholders of $988,041 at December 31,
2001.  This loss included  non-cash items of $1,596,600  for unrealized  loss on
derivative  instruments  and  $617,400  for dry holes,  abandoned  property  and
impaired  assets.

                                       22


     On April 5, 2000, we entered into an agreement with Aquila Energy  Capital,
an energy lender,  to provide  $19,302,000 in financing,  of which  $13,302,000,
less closing  costs of $402,000,  was funded at closing and  $6,000,000  was for
future  development  capital.  We used the net  proceeds to (i) retire  existing
debt,  including  accrued interest,  of $10,234,977;  (ii) acquire crude oil and
natural gas properties in Zavala County, Texas for $2,300,000,  including $3,266
in cash and  200,000  shares of common  stock;  and,  (iii)  acquire  additional
interests in the Madisonville Field, Texas. The loan is secured by substantially
all of the  Company's  interests in oil and gas  properties,  bears  interest at
prime plus 3.5% and matures May 29, 2004.  Monthly  payments as to principal and
interest  are from an 85% net revenue  interest in the secured  properties.  The
lender retains a 7% overriding  royalty interest with payments  commencing after
the loan is paid in full.  On August 16,  2001,  the total  amount of  financing
increased  by  $16,800,000  to  $36,102,000.  The  proceeds  were  to be used as
follows:  $10,000,000 for the Goldking  Acquisition (see below),  $6,630,000 for
development of the  properties  securing the loan and $170,000 for a structuring
fee paid to the lender.  As a result of the amendment,  the net revenue interest
payment increased from 85% to 90%. In addition,  the amendment requires payments
on principal of $1,000,000 in February, 2002, August 2002 and February, 2003

     In December,  2002, Aquila sold its loan portfolio,  including our loan, to
another  energy lender.  In a subsequent  event on February 28, 2003, we entered
into an  agreement  with that  lender to buy-out  the loan,  which has a current
balance of $27.9 million for a cash payment of $20 million,  under the following
terms and conditions:

     1.   A cash  payment of Twenty  Million  Dollars  ($20,000,000),  funded at
          Closing.

     2.   Cancellation  of the Note and Credit  Agreement and termination of all
          debt instruments securing this obligation.

     3.   Re-assignment  to GulfWest O and G of the Overriding  Royalty Interest
          previously conveyed to Aquila and now held by the lender.

     4.   Cancellation  and  termination  of all  fixed  price  hedges  and swap
          agreements  entered  into  between  GulfWest O and G and Aquila.  Such
          cancellation  to be effective the first day of the month following the
          Closing Date.

     5.   The current reporting and cashflow sweep will remain in effect through
          the Closing Date.  Commencing  January 1, 2003,  GulfWest O and G will
          pay interest only due under the Note and no part of the funds retained
          by lender in the "sweep"  shall  include  any  amounts  for  principal
          repayment.  Therefore,  as  respects  oil and gas sales  revenues  due
          GulfWest O and G under the "sweep" for January 2003 production,  which
          is to be paid in March  2003,  no funds will be retained by the lender
          for principal repayment under the Note.

     6.   Within  forty-five  (45)  days  of the  date of the  lender's  written
          acceptance of this offer,  GulfWest will furnish the lender acceptable
          financial   assurance   that  GulfWest  will  close  the   anticipated
          refinancing  within ninety (90) days of the written  acceptance of the
          offer. If within such  forty-five  (45) day period,  GulfWest does not
          furnish the lender the required financial  assurance,  then the lender
          may, at its option,  notify GulfWest that it is no longer obligated to
          the terms of this Agreement,  and at the lender's  option,  re-instate
          the  combined  principal  and  interest  payments  under  the  "sweep"
          arrangement.

     7.   Should GulfWest not close this transaction  within ninety (90) days of
          the lender's  written  acceptance of this offer,  then GulfWest  will,
          within  thirty  (30)  days,  issue to the  lender  one $1  million  of
          preferred  stock  convertible at $1.00 per share of common stock.  The
          stock will be in the form of 2,000 shares of a new  GulfWest  Series F

                                       23


          Preferred Stock, par value $.01 and liquidation  value $500 per share,
          with the same terms as the existing GulfWest Preferred E stock (except
          there  will  be no net  profits  interest  redemption  rights  and the
          conversion  price of the  GulfWest  Preferred  Series F stock shall be
          $1.00  per  common  share  instead  of  the  $2.00   conversion  price
          established for GulfWest's Preferred Series E stock).  Provisions will
          be included in the Preferred  Series F Stock  Agreement to protect the
          Preferred  Series  F  stockholder(s)  and  keep  them on par  with the
          Preferred  Series E stockholders  and other past and future  preferred
          stockholders.

     We  are  currently  negotiating  with  various  financial  institutions  to
refinance  the loan under the above terms and  conditions,  as well as providing
funds for our $6.4 million capital development plan for 2003.

     In a subsequent  event on March 3, 2003, the lender  notified us we were in
default and agreed to forbear from exercising its rights and remedies  regarding
Events of Default  resulting  from (1) our most  recent  Reserve  Reporting,  as
adjusted by the lender,  being insufficient to fully amortize the loans by their
stated maturity; and, (2 our failure to make the $1,000,000 repayment originally
scheduled  for  August  31,  2002 and  deferred  to  November  30,  2002 and the
$1,000,000  repayment  scheduled  for February 28,  2003.  The lender  agreed to
forebear  until the earlier of: (1) May 31, 2003,  (2) the occurrence of another
Event of Default or Unmatured  Event of Default,  or (3) the lender  learning of
another Event of Default or Unmatured  Event of Default that has occurred and is
continuing, which is not listed above.

     On August 17,  2001,  we purchased  several oil and natural gas  properties
located in four fields in Texas and Louisiana (the "Goldking Acquisition").  The
effective date of the acquisition was July 1, 2001. The acquired  properties are
currently producing an aggregate 600 barrels of oil and 1,200 Mcf of natural gas
per day, with total proved reserves (net to the acquired interests) estimated at
1.2 million  barrels of oil and 9.5 billion cubic feet of natural gas. There are
additional  possible reserves estimated at 10 billion cubic feet of natural gas.
The purchase price of the  acquisition was $15 million in a combination of notes
payable,  preferred  stock,  cash,  warrants  and common  stock.  Financing  was
arranged  through  an  existing  credit  facility  and  included  expanding  the
company's credit line to continue the development of its properties  through the
year 2002.

     Effective  December 1, 200l and amended August 16, 2002, we entered into an
Oil and Gas Property  Acquisition,  Exploration and  Development  Agreement (the
"Summit  Agreement") with Summit  Investment  Group-Texas,  L.L.C., an unrelated
party, ("Summit").  Under the agreement,  Summit will provide or makes available
to us payments in the aggregate of  $1,200,000  in advanced  funds (the Advanced
Funds") for our use in the  acquisition  of oil and gas leases and other mineral
and  royalty  interests  in  order  that we may  conduct  specified  oil and gas
exploration  and  production  activities.  We will pay Summit a sourcing  fee of
$100,000 and expenses of $100,000  from the  Advanced  Funds.  We agree to drill
four (4) wells  located  on oil and gas  properties  acquired  under the  Summit
Agreement  (the  "Obligation  Wells") and to commence such drilling prior to the
expiration of two (2) years from the effective date of the Summit Agreement.  We
will pay Summit  $150,000 on or before the date of  commencement  of drilling of
each  Obligation  Well and Summit shall assign us its interest in the applicable
oil and gas leases attributable to the production unit for such well. We further
agree to conduct well workover  operations on certain existing wells acquired by
us, which are located on lands described in the Summit Agreement,  all such well
workover  operations  to be  completed  within nine (9) months of the  Effective
Date.  Summit will reserve a 2.5%  overriding  royalty  interest in the drilling
prospect leases and a 25% net profits interest in the workover leases.

     The Advanced Funds shall be recouped by Summit in the following manner:

     (a)  A total of  $600,000  shall be repaid out of an  undivided  40% of the
          "Summit Net Profits Interest", defined as twenty five percent (25%) of
          the monthly net sale proceeds of all oil and gas production  allocable
          to our interest in the pertinent oil and gas properties, as more fully

                                       24


          defined in the Summit  Agreement.  Summit will retain an 8.5%  working
          interest in the workover leases after payment of the $600,000.

     (b)  We shall  pay  $150,000  in cash to  Summit  on the  date we  commence
          drilling each Obligation Well; or

     (c)  By virtue of a lump sum production payment by us.

     If, at the expiration of two (2) years from the Effective Date,  Summit has
not completely recouped the Advanced Funds from the payments referred to in (a),
(b) and (c) above, then Summit, at its sole election,  may require that we issue
to it a  quantity  of  our  Common  Stock  equivalent  to  the  quotient  of the
outstanding Advanced Funds (numerator) and $2.00 per share  (denominator).  Upon
issuance of such stock to Summit,  Summit shall assign to us all its interest in
the remaining  oil and gas  properties  within the subject  area,  reserving its
overriding royalty interest in the properties.

Inflation and Changes in Prices.

     While the general level of inflation  affects certain costs associated with
the petroleum  industry,  factors  unique to the industry  result in independent
price  fluctuations.  Such price  changes have had, and will  continue to have a
material   effect  on  our   operations;   however,   we  cannot  predict  these
fluctuations.

     The following  table indicates the average crude oil and natural gas prices
received over the last three years by quarter.  Average prices per barrel of oil
equivalent,   computed  by  converting  natural  gas  production  to  crude  oil
equivalents  at the rate of 6 Mcf per barrel,  indicate the composite  impact of
changes in crude oil and natural gas prices.

                                         Average Prices
                    ------------------------------------------------------------
                      Crude Oil                                      Per
                         And                 Natural             Equivalent
                       Liquids                 Gas                 Barrel
                    -----------------     ----------------      ----------------
                      (per Bbl)             (per Mcf)

     2002
     ----
     First          $    19.40            $      2.81           $       18.31
     Second              20.75                   3.16                   19.83
     Third               22.04                   2.87                   19.67
     Fourth              22.38                   3.56                   22.11

     2001
     ----
     First          $    24.15           $       5.27           $       27.87
     Second              24.14                   3.88                   23.71
     Third               23.25                   3.08                   21.08
     Fourth              19.94                   2.62                   17.96

     2000
     ----
     First          $    26.06           $       2.73           $       21.23
     Second              25.14                   3.19                   21.89
     Third               25.79                   3.90                   24.42
     Fourth              27.38                   4.68                   27.74

                                       25


ITEM 7a. Qualitative and Quantitative Disclosures About Market Risk.

     Information with respect to qualitative  disclosures about material risk is
contained in Item 1 "Risk Factors".

     Information  with respect to quantitative  disclosures  about material risk
follow:

     All of the  Company's  financial  instruments  are for purposes  other than
trading. The Company only enters derivative financial instruments in conjunction
with its oil and gas hedging activities.

     Hypothetical  changes in interest rates and prices chosen for the following
stimulated   sensitivity  effects  are  considered  to  be  reasonably  possible
near-term changes generally based on consideration of past fluctuations for each
risk  category.  It is not  possible to  accurately  predict  future  changes in
interest rates and product prices.  Accordingly,  these hypothetical changes may
not be an indicator of probable future fluctuations.

Interest Rate Risk

     The Company is exposed to interest rate risk on debt with variable interest
rates.  At  December  31,  2002,  the  Company  carried  variable  rate  debt of
$38,598,511.  Assuming a one percentage point change at December 31, 2002 on the
Company's  variable  rate debt,  the annual pretax income (loss) would change by
$385,985.

Commodity Price Risk

     The Company hedges a portion of its price risks associated with its oil and
natural gas sales which are classified as derivative instruments. As of December
31, 2002, these derivative instruments' assets had a fair value of $(1,128,993).
Fair value was  estimated  based upon the net present  value of expected  future
cash flows,  comparing  prices for oil and gas in the hedge contract with quoted
oil and gas futures  prices.  A hypothetical  change in oil and gas prices could
have an effect on oil and gas futures  prices,  which are used to  estimate  the
fair value of our  derivative  instrument.  However,  it is not  practicable  to
estimate  the  resultant  change,  in any,  in the fair value of our  derivative
instrument.

ITEM 8. Financial Statements and Supplementary Data.

     Information  with  respect  to this Item 8 is  contained  in our  financial
statements beginning on Page F-1 of this Annual Report.


ITEM 9. Changes In and Disagreements With Accountants and Accounting and Financial Disclosure.

     None

                                       26



                                    PART III


ITEM 10. Directors and Executive Officers of the Registrant.

     The following  table sets forth  information on our directors and executive
officers:

                                                             Year First Elected
Name                          Age Position                   Director or Officer
----                          --- --------                   -------------------

J. Virgil Waggoner(1)(2)(3)   75  Chairman of the Board           1997

Thomas R. Kaetzer(3)          44  Chief Executive Officer         1998
                                  President and Director

Jim C. Bigham                 67  Executive Vice President        1991
                                  and Secretary

Richard L. Creel              54  Vice President of Finance       1998
                                  and Controller

Marshall A. Smith III(3)      55  Director                        1989

John E. Loehr(1)(2)(3)        57  Director                        1992

William T. Winston            36  Director                        2000

Steven M. Morris(1)(2)        51  Director                        2000

John P. Boylan(1)             36  Director                        2001

         (1)      Member of the Audit Committee.
         (2)      Member of the Compensation Committee.
         (3)      Member of the Executive Committee.

