Exhibit 10.1

ASSET PURCHASE AGREEMENT

by and among

TESCO CORPORATION,

LAMB ENERGY SERVICES, L.L.C.,

TONG SPECIALTY, L.L.C.

and

the other parties hereto

dated

November 1, 2005

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TABLE OF CONTENTS

 

 

ARTICLE I    PURCHASE AND SALE   

Section 1.01

   Responsibility for Conduct of Business    1

Section 1.02

   Acquired Assets    1

Section 1.03

   Excluded Assets    3

Section 1.04

   Assignment of Contracts and Rights    3 ARTICLE II    PURCHASE PRICE   

Section 2.01

   Purchase Price    4

Section 2.02

   Purchase Price Adjustment    4

Section 2.03

   Prorations; Adjustments    6

Section 2.04

   Acquired Assets and Sellers’ Employees in Use    6

Section 2.05

   Like Kind Exchange    7

Section 2.06

   Allocation of Consideration    7 ARTICLE III    ASSUMED LIABILITIES; RETAINED
LIABILITIES   

Section 3.01

   Assumed Liabilities    7

Section 3.02

   Retained Liabilities    8 ARTICLE IV    THE CLOSING   

Section 4.01

   Time and Place    9

Section 4.02

   Documents to be Delivered By Sellers    9

Section 4.03

   Documents to be Delivered by Purchaser    10 ARTICLE V    CONDITIONS TO
CLOSING   

Section 5.01

   Purchaser’s Conditions to Closing    10

Section 5.02

   Sellers’ Conditions to Closing    11 ARTICLE VI    REPRESENTATIONS AND
WARRANTIES OF SELLER   

Section 6.01

   Organization of Sellers; Authority    12

Section 6.02

   Noncontravention    12

Section 6.03

   Title to Acquired Assets    12

Section 6.04

   Ownership; No Equity Interests    13

Section 6.05

   Absence of Changes    13

Section 6.06

   Personal Property    14

Section 6.07

   Permits    14

Section 6.08

   Contracts    14

Section 6.09

   Intellectual Property    15

Section 6.10

   Brokers’ Fees    16

 

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Section 6.11

   Taxes    16

Section 6.12

   Product and Service Warranty    17

Section 6.13

   Employees; Employee Relations    17

Section 6.14

   Employee Benefit Plans    18

Section 6.15

   Environmental Matters    18

Section 6.16

   Property Matters    19

Section 6.17

   Customers, Vendors and Suppliers    19

Section 6.18

   Insurance    19

Section 6.19

   Inventories    19

Section 6.20

   Assets Necessary to the Business    19

Section 6.21

   Conformity to Law    19

Section 6.22

   Accounts Receivable    20

Section 6.23

   Financial Statements    20

Section 6.24

   Safety Performance    20

Section 6.25

   Condition of Assets    20 ARTICLE VII    REPRESENTATIONS AND WARRANTIES OF
BUYER   

Section 7.01

   Organization of Purchaser; Authority    21

Section 7.02

   Noncontravention    21

Section 7.03

   Brokers    21 ARTICLE VIII    COVENANTS   

Section 8.01

   Conduct of Business    22

Section 8.02

   Access    23

Section 8.03

   Third Party Approvals    23

Section 8.04

   Non-Competition and Non-Solicitation    24

Section 8.05

   Retained Employees    26

Section 8.06

   Use of Name    26

Section 8.07

   Further Assurances    27

Section 8.08

   Confidentiality    27

Section 8.09

   Exclusivity    27

Section 8.10

   Access to Former Business Records    27

Section 8.11

   Accounts Receivable    28 ARTICLE IX    INDEMNIFICATION   

Section 9.01

   Survival    28

Section 9.02

   Sellers Indemnity    28

Section 9.03

   Limitations on Liability of Sellers and Stockholders    29

Section 9.04

   Purchaser Indemnity    29

Section 9.05

   Limitations on Liability of Purchaser    29

Section 9.06

   Restricted Party Obligations    30

Section 9.07

   Claims    30

 

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ARTICLE X    TERMINATION   

Section 10.01

   Termination    31

Section 10.02

   Effect of Termination    32 ARTICLE XI    GENERAL   

Section 11.01

   Expenses    32

Section 11.02

   Notices    32

Section 11.03

   Entire Agreement    33

Section 11.04

   Governing Law    33

Section 11.05

   Sections and Section Headings    33

Section 11.06

   Assigns    33

Section 11.07

   No Third Party Rights or Remedies    34

Section 11.08

   Rules of Construction    34

Section 11.09

   Waiver    34

Section 11.10

   Counterparts    34

 

