The following discussion provides information regarding the results of operations for the three month periods ended March 31, 2012 and 2011, and our financial condition, liquidity and capital resources as of March 31, 2012, and December 31, 2011. The financial statements and the notes thereto contain detailed information that should be referred to in conjunction with this discussion.

Forward-Looking Statements

The information discussed in this Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). All statements, other than statements of historical facts, included herein concerning, among other things, planned capital expenditures, increases in oil and gas production, the number of anticipated wells to be drilled after the date hereof, future cash flows and borrowings, pursuit of potential acquisition opportunities, our financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. These forward-looking statements are identified by their use of terms and phrases such as "may," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "will," "continue," "potential," "should," "could," and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, among others:

• our $2.0 million working capital deficit at March 31, 2012 ($2.7 million deficit at December 31, 2011) raises concerns regarding our financial and operational capabilities absent raising debt or equity, or improving results of operations, to address the working capital deficit;

• our ability to generate sufficient cash flows to repay our debt obligations as they become due and to repay our outstanding debt when due;

• future capital requirements and uncertainty of obtaining additional funding on terms acceptable to us;

• availability of borrowings under our credit facility;

• historical incurrence of losses;

• our ability to retain key members of our senior management and key technical employees, and conflicts of interests with respect to our directors;

• effect of seasonal factors;

• a decline in oil or natural gas production or oil or natural gas prices, the impact of price volatility in the oil and natural gas industries and the impact of general economic conditions on the demand for the services we offer to the oil and natural gas industries;

• activities of our competitors, many of whom have greater financial resources than we have;

• geographical diversity of our operations and the difficulties inherent in managing such geographically diverse operations;

• ongoing U.S. and global economic uncertainty;

• unanticipated increases in the cost of our operations;

• reliance on limited number of customers and creditworthiness of our customers;

• increases in interest rates and our failure to hedge against possible interest rate increases;

• impact of environmental, health and safety, and other governmental regulations, and of current or pending legislation;

• further sales or issuances of common stock; and

• our common stock's limited trading history.

Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in our filings with the SEC and in Part II, Item 1A of this Quarterly Report. For additional information regarding risks and uncertainties, please read our filings with the SEC under the Exchange Act and the Securities Act, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in this Quarterly Report. Other than as required under securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

Company Overview and Overview of the Information Presented

The Company was incorporated as Aspen Exploration Corporation under the laws of the State of Delaware on February 28, 1980 for the primary purpose of acquiring, exploring and developing oil and natural gas and other mineral properties. On June 30, 2009, Aspen disposed of all of its remaining oil and natural gas producing assets and as a result was no longer engaged in active business operations. On June 24, 2010, Aspen entered into an Agreement and Plan of Merger and Reorganization with Dillco Fluid Service, Inc. ("Dillco") which set forth the terms by which Dillco became a wholly owned subsidiary of Aspen on July 27, 2010 (the "Merger Transaction").

On December 30, 2010, Aspen changed its name to "Enservco Corporation." As such, throughout this report the terms the "Company" and/or "Enservco" are intended to refer to the Company on a post Merger Transaction basis and as a whole, with respect to both historical and forward looking contexts. As a result of the Merger Transaction, the Company's fiscal year was modified to be the calendar year as described below.

Going forward, and subject to the availability of adequate financing, the Company expects to continue to pursue its growth strategies of exploring additional acquisitions, potentially expanding the geographic areas in which it operates, and diversifying the products and services it provides to customers, as well as making further investments in its assets and equipment. The Company will require additional debt or equity financing to fund the costs necessary to expand the services it offers. There can be no assurance that the Company will be able to raise outside capital or have access to outside funding on reasonable terms, if at all.

Accounting Treatment of the Merger

The Merger Transaction, by which Dillco became a wholly-owned subsidiary of Enservco, was treated as a "reverse acquisition" for accounting purposes. In a reverse acquisition, although Aspen was considered to be the "legal acquirer" (that is, Aspen (now Enservco Corporation) survived as the parent corporation), Dillco was the "accounting acquirer" (that is because Dillco's and its subsidiaries' business was undeniably the more significant business). As a result, Dillco's financial statements became the financial statements of the surviving company. Aspen's financial condition is additive to Dillco's financial statements for the period following the Merger Transaction.