     J. Virgil  Waggoner has served as a director of GulfWest  since December 1,
1997.  Mr.  Waggoner's  career in the  petrochemical  industry began in 1950 and
included senior management  positions with Monsanto Company and El Paso Products
Company,  the petrochemical  and plastics unit of El Paso Company.  He served as
president  and chief  executive  officer of Sterling  Chemicals,  Inc.  from the
firm's  inception  in 1986  until  its sale and his  retirement  in 1996.  He is
currently chief executive officer of JVW Investments, Ltd., a private company.

     Thomas R. Kaetzer was appointed  senior vice president and chief  operating
officer of  GulfWest  on  September  15,  1998 and on  December  21, 1998 became
president and a director.  On March 20, 2001, he was appointed  chief  executive
officer.  Mr.  Kaetzer  has 17  years  experience  in the oil and gas  industry,
including 14 years with Texaco Inc., which involved the evaluation, exploitation
and  management  of oil  and  gas  assets.  He has  both  onshore  and  offshore
experience  in  operations  and  production   management,   asset   acquisition,
development,  drilling and workovers in the  continental  U.S.,  Gulf of Mexico,
North Sea,  Colombia,  Saudi Arabia,  China and West Africa.  Mr.  Kaetzer has a
Masters Degree in Petroleum Engineering from Tulane University and a Bachelor of
Science Degree in Civil Engineering from the University of Illinois.

                                       27



     Jim C.  Bigham has served as  secretary  since 1991 and as  executive  vice
president of GulfWest since 1996. Prior to joining GulfWest,  he held management
and sales  positions in the real estate and printing  industries.  Mr. Bigham is
also a retired  United States Air Force Major.  During his military  career,  he
served  in  both  command  and  staff  officer  positions  in  the  operational,
intelligence and planning areas.

     Richard L. Creel has served as controller of GulfWest since May 1, 1997 and
was  elected  vice  president  of  finance  on May 28,  1998.  Prior to  joining
GulfWest, Mr. Creel served as Branch Manager of the Nashville,  Tennessee office
of Management Reports and Services, Inc. He has also served as controller of TLO
Energy  Corp.  He has  extensive  experience  in general  accounting,  petroleum
accounting, and financial consulting and income tax preparation.

     Marshall A. Smith III founded  GulfWest and served as an officer in various
capacities,  including  president,  chief executive  officer and chairman of the
board,  from July 1989 until his resignation in May 2002. He is currently a paid
consultant and remains a director.

     John E. Loehr has served as a director of GulfWest since 1992, was chairman
of the board  from  September  1,  1993 to July 8, 1998 and was chief  financial
officer from November 22, 1996 to May 28, 1998. He is also  currently  president
and sole  shareholder of ST Advisory  Corporation,  an investment  company,  and
vice-president of Star-Tex Trading Company,  also an investment  company. He was
formerly president of Star-Tex Asset Management,  a  commodity-trading  advisor,
and a position he held from 1988 until 1992 when he sold his ownership interest.
Mr.  Loehr is a CPA and a member of the American  Institute of Certified  Public
Accountants.

     William  T.  Winston  joined  GulfWest  in April  1999 and  served  as vice
president  from May 2000 until  March 29,  2002.  He became a director in August
2001.  While  vice  president,  he was  responsible  for  business  development,
including identifying and evaluating pipeline and gathering system acquisitions,
and assisting in the  evaluation  for  production  acquisitions.  Before joining
GulfWest, Mr. Winston was in charge of field operations and project planning for
Eagle Natural Gas Co., a privately  held natural gas gathering  company based in
Houston.  He served six years in the United States Army and Texas National Guard
and holds a Bachelor of Arts Degree in Government  from the  University of Texas
at Austin.

     Steven M.  Morris was  appointed a director of GulfWest on January 6, 2000.
He was the president of Pozo Resources, Inc., an oil and gas production company,
until its asset were sold to GulfWest  on December  31,  1999.  Mr.  Morris is a
certified public accountant and president of Pentad Enterprises, Inc., a private
investment  firm in Houston,  Texas.  He is  currently a director of the Bank of
Tanglewood,  Houston, Texas, and Quicksilver Resources,  Inc., a publicly traded
oil and gas exploration and production company with offices in Ft. Worth, Texas.
In a subsequent  event,  Mr. Morris resigned as a director for personal  reasons
effective January 7, 2003.

     John P. Boylan was appointed a director of GulfWest on August 7, 2001.  Mr.
Boylan has served as Managing  Partner and Chief  Executive  Officer of Birdwell
Partners,   L.P.,  the  parent   company  and  General   Partner  of  Five  Star
Transportation,  Superior Trucking Company and American Pipe Inspection  Company
since 1999.  He began his career in the oil and gas  industry in 1993  providing
venture funding for lease  acquisition and drilling  projects,  and from 1996 to
present  has  been  actively  involved  in  the  management  of  an  independent
exploration  and production  company.  He has had experience in all of the major
producing  trends covering the Texas Gulf Coast and South Texas. He received the
degree of Bachelor of Business Administration,  with a major in Accounting, from
the  University  of  Texas  in  1988  and  the  degree  of  Master  of  Business
Administration,  with majors in Finance,  Economics and  International  Business
from the Leonard N. Stern Graduate  School of Business of New York University in
1995.  Mr. Boylan has been a Certified  Public  Accountant in the State of Texas
since 1991.

                                       28


     Our  directors  are elected  annually and hold office until the next annual
meeting  of  shareholders  and  until  their  successors  are duly  elected  and
qualified. The board of directors met six times during the calendar year ended
December 31, 2002.

Committees of the Board of Directors.

     Our board of directors has established an audit  committee,  a compensation
committee and an executive committee.  The functions of these committees,  their
current  members,  and the number of meetings  held  during  2002 are  described
below.

     The audit  committee  was  established  to review  and  appraise  the audit
efforts  of our  independent  auditors,  and  monitor  the  company's  accounts,
procedures  and  internal  controls.  The  committee is comprised of Mr. John E.
Loehr (Chairman),  Mr. J. Virgil Waggoner,  Mr. John P. Boylan and Mr. Steven M.
Morris. The committee met twice in 2002.

     The function of the  compensation  committee is to fix the annual  salaries
and other  compensation  for the officers and key employees of the Company.  The
committee is comprised of Mr. J. Virgil Waggoner  (Chairman),  Mr. John E. Loehr
and Mr. Steven M. Morris. The committee met twice in 2002.

Compensation of Directors.

     The  shareholders  approved an amended and restated  Employee  Stock Option
Plan on May 28, 1998,  which  included a provision for the payment of reasonable
fees in cash or stock to  directors.  No fees were paid to  directors in 2002 or
2001.

                                       29


ITEM 11. Executive Compensation.

     Information  regarding  executive  compensation is  incorporated  herein by
reference to our Proxy Statement.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management.

     Information  regarding  security ownership of certain beneficial owners and
management is incorporated herein by reference to our Proxy Statement.

ITEM 13. Certain Relationships and Related Transactions.

     Information  regarding certain  relationships  and related  transactions is
incorporated herein by reference to our Proxy Statement.

ITEM 14. Controls and Procedures

     Within  ninety  days  of  the  date  of  this  Report,  we  carried  out an
evaluation,  under the  supervision  and with the  participation  of management,
including  the Chief  Executive  Officer  and Chief  Financial  Officer,  of our
disclosure  controls and procedures (as defined in Rules 13a-14 and 15d-14 under
the  Securities  Exchange Act of 1934).  Based upon that  evaluation,  the Chief
Executive  Officer and Chief  Financial  Officer  concluded  that our disclosure
controls  and  procedures  are  effective  in timely  alerting  them to material
information  required to be included in periodic filings with the Securities and
Exchange Commission.  There were no significant changes in our internal controls
or in other  factors that could  significantly  affect these  internal  controls
subsequent to the date of our most recent evaluation.

                                       30


                  GLOSSARY OF INDUSTRY TERMS AND ABBREVIATIONS

     The following are definitions of certain  industry terms and  abbreviations
used in this report:

Bbl.  Barrel.

BOE. Barrel of oil  equivalent,  based on a ratio of 6,000 cubic feet of natural
gas for each barrel of oil.

Gross Acres or Gross  Wells.  The total  acres or wells,  as the case may be, in
which a working interests is owned.

Horizontal Drilling. High angle directional drilling with lateral penetration of
one or more productive reservoirs.

Mcf. One thousand cubic feet.

Net Acres or Net Wells.  The sum of the fractional  working  interests  owned in
gross acres or gross wells.

Overriding  Royalty  Interest.  The right to receive a share of the  proceeds of
production from a well, free of all costs and expenses, except transportation.

Present Value. The pre-tax present value,  discounted at 10%, of future net cash
flows  from  estimated  proved  reserves,  calculated  holding  prices and costs
constant at amounts in effect on the date of the report  (unless  such prices or
costs are subject to change pursuant to contractual provisions) and otherwise in
accordance  with the  Commission's  rules for  inclusion  of oil and gas reserve
information in financial statements filed with the Commission.

Proceeds of Production.  Money received  (usually  monthly) from the sale of oil
and gas produced from producing properties.

Producing Properties. Properties that contain one or more wells that produce oil
and/or gas in paying quantities (i.e., a well for which proceeds from production
exceed operating expenses).

Productive  Well.  A well that is  producing  oil or gas or that is  capable  of
production.

Prospect.  A lease or group of leases containing  possible reserves,  capable of
producing  crude  oil,  natural  gas,  or  natural  gas  liquids  in  commercial
quantities,  either at the time of acquisition,  or after vertical or horizontal
drilling, completion of workovers, recompletions, or operational modifications.

Proved Reserves. Estimated quantities of crude oil, natural gas, and natural gas
liquids  that  geological  and  engineering  data  demonstrate  with  reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic conditions; i.e., prices and costs as of the date the estimate is made.
Reservoirs  are  considered  proved if either actual  production or a conclusive
formation test supports economic production.

     The area of a reservoir considered proved includes:

     a.   That  portion  delineated  by  drilling  and  defining  by  gas-oil or
          oil-water contacts, if any; and

                                       31



     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.  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.

     Proved Reserves do not include:

     a.   Oil that may become  available from known reservoirs but is classified
          separately as "indicated additional reserves";

     b.   Crude oil, natural gas, and natural gas liquids, the recovery of which
          is subject to reasonable  doubt because of  uncertainty as to geology,
          reservoir characteristics, or economic factors;

     c.   Crude oil,  natural  gas,  and natural  gas liquids  that may occur in
          undrilled prospects; and

     d.   Crude oil,  natural gas, and natural gas liquids that may be recovered
          from oil shales and other sources.

Proved Developed Reserves. 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 should be included as proved developed only after testing by
a pilot project or after operation of an installed program has confirmed through
production response that increased recovery will be achieved.

Proved Undeveloped Reserves. Reserves that are expected to be recovered from new
wells on  undrilled  acreage or from  existing  wells where a  relatively  major
expenditure is required for recompletion. 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 units that have
not been drilled 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
proven effective by actual tests in the area and in the same reservoir.

Recompletion.  The completion for production of an existing  wellbore in another
formation from that in which the well has previously been completed.

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

Royalty.  The right to a share of production  from a well, free of all costs and
expenses, except transportation.

Royalty Interest.  An interest in an oil and gas property entitling the owner to
a share of oil and natural gas production free of costs of production.

                                       32


Standardized  Measure. The present value,  discounted at 10%, of future net cash
flows from estimated proved  reserves,  after income taxes,  calculated  holding
prices and costs constant at amounts in effect on the date of the report (unless
such prices or costs are subject to change  pursuant to contractual  provisions)
and otherwise in accordance with the Commission's rules for inclusion of oil and
gas reserve information in financial statements filed with the Commission.

Waterflood.  An engineered,  planned effort to inject water into an existing oil
reservoir  with the intent of  increasing  oil reserve  recovery and  production
rates.

Working Interest.  The operating  interest under a lease, the owner of which has
the right to explore for and produce oil and gas covered by such lease. The full
working  interest  bears 100 percent of the costs of  exploration,  development,
production,  and operation, and is entitled to the portion of gross revenue from
the proceeds of production which remains after proceeds allocable to royalty and
overriding royalty interests or other lease burdens have been deducted.

Workover.  Rig work  performed  to restore an  existing  well to  production  or
improve its production from the current existing reservoir.

                                       33

                                    PART III

ITEM 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

     (a)  The following documents are filed as part of this Report:

          (1)  Financial Statements: Consolidated Balance Sheets at December 31,
               2002 and 2001.  Consolidated  Statements  of  Operations  for the
               years  ended  December  31,  2002,  2001 and  2000.  Consolidated
               Statements of  Stockholders'  Equity for the years ended December
               31, 2002,  2001 and 2000.  Consolidated  Statements of Cash Flows
               for the years ended  December 31, 2002,  2001 and 2000.  Notes to
               Consolidated  Financial  Statements,  December 31, 2002, 2001 and
               2000.