Exhibit A    Assignment and Bill of Sale Exhibit B    Founder Lease Agreement
Exhibit C    Employment Agreement Exhibit D    Preferred Provider Agreement
Schedule 1.02(a)    Equipment Schedule 1.02(b)    Scheduled Contracts
Schedule 1.02(c)    Scheduled Leasehold Interests and Lease Agreements
Schedule 1.03(c)    Excluded Insurance Policies Schedule 1.03(g)    Excluded
Plans Schedule 2.02(a)    Sample Net Working Capital Calculation Schedule 2.06
   Purchase Price Allocation Schedule 3.02(g)    Retained Liabilities
Schedule 5.01(c)    Required Consents Schedule 5.01(h)    Key Employees
Schedule 6.03    Encumbrances and Permitted Encumbrances Schedule 6.05   
Absence of Changes Schedule 6.07    Scheduled Permits Schedule 6.08(a)   
Exceptions to Scheduled Contracts Schedule 6.08(b)    Scheduled Contracts –
Consents to Assignment Schedule 6.08(c)    Other Contracts Schedule 6.09   
Material Intellectual Property Schedule 6.11    Tax Matters Schedule 6.13   
Business Employees Schedule 6.16    Excluded Real Property Schedule 6.17   
Customers, Vendors and Suppliers Schedule 6.19    Inventories

 

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Schedule 6.23    Financial Statements Schedule 6.24    Safety Statistics
Schedule 8.01    Conduct of Business Schedule 8.04(a)(ii)    Administrative
Employees Schedule 8.06(b)    Lamb Energy Logo Schedule 11.08(d)    Sellers’
Knowledge

 

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of the 1st day of
November, 2005, by and among TESCO CORPORATION, an Alberta corporation (the
“Purchaser”), LAMB ENERGY SERVICES, L.L.C., a Delaware limited liability company
(“Lamb Energy”), TONG SPECIALTY, L.L.C., a Louisiana limited liability company
(“Tong Specialty”), LES, INC., a Louisiana corporation (“LES”), Edward Lamb
(“Lamb”), Donald Daigle (“Daigle”), Stacey Reaux (“Reaux”) and SESI, L.L.C., a
Delaware limited liability company (“SESI”). Each of Lamb Energy and Tong
Specialty are referred to herein individually as a “Seller” and collectively as
“Sellers.” Each of LES and SESI are referred to herein individually as a
“Stockholder” and collectively as “Stockholders.” Each of Lamb, Daigle and Reaux
are referred to herein individually as a “Restricted Party” and collectively as
the “Restricted Parties.”

WHEREAS, Sellers desire to sell and Purchaser desires to purchase certain assets
which comprise Sellers’ casing and tubular running business and inspection
services business which includes (i) equipment and expertise used in the
handling, running, installation and removal of tubing and casing, (ii) related
services including wellsite supervision of said running, installation and
removal, (iii) assembly torque monitoring services, and (iv) the sale of certain
consumable and cementing accessory items (the “Business”), which are referenced
as Acquired Assets in Section 1.01 below.

WHEREAS, Lamb Energy owns all of the issued and outstanding membership interests
of Tong Specialty;

WHEREAS, LES and SESI collectively own all of the issued and outstanding
membership interests of Lamb Energy; and

WHEREAS, Lamb, Daigle and Reaux collectively own all of the issued and
outstanding capital stock of LES.

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth
herein, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE

Section 1.01 Responsibility for Conduct of Business. In accordance with the
terms of this Agreement and subject to the conditions, limitations and
provisions contained herein, it is the parties’ intentions that Sellers shall be
entitled to the benefits and responsible for the liabilities and obligations
arising from or related to the ownership and use of the Acquired Assets prior to
the Effective Time (as defined in Section 2.02(a) below), and that Purchaser
shall be entitled to the benefits and responsible for the liabilities and
obligations arising from or related to the ownership and use of the Acquired
Assets from and after the Effective Time.