As part of the Merger Transaction, Aspen issued 14,519,244 shares of its common stock to the shareholders of Dillco, in exchange for all of the issued and outstanding shares of Dillco (7,259,622 shares).

Effective with the Agreement, the Company's stockholders' equity was recapitalized as that of Aspen, or $72,596 from Dillco and $36,298 from Aspen for a total of $108,894, while 100% of the assets and liabilities of Aspen were recorded as being acquired in the reverse acquisition.

Dillco's fiscal year end is December 31 whereas prior to the Merger Transaction Aspen's fiscal year end was June 30. Because Dillco was the accounting acquirer the Merger Transaction resulted in the Company's fiscal year end being deemed to change to December 31. Thus, starting with its Form 10-Q filed for the quarter ended September 30, 2010, the Company is now filing annual and quarterly reports based on the December 31 fiscal year end of Dillco rather than the former (pre-acquisition) June 30 fiscal year end of Aspen. Although not required to complete the change of the fiscal year, more than a majority of the Company's stockholders approved that change (as well as a change to the Company's tax year) by consent.

The financial statements included in this report are for Enservco's three month periods ended March 31, 2012 and 2011 and include Aspen's financial statements only as a result of, and subsequent to, the Merger Transaction. As such, the following management's discussion and analysis is with respect to Enservco's three months ended March 31, 2012, and the corresponding period(s) in the previous fiscal year. Because of the business combination by which Dillco became a wholly owned subsidiary of Enservco, no separate discussion regarding Aspen's financial condition or results of operations are included in this report.

Discussion of Operations for the Three Months ended March 31, 2012 and 2011



The following table shows the results of operations for the periods noted.
Please see information following the table for management's discussion of
significant changes.



                                                          For the Three Months Ended
                                                                  March 31,
                                                            % of                              % of
                                            2012           Revenue            2011           Revenue
                                        (Unaudited)                       (Unaudited)

Revenues                                $  9,537,994             100 %    $  9,261,521             100 %
Cost of Revenue                            6,676,684              70 %       5,797,434              63 %
Gross Profit                               2,861,310              30 %       3,464,087              37 %

Operating Expenses
General and administrative expenses          903,360               9 %         748,904               8 %
Depreciation and amortization              1,401,192              15 %       1,080,607              12 %
Total operating expenses                   2,304,552              24 %       1,829,511              20 %

Income from Operations                       556,758               6 %       1,634,576              18 %
Other Expense                               (139,515 )            (1 )%       (219,853 )            (2 )%
Income Before Income Tax Expense             417,243               5 %       1,414,723              16 %

Income Tax Expense                           139,356               1 %         529,635               6 %
Net Income                              $    277,887               4 %    $    885,088              10 %

EBITDA:
Net Income                              $    277,887                      $    885,088
Add:
Interest Expense                             209,741                           180,311
Provision for income taxes                   139,356                           529,635
Depreciation and amortization              1,401,192                         1,080,607
EBITDA                                     2,028,176                         2,675,641
Add (Deduct):
Stock-based compensation                      44,636                            49,681
Loss on disposal of equipment                      -                            44,286
Gain on sale of investments                  (11,762 )                               -
Other income                                 (58,464 )                          (4,744 )
Adjusted EBITDA*                        $  2,002,586                      $  2,764,864

Income Per Common Share:
Basic                                   $       0.01                      $       0.04
Diluted                                 $       0.01                      $       0.04

Weighted average number of common
shares outstanding   (used to
calculate basic and diluted income
per share)
Basic                                     21,778,866                        21,778,866
Diluted                                   23,019,613                        22,397,806

Although Enservco does not have segmented business operations, which would require segment reporting within the notes of its financial statements per general accounting standards, we believe that revenue by service offering may be useful to readers of our financials. The following tables set forth revenue information for the Company's three service offerings during the three month periods ending March 31, 2012 and 2011:

                                                    For the Three Months Ended
                                                            March 31,
                                                      2012               2011
BY SERVICE OFFERING:                              (Unaudited)        (Unaudited)
Fluid Management (1)                             $    2,111,226      $  2,369,036

Well Enhancement Services (2)                         7,333,854         6,657,366

Well Site Construction and Roustabout Services           92,914           235,119

Total Revenues                                   $    9,537,994      $  9,261,521

Enservco has also determined that an understanding of the diversity of its operations by geography is important to an understanding of its business operations. Enservco only does business in the United States, in what it believes are three geographically diverse regions. The following table sets forth revenue information for the Company's three geographic regions during the three month periods ending March 31, 2012 and 2011:

                               For the Three Months Ended
                                       March 31,
                                 2012               2011
BY GEOGRAPHY:                (Unaudited)        (Unaudited)
Eastern USA Region (3)      $    1,298,110      $  4,686,710

Rocky Mountain Region (4)        5,525,073         1,768,544

Central USA Region (5)           2,714,811         2,806,267

Total Revenues              $    9,537,994      $  9,261,521

Notes to tables:

(1) Water hauling/disposal and frac tank rental.

(2) Services such as frac heating, acidizing, hot oil services, and pressure testing.

(3) Consists of operations and services performed in the southern region of the Marcellus Shale formation (southwestern Pennsylvania and northern West Virginia). Heat Waves is the only Company subsidiary operating in this region.

(4) Consists of western Colorado, northeastern Utah, southeastern Wyoming, western North Dakota, and eastern Montana. Heat Waves is the only Company subsidiary operating in this region.

(5) Consists of southwestern Kansas, northwestern Oklahoma, and northern New Mexico. Both Dillco and Heat Waves engage in business operations in this region.

Revenues

Due to the two new operation centers opened during September 2011 and anticipated organic growth in our Rocky Mountain and Central USA regions, the Company expected a significant increase in revenues during the first quarter of 2012 as compared to the same period in 2011. However, due to the higher-than-average temperatures and moderate weather within these regions (regions in which the Company performs Well Enhancement services, primarily as it relates to our frac heating and hot oiling services), the Company realized only a slight increase (increase of $275,000 or 3%) in revenues during the first quarter of 2012 as compared to the same period in 2011. If the weather within these regions would have followed historic cold weather trends for the first quarter of 2012, as it has in prior years, we believe there would have been a greater increase in revenues for the three months ended March 31, 2012. We believe that the continuing oil and gas exploration and development activities in our Central and Rocky Mountain regions and our new operations in the Niobrara and Bakken basins will continue to positively impact revenues in future periods.

The approximately $275,000 or 3% increase in revenues in the first three months of 2012 compared to the same period in 2011 was a result of several factors. Please see below for a discussion of these factors:

Factors that increased revenues during the three months ended March 31, 2012 as compared to 2011:

(1) Opening two new operation centers during September 2011 in a) Cheyenne, Wyoming (to expand service coverage within the D-J Basin and Niobrara formation), and b) Killdeer, North Dakota (to provide new service coverage within the Bakken formation of western North Dakota and eastern Montana). These two new operation centers (located within our Rocky Mountain region) accounted for the majority of the approximate $5.5 million of revenues generated in our Rocky Mountain region during the three months ended March 31, 2012, an approximate $3.8 million increase over revenues generated in the Rocky Mountain region during the same period 2011;

(2) Increased Well Enhancement services within our Rocky Mountain and Central USA regions (made up of multiple operation centers covering western Colorado, northeastern Utah, southeastern Wyoming; and southwestern Kansas, northwestern Oklahoma, eastern Colorado, northern New Mexico; respectively) due to increased demand for services from existing and new customers due primarily to the growth in the development of unconventional oil and gas wells; and

(3) Increased Fluid Management services within our Central USA region as the Company was able to acquire new water hauling service contracts through our Dillco operations center.