          (2)  Financial  Statement  Schedule:   Schedule  II  -  Valuation  and
               Qualifying Accounts

          (3)  Exhibits:

          Number Description
          ------ -----------

          *3.1   Articles of Incorporation of the Registrant and Amendments
                 thereto.

          *3.2   Bylaws of the Registrant.

          %10.1  GulfWest Oil Company 1994 Stock Option and  Compensation  Plan,
                 amended and restated as of April 1, 2001 and approved by the
                 shareholders on May 18, 2001.

           22.1  Subsidiaries of the Registrant (included on page 3 of this
                 Annual Report).

           25    Power of Attorney (included on signature page of this Annual
                 Report).
-----------------
            *    Previously filed with the Company's Registration Statement
                 (on Form S-1, Reg. No. 33-53526),  filed with the Commission
                 on October 21, 1992.
            %    Previously  filed with the Company's Proxy Statement on Form
                 DEF 14A, filed with the Commission on April 16, 2001.

     (b)  Reports on Form 8-K.

          None.

                                       34

                               S I G N A T U R E S

     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.

                                               GULFWEST ENERGY INC.

Date:  April 9, 2003                           By  \s\ Thomas R. Kaetzer
                                               ----------------------------
                                                   Thomas R. Kaetzer, President

                                POWER OF ATTORNEY

     Know all men by these presents,  that each person whose  signature  appears
below  constitutes  and  appoints  Thomas  R.  Kaetzer  as his true  and  lawful
attorney-in-fact and agent, with full power of substitution,  for him and in his
name, place, and stead, in any and all capacities to sign any and all amendments
or  supplements  to this Annual Report on Form 10-K,  and to file the same,  and
with all exhibits thereto and other documents in connection therewith,  with the
Securities  and Exchange  Commission,  granting unto said  attorney-in-fact  and
agent full power and  authority  to do and perform  each and every act and thing
requisite  and  necessary  to be done as fully to all intents and purposes as he
might or could do in  person,  hereby  ratifying  and  confirming  all that said
attorney-in-fact and agent or his substitute or substitutes,  may lawfully do or
cause to be done by virtue hereof.

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

     Signature            Title                                    Date
-----------------------   -----------------------------------    ---------------

\s\ J. Virgil Waggoner    Chairman of the Board                   April 9, 2003
----------------------
J. Virgil Waggoner

\s\ Thomas R. Kaetzer     President, Chief Executive Officer      April 9, 2003
----------------------
Thomas R. Kaetzer         and Director

\s\ Jim C. Bigham         Executive Vice President and Secretary  April 9, 2003
----------------------
Jim C. Bigham

\s\ Richard L. Creel      Vice President of Finance, Controller   April 9, 2003
----------------------
Richard L. Creel

\s\ William T. Winston    Director                                April 9, 2003
----------------------
William T. Winston

\s\ Marshall A. Smith III Director                                April 9, 2003
-------------------------
Marshall A. Smith III

\s\ John E. Loehr         Director                                April 9, 2003
-----------------
John E. Loehr

\s\ John P. Boylan        Director                                April 9, 2003
------------------
John P. Boylan

\s\ Steven M.Morris       Director                                April 9, 2003
-------------------
Steven M. Morris

                                       35








                              GULFWEST ENERGY INC.

                                FINANCIAL REPORT

                                DECEMBER 31, 2002







                                 C O N T E N T S



                                                                           Page



INDEPENDENT AUDITOR'S REPORT
    ON THE FINANCIAL STATEMENTS                                             F-1


FINANCIAL STATEMENTS

    Consolidated balance sheets                                             F-2

    Consolidated statements of operations                                   F-4

    Consolidated statements of stockholders' equity                         F-5

    Consolidated statements of cash flows                                   F-7

    Notes to consolidated financial statements                              F-8


INDEPENDENT AUDITOR'S REPORT ON
    THE FINANCIAL STATEMENT SCHEDULE                                        F-30


FINANCIAL STATEMENT SCHEDULE

    Schedule II - Valuation and Qualifying Accounts                         F-31

    All other Financial Statement Schedules have
      been omitted because they are either
      inapplicable or the information required is
      included in the financial statements or
      the notes thereto.



                          INDEPENDENT AUDITOR'S REPORT



To the Stockholders and
     Board of Directors
GULFWEST ENERGY INC.



We have audited the accompanying  consolidated balance sheets of GulfWest Energy
Inc. (a Texas  Corporation)  and  Subsidiaries as of December 31, 2002 and 2001,
and the related consolidated statements of operations,  stockholders' equity and
cash flows for each of the three years in the period  ended  December  31, 2002.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  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  consolidated  financial  position  of
GulfWest Energy Inc. and  Subsidiaries as of December 31, 2002 and 2001, and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  As shown in the consolidated
financial  statements,  the Company incurred a net loss of $4,502,313 during the
year ended  December  31,  2002,  and,  as of that date,  had a working  capital
deficiency of $41,645,520.  Those conditions raise  substantial  doubt about the
Company's ability to continue as a going concern.  Management's  plans regarding
those  matters  described in Note 2,  "Operations  and  Management  Plans".  The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


\s\WEAVER AND TIDWELL, L.L.P
------------------------------
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
March 24, 2003

                                      F-1




                      GULFWEST ENERGY INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2002 AND 2001


                                                         ASSETS


                                                                                   ----------------      -----------------
                                                                                        2002                   2001
                                                                                   ----------------      -----------------
CURRENT ASSETS
     Cash and cash equivalents                                                     $     687,694         $      689,030
     Accounts receivable - trade, net of allowance
          for doubtful accounts of $-0- in 2002 and 2001                               1,361,446              1,392,751
     Prepaid expenses                                                                    303,906                124,081
                                                                                   ----------------      -----------------
               Total current assets                                                    2,353,046              2,205,862
                                                                                   ----------------      -----------------


OIL AND GAS PROPERTIES,
     using the successful efforts method of accounting                                56,786,043             52,045,178


OTHER PROPERTY AND EQUIPMENT                                                           2,121,410              2,352,166
     Less accumulated depreciation, depletion and amortization                        (8,498,497)            (6,235,251)
                                                                                   ----------------      -----------------

     Net oil and gas properties and other property and equipment                      50,408,956             48,162,093
                                                                                   ----------------      -----------------


OTHER ASSETS
     Deposits                                                                             37,442                 37,442
     Debt issue cost, net                                                                289,497                506,230
     Derivative instruments                                                                                     467,582
                                                                                   ----------------      -----------------
               Total other assets                                                         326,939             1,011,254
                                                                                   ----------------      -----------------

TOTAL ASSETS                                                                       $   53,088,941           $51,379,209
                                                                                   ================      =================















The Notes to Consolidated Financial Statements are an integral part of  these statements.
                                      F-2












                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                                                                   ----------------      -----------------
                                                                                        2002                   2001
                                                                                   ----------------      -----------------
CURRENT LIABILITES
     Notes payable                                                                 $    4,936,088          $   2,821,020
     Notes payable - related parties                                                    1,290,000                 40,000
     Current portion of long-term debt                                                 33,128,447              6,065,588
     Current portion of long-term debt - related parties                                  256,967                222,687
     Accounts payable - trade                                                           3,928,477              3,099,399
     Accrued expenses                                                                     458,587                243,671
                                                                                   ----------------      -----------------
               Total current liabilities                                               43,998,566             12,492,365
                                                                                   ----------------      -----------------

NONCURRENT LIABILITIES
     Long-term debt, net of current portion                                               126,552             26,330,589
     Long-term debt - related parties                                                      11,256                211,368
                                                                                   ----------------      -----------------
               Total noncurrent liabilities                                               137,808             26,541,957
                                                                                   ----------------      -----------------

OTHER LIABILITES
     Derivative instruments                                                            1,128,993
                                                                                   ----------------      -----------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
     Preferred stock                                                                         170                     170
     Common stock                                                                         18,493                  18,493
     Additional paid-in capital                                                       28,258,212              28,164,712
     Retained deficit                                                                (20,453,301)            (15,838,488)
                                                                                   ----------------      -----------------
               Total stockholders' equity                                              7,823,574              12,344,887
                                                                                   ----------------      -----------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $  53,088,941         $    51,379,209
                                                                                   ================      =================











The Notes to Consolidated Financial Statements are an integral part of  these statements.
                                      F-3


                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


                                                                    2002                   2001                 2000
                                                               ----------------      -----------------    -----------------
                                                               ----------------      -----------------    -----------------

OPERATING REVENUES
     Oil and gas sales                                         $   10,447,169        $    12,426,103      $      8,445,932
     Well servicing revenues                                           39,116                169,167               188,052
     Operating overhead and other income                              353,512                395,311               350,191
                                                               ----------------      -----------------    -----------------
          Total Operating Revenues                                 10,839,797             12,990,581             8,984,175
                                                               ----------------      -----------------    -----------------
OPERATING EXPENSES
     Lease operating expenses                                       5,430,205              5,155,500             3,377,583
     Cost of well servicing operations                                 56,295                182,180               212,286
     Depreciation, depletion and amortization                       2,697,784              2,491,385             1,341,890
     General administrative                                         1,727,858              1,709,641             1,588,399
                                                               ----------------      -----------------    -----------------
          Total Operating Expenses                                  9,912,142              9,538,706             6,520,158
                                                               ----------------      -----------------    -----------------
INCOME FROM OPERATIONS                                                927,655              3,451,875             2,464,017
                                                               ----------------      -----------------    -----------------
OTHER INCOME AND EXPENSE
     Interest income                                                                                                16,082
     Interest expense                                              (3,159,381)            (2,756,912)           (2,134,718)
     Gain (loss) on sale of assets                                    (56,647)              (118,254)                7,393
     Unrealized gain (loss) on derivative instruments              (1,596,575)             4,215,017
     Dry holes, abandoned property and impaired assets               (617,365)
                                                               ----------------      -----------------    -----------------
          Total Other Income and (Expense)                          5,429,968              1,339,851            (2,111,243)
                                                               ----------------      -----------------    -----------------
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE
  EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES                        (4,502,313)             4,791,726               352,774
INCOME TAXES
                                                               ----------------      -----------------    -----------------
INCOME (LOSS) BEFORE CUMULATIVE FFECT OF CHANGE
  IN ACCOUNTING PRINCIPLES                                         (4,502,313)             4,791,726               352,774
CUMULATIVE EFFECT OF CHANGE IN
  ACCOUNTING PRINCIPLES, NET OF INCOME TAXES
                                                                                          (3,747,435)
                                                               ----------------      -----------------    -----------------
NET INCOME (LOSS)                                              $   (4,502,313)       $     1,044,291      $        352,774
DIVIDENDS ON PREFERRED STOCK
  (PAID 2002-$112,500; 2001-$28,125; 2000-$76,992)                   (112,500)               (56,250)
                                                               ----------------      -----------------    -----------------
NET INCOME (LOSS) AVAILABLE TO COMMON
  SHAREHOLDERS                                                 $   (4,614,813)       $       988,041      $        352,774
                                                               ================      =================    =================
NET INCOME (LOSS) PER SHARE, BASIC
 BEFORE CUMULATIVE EFFECT OF CHANGE
 IN ACCOUNTING PRINCIPLES                                      $         (.25)       $           .25      $            .02
 CUMULATIVE EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLES                                                                      (.20)
                                                               ----------------      -----------------    -----------------
NET INCOME (LOSS) PER SHARE BASIC                              $         (.25)       $           .05      $             .02
                                                               ================      =================    =================
NET INCOME (LOSS) PER SHARE, DILUTED BEFORE CUMULATIVE
EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLES                                         $         (.25)       $           .23      $             .02
CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLES                                                                          (.18)
                                                               ----------------      -----------------    -----------------
NET INCOME (LOSS) PER SHARE, DILUTED                           $         (.25)       $           .05      $             .02
                                                               ================      =================    =================

                                      F-4





                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000






                                                                              -------------------------------
                                                                                     Number of Shares
                                                                              -------------------------------
                                                                              -------------- -- -------------
                                                                                Preferred          Common
                                                                                  Stock            Stock
                                                                              --------------    -------------
                                                                              --------------    -------------
         BALANCE, December 31, 1999                                                   8,815       15,696,882

              Conversion of 815 shares of AAA preferred stock and unpaid
                   dividends to 538,222 shares of common stock                         (815)         538,322
              Issuance of 2,209,837 shares of common stock, net of offering costs
                   (1,143,837 through private placement, 200,000 for acquisition of
                   assets, 866,000 in exchange for debt)                                           2,209,837
              Issuance of warrants and options for services and additional financing
              Netting of related party receivables and payables
              Provision for bad debts - receivables from related parties
              Net income
                                                                              --------------    -------------

         BALANCE, December 31, 2000                                                   8,000       18,445,041
              Issuance of 9,000 shares of Series E preferred stock for the
                acquisition of assets                                                 9,000
              Issuance of 47,500 shares of common stock for the acquisition of
                assets                                                                                47,500
              Issuance of warrants for the acquisition of assets
              Net income
              Dividends paid on preferred stock
                                                                              --------------    -------------


         BALANCE, December 31, 2001                                                  17,000       18,492,541
              Issuance of warrants for additional financing
              Net loss
              Dividends paid on preferred stock
                                                                              --------------    -------------

         BALANCE, December 31, 2002                                                  17,000       18,492,541
                                                                              ==============    =============














The Notes to Consolidated Financials are an integral part of these statements.