Section 1.02 Acquired Assets. In furtherance of the parties intentions set forth
in Section 1.01 and subject to the terms and conditions set forth in this
Agreement, and except for the Excluded Assets, at the Closing referred to in
Article IV hereof, Sellers shall sell, assign,

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transfer, and deliver to Purchaser, and Purchaser shall purchase, acquire, and
take assignment and delivery of, all of the assets, properties, rights and
licenses of Sellers of every kind and description, wherever located, real,
personal or mixed, tangible or intangible, owned, held, used or usable in the
conduct of the Business (all of which assets are hereinafter referred to
collectively as the “Acquired Assets”), including all right, title and interest
of Sellers in and to the following:

(a) the equipment, machinery, furniture and furnishings, computers and computer
hardware (including processing units, terminals, disk drives, tape drives,
printers, keyboards, screens, and peripherals), vehicles, trailers, apparatus,
tools, dies, appliances, implements and other tangible personal property used or
usable in the Business, including the personal property listed on
Schedule 1.02(a) hereto (the “Equipment”);

(b) the contracts and agreements listed on Schedule 1.02(b) hereto (the
“Scheduled Contracts”);

(c) the leasehold estate of Sellers in and to that certain property described on
Schedule 1.02(c) (the “Scheduled Leasehold Interests”), under the lease
agreements creating such leasehold estate, which lease agreements are listed in
Schedule 1.02(c) (the “Lease Agreements”);

(d) inventories, including parts and spare parts inventories, chemicals,
finished goods, products, work-in-progress, raw materials and other inventories
(“Inventories”) used or usable in the Business;

(e) all of Sellers’ books, records, papers and instruments of whatever nature
and wherever located that relate to the Acquired Assets or which are required or
necessary in order for Purchaser to conduct the Business from and after Closing
in the manner in which it is presently being conducted (but only to the extent
allowed by applicable laws), including, without limitation, specifications, blue
prints, drawings, designs, sales, promotional and marketing literature,
accounting and financial records, personnel and labor records, sales and
property tax records and returns relating to the Business;

(f) all patents, trademarks, technology, know-how, data, copyrights, tradenames,
service marks, licenses and other intellectual property used or usable in the
conduct of the Business, to the extent assignable (“Intellectual Property”),
including, without limitation, all software, all of Sellers’ rights under any
licenses related to Sellers’ use, at any time, of computer equipment, hardware
or software;

(g) any lists in the possession of Sellers that identify customers to whom sales
have been made in connection with the operation of the Business and vendors from
whom supplies are purchased in connection with the operation of the Business;

(h) the Scheduled Permits (as defined in Section 6.07 below), to the extent
assignable;

 

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(i) the name “Tong Specialty” and any derivatives thereof used or usable in the
Business and the right to use the name “Lamb Energy Services” as contemplated in
Section 8.06; and

(j) all cash and cash equivalents on hand and in banks; and

(k) all accounts, notes and other receivables and rights to receive payments
from any person used to calculate the amount of Net Working Capital pursuant to
Section 2.02.

Section 1.03 Excluded Assets. Notwithstanding the foregoing, Sellers are not
selling, and Purchaser is not purchasing pursuant to this Agreement or
otherwise, any of the following assets and properties of Sellers (all of which
assets are hereinafter referred to collectively as the “Excluded Assets”), all
of which shall be retained by Sellers and shall be excluded from the Acquired
Assets:

(a) Sellers’ minute books, tax returns and other corporate documents and
Seller’s financial records;

(b) the membership interests of Tong Specialty held by Lamb Energy;

(c) all contracts of property and casualty insurance listed on Schedule 1.03(c)
(the “Insurance Policies”) and all rights thereunder (including proceeds from
such insurance policies) relating to the Business or the Acquired Assets;

(d) all deposits, advances, credits and expenses that have been prepaid by
Sellers under the Insurance Policies;

(e) any tax (as defined in Section 6.11(c)(i) below) refunds and prepaid taxes;

(f) all rights, claims, counterclaims, credits, causes of action, lawsuits,
judgments, demands or rights of set-off in favor of Sellers arising out of or
relating to the conduct of the Business prior to the Closing Date other than
with respect to the Acquired Assets;

(g) all employee benefit plans relating to the Business existing as of the
Closing, including the plans listed on Schedule 1.03(g) (the “Plans”), and all
assets related thereto;

(h) assets and properties of Sellers not used in the Business, which are listed
on Schedule 1.03(h); and

(i) all other contracts and agreements to which a Seller is party or by which
its assets or properties are bound other than the Scheduled Contracts (“Retained
Contracts”).

