How did the 1st Season end?

Well, technically, it didn't! Sony was contractually obligated to produce 40 episodes of Roughnecks, but due to the budget limitations of the project, four episodes had to be scrapped and four clip shows were substituted instead. Episodes 33, 38, 39 and 40 were scripted, the voice work was recorded, the scripts were storyboarded, but the shows were never animated. The end result was that the climactic three episodes intended to wrap up the first season NEVER AIRED!

No one can say for sure how the series would have ended, but during the question and answer session at the ComiCon 2001 Roughnecks Panel, Greg Weisman (writer and story editor for Sony) answered the question this way:

After a little prompting from Carl, Rico and Dizzy decide to pursue a relationship. But as S.I.C.O.N. attempts to retake Oahu, Honolulu, City Hall and S.I.C.O.N. HQ, Rico becomes dangerously overprotective of his new "girlfriend." After the victory, Rico and Diz sadly agree to table their feelings until the war's over. Seconds later, Sky Marshal Sanchez arrives at S.I.C.O.N. HQ to congratulate his men. Suddenly, a huge pit opens up under the building -- and Sanchez is taken down into the pit by the Bugs.

S.I.C.O.N. HQ is destroyed by the Bugs and the entire headquarters sinks underground into a huge caldera five miles across dug by the bugs. SkyMarshall Sanchez is captured. The final battle to destroy the Bug Queen will be waged under the earth. S.I.C.O.N. forces move underground, passing though the "Circles of Hell" like Dante's Inferno, finding villages and prisoners of war in the successive underground layers.

150 Marauders designed to fight in lava start the final assault on the Bug Queen as she lures them into the deepest levels of the huge cauldra that was once S.I.C.O.N. HQ. The first 100 will clear the first level so 50 can pass to the second; they in turn will enable 10 Marauders to pass to the next level. These will in turn enable one Marauder (probably Rico) to reach the Queen for the final showdown!