                                      F-5















   Common                     Preferred              Additional                  Retained              Receivables from
    Stock                      Stock              Paid-In Capital                 Deficit              Related Parties
----------------------    --------------------   ----------------------    ----------------------    ---------------------
$     15,697              $        88            $     21,321,909          $      (17,130,436)       $       (152,474)

         538                       (8)                     76,463                     (76,992)


       2,210                                            2,123,868
                                                           15,660
                                                                                                              112,226
                                                                                                               40,248
                                                                                      352,774
----------------------    --------------------   ----------------------    ----------------------    ---------------------
$     18,445              $        80            $     23,537,900          $      (16,854,654)       $      -

                                   90                   4,499,910

          48                                               35,402
                                                           91,500
                                                                                    1,044,291
                                                                                      (28,125)
----------------------    --------------------   ----------------------    ----------------------    ---------------------

$     18,493              $       170            $     28,164,712          $      (15,838,488)       $       -
                                                           93,500
                                                                                   (4,502,313)
                                                                                     (112,500)
----------------------    --------------------   ----------------------    ----------------------    ---------------------
$     18,493              $       170            $     28,258,212          $      (20,453,301)       $       -
======================    ====================   ======================    ======================    =====================
















The Notes to Consolidated Financials are an integral part of these statements.

                                      F-6




                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


                                                                             2002               2001                2000
                                                                        ---------------    ----------------    ---------------
                                                                        ---------------    ----------------    ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                  $   (4,502,313)    $     1,044,291     $      352,774
     Adjustments to reconcile net income (loss) to net cash
          Provide by (used in) operating activities:
               Depreciation, depletion and amortization                      2,697,784           2,491,385          1,341,890
               Common  stock and  warrants  issued and  charged to
               operations                                                       93,500                                 15,660
               (Gain) loss on sale of assets                                    56,647             118,254             (7,393)
               Dry holes, abandoned property, impaired assets                  617,365
               Unrealized (gain) loss on derivative instruments              1,596,575          (4,215,017)
               Cumulative effect of accounting change                                            3,747,435
               Other non-operating income                                                                              (5,780)
               Provision for bad debts                                                                                 40,248
               (Increase)decrease in accounts receivable - trade, net         (109,437)            765,939         (1,344,767)
               (Increase) decrease in prepaid expenses                        (179,825)            (40,730)            (3,588)
               Increase (decrease)in accounts payable and accrued expenses   1,043,994             797,800          1,710,769
                                                                        ---------------    ----------------    ---------------
                  Net cash provided by operating activities                  1,314,290           4,709,357          2,099,813
                                                                        ---------------    ----------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Deposits                                                                                      (9,804)
     Proceeds from sale of property and equipment                              675,440            394,423              14,915
     Purchase of property and equipment                                     (5,861,969)        (6,962,650)         (6,126,817)
                                                                        ---------------    ----------------    ---------------
                  Net cash used in investing activities                     (5,186,529)        (6,578,031)         (6,111,902)
                                                                        ---------------    ----------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of common stock, net                                                                          795,378
     Payments on debt                                                       (3,410,778)        (6,577,928)         (1,733,513)
     Proceeds from debt issuance                                             7,394,181          8,530,269           5,694,510
     Debt issue cost                                                                              (29,544)           (368,554)
     Dividends paid                                                           (112,500)           (28,125)
                                                                        ---------------    ----------------    ---------------
                  Net cash provided by financing activities                  3,870,903          1,894,672           4,387,821                                            ---------------    ----------------    ---------------
                                                                        ---------------    ----------------    ---------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                (1,336)            25,998             375,732

CASH AND CASH EQUIVALENTS,
     Beginning of year                                                         689,030            663,032             287,300
                                                                        ---------------    ----------------    ---------------

CASH AND CASH EQUIVALENTS,
     End of year                                                        $      687,694     $      689,030      $      663,032
                                                                        ===============    ================    ===============

CASH PAID FOR INTEREST                                                  $    3,004,015     $    2,811,677      $    2,041,630
                                                                        ===============    ================    ================











The Notes to Consolidated Financial Statements are an integral part of these statements.

                                      F-7



                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Summary of Significant Accounting Policies

          The  following  is a summary of the  significant  accounting  policies
          consistently   applied  by  management  in  the   preparation  of  the
          accompanying consolidated financial statements.

          Organization/Concentration of Credit Risk

               GulfWest  Energy Inc. and our  subsidiaries  intend to pursue the
          acquisition  of  quality  oil and gas  prospects,  which  have  proved
          developed and  undeveloped  reserves and the  development of prospects
          with third party industry partners.

               The accompanying  consolidated  financial  statements include our
          company and its wholly-owned subsidiaries:  RigWest Well Service, Inc.
          ("RigWest"),  GulfWest  Texas  Company  ("GWT"),  both formed in 1996;
          DutchWest  Oil  Company  formed  in 1997;  SETEX  Oil and Gas  Company
          ("SETEX") formed August 11, 1998; Southeast Texas Oil and Gas Company,
          L.L.C.  ("Setex LLC") acquired September 1, 1998; GulfWest Oil and Gas
          Company  formed  February 18, 1999;  LTW Pipeline Co. formed April 19,
          1999; GulfWest Development Company ("GWD") formed November 9, 2000 and
          GulfWest Oil and Gas Company  (Louisiana)  LLC,  formed July 31, 2001.
          All material  intercompany  transactions  and balances are  eliminated
          upon consolidation.

               We grant credit to  independent  and major oil and gas  companies
          for the sale of crude  oil and  natural  gas.  In  addition,  we grant
          credit to joint owners of oil and gas  properties,  which we,  through
          our  subsidiary,  SETEX,  operate.  Such  amounts  are  secured by the
          underlying ownership interests in the properties. We also grant credit
          to  various  third  parties   through   RigWest  for  well   servicing
          operations.

               We maintain cash on deposit in interest and non-interest  bearing
          accounts,  which, at times,  exceed federally  insured limits. We have
          not  experienced  any losses on such  accounts  and believe we are not
          exposed to any significant credit risk on cash and equivalents.

     Statement of Cash Flows

               We consider all highly liquid  investment  instruments  purchased
          with  remaining  maturities  of  three  months  or  less  to  be  cash
          equivalents for purposes of the consolidated statements of cash flows.

          Non-Cash Investing and Financing Activities:

               During the twelve  month  period  ended  December  31,  2002,  we
          acquired  $74,653 in property and  equipment  through notes payable to
          financial  institutions.  We also  acquired  $182,742 of oil producing
          properties in exchange of accounts receivable from a related party. In
          addition,  we sold property and  equipment,  which included an account
          receivable of $42,000. This receivable was collected in January 2003.

               During the twelve  month  period  ended  December  31,  2001,  we
          acquired  $15,068,774 in property and equipment through $10,441,824 in
          notes  payable to  financial  institutions  and  related  parties,  by
          issuing  9,000 shares of  preferred  stock  valued at  $4,500,000,  by
          issuing 47,500 shares of common stock valued at $35,450 and by issuing
          150,000  warrants valued at $91,500.  Also, debt issue costs increased
          $170,000 in notes payable.

                                      F-8



                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Summary of Significant Accounting Policies (continued)

     Statement of Cash Flows - Non-cash  Investing  and  Financing  Activities -
         continued

               During the twelve  month  period  ended  December  31,  2000,  we
          acquired $5,434,161 in property and equipment through notes payable to
          financial institutions and related parties of $4,958,163,  in exchange
          of accounts  receivable of $169,798 and by issuing  200,000  shares of
          common  stock valued at $306,200.  In addition,  accounts  payable and
          accrued  expenses  decreased  $312,791,  debt  issue  costs  increased
          $206,875 through notes payable to financial  institutions.  During the
          period,  815 shares of preferred stock, along with unpaid dividends of
          $76,992,  were  converted  to 538,322  shares of common  stock,  notes
          payable of $975,000  (including $750,000 to a director) were converted
          to 800,000 shares of common stock and accounts payable of $49,352 were
          converted  to  66,000shares  of  common  stock.  Also,  related  party
          receivables  of  $112,226  and  accounts  receivable  of $26,950  were
          exchanged  for related party notes payable of $75,000 and for accounts
          payable of $64,176.

     Use of Estimates in the Preparation of Financial Statements

               The   preparation  of   consolidated   financial   statements  in
          conformity  with 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 consolidated  financial  statements
          and the reported amounts of revenues and expenses during the reporting
          period. Actual results could differ from those estimates.

     Oil and Gas Properties

               We use the  successful  efforts  method of accounting for oil and
          gas producing  activities.  Costs to acquire mineral  interests in oil
          and gas  properties,  to drill and equip  exploratory  wells that find
          proved  reserves,  and  to  drill  and  equip  development  wells  are
          capitalized.  Costs to drill exploratory wells that do not find proved
          reserves, and geological and geophysical costs are expensed.

               As we acquire  significant oil and gas  properties,  any unproved
          property that is considered  individually  significant is periodically
          assessed for impairment of value, and a loss is recognized at the time
          of impairment by providing an impairment allowance.  Capitalized costs
          of  producing  oil and gas  properties  and support  equipment,  after
          considering   estimated   dismantlement   and  abandonment  costs  and
          estimated  salvage  values,   are  depreciated  and  depleted  by  the
          unit-of-production method.

               On the sale of an entire interest in an unproved  property,  gain
          or loss on the  sale is  recognized,  taking  into  consideration  the
          amount of any recorded  impairment  if the property has been  assessed
          individually.  If a partial interest in an unproved  property is sold,
          the  amount  received  is treated  as a  reduction  of the cost of the
          interest  retained.  On the sale of an entire or partial interest in a
          proved  property,  gain or loss is  recognized,  based  upon  the fair
          values of the interests sold and retained.

     Other Property and Equipment

               The following  tables set forth certain  information with respect
          to our other property and equipment.  We provide for  depreciation and
          amortization  using  the  straight-line   method  over  the  following
          estimated useful lives of the respective assets:

                       Assets                                      Years
                       ---------------------------------        -------------
                            Automobiles                             3-5
                            Office equipment                         7
                            Gathering system                         10
                            Well servicing equipment                 10

                                      F-9



                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                             NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS


Note 1. Summary of Significant Accounting Policies - continued

     Other Property and Equipment - continued

          Capitalized costs relating to other properties and equipment:

                                                                   2002                  2001
                                                           ---------------------   ------------------
                                                           ---------------------   ------------------
                      Automobiles                          $       420,776         $     446,055
                      Office equipment                             137,362               126,690
                      Gathering system                             529,486               529,486
                      Well servicing equipment                   1,033,786             1,249,935
                                                           ---------------------   ------------------
                                                                 2,121,410             2,352,166

                      Less accumulated depreciation             (1,037,076)             (937,488)
                                                           ---------------------   ------------------

                      Net capitalized cost                 $     1,084,334         $   1,414,678
                                                           =====================   ==================

          Revenue Recognition

                    We recognize oil and gas revenues on the sales method as oil
               and  gas  production  is  sold.  Differences  between  sales  and
               production  volumes  during the years ended  December  31,  2002,
               2001, and 2000 were not significant.  Well servicing revenues are
               recognized  as the  related  services  are  performed.  Operating
               overhead  income is  recognized  based upon  monthly  contractual
               amounts for lease  operations  and other income is  recognized as
               earned.

          Fair Value of Financial Instruments

                    At December  31, 2002 and 2001,  our  financial  instruments
               consist of notes  payable  and  long-term  debt.  Interest  rates
               currently  available to us for notes payable and  long-term  debt
               with similar terms and remaining  maturities are used to estimate
               fair  value  of  such  financial  instruments.  Accordingly,  the
               carrying amounts are a reasonable estimate of fair value.

          Debt Issue Costs

                    Debt issue costs incurred are capitalized  and  subsequently
               amortized  over the term of the related  debt on a  straight-line
               basis.

          Earnings (Loss) Per Share

                    Earnings  (loss)  per share are  calculated  based  upon the
               weighted-average  number of outstanding  common  shares.  Diluted
               earnings   (loss)  per  share  are  calculated   based  upon  the
               weighted-average  number of outstanding  common shares,  plus the
               effect of dilutive stock options, warrants, convertible preferred
               stock and convertible debentures.

          Trade Accounts Receivable

                    Trade accounts  receivable are reported in the  consolidated
               balance  sheet  at the  outstanding  principal  adjusted  for any
               chargeoffs.  An allocation for doubtful accounts is recognized by
               management  based upon a review of  specific  customer  balances,
               historical losses and general economic conditions.