Section 1.04 Assignment of Contracts and Rights. Notwithstanding any other
provision of this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any Acquired Asset or any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted assignment thereof,
without the consent, approval or authorization of a third party thereto, would
constitute a breach or other contravention thereof or in any way

 

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adversely affect the rights of Purchaser or Sellers thereunder. Sellers and
Purchaser will use commercially reasonable efforts to obtain the consent of the
other parties to any such Acquired Asset or any claim or right or any benefit
arising thereunder for the assignment thereof to Purchaser. If such consent is
not obtained, or if an attempted assignment thereof would be ineffective or
would adversely affect the rights of a Seller thereunder so that Purchaser would
not in fact receive all such rights as contemplated herein, Sellers and
Purchaser will cooperate in a mutually agreeable arrangement under which
Purchaser would obtain the benefits and assume the obligations thereunder in
accordance with this Agreement, including subcontracting, sub-licensing or
sub-leasing to Purchaser, or under which Sellers would enforce for the benefit
of Purchaser, with Purchaser assuming Sellers’ obligations, any and all rights
of Sellers against a third party thereto.

ARTICLE II

PURCHASE PRICE

Section 2.01 Purchase Price. Purchaser shall pay to Sellers at the Closing, as
the aggregate purchase price for the Acquired Assets, an amount equal to
$30,000,000 (the “Purchase Price”) by wire transfer of immediately available
funds to an account or accounts designated by Lamb Energy at least two days
prior to the Closing. The purchase price will be subject to adjustment as
provided in Sections 2.02 and 2.03.

Section 2.02 Purchase Price Adjustment.

(a) For purposes of establishing the Purchase Price, Purchaser and Sellers have
assumed that the Net Working Capital as of 12:01 a.m., Houston Texas time, on
the Closing Date (the “Effective Time”) will be $3,000,000 (the “Net Working
Capital Threshold”). “Net Working Capital” shall mean the total current assets
of Sellers of the type set forth on Schedule 2.02(a), less total current
liabilities of Sellers of the type set forth on Schedule 2.02(a).

(b) No less than five days prior to Closing, Sellers shall prepare and deliver
to Purchaser a certificate (the “Pre-Closing Working Capital Certificate”) of an
authorized officer of Lamb Energy setting forth Sellers’ good faith estimate of
Sellers’ Net Working Capital as of the Effective Time (the “Estimated Effective
Time Net Working Capital”). From and after the delivery of the Pre-Closing
Working Capital Certificate, Purchaser shall be permitted to review Sellers’
working papers relating to the preparation of the Pre-Closing Working Capital
Certificate, and Sellers shall provide Purchaser with reasonable access to the
persons involved in preparing or reviewing such Pre-Closing Working Capital
Certificate. If Purchaser disagrees with Sellers’ good faith estimate of
Sellers’ Net Working Capital as set forth in the Pre-Closing Working Capital
Certificate, Sellers and Purchaser shall negotiate in good faith to resolve
their differences prior to the Closing. If Purchaser provides a notice of
agreement or does not provide a notice of disagreement within five days
following its receipt of the Pre-Closing Working Capital Certificate, then
Purchaser shall be deemed to have accepted the calculations and the amounts set
forth in the Pre-Closing Working Capital Certificate, which shall then be the
amount used for purposes of determining the amount of Purchase Price payable at
Closing. If the Estimated Effective Time Net Working Capital set forth in the
Pre-Closing Working Capital Certificate exceeds the Net Working Capital
Threshold, then the Purchase Price will be increased and Purchaser shall pay as
an addition to the Purchase Price payable at Closing an amount in

 

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cash equal to such excess. If the Estimated Effective Time Net Working Capital
set forth in the Pre-Closing Working Capital Certificate is less than the Net
Working Capital Threshold, then the Purchase Price will be reduced and the
Purchase Price payable by Purchaser at Closing shall be reduced by such
difference.

(c) As soon as reasonably practicable following the Closing Date, and in any
event within 60 days thereafter, Purchaser shall prepare and deliver to Sellers
a certificate (the “Post-Closing Working Capital Certificate”) of an authorized
officer of Purchaser setting forth Purchaser’s good faith calculation of the
actual Net Working Capital as of the Effective Time (the “Final Effective Time
Net Working Capital”). From and after the delivery of the Post-Closing Working
Capital Certificate, Sellers shall be permitted to review Purchaser’s working
papers relating to the preparation of the Post-Closing Working Capital
Certificate, and Purchaser shall provide Sellers with reasonable access to the
persons involved in preparing or reviewing such Post-Closing Working Capital
Certificate.