Factors that decreased revenues during the three months ended March 31, 2012 as compared to 2011:

(1) Revenues in the Eastern USA region (the southern Marcellus Shale formation covering southwestern Pennsylvania and northern West Virginia) decreased by approximately $3.4 million (approximately $3.0 million in Well Enhancement services and $400,000 in Fluid Management services) from the same period in 2011.

a. During the three months ended March 31, 2011, the Eastern USA region accounted for approximately $4.7 million of revenues (approximately $4.2 million of Well Enhancement services and $500,000 of Fluid Management services). However, due to higher-than-average temperatures and moderate weather during the 2011 - 2012 winter season (what has been called one of the warmest winters on record), starting late in the fourth quarter of 2011 and continuing through first quarter of 2012, we redeployed a majority of the assets from our operation center in the Eastern USA region in order to meet demands in our Rocky Mountain and Central USA regions (due to new operating centers and growth in those regions, as discussed above). As a result, revenues in this region for the three months ended March 31, 2012 were approximately $1.3 million (approximately $1.2 million of Well Enhancement services and $100,000 of Fluid Management services), a decrease of approximately $3.4 million as compared to the three months ended March 31, 2011.

Historical Seasonality of Revenues. Because of the seasonality of our frac heating and hot oiling business, the second and third quarters are historically our lowest revenue generating periods of our fiscal year. In addition, the revenue mix of our service offerings also changes as our Well Enhancement services (which includes frac heating and hot oiling) decrease as a percentage of total revenues and Fluid Management services and other services increase. The first and fourth quarters of our fiscal year, covering the months during what is known as our "heating season", have historically made up approximately 60% or more of our total fiscal year revenues, with the remaining 40% historically split evenly between the second and third quarters. As noted above, our first quarter of 2012 experienced higher-than-average temperatures and moderate weather and we were unable to realize the expected revenues within the quarter. However, revenue for the first quarter of 2012 (as it pertains to the percentage of annual revenues generated in each quarter) remained consistent with prior fiscal years.

Costs of Revenues and Gross Profit

Although revenues increased (by approximately $275,000 or 3%) during the three months ended March 31, 2012 as compared to the same period of 2011, cost of revenues as a percentage of revenues increased by approximately 7%. This resulted in a decreased gross profit margin of approximately $600,000 or 17% for the first quarter in 2012 when compared to the same period in 2011. This increase in the cost of revenues as a percentage of revenues and resulting declining profitability rate for the period ending March 31, 2012 is primarily due to the following factors:

(1) As discussed throughout this report, the Company relies heavily on the ability to generate the majority of its revenues and gross profit during the heating season (during the first and fourth quarters of our fiscal year), when temperatures are colder through its frac heating and hot oiling services. During the start of the 2011-2012 heating season, the Company fully staffed its operational centers with drivers and operators in order to meet the expected demand during the heating season. However, due to higher-than-expected temperatures in all company locations, the expected demand for our heating services (frac heating and hot oiling) did not begin to materialize until midway through the first quarter of 2012, which still did not meet our projections for first quarter 2012. As such, the Company experienced significant operation costs during the first quarter of 2012 without achieving the expected revenues, resulting in increased cost of revenues as a percentage of revenues, thereby decreasing gross margins;

(2) An increase in labor costs (salary and wages, benefits, etc,) and site overhead during the first quarter of 2012 due to the opening in September 2011 of two new operation centers in Cheyenne, WY and Killdeer, ND. We hired and trained employees at these and each of our locations to meet expected demand in anticipation of a normal heating season. When, as discussed above, revenues were adversely affected by warm weather, we experienced an increase in cost of revenues as a percentage of revenues and decreased gross margins;

(3) An overall increase in the price of fuel and other transportation costs during the period; and

(4) An increase in costs for repairs and general maintenance during the period due to the increased truck and equipment fleet (over $6.7 million of truck and equipment purchases within the last five quarters).

General and Administrative Expenses

Although general and administrative expenses remained relatively consistent as a percentage of revenues during the three months ended March 31, 2012 as compared to the same period 2011, only increasing by 1%, the amount spent on our general and administrative expenses increased during the first quarter in 2012 by approximately $155,000 or 21%, as compared to the same period in 2011.