                                      F-10



                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Summary of Significant Accounting Policies - continued

          Earnings (Loss) Per Share - continued

                    We have adopted Statement of Financial  Accounting Standards
               (SFAS) No. 128  "Earnings  Per Share",  which  requires that both
               basic earnings  (loss) per share and diluted  earnings (loss) per
               share be  presented on the face of the  statement of  operations.
               All per-share  amounts are presented on a diluted basis, that is,
               based  upon the  weighted-average  number of  outstanding  common
               shares and the effect of all potentially diluted common shares.

          Impairments

                    Impairments,   measured   using  fair  market   value,   are
               recognized  whenever events or changes in circumstances  indicate
               that  the  carrying  amount  of  long-lived  assets  (other  than
               unproved  oil  and gas  properties  discussed  above)  may not be
               recoverable and the future  undiscounted cash flows  attributable
               to the asset are less than its carrying value.

          Stock Based Compensation

                    In October 1995, SFAS No. 123,  "Stock Based  Compensation,"
               (SFAS 123) was issued.  This  statement  requires  that we choose
               between two different methods of accounting for stock options and
               warrants.  The  statement  defines a  fair-value-based  method of
               accounting for stock options and warrants but allows an entity to
               continue  to  measure  compensation  cost for stock  options  and
               warrants  using the  accounting  prescribed by APB Opinion No. 25
               (APB 25),  "Accounting for Stock Issued to Employees." Use of the
               APB 25 accounting  method results in no  compensation  cost being
               recognized  if options are  granted at an  exercise  price at the
               current market value of the stock or higher.  We will continue to
               use the  intrinsic  value method under APB 25 but are required by
               SFAS 123 to make pro forma  disclosures  of net income (loss) and
               earnings  (loss) per share as if the fair  value  method had been
               applied in its 2002, 2001 and 2000 financial statements.

                    During 2002,  2001 and 2000, we issued  options and warrants
               totaling:  2002 - 405,000 (all exercisable);  2001 - 184,000 (all
               exercisable); and 2000 - 354,000 (all exercisable), respectively,
               to employees  and directors as  compensation.  If we had used the
               fair value method required by SFAS 123, our net income (loss) and
               per share information would approximate the following amounts:

                                          2002                           2001                         2000
                               ---------------------------    ---------------------------   --------------------------

                               As Reported      ProForma      As Reported      ProForma     As Reported     ProForma
                               ------------    -----------    ------------    -----------   ------------    ----------
         SFAS 123
         compensation cost     $               $    38,300                    $   99,360                    $ 265,620
         APB 25
         compensation cost     $               $                              $             $
         Net income (loss)     $(4,614,813)    $(4,653,113)   $   988,041     $  888,681    $ 352,774       $  87,154
         Income (loss) per
         common share-basic    $      (.25)    $      (.25)   $       .05     $      .05    $     .02       $     .00
         Income (loss) per
         common share-diluted  $      (.25)    $      (.25)   $       .05     $      .04    $     .02       $     .00


                                      F-11


                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Summary of Significant Accounting Policies - continued

     Stock Based Compensation - continued

               The  effects  of  applying  SFAS 123 as  disclosed  above are not
          indicative of future amounts.  We anticipate  making  additional stock
          based employee compensation awards in the future.

               We use the Black-Sholes option-pricing model to estimate the fair
          value of the options and warrants (to employee and  non-employees)  on
          the grant date.  Significant  assumptions  include (1) 5.75% risk free
          interest rate; (2) weighted  average expected life of 2002 - 3.6; 2001
          - 5.0; 2000 - 4.8; (3) expected  volatility of 2002 - 101.73%;  2001 -
          103.27%; 2000 - 99.82%; and (4) no expected dividends.

     Implementation of New Financial Accounting Standards

               Effective  January 1, 2001,  we adopted SFAS No. 133  "Accounting
          for Derivative  Instruments and Other Hedging Activities",  as amended
          by SFAS No. 137 and No. 138. As a result of a financing agreement with
          an  energy  lender,  we were  required  to  enter  into an oil and gas
          hedging  agreement  with  the  lender.  It has  been  determined  this
          agreement  meets the definition of SFAS 133 "Accounting for Derivative
          Instruments  and  Hedging  Activities"  and  is  accounted  for  as  a
          derivative instrument.

               The estimated change in fair value of the derivatives is reported
          in Other Income and Expense as  unrealized  (gain) loss on  derivative
          instruments.  The estimated fair value of the  derivatives is reported
          in Other Assets (or Other Liabilities) as derivative instruments.

               The estimated fair value of the derivative instruments at January
          1, 2001, the date of initial application of SFAS 133, of $3,747,435 is
          reported in the Statement of Operations as the cumulative  effect of a
          change in accounting principle.

               In June, 2001, SFAS No. 141 "Business  Combinations" and SFAS No.
          142 "Goodwill and Other  Intangible  Assets were issued.  We presently
          have no goodwill  or  intangible  assets and are thus not  affected by
          SFAS No. 142.

               Effective  January 1, 2002, we adopted SFAS No. 144,  "Accounting
          for the  Impairment or Disposal of Long-Lived  Assets." This statement
          requires  the   following   three-step   approach  for  assessing  and
          recognizing the impairment of long-lived  assets: (1) consider whether
          indicators  of impairment  of  long-lived  assets are present;  (2) if
          indicators of impairment are present, determine whether the sum of the
          estimated undiscounted future cash flows attributable to the assets in
          question  is  less  than  their  carrying  amount;  and  (3) if  less,
          recognize  an  impairment  loss  based on the  excess of the  carrying
          amount of the assets over their  respective fair values.  In addition,
          SFAS No. 144  provides  more  guidance on  estimating  cash flows when
          performing a recoverability  test, requires that a long-lived asset to
          be disposed of other than by sale (such as abandoned) be classified as
          "held  and  used"  until  it is  disposed  of,  and  establishes  more
          restrictive  criteria  to  classify  an asset as "held for sale".  The
          adoption  of SFAS  No.  144  did not  have a  material  impact  on our
          financial  statements since it retained the fundamental  provisions of
          SFAS No. 121, "Accounting for the Impairment or Disposal of Long-Lived
          Assets and for  Long-Lived  Assets to be Disposed  Of," related to the
          recognition and measurement of the impairment of long-lived  assets to
          be "held and used".

                                      F-12


                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Summary of Significant Accounting Policies - continued

     Implementation of New Financial Accounting Standards - continued

               In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
          Associated with Exit or Disposal  Activities."  SFAS No. 146 addresses
          financial  accounting and reporting for costs  associated with exit or
          disposal  activities  and  nullifies  EITF Issue No. 94-3,  "Liability
          Recognition for Certain Employee  Termination Benefits and Other Costs
          to  Exit  an  Activity   (including   Certain  Costs   Incurred  in  a
          Restructuring)."  SFAS No. 146  requires  that a liability  for a cost
          associated  with an exit or disposal  activity be recognized  when the
          liability is incurred.  Under EITF Issue No. 94-3, a liability  for an
          exit  cost as  defined  was  recognized  at the  date  of an  entity's
          commitment  to an exit plan.  SFAS No. 146 also  establishes  that the
          fair  value  is the  objective  for  the  initial  measurement  of the
          liability.  SFAS No. 146 is effective for exit and disposal activities
          that are initiated after December 31, 2002. This statement will impact
          the timing of our recognition of liabilities for costs associated with
          exit or disposal activities.

Note 2. Operations and Management Plans

          At December 31,  2002,  our current  liabilities  exceeded our current
     assets by $41,645,520.  We had a net loss available to common  shareholders
     of $4,614,813  compared to a net income available to common shareholders of
     $988,041  at  December  31,  2001.  This loss  included  non-cash  items of
     $1,596,600 for unrealized  loss on derivative  instruments and $617,400 for
     dry holes, abandoned property and impaired assets.

          On April 5, 2000,  we entered  into an  agreement  with Aquila  Energy
     Capital ("Aquila"),  an energy lender, to provide $19,302,000 in financing,
     of which $13,302,000, less closing costs of $402,000, was funded at closing
     and $6,000,000 was for future development capital. We used the net proceeds
     to (i) retire existing debt,  including accrued  interest,  of $10,234,977;
     (ii) acquire crude oil and natural gas properties in Zavala  County,  Texas
     for  $2,300,000,  including  $3,266  in cash and  200,000  shares of common
     stock; and, (iii) acquire additional  interests in the Madisonville  Field,
     Texas. The loan is secured by substantially all of the Company's  interests
     in oil and gas  properties,  bears  interest at prime plus 3.5% and matures
     May 29, 2004. Monthly payments as to principal and interest are from an 85%
     net revenue  interest in the secured  properties.  The lender  retains a 7%
     overriding royalty interest with payments commencing after the loan is paid
     in full.

          On August  16,  2001,  the  total  amount of  financing  increased  by
     $16,800,000  to  $36,102,000.  The  proceeds  were to be  used as  follows:
     $10,000,000  for the  Goldking  Acquisition  (see  below),  $6,630,000  for
     development  of  the  properties  securing  the  loan  and  $170,000  for a
     structuring fee paid to the lender.  As a result of the amendment,  the net
     revenue  interest  payment  increased  from 85% to 90%.  In  addition,  the
     amendment  requires payments on principal of $1,000,000 in February,  2002,
     August 2002 and February, 2003.

          In December, 2002, Aquila sold its loan portfolio, including our loan,
     to another  energy lender.  In a subsequent  event on February 28, 2003, we
     entered into an agreement with that lender to buy-out the loan, which has a
     current  balance of $27.9 million for a cash payment of $20 million,  under
     the following terms and conditions:

          1.   A cash payment of Twenty Million Dollars ($20,000,000), funded at
               Closing.

          2.   Cancellation of the Note and Credit  Agreement and termination of
               all debt instruments securing this obligation.

          3.   Re-assignment to us of the Overriding Royalty Interest previously
               conveyed to Aquila and now held by the lender.

                                      F-13


                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2. Operations and Management Plans - continued

          4.   Cancellation  and  termination of all fixed price hedges and swap
               agreements  entered into between Aquila and us. Such cancellation
               to be effective the first day of the month  following the Closing
               Date.

          5.   We will pay interest only due under the Note.

          6.   By April 14,  2003,  we furnish the lender  acceptable  financial
               assurance that we will close the  anticipated  refinancing by May
               29,  2003.  If by April 14, 2003 we do not furnish the lender the
               required financial assurance, then the lender may, at its option,
               notify  us that it is no  longer  obligated  to the terms of this
               Agreement,  and at the lender's  option,  re-instate the combined
               principal and interest payments.

          7.   Should we not close this  transaction  within ninety (90) days of
               the  lender's  written  acceptance  of this offer,  then we will,
               within  thirty  (30) days,  issue to the lender one $1 million of
               preferred  stock  convertible at $1.00 per share of common stock.
               The stock will be in the form of 2,000  shares of a new  GulfWest
               Series F Preferred  Stock,  par value $.01 and liquidation  value
               $500 per  share,  with the same  terms as the  existing  GulfWest
               Preferred E stock (except  there will be no net profits  interest
               redemption  rights  and  the  conversion  price  of the  GulfWest
               Preferred  Series F stock shall be $1.00 per common share instead
               of  the  $2.00  conversion   price   established  for  GulfWest's
               Preferred  Series E stock).  Provisions  will be  included in the
               Preferred  Series F Stock  Agreement  to  protect  the  Preferred
               Series F  stockholder(s)  and keep them on par with the Preferred
               Series  E  stockholders  and  other  past  and  future  preferred
               stockholders.

          We are currently  negotiating with various  financial  institutions to
     refinance  the loan  under  the  above  terms  and  conditions,  as well as
     providing funds for our $6.4 million capital development plan for 2003.

          In a subsequent event on March 3, 2003, the lender notified us we were
     in default and agreed to forbear  from  exercising  its rights and remedies
     regarding  Events of Default  resulting  from (1) our most  recent  Reserve
     Reporting,  as adjusted by the lender, being insufficient to fully amortize
     the  loans  by their  stated  maturity;  and,  (2 our  failure  to make the
     $1,000,000  repayment originally scheduled for August 31, 2002 and deferred
     to November 30, 2002 and the  $1,000,000  repayment  scheduled for February
     28, 2003.  The lender agreed to forebear  until the earlier of: (1) May 31,
     2003, (2) the occurrence of another Event of Default or Unmatured  Event of
     Default,  or (3) the  lender  learning  of  another  Event  of  Default  or
     Unmatured  Event of Default that has occurred and is  continuing,  which is
     not listed above.  Because of the  defaults,  the long term portion of this
     debt was reclassified to current.

          On  August  17,  2001,  we  purchased  several  oil  and  natural  gas
     properties  located in four fields in Texas and  Louisiana  (the  "Goldking
     Acquisition").  The effective date of the acquisition was July 1, 2001. The
     acquired properties are currently producing an aggregate 600 barrels of oil
     and 1,200 Mcf of natural gas per day,  with total proved  reserves  (net to
     the acquired  interests)  estimated  at 1.2 million  barrels of oil and 9.5
     billion cubic feet of natural gas. There are additional  possible  reserves
     estimated at 10 billion  cubic feet of natural  gas. The purchase  price of
     the  acquisition  was  $15  million  in a  combination  of  notes  payable,
     preferred stock,  cash,  warrants and common stock.  Financing was arranged
     through an existing  credit  facility and included  expanding the company's
     credit line to continue the development of its properties  through the year
     2002.