(d) (i) Within 20 days after Sellers’ receipt of the Post-Closing Working
Capital Certificate, Sellers shall notify Purchaser as to whether Sellers agree
or disagree with the calculation of the Final Effective Time Net Working Capital
as reflected on the Post-Closing Working Capital Certificate and, if Sellers
disagree, such notice shall set forth in reasonable detail the particulars of
such disagreement. If Sellers provide a notice of agreement or do not provide a
notice of disagreement within such 20-day period, then Sellers shall be deemed
to have accepted the calculations and the amounts set forth in the Post-Closing
Working Capital Certificate delivered by Purchaser, which shall then be final,
binding and conclusive for all purposes hereunder. If any such notice of
disagreement is timely provided, then Purchaser, on the one hand, and Sellers,
on the other, shall each use reasonable efforts for a period of 15 days
thereafter to resolve any disagreements with respect to the calculations in the
Post-Closing Working Capital Certificate.

(ii) If, at the end of the 15-day resolution period, Purchaser and Sellers are
unable to resolve any disagreements as to items in the Post-Closing Working
Capital Certificate, then KPMG LLP (or such other independent accounting firm of
recognized national standing as may be mutually selected by Purchaser and
Sellers) shall resolve any remaining disagreements. If KPMG LLP is unwilling or
unable to serve in such capacity, then Sellers shall within 10 days after such
15-day resolution period deliver to Purchaser a listing of three other
accounting firms of recognized national or regional standing and Purchaser shall
within 10 days after receipt of such list, select one of such three accounting
firms (such firm as is ultimately selected pursuant to the aforementioned
procedures being the “Accountant”). The Accountant shall be charged with
determining as promptly as practicable, but in any event within 30 days after
the date on which such dispute is referred to the Accountant any disputed items
required to determine Sellers’ actual Net Working Capital as of the Effective
Time. The fees, costs and expenses of the Accountant shall be allocated between
Sellers and Purchaser so that Sellers’ share of such fees, costs and expenses
shall be in the same proportion that the aggregate dollar amount of the disputed
items submitted by Sellers to the Accountant that is unsuccessfully disputed by
Sellers (as finally determined by the Accountant) bears to the total dollar
amount of all disputed

 

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items so submitted by Sellers to the Accountant. Purchaser shall be responsible
for all remaining costs and expenses of the Accountant, if any. The
determination of the Accountant shall be final, binding and conclusive for all
purposes hereunder. Such amounts as finally determined by the Accountant shall
be used to determine the Purchase Price.

(iii) Within five Business Days of the date on which the later of the last
disputed item required to determine the actual Net Working Capital as of the
Effective Time is resolved pursuant to this Section 2.02 or Sellers’ acceptance
of Purchaser’s calculations and amounts set forth in the Post-Closing Working
Capital Certificate, Purchaser shall pay to Sellers an amount equal to the
excess, if any, of the Final Effective Time Net Working Capital minus the
Estimated Effective Time Net Working Capital, or Sellers shall pay to Purchaser
an amount equal to the excess, if any, of the Estimated Effective Time Net
Working Capital minus the Final Effective Time Net Working Capital, in each case
by wire transfer of immediately available funds to an account designated by the
recipient at least two days prior to the date of payment.

Section 2.03 Prorations; Adjustments. All personal property taxes and ad valorem
taxes with respect to the Acquired Assets and all rent and other payments under
or pursuant to the Scheduled Contracts to the extent not deemed an Acquired
Asset or an Assumed Liability shall be apportioned and shall be adjusted, with
Sellers being responsible for such taxes and payments relating to the period
ending prior to the Effective Time and Purchaser being responsible for such
taxes and payments relating to the period commencing from and after the
Effective Time, and the net amount thereof shall be added to or deducted from,
as the case may be, that portion of the Purchase Price paid by Purchaser on the
Closing Date. If the amount of any item is not known at the time of Closing, it
shall be apportioned on a basis which is agreed to by Purchaser and Sellers
prior to the payment of the Purchase Price with a reapportionment at the later
of the payment of the balance of the Purchase Price under Section 2.02 hereof or
when definitive data are available. Sellers and Purchaser shall each pay
one-half of all sales, use, and other transfer taxes with respect to the sale
and purchase of the Acquired Assets.