In general, this increase reflects increased payroll costs in order to employ and retain experienced personnel to meet corporate management and staff needs, which included increased salary, benefits, and bonus expenses during the period. The increase is also due to non-cash expenses for the issuance of stock options to employees; issued in current and future periods (these expenses are recognized over the expected life of the options, subject to vesting terms). This non-cash increase in expense was offset by releasing the cumulative expense in the current period for stock options which were forfeited by former Company employees; releasing the total amount for current and past periods within the current period.

We anticipate that our general and administrative expenses will continue to increase as our operations increase, although we expect to be able to maintain our general and administrative expenses as a reasonable and consistent percentage of revenues.

Depreciation and Amortization

Our depreciation and amortization expenses increased as a percentage of revenues in the three months ended March 31, 2012, as compared to 2011, by approximately 3%. This resulted in an increase in our depreciation and amortization expense of approximately $320,000 or 30% for the first quarter of 2012 as compared to the same period in 2011. This is due mainly to property and equipment purchases during fiscal year 2011 of approximately $5.3 million and another $1.4 million in purchases during the first quarter of 2012. We anticipate that our depreciation and amortization expenses will continue to increase as we add more equipment to the extent that financing is available to do so, of which there can be no assurance.

Results of Operations

Although revenues increased (by approximately $275,000 or 3%) during the three months ended March 31, 2012, our income from operations as a percentage of revenues decreased by approximately 12%, a decrease in income from operations of approximately $1.1 million or 66%, as compared to the same period in 2011. As discussed within the Cost of Revenues and Gross Profit, General and Administrative Expenses, and Depreciation and Amortization sections above, this decrease in our income from operations during the first quarter of 2012 was primarily a result of the $600,000 or 17% decrease in our gross profit margins (as a result of a record warm winter) and our $155,000 or 21% increase in our general and administrative expenses, as compared to the same period in 2011.

Notwithstanding the $1.1 million decrease in our income from operations during the first quarter in 2012, the Company experienced positive cash flow from operations for the period of approximately $580,000. As cash flow from operations continues to improve, we are hopeful that our income from operations and net income will also continue to improve. While we cannot provide any assurance that the improvements in cash flow from operations will continue as recognized during our first quarter of 2012, we intend to continue to monitor all of the components and work to achieve operational and cash flow efficiencies.

Management believes that this improvement in operations reflects the beneficial effect of our increased operations, focus on obtaining profitability, and the benefit of the colder weather in the first and last quarters of the year. We believe that as long as we are able to maintain our costs under control and increase our revenues as a result of our expanding geographical regions and service areas, our financial performance will continue to improve over the long run, although during the short term and thereafter on a quarter-to-quarter basis, there may still be periods of loss.

Income Taxes

The decrease in the income tax expense for the three months ending March 31, 2012 as compared to the same period during 2011 was due to a decrease in the Company's net income before taxes of approximately $1.0 million; from approximately $1.4 million during the first quarter of 2011 to approximately $400,000 for the same period during 2012.

Adjusted EBITDA*



The following table presents a reconciliation of our net income to our Adjusted
EBITDA on a historical basis for each of the periods indicated:



                                   For the Three Months Ended
                                           March 31,
                                     2012               2011
                                 (Unaudited)        (Unaudited)

Net Income                      $      277,887      $    885,088
Add:
Interest Expense                       209,741           180,311
Provision for income taxes             139,356           529,635
Depreciation and amortization        1,401,192         1,080,607

EBITDA                               2,028,176         2,675,641
Add (Deduct):
Stock-based compensation                44,636            49,681
Loss on disposal of equipment                -            44,286
Gain on sale of investments            (11,762 )               -
Other income                           (58,464 )          (4,744 )
Adjusted EBITDA*                $    2,002,586      $  2,764,864

*Note: See below for discussion of the use of non-GAAP financial measurements.

Use of Non-GAAP Financial Measures: Non-GAAP results are presented only as a . . .