          Effective  December 1, 200l and amended  August 16,  2002,  we entered
     into an Oil and  Gas  Property  Acquisition,  Exploration  and  Development
     Agreement  (the "Summit  Agreement")  with Summit  Investment  Group-Texas,
     L.L.C., an unrelated party,  ("Summit").  Under the agreement,  Summit will
     provide or makes available to us payments in the aggregate of $1,200,000 in
     advanced funds (the Advanced  Funds") for our use in the acquisition of oil
     and gas leases and other mineral and royalty interests in order that we may

                                      F-14


                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2. Operations and Management Plans - continued

     conduct  specified oil and gas  exploration and production  activities.  We
     will pay Summit a sourcing fee of $100,000  and  expenses of $100,000  from
     the Advanced Funds. We agree to drill four (4) wells located on oil and gas
     properties acquired under the Summit Agreement (the "Obligation Wells") and
     to commence such drilling prior to the expiration of two (2) years from the
     effective date of the Summit  Agreement.  We will pay Summit $150,000 on or
     before the date of  commencement  of drilling of each  Obligation  Well and
     Summit shall assign us its  interest in the  applicable  oil and gas leases
     attributable  to the  production  unit for such well.  We further  agree to
     conduct well workover  operations on certain existing wells acquired by us,
     which are located on lands described in the Summit Agreement, all such well
     workover operations to be completed within nine (9) months of the Effective
     Date.  Summit  will  reserve  a 2.5%  overriding  royalty  interest  in the
     drilling  prospect  leases and a 25% net profits  interest in the  workover
     leases.

          The  Advanced  Funds  shall be  recouped  by Summit  in the  following
     manner:

          (a)  A total of $600,000  shall be repaid out of an  undivided  40% of
               the "Summit Net Profits Interest", defined as twenty five percent
               (25%)  of the  monthly  net  sale  proceeds  of all  oil  and gas
               production allocable to our interest in the pertinent oil and gas
               properties, as more fully defined in the Summit Agreement. Summit
               will retain an 8.5% working interest in the workover leases after
               payment of the $600,000.

          (b)  We shall pay  $150,000  in cash to Summit on the date we commence
               drilling each Obligation Well; or

          (c)  By virtue of a lump sum production payment by us.

          If, at the expiration of two (2) years from the Effective Date, Summit
     has not completely  recouped the Advanced Funds from the payments  referred
     to in (a),  (b) and (c)  above,  then  Summit,  at its sole  election,  may
     require  that we issue to it a quantity of our Common Stock  equivalent  to
     the quotient of the  outstanding  Advanced Funds  (numerator) and $2.00 per
     share  (denominator).  Upon issuance of such stock to Summit,  Summit shall
     assign  to us all its  interest  in the  remaining  oil and gas  properties
     within the subject area,  reserving its overriding  royalty interest in the
     properties.

                                      F-15


                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 3. Cost of Oil and Gas Properties

          The following tables set forth certain information with respect to our
     oil and gas producing activities for the periods presented:

          Capitalized Costs Relating to Oil and Gas Producing Activities:

                                                                          2002                      2001
                                                                     ----------------          ----------------
              Unproved oil and gas properties                        $       439,926           $       440,033
              Proved oil and gas properties                               52,847,625                48,702,656
              Support equipment and facilities                             3,498,492                 2,902,489
                                                                     ----------------          ----------------
                                                                          56,786,043                52,045,178

              Less accumulated depreciation, depletion and
              Amortization                                                (7,461,421)               (5,297,763)
                                                                     ----------------          ----------------
              Net capitalized costs                                  $    49,324,622           $    46,747,415
                                                                     ================          ================

          Results of Operations for Oil and Gas Producing Activities:


                                                                      2002                2001               2000
                                                                 ----------------    ----------------    ---------------
              Oil and gas sales                                  $    10,447,169     $    12,426,103     $    8,445,932
              Production costs                                        (5,430,205)         (5,155,500)        (3,377,583)
              Depreciation, depletion and amortization                (2,187,036)         (2,018,890)        (1,030,635)
              Income tax expense                                        -                   -                   -
                                                                 ----------------    ----------------    ---------------
              Results of operations for oil and gas
                   producing activities - income                 $     2,829,928     $     5,251,713     $     4,037,714
                                                                 ================    ================    ===============

              Costs Incurred in Oil and Gas Producing Activities:
                                                                      2002                2001               2000
                                                                 ----------------    ----------------    ---------------
              Property Acquisitions
                    Proved                                       $      562,760      $    15,236,808     $    5,874,199
                    Unproved                                             14,401              154,076            122,837
              Development Costs                                       5,141,075            6,317,527          4,814,317
                                                                 ----------------    ----------------    ---------------
                                                                 $    5,718,236      $    21,708,411     $   10,811,353
                                                                 ================    ================    ===============
                                      F-16

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3. Cost of Oil and Gas Properties - continued

          Effective  July  1,  2001,  we  acquired  interests  in  oil  and  gas
     properties  located in Texas and Louisiana from an unrelated  party,  Grand
     Goldking L.L.C. The acquisition  cost was $15,077,358,  consisting of 9,000
     shares of Series E preferred  stock valued at $4,500,000 and $10,000,000 in
     debt. In addition,  we paid $545,300 in commissions  to unrelated  parties.
     The  commissions  were paid by issuing 10,000 shares of common stock valued
     at $8,800,  150,000  warrants  valued at $91,500 and  $445,000 in cash.  We
     incurred  additional cash costs of $33,058 related to the  acquisition.  On
     the same date, we transferred its ownership interest in these properties to
     our wholly owned subsidiary, GulfWest Oil and Gas Company.

          Supplemental  unaudited  pro forma  information  (under  the  purchase
     method of  accounting)  presenting  the results of operations for the years
     ended December 31, 2001 and 2000, as if the Grand Goldking  acquisition had
     occurred as of January 1, 2001 and 2000:

                                                                 Year Ended           Year Ended
                                                                December 31,         December 31,
                                                                    2001                 2000
                                                               ----------------    -----------------
                 Operating revenues                            $    15,649,329      $    16,343,559
                 Operating expenses                                 10,652,222            9,027,278
                                                               ----------------    -----------------
                 Income from operations                              4,997,107            7,316,281
                 Other income and expense                           (3,325,166)          (3,011,243)
                 Income taxes                                         -                   -
                                                               ----------------    -----------------
                 Net income                                          1,671,941            4,305,038
                 Preferred dividends                                  (112,500)            (112,500)
                                                               ----------------    -----------------
                 Net income to common shareholders             $     1,559,441     $      4,192,538
                                                               ================    =================
                 Earnings per share
                      Basic                                    $          0.08     $           0.24
                                                               ================    =================
                      Diluted                                  $          0.07     $           0.21
                                                               ================    =================

          Effective January 1, 2002, we acquired oil and gas properties  located
     in Louisiana from a related party for $182,742.  The acquisition  price was
     the amount of accounts receivable due us.

Note 4. Accrued Expenses

          Accrued expenses consisted of the following:

                                                  December 31,               December 31,
                                                      2002                       2001
                                                 ----------------          -----------------
                 Payroll and payroll taxes       $        1,863            $         3,910
                 Interest                               414,724                    194,761
                 Professional fees                       42,000                     45,000
                                                 ----------------          -----------------
                                                 $      458,587            $       243,671
                                                 ================          =================

                                      F-17



                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 5. Notes Payable and Long-Term Debt

        Notes payable is as follows:
                                                                                       2002                2001
                                                                                   -------------     ------------------
        Non-interest  bearing note payable to an  unrelated  party;  payable out
          of 50% of the net transportation revenues from a certain natural gas
          pipeline; no due date.                                                   $     40,300      $          40,300

        Note payable to a bank with monthly principal payments of $13,889;
          interest at prime plus 1%; due March 2002; secured by the guaranty
          of three of our directors; retired September, 2002.                                                  374,999

        Promissory note payable to one of our directors at 8%; due May,
          2001; unsecured.                                                               40,000                 40,000

        Promissory note payable to an unrelated party at 10%; payable on
          demand; unsecured.                                                             45,000                115,000

        Line of credit (up to $2,500,000) to a bank; due October, 2002; secured
          by guaranty of a director;  interest at prime rate, less.25% (prime
          rate 4.25% at December 31, 2001).  Line of credit increased to
          $3,000,000 and due date extended to April, 2003                             2,995,488              2,251,192

        Promissory note to an unrelated party at 10%; due and retired in
          January, 2002.                                                                                       39,529

        Note payable to a bank; due March, 2003; interest at prime rate plus 1%
          (prime rate 4.25% at December 31, 2002); secured by guaranty of
          three of our directors                                                        500,000

        Promissory note payable to an unrelated party; payable on demand;
          interest at 8%; secured by certain oil and gas properties.                    300,000

        Line of credit payable to a bank; due April, 2003; secured by guaranty
          of a director; interest at prime rate (prime rate 4.25% at December
          31, 2002 with a floor of 5.5% and a ceiling of 8.5%.                        1,000,000

        Promissory note payable to unrelated party; interest at 6%; due June,
          2003.                                                                          55,300

        Promissory note payable to one of our directors; interest at 8%;
          due on demand; unsecured.                                                      50,000

        Promissory note payable to one of our directors; interest at
          prime rate (prime rate 4.25% at December 31, 2002); due May, 2003;
          secured by common stock of DutchWest Oil Company, our wholly
          owned subsidiary.                                                           1,200,000
                                                                                   -------------     ------------------
                                                                                   $  6,226,088      $      2,861,020
                                                                                   =============     ==================

        The weighted average interest rate for notes payable at December 31, 2002 and 2001 was 4.7% and 5.0%, respectively.

                                      F-18



                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5. Notes Payable and Long-Term Debt

        Long-term debt is as follows:

                                                                                      2002                 2001
                                                                                  --------------     ------------------
        Line of credit (up to $3,000,000) to a bank; due July, 2003; secured
          by the guaranty of a director; interest at prime rate (prime rate
          4.25% at December 31, 2002).                                           $    2,999,515      $      2,939,515

        Subordinated promissory notes to various individuals at 9.5% interest
          per annum; amounts include $50,000 ($100,000 - 2001) due to
          related parties; past due.                                                    150,000               200,000

        Notes payable to finance vehicles, payable in aggregate monthly
          installments of approximately $6,000, including interest of.9% to
          13% per annum; secured by the related equipment; due various
          dates through 2007.                                                           116,721                96,024

        Note payable to related party to finance equipment with monthly
          installments of $5,200, including interest at 13.76% per annum;
          final payment due October, 2003; secured by related equipment.                 48,850               100,591

        Promissory note to a director; interest at 8.5%; due
          December 31, 2003.                                                             95,670                88,814

        Note payable to a related party to finance equipment with monthly
          installments of $2,300, including interest at 11% per annum; final
          payment due March, 2002; secured by related equipment.                                                6,871

        Note payable to a related party to finance equipment with monthly
          installments of $1,100, including interest at 11% per annum; final
          payment due September, 2002; secured by related equipment.                                            9,453

        Note payable to a bank with monthly principal payments of $2,300;
          interest at 9.5%; due May, 2003; secured by related equipment.                 11,630                39,543

        Note payable to an energy lender; interest at prime plus 3.5% (prime
          rate 4.25% at December 31, 2002) payable monthly out of 85%
          (90% beginning July, 2001) net profits from certain oil and gas
          properties; final payment due May, 2004; secured by related oil
          and gas properties.                                                        27,907,509            26,679,770

                                      F-19

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5. Notes Payable and Long-Term Debt

        Long-term debt is as follows - continued:

                                                                                      2002                   2001
                                                                                ------------------     -----------------
        Note payable to a bank with monthly principal payments of $15,000;
          interest at prime plus 1% (prime rate 4.75% at December 31,
          2002); in October, 2001 monthly principal payments became
          $36,000 and interest prime plus 1% with a minimum prime rate
          of 5.5%; final payment due November, 2003; secured by related
          oil and gas properties.                                               $     1,996,000        $    2,392,000

         Note payable to unrelated party to finance saltwater disposal well
           with monthly  installments of $4,540,  including interest at 10%
           per annum; final payment due January, 2005; secured by related well.         123,624               149,325

         Note payable to related party to finance equipment with monthly
           installments of $5,109, including interest at 13.75% per annum;
           final payment due February, 2004; secured by related equipment.
                                                                                         65,743               114,324

         Note payable to related party to finance equipment with monthly
              installments of $608, including interest at 11% per annum;
              final payment due February, 2004; secured by related equipment.             7,960                14,002
                                                                                ------------------     -----------------
                                                                                     33,523,222            32,830,232
         Less current portion                                                       (33,385,414)           (6,288,275)
                                                                                ------------------     -----------------
         Total long-term debt                                                   $       137,808        $   26,541,957
                                                                                ==================     =================

               Estimated annual maturities for long-term debt are as follows:

                   2003                                                         $     33,385,414
                   2004                                                                  102,008
                   2005                                                                   27,291
                   2006                                                                    7,150
                   2007                                                                    1,359
                                                                                ------------------
                                                                                $     33,523,222
                                                                                ==================

                                      F-20

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 6.   Stockholders' Equity

          Common Stock
          ------------
                                                                                    2002               2001
                                                                              -----------------    --------------
          Par value $.001; 40,000,000 shares authorized; 18,492,541
            shares issued and outstanding as of December 31, 2002 and
            2001, respectively                                                $        18,493      $      18,493

                                                                              =================    ==============

          Preferred Stock
          ---------------

         Series D, par value $.01; 12,000 shares authorized; 8,000 shares
           issued and outstanding at December 31, 2002 and 2001.  The
           Series D preferred stock does not pay dividends and is not
           redeemable.  The liquidation value is $500 per share.  After
           three years from the date of issue, and thereafter, the shares
           are convertible to common stock based upon a value of $500
           per Series D share divided by $8 per share of common stock.                     80                 80

         Series E, par value $.01; 9,000 shares authorized; 9,000 shares
           issued and outstanding at December 31, 2002 and 2001.  The
           Series E preferred  stock pays  dividends,  as declared,  at a
           rate of 2.5% per anum, has a liquidation value of $500 per share,
           may be redeemed at our and, if not  redeemed  after two years,
           is convertible to common stock based upon a value of $500 per
           Series E share divided by $2 per share of common stock.                         90                 90
                                                                              -----------------    --------------
                                                                              $           170                170
                                                                              =================    ==============

               All classes of preferred shareholders have liquidation preference
          over common  shareholders  of $500 per preferred  share,  plus accrued
          dividends. There were no dividends in arrears at December 31, 2002.