Section 2.04 Acquired Assets and Sellers’ Employees in Use. At the Closing,
Sellers shall deliver to Purchaser a schedule setting forth all services being
performed by Business Employees (as defined in Section 6.13(a) below) and
utilizing Equipment as of the Effective Time (“Current Jobs”), accompanied by a
list of all work orders or job tickets under which such Business Employees and
Equipment are being utilized, which list shall set forth the rates being paid by
Sellers’ customers for such Business Employees and Equipment. From and after the
Effective Time, the Business Employees and Equipment being utilized for the
Current Jobs shall be deemed to have been rented to Tong Specialty by Purchaser
under the terms and conditions of the Preferred Provider Agreement (as defined
in Section 5.01(j) below), except that Tong Specialty shall only pay to
Purchaser as a rental fee for such Business Employees and Equipment in
connection with completion of such Current Jobs those revenue amounts specified
in the next sentence of this Section 2.04. All payments and revenues received or
receivable from Sellers’ customers with respect to Current Jobs for the periods
prior to the Effective Time will be the property of Sellers, and all payments
and revenues received or receivable from Sellers’ customers with respect to
Current Jobs for periods from and after the Effective Time will be the

 

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property of Purchaser. Sellers will invoice customers in accordance with their
customary practices for rental fees for Current Jobs until such time as the
Current Jobs are completed and will promptly, after the Closing, remit to
Purchaser any revenues received by Sellers which belong to Purchaser pursuant to
this Section 2.04.

Section 2.05 Like Kind Exchange. Purchaser may consummate the purchase of all or
part of the Acquired Assets as part of a so-called like kind exchange (the
“Exchange”) pursuant to §1031 of the Internal Revenue Code of 1986, as amended
(the “Code”), provided that (i) all costs, fees and expenses attendant to the
Exchange shall be the responsibility of Purchaser and (ii) Sellers shall not be
required to acquire or hold title to any property or assets other than the
Acquired Assets for purposes of consummating the Exchange but rather the
Exchange shall be affected through an assignment by Purchaser of its rights
under this Agreement to a qualified intermediary. In the event that all
conditions precedent to the consummation of the transaction have been satisfied,
Sellers hereby agree that the Closing may be delayed to permit Purchaser to
effect the Exchange, provided that in no event may Purchaser delay such Closing
beyond the date set forth in Section 10.01(e) hereof. Sellers shall not, by this
Agreement or acquiescence to the Exchange, (1) have their rights under this
Agreement, including (without limitation) those that survive Closing, affected
or diminished in any manner or (2) be responsible for compliance with or be
deemed to have warranted to Purchaser that the Exchange in fact complies with
§1031 of the Code. Sellers acknowledge that Purchaser, in order to effect a like
kind exchange, may assign its rights hereunder to purchase all or part of the
Acquired Assets to a third party, but that such assignment shall in no way
release Purchaser from any of its obligations under this Agreement.

Section 2.06 Allocation of Consideration. Sellers and Purchaser agree that the
sale of the Business is subject to Section 1060 of the Code. The Purchase Price
shall be allocated among the Acquired Assets in accordance with Schedule 2.06.
Purchaser and Sellers agree (a) to treat and report for income tax purposes the
transactions contemplated by this Agreement in a manner consistent with the
allocations set forth in Schedule 2.06, and (b) not to take any action for
income tax purposes inconsistent with such allocation. Sellers and Purchaser
shall duly prepare and timely file such reports and information returns as may
be prescribed under Section 1060 of the Code, including Form 8594, and any
similar returns or reports required under other applicable law, to report the
allocation of the Purchase Price in accordance with Schedule 2.06. Sellers and
Purchaser acknowledge and agree that the allocations made pursuant to this
Section 2.06 are solely for income tax purposes. Sellers and Purchaser will
notify the other in the event of an examination, audit or other proceeding
regarding the agreed upon allocation of the Purchase Price.

ARTICLE III

ASSUMED LIABILITIES; RETAINED LIABILITIES

Section 3.01 Assumed Liabilities. In furtherance of the parties intentions set
forth in Section 1.01 and subject to the terms and conditions set forth in this
Agreement, at the Closing Purchaser shall assume and agree to pay or perform as
and when due the following liabilities (the “Assumed Liabilities”):

(a) those accounts payables, current portion of vehicle leases and accrued
bonuses which are current liabilities of Sellers and used to calculate the
amount of Net Working Capital pursuant to Section 2.02;

 

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(b) all liabilities and obligations under the Scheduled Contracts that are first
required to be performed from and after the Effective Time (but excluding any
liabilities or obligations which are attributable to a Seller’s violation or
breach of any Scheduled Contract); and

(c) all liabilities and obligations arising out of or related to the business,
operations or activities conducted by Purchaser or any of its Affiliates in
connection with the Business or the Acquired Assets from and after the Effective
Time.

The foregoing Assumed Liabilities are the only liabilities or obligations with
respect to the Business or the Acquired Assets which are being assumed by
Purchaser.

Section 3.02 Retained Liabilities. In furtherance of the parties intentions set
forth in Section 1.01, Sellers acknowledge and agree that they are responsible
for and shall indemnify and hold harmless Purchaser from and against any and all
claims, liabilities, losses or obligations arising out of or in connection with
the Acquired Assets or the Business other than the Assumed Liabilities (the
“Retained Liabilities”), including:

(a) any accrued salaries, bonuses or other accrued compensation or employee
benefits of any employees of Sellers other than accrued bonuses included as a
current liability in the calculation of Net Working Capital pursuant to
Section 2.02;

(b) any obligations to employees or consultants of Sellers under any employment,
consulting, change of control or severance agreements;

(c) all obligations of Sellers under this Agreement;

(d) all taxes with respect to the ownership of the Acquired Assets or conduct of
the Business with respect to all periods ending prior to the Effective Time;

(e) all fees and expenses owed to third parties incurred in connection with the
sale of the Acquired Assets;

(f) any contracts, agreements or instruments to which Sellers or any of their
Affiliates is a party or any of the Acquired Assets are bound, whether or not
relating to the Business other than liabilities arising after the Closing under
Scheduled Contracts;

(g) all obligations of Sellers with respect to any indebtedness, including but
not limited to indebtedness for borrowed money and the other obligations
described on Schedule 3.02(g);

(h) all obligations of Sellers to Affiliates of Sellers, to the extent not used
to calculate the amount of Net Working Capital pursuant to Section 2.02; and

 

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(i) all liabilities and obligations arising out of or related to the business,
operations or activities conducted by Sellers in connection with the Business,
to the extent not an Assumed Liability or used to calculate the amount of Net
Working Capital pursuant to Section 2.02.

ARTICLE IV

THE CLOSING

Section 4.01 Time and Place. The closing of the transfer and delivery of the
documents and instruments necessary to consummate the purchases and sales
contemplated by this Agreement (the “Closing”) shall be held at the offices of
Purchaser’s counsel, Vinson & Elkins, L.L.P., 1001 Fannin, Houston, Texas, at 9
a.m. (Houston, Texas time) on November 1, 2005 as soon as possible, but in no
event later than five business days after satisfaction or waiver of the
conditions set forth in Article V, or at such other time or place as Purchaser
and Sellers may agree. The date on which the Closing is actually closed
hereunder is sometimes referred to herein as the “Closing Date.”

Section 4.02 Documents to be Delivered By Sellers. At the Closing:

(a) Sellers shall execute and deliver to Purchaser (or its designee) an
Assignment and Bill of Sale, in the form attached hereto as Exhibit A, conveying
to Purchaser (or such designee) good and marketable title to the Acquired
Assets;

(b) Sellers shall deliver to Purchaser a copy of the resolutions adopted by the
Board of Managers of Lamb Energy authorizing the execution and delivery of this
Agreement by Lamb Energy and Tong Specialty, as its sole member, and the
consummation of the transactions contemplated hereby, in each case duly
certified as of the Closing Date by the Secretary of Lamb Energy;

(c) Sellers shall deliver a copy of the certificate of formation or articles of
organization, as applicable, of each Seller certified as true and correct by the
Secretaries of State of the States of Delaware and Louisiana, as applicable, and
a certificate of good standing of each Seller issued by such Secretaries of
State as of a date not more than 10 days prior to the Closing Date;

(d) Sellers shall deliver evidence satisfactory to Purchaser of the release
(subject to filing with the applicable governmental authority) of all
Encumbrances (as defined in Section 6.03 below), other than Permitted
Encumbrances (as defined in Section 6.03 below), affecting the Acquired Assets;

(e) Sellers shall execute and deliver lease agreements (the “Founder Lease
Agreements”) respecting the property of Sellers located at Lafayette, Louisiana
in the form attached hereto as Exhibit B; and

(f) Sellers shall execute and deliver to Purchaser such other agreements and
instruments as may reasonably be required to consummate the transactions
contemplated by this Agreement.

 

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Section 4.03 Documents to be Delivered by Purchaser. At the Closing:

(a) Purchaser shall pay the Purchase Price;

(b) Purchaser shall execute and deliver to Sellers the Assignment Agreement,
assuming from Seller the intangible Acquired Assets being assigned by Sellers;

(c) Purchaser shall deliver to Sellers a copy of the resolutions adopted by the
Board of Directors of Purchaser, authorizing the execution and delivery of this
Agreement by Purchaser and the consummation of the transactions contemplated
hereby, in each case duly certified as of the Closing Date by the Secretary or
any Assistant Secretary of Purchaser;

(d) Purchaser shall deliver a copy of the articles of incorporation of Purchaser
certified as true and correct by the Registrar of Alberta and a certificate of
good standing of Purchaser issued by such Registrar as of a date not more than
10 days prior to the Closing Date; and

(e) Purchaser shall execute and deliver to Sellers such other agreements and
instruments as may reasonably be required to consummate the transactions
contemplated by this Agreement.

ARTICLE V

CONDITIONS TO CLOSING

Section 5.01 Purchaser’s Conditions to Closing. The obligations of Purchaser to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment to Purchaser’s reasonable satisfaction of each of the following
conditions:

(a) The representations and warranties of Sellers herein contained shall be true
and correct (i) in all material respects with respect to representations and
warranties which are not modified by materiality and (ii) in all respects with
respect to representations and warranties which are modified by materiality, in
either case, on and as of the Closing Date with the same force and effect as
though made as of such date, except for any variations permitted by this
Agreement.

(b) Sellers shall have performed and complied with in all material respects the
covenants and agreements contained in this Agreement that are required to be
performed or complied with by Sellers on or prior to the Closing Date.

(c) Sellers shall have secured in writing all consents and approvals described
in Schedule 5.01(c), in form and substance satisfactory to Purchaser, by and
from all third parties whose consent and approval is required by contract or law
for the consummation of the transactions herein contemplated or shall have
otherwise provided alternative or substitute arrangements in accordance with
Section 1.04.

(d) Sellers shall have delivered all documents required to be delivered by
Sellers at Closing, as more specifically set forth in Article IV of this
Agreement, in each case in form and substance reasonably satisfactory to
Purchaser.

 

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(e) Sellers shall have secured all appropriate orders, consents, approvals and
clearances, in form and substance reasonably satisfactory to Purchaser, by and
from all third parties, including regulatory agencies and other governmental
authorities and agencies, whose order, consent, approval or clearance is
required by contract or law for Seller’s consummation of the transactions herein
contemplated, and shall have delivered copies thereof to Purchaser.

(f) There shall not have been any material adverse change since June 30, 2005 in
Sellers’ business, financial condition, assets or operations or any occurrence
or circumstance which could reasonably be expected to have such a material
adverse change, other than a material adverse change arising from events or
conditions relating to the economy in general or the oil and gas industry in
general and not specifically relating to Sellers.

(g) There shall be no pending or threatened litigation relating to this
Agreement or the transactions contemplated hereby.

(h) Each of those key employees listed on Schedule 5.01(h) attached hereto shall
have executed and delivered to Purchaser an Employment Agreement (including
non-competition covenants) in the form attached hereto as Exhibit C.

(i) SESI shall have executed and delivered to Purchaser or a designated
Affiliate of Purchaser, a Preferred Provider Agreement (for power swivels and
tongs) in the form of Exhibit D (the “Preferred Provider Agreement”).

Section 5.02 Sellers’ Conditions to Closing. The obligation of Sellers to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment to Sellers’ reasonable satisfaction of the following conditions:

(a) The representations and warranties of Purchaser herein contained shall be
true and correct (i) in all material respects with respect to representations
and warranties which are not modified by materiality and (ii) in all respects
with respect to representations and warranties which are modified by
materiality, in either case, on and as of the Closing Date with the same force
and effect as though made as of such date, except for any variations permitted
by this Agreement.

(b) Purchaser shall have performed and complied with in all material respects
the covenants and agreements contained in this Agreement that are required to be
performed or complied with by Purchaser on or prior to the Closing Date.

(c) Purchaser shall have delivered all documents required to be delivered by
Purchaser at Closing, as more specifically set forth in Article IV hereof, in
each case in form and substance reasonably satisfactory to Sellers.

(d) Purchaser shall have secured all appropriate orders, consents, approvals and
clearances, in form and substance reasonably satisfactory to Sellers, by and
from all parties, including regulatory agencies and other governmental
authorities and agencies, whose order, consent, approval or clearance is
required by contract or law for Purchaser’s consummation of the transactions
herein contemplated, and shall have delivered copies thereof to Sellers.

(e) There shall be no pending or threatened litigation relating to this
Agreement or the transactions contemplated hereby.

 

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ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF SELLER

Sellers and the Stockholders jointly and severally represent and warrant (except
with respect to Section 6.04, whereby Sellers and