          Stock Options
          -------------

               We  maintain a  Non-Qualified  Stock  Option Plan (as amended and
          restated,  the "Plan"), which authorizes the grant of options of up to
          2,000,000  shares of common  stock.  Under  the Plan,  options  may be
          granted to any of our key employees (including officers), employee and
          nonemployee  directors,  and  advisors.  A committee  appointed by the
          Board  administers the Plan. Prior to 1999,  options granted under the
          Plan had been granted at an option price of $3.13 and $1.81 per share.
          In July 1999, the Board  authorized that all then current employee and
          director  options  under  the plan be  reduced  to a price of $.75 per
          share.  Following  is a schedule  by year of the  activity  related to
          stock options,  including weighted-average ("WTD AVG") exercise prices
          of options in each category.

                                               2002                            2001                          2000
                                    ---------------------------    -----------------------------    ------------------------
                                    Wtd Avg                         Wtd Avg                         Wtd Avg
                                    Prices          Number          Prices           Number          Prices        Number
                                    --------     --------------    ----------    ---------------    ---------    -----------
         Balance, January 1         $ 1.03          1,097,000      $    1.09           923,000      $  1.07       717,000
               Options issued       $  .75             35,000      $     .83           184,000      $  1.17       206,000
               Options expired      $ 3.00            (65,000)     $    3.00           (10,000)          -           -
                                                 --------------                  ---------------                 -----------
         Balance, December 31       $   .90         1,067,000      $    1.03         1,097,000      $  1.09       923,000
                                                 ==============                  ===============                 ===========

                                      F-21

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 6. Stockholders' Equity - continued

          All options were  exercisable  at December  31,  2002.  Following is a
     schedule  by year and by  exercise  price of the  expiration  of our  stock
     options issued as of December 31, 2002:

                        2003         2004           2005          2006          2007        Thereafter         Total
                      ---------    ----------    -----------    ----------    ----------    ------------     -----------
            $ .75                    432,000                                     35,000         150,000         617,000
            $ .83                                                 184,000                                       184,000
            $1.13                                   100,000                                                     100,000
            $1.20                                   106,000                                                     106,000
            $1.81                                                                                60,000          60,000
                      ---------    ----------    -----------    ----------    ----------    ------------     -----------
                         -           432,000        206,000       184,000        35,000         210,000       1,067,000
                      =========    ==========    ===========    ==========    ==========    ============     ===========

          Stock Warrants
          --------------

               We have  issued a  significant  number  of stock  warrants  for a
          variety of reasons,  including  compensation to employees,  additional
          inducements  to purchase  our common or preferred  stock,  inducements
          related to the issuance of debt and for payment of goods and services.
          Following  is a  schedule  by year of the  activity  related  to stock
          warrants,  including  weighted-average  exercise prices of warrants in
          each category:

                                               2002                          2001                           2000
                                     --------------------------    --------------------------    ---------------------------
                                     Wtd Avg                       Wtd Avg                       Wtd Avg
                                      Prices         Number         Prices         Number         Prices         Number
                                     ---------    -------------    ---------    -------------    ---------    --------------
          Balance, January 1         $  2.15       1,306,754       $ 2.31         1,392,254      $  2.53         1,369,754
             Warrants issued         $   .75       1,145,000       $  .75           150,000      $  1.86           170,000
             Warrants exercised
                  or expired         $  3.57        (270,000)      $ 2.22          (235,500)     $  2.65          (147,500)
                                                  -------------                 -------------                 --------------

          Balance, December 31       $  1.24       2,181,754       $ 2.15         1,306,754      $  2.31         1,392,254
                                                  =============                 =============                 ==============

               Included    in    the    "warrants    issued"    and    "warrants
          exercised/expired"  columns in 2002 were 270,000  warrants whose price
          was reduced in 2002 to $.75.

               Following  is a  schedule  by year and by  exercise  price of the
          expiration of our stock warrants issued as of December 31, 2002:

                          2003          2004            2005            2006            2007            Total
                          ----          ----            ----            ----            ----            -----
         $  .75           166,754                        75,000       1,590,000                        1,831,754
            .875                                        150,000                                          150,000
           6.00           200,000                                                                        200,000
                        ----------    ----------    -------------    ------------    -----------     ------------
                          366,754         -             225,000       1,590,000          -             2,181,754
                        ==========    ==========    =============    ============    ===========     ============

               Warrants outstanding to our officers,  directors and employees at
          December 31, 2002 and 2001 were  approximately  1,682,000 and 957,000,
          respectively. The exercise prices on these warrants range from $.75 to
          $.88 and expire various dates through 2006.

                                      F-22



                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 7. Income (Loss) Per Common Share

          The following is a  reconciliation  of the numerators and denominators
          used in computing income (loss) per share:

                                                         2002                  2001                 2000
                                                   ------------------    -----------------    ------------------
         Net income (loss)                         $    (4,502,313)      $      1,044,291     $         352,774
         Preferred stock dividends                        (112,500)               (56,250)              -
                                                   ------------------    -----------------    ------------------
         Income (loss) available to common
         shareholders (numerator)                  $    (4,614,813)      $        988,041     $         352,774
                                                   ==================    =================    ==================
         Weighted-average number of shares
            of common stock - basi
            (denominator)                               18,492,541             18,464,343            17,293,848
                                                   ------------------    -----------------    ------------------
         Income (loss) per share - basic           $          (.25)      $            .05     $             .02
                                                   ==================    =================    ==================

               Potential dilutive securities (stock options,  stock warrants and
          convertible preferred stock) in 2002 have not been considered since we
          reported  a  net  loss  and,  accordingly,   their  effects  would  be
          antidilutive.  Potential  dilutive  securities  (stock options,  stock
          warrants and convertible  preferred stock) totaling 2,780,520 weighted
          average shares in 2001 and 1,102,960  weighted  average shares in 2000
          have been  considered  but there is no  effect  on income  per  common
          share.

Note 8. Related Party Transactions

               On December 1, 1992, Ray Holifield and Associates,  Inc. executed
          an unsecured  promissory  note to us for $118,645 with interest at 10%
          per annum,  due on October 1, 1993. At December 31, 1993, the note was
          still outstanding.  During 1994, we entered into an agreement with the
          Holifield  Trust in which Holifield will make payments on the past due
          note from future oil and gas revenue. During 1995, $10,995 of interest
          payments were received.  At December 31, 2001 the unsecured promissory
          note had been fully  reserved.  At December  31, 2002,  the  unsecured
          promissory note had been fully written off.

               On December 1, 1992,  Parkway Petroleum  Company, a Ray Holifield
          related  company,  executed  an  unsecured  promissory  note to us for
          $54,616 with  interest at 10% per annum,  due on October 1, 1993.  The
          note was issued for amounts  due from  contract  drilling  services we
          provided Parkway Petroleum Company. At December 31, 1993, the note was
          still outstanding.  During 1994, we entered into an agreement with the
          Holifield  Trust in which Holifield will make payments on the past due
          note from future oil and gas revenue.  During 1995, $6,250 of interest
          payments were received. At December 31, 2001, the unsecured promissory
          note had been fully  reserved.  At December  31, 2002,  the  unsecured
          promissory note had been fully written off.

               On January 10, 1994, we entered into a consulting  agreement with
          Williams  Southwest  Drilling Company,  Inc.  ("Williams")  whereby we
          would provide management and accounting services for $25,000 per month
          for a period of one  year.  We  accrued  the  consulting  fees with an
          offset  to  deferred  income  until  payment  of the fees is  actually
          received. During 1994, $172,140 was recorded as consulting fee income.
          Beginning in the second quarter 1994, we began recognizing  consulting
          income  only as cash  payments  were  received.  Prior  to the  second
          quarter,  $75,000 in consulting  fee revenue was accrued.  We received
          $97,140 in  consulting  fee  payments.  As of December 31,  1994,  the
          receivable  from  Williams of $202,860  for  consulting  fees has been
          offset by deferred  income of $127,860  and a provision  for  doubtful
          accounts  of  $75,000.  Effective  January  1,  1995,  we  received  a
          promissory  note from  Williams  in the  amount of  $202,860,  bearing
          interest  at the  rate of 10% per  annum,  and  payable  in  quarterly
          installments of principal and interest of $15,538.87.  At December 31,
          2001,  the  unsecured  promissory  note had been  fully  reserved.  At
          December  31,  2002,  the  unsecured  promissory  note had been  fully
          written off.

                                      F-23



                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 8. Related Party Transactions (continued)

               From  July 22 to August  13,  1998,  we  advanced  sums  totaling
          $102,000 to Gulf Coast  Exploration,  Inc. At December 31,  2001,  the
          debt had been fully reserved.  At December 31, 2002, the debt had been
          fully written off.

               On  October 1,  1998,  Toro Oil  Company  executed  an  unsecured
          promissory note to us for the purchase of 100% of WestCo for $150,000,
          with  interest at the prime rate per annum and due September 30, 1999.
          To date,  no principal  payments have been  received.  At December 31,
          2001, the  promissory  note had been fully  reserved.  At December 31,
          2002, the debt had been fully written off.

               Interest  expensed on related party notes  totaled  approximately
          $53,000,  $128,000 and $186,000 for the years ended December 31, 2002,
          2001 and 2000, respectively.

Note 9. Income Taxes

               The  components  of the net  deferred  federal  income tax assets
          (liabilities)  recognized in our  consolidated  balance sheets were as
          follows:

                                                                     December 31,          December 31,
                                                                         2002                  2001
                                                                         ----                  ----
         Deferred tax assets
             Provision for bad debts                               $                     $    251,763
             Net operating loss carryforwards                         5,236,485             3,843,135
             Oil and gas properties                                     542,131               617,780
             Capital loss carryforwards                                  93,211               114,997
             Derivative instruments                                     383,858

         Deferred tax liability
              Derivative instruments                                                         (158,978)
                                                                   -----------------    -------------------

         Net deferred tax assets before
             valuation allowance                                      6,255,685             4,668,697
         Valuation allowance                                         (6,255,685)           (4,668,697)
                                                                   -----------------    -------------------
         Net deferred tax assets (liabilities)                     $      -             $       -
                                                                   =================    ===================

               As of December 31, 2002 and 2001,  we did not believe it was more
          likely than not that the net  operating  loss  carryforwards  would be
          realizable  through  generation of future taxable  income;  therefore,
          they were fully reserved.

                                      F-24

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9. Income Taxes - continued

               The following table summarizes the difference  between the actual
          tax provision  and the amounts  obtained by applying the statutory tax
          rate of 34% to the income  (loss)  before  income  taxes for the years
          ended December 31, 2002, 2001 and 2000.

                                                                     2002                2001                2000
                                                               -----------------   -----------------    ----------------

         Tax (benefit) calculated at statutory rate            $   (1,530,786)     $        355,059     $       119,943

         Increase (reductions) in taxes due to:

             Effect of net operating loss carryforwards                                                         (45,176)
             Effect on non-deductible expenses                         65,174                18,157              43,133
             Change in valuation allowance                          1,586,988              (345,754)            (60,422)
             Other                                                   (121,376)              (27,462)            (57,478)
                                                               -----------------   -----------------    ----------------

         Current federal income tax provision                   $      -           $        -           $        -
                                                               =================   =================    ================

               As of December 31, 2002 we had net operating  loss  carryforwards
          of  approximately   $15,400,000  and  capital  loss  carryforwards  of
          approximately  $274,000,  which are available to reduce future taxable
          income and capital  gains,  respectively,  and the related  income tax
          liability.  The capital  loss  carryforward  expires in 2003.  The net
          operating loss carryforward expires at various dates through 2022.

Note 10. Commitments and Contingencies

          Oil and Gas Hedging Activities

               We entered into an agreement with an energy lender  commencing in
          May,  2000, to hedge a portion of our oil and gas sales for the period
          of May, 2000 through  April,  2004.  The agreement  called for initial
          volumes of 7,900  barrels  of oil and  52,400  Mmbtu of gas per month,
          declining monthly thereafter.  We entered into a second agreement with
          the energy lender, commencing September,  2001, to hedge an additional
          portion of our oil and gas sales for the  periods of  September,  2001
          through  July,  2004  and  September,   2001  through  December  2002,
          respectively.  The  agreement  called  for  initial  volumes of 15,000
          barrels of oil and 50,000  Mmbtu of gas per month,  declining  monthly
          thereafter. Volumes at December 31, 2002 had declined to 9,800 barrels
          of oil and 26,500  Mmbtu of gas. As a result of these  agreements,  we
          realized a reduction in revenues of $368,776,  $762,480 and $1,200,794
          for the  twelve-month  periods ended December 31, 2002, 2001 and 2000,
          respectively, which is included in oil and gas sales.

          Lease Obligations

               We lease  office space at one  location  under a sixty-four  (64)
          month lease,  which commenced December 1, 2001 and was amended May 30,
          2002 after expansion.  Annual  commitments under the lease are: 2003 -
          $126,536, 2004 - $130,051, 2005 - $132,980, 2006 - $135,241 and 2007 -
          $33,977.  Total rent  expense for the years ended  December  31, 2002,
          2001  and  2000  were  approximately  $91,000,  $60,000  and  $54,000,
          respectively.

          Litigation

               From time to time, we are involved in  litigation  arising out of
          our  operations  or from disputes with vendors in the normal course of
          business.  As of  April 9,  2003,  we were not  engaged  in any  legal
          proceedings  that are expected,  individually or in the aggregate,  to
          have a material effect on our consolidated financial statements.

                                      F-25

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 11. Oil and Gas Reserves Information (Unaudited)

               The  estimates  of proved oil and gas  reserves  utilized  in the
          preparation  of the financial  statements  are estimated in accordance
          with guidelines  established by the Securities and Exchange Commission
          and the  Financial  Accounting  Standards  Board,  which  require that
          reserve  estimates be prepared under  existing  economic and operating
          conditions  with no  provision  for  price and cost  escalations  over
          prices  and  costs   existing  at  year  end  except  by   contractual
          arrangements.

               We emphasize  that reserve  estimates are  inherently  imprecise.
          Accordingly,  the  estimates  are  expected to change as more  current
          information becomes available.  Our policy is to amortize  capitalized
          oil and gas costs on the unit of production  method,  based upon these
          reserve estimates.  It is reasonably possible that, because of changes
          in market  conditions  or the inherent  imprecision  of these  reserve
          estimates,  that the  estimates of future cash  inflows,  future gross
          revenues,  the amount of oil and gas reserves, the remaining estimated
          lives of the oil and gas  properties,  or any combination of the above
          may be increased or reduced in the near term. If reduced, the carrying
          amount of capitalized oil and gas properties may be reduced materially
          in the near term.

                                      F-26

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 11. Oil and Gas Reserves Information (Unaudited) - continued

               The  following  unaudited  table  sets  forth  proved oil and gas
          reserves,  all within the United States,  at December 31, 2002,  2001,
          and 2000, together with the changes therein.

                                                                                      Crude Oil          Natural Gas
                                                                                       (BBls)               (Mcf)
                                                                                   ----------------    ----------------
         QUANTITIES OF PROVED RESERVES:

              Balance December 31, 1999                                                 3,314,908          19,186,865
                   Revisions                                                              433,409           1,478,834
                   Extensions, discoveries and additions                                  501,293           1,509,014
                   Purchase                                                               490,600           3,748,845
                   Sales                                                                     -                  -
                   Production                                                            (165,031)         (1,111,639)
                                                                                   ----------------    ----------------

              Balance December 31, 2000                                                 4,575,179          24,811,919
                   Revisions                                                             (386,078)            238,595
                   Extensions, discoveries and additions                                    5,676             895,333
                   Purchase                                                             2,078,561          14,905,837
                   Sales                                                                 (107,225)              1,122
                   Production                                                            (294,276)         (1,594,899)
                                                                                   ----------------    ----------------

              Balance December 31, 2001                                                 5,871,837          39,257,907
                   Revisions                                                             (125,468)         (4,959,229)
                   Extensions, discoveries and additions                                   22,129           1,090,024
                   Purchase                                                                52,480           1,090,025
                   Sales                                                                  (20,698)           (837,856)
                   Production                                                            (278,374)         (1,487,048)
                                                                                   ----------------    ----------------

              Balance December 31, 2002                                                 5,521,906          34,158,823
                                                                                   ================    ================

         PROVED DEVELOPED RESERVES:
              December 31, 2000                                                         2,883,641          15,141,979
                                                                                   ================    ================
              December 31, 2001                                                         3,939,593          21,203,989
                                                                                   ================    ================
              December 31, 2002                                                         4,025,552          25,374,113
                                                                                   ================    ================

                                      F-27

                                                 GULFWEST ENERGY INC. AND SUBSIDIARIES
                                              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11. Oil and Gas Reserves Information (Unaudited) - continued

         STANDARDIZED MEASURE:

         Standardized measure of discounted future net cash flows relating to proved reserves:

                                                                  2002                  2001                 2000
                                                                  ----                  ----                 ----

         Future cash inflows                               $     308,381,837      $ 199,162,921        $  318,504,931

         Future production and development costs
            Production                                           105,629,872         77,526,278            97,465,972
            Development                                           23,350,811         23,610,596            13,400,359
                                                           -------------------    -----------------    -----------------

         Future cash flows before income taxes                   179,401,154         98,026,047           207,638,600
         Future income taxes                                     (38,611,577)       (13,281,358)          (56,466,527)
                                                           -------------------    -----------------    -----------------

         Future net cash flows after income taxes                140,789,577         84,744,689           151,172,073
         10% annual discount for estimated
           timing of cash flows                                  (63,165,742)       (35,895,306)          (60,790,946)
                                                           -------------------    -----------------    -----------------

         Standardized measure of discounted
           future net cash flows                           $      77,623,835      $  48,849,383        $   90,381,127
                                                           ===================    =================    =================

         The following reconciles the change in the standardized measure of discounted future net cash flows:

         Beginning of year                                 $      48,849,383      $  90,381,127       $    30,955,399

         Changes from:
            Purchases                                              3,054,793         27,032,359            18,483,582
            Sales                                                   (953,159)          (443,324)
            Extensions, discoveries and improved
             recovery, less related costs                          2,002,176            427,192            10,727,329
            Sales of oil and gas produced net of
                production costs                                  (5,016,964)        (7,270,603)           (5,068,349)
            Revision of quantity estimates                        (9,974,557)        (1,783,276)            7,365,348
            Accretion of discount                                  5,649,945          12,414,073            3,765,842
            Change in income taxes                               (13,624,917)         26,109,535          (27,056,577)
            Changes in estimated future
                development costs                                 (5,254,561)         (6,360,990)            (504,445)
           Development costs incurred that
                reduced future development costs                   5,569,881           5,945,369            4,359,405
           Change in sales and transfer prices,
                net of production costs                           46,903,282         (89,573,528)          38,543,222
           Changes in production rates (timing)
                and other                                            418,533          (8,028,551)           8,810,371
                                                           -------------------    -----------------    -----------------
          End of year                                      $      77,623,835      $   48,849,383       $   90,381,127
                                                           ===================    =================    =================

F-28

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 12. Quarterly Results (Unaudited)

               Summary  data  relating  to the  results of  operations  for each
          quarter for the years ended December 31, 2002 and 2001 follows:

                                                                        Three Months Ended
                                            ----------------------------------------------------------------------------
                                               March 31             June 30          September 30         December 31
                                            ----------------    ----------------    ----------------    ----------------
         2002
              Net sales                     $     2,648,873     $     2,951,798     $     2,641,626     $     2,597,500
              Gross profit                          239,912             450,255             100,527             136,961
              Net income (loss)                  (1,964,010)           (305,060)           (924,750)         (1,420,993)
              Income (loss) per common
                 share - basic and diluted  $         (0.11)    $         (0.02)    $         (0.05)    $         (0.07)

         2001
              Net sales                     $     3,057,739     $     3,455,882     $     3,669,203     $     2,807,757
              Gross profit                          930,784           1,219,002           1,083,789             218,300
              Net income (loss)                  (2,409,567)          1,919,735           1,671,994            (194,121)
              Income (loss) per common
                 share - basic              $         (0.13)    $          0.10     $          0.09     $         (0.01)
                       - diluted            $         (0.13)    $          0.10     $          0.08     $         (0.01)

                                      F-29

                          INDEPENDENT AUDITOR'S REPORT










     Stockholders and Board of Directors
     GULFWEST ENERGY INC.


     Our report on the consolidated financial statements of GulfWest Energy Inc.
     and Subsidiaries as of December 31, 2002 and 2001 and for each of the three
     years in the period ended  December  31, 2002,  is included on page F-1. In
     connection with our audit of such  consolidated  financial  statements,  we
     have also audited the related  financial  statement  schedule for the years
     ended December 31, 2002, 2001 and 2000 on page F-31.

     In our opinion,  the financial  statement  schedule referred to above, when
     considered in relation to the basic consolidated financial statements taken
     as a whole,  presents  fairly,  in all material  respects,  the information
     required to be included therein.




     \s\ WEAVER AND TIDWELL, L.L.P.
    ---------------------------------
     WEAVER AND TIDWELL, L.L.P.

     Dallas, Texas
     March 24, 2003







                                      F-30

                      GULFWEST ENERGY INC. AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                                                BALANCE                                                       BALANCE
                                                  AT                                                             AT
                                               BEGINNING          PROVISIONS/           RECOVERIES/             END
DECRIPTION                                     OF PERIOD           ADDITIONS            DEDUCTIONS           OF PERIOD
----------------------------------------    ----------------    -----------------    ------------------    ---------------
For the year ended

     December 31, 2000

          Accounts and notes receivable
               related parties              $      700,230      $     40,248         $                     $     740,478

                                            ================    =================    ==================    ===============

          Valuation allowance for
               Deferred tax assets          $    5,074,873      $    (60,422)        $                     $   5,014,451

                                            ================    =================    ==================    ===============

For the year ended

     December 31, 2001

          Accounts and notes receivable
               related parties              $      740,478      $                    $                     $     740,478
                                            ================    =================    ==================    ===============

          Valuation allowance for
               Deferred tax assets          $    5,014,451      $   (345,754)        $                     $   4,668,697
                                            ================    =================    ==================    ===============

For the year ended

     December 31, 2002

          Accounts and notes receivable
               related parties              $      740,478      $                    $      (740,478)      $
                                            ================    =================    ==================    ===============

          Valuation allowance for
               Deferred tax assets          $    4,668,697      $   1,586,988        $                     $   6,255,685
                                            ================    =================    ==================    ===============



                                      F-31

                                 CERTIFICATIONS

I, Thomas R. Kaetzer, certify that:

     1.   I have  reviewed  this amended  annual report on Form 10-K of GulfWest
          Energy Inc.;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date.

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent functions):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

                                       i

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.



Date: April 9, 2003

                                      /s/ Thomas R. Kaetzer
                                          -------------------------------
                                          Thomas R. Kaetzer
                                          President and Chief Executive Officer

                                       ii

                                 CERTIFICATIONS

I, Richard L. Creel, certify that:

     1.   I have  reviewed  this amended  annual report on Form 10-K of GulfWest
          Energy Inc.;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date.

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent functions):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

                                       i

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.



Date: April 9, 2003

                                       /s/  Richard L. Creel
                                      -----------------------------------
                                            Richard L. Creel
                                            Vice President of Finance


                                       ii











April 9, 2003


Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549


Re:  Certification Required Under Section 906 of Sarbanes-Oxley Act of 2002

In connection with the  accompanying  amended report on Form 10-K for the period
ended December 31, 2002,  and filed with the Securities and Exchange  Commission
on the date hereof (the "Report"),  We, Thomas R. Kaetzer,  President and CEO of
GulfWest Energy Inc. (the  "Company"),  and Richard L. Creel,  Vice President of
Finance of the Company hereby certify that:

     1.   The report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     2.   The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.


GulfWest Energy Inc.


/s/ Thomas R. Kaetzer
------------------------------------
By: Thomas R. Kaetzer
President and Chief Executive Officer


/s/ Richard L. Creel
------------------------------------
By: Richard L. Creel
Vice President of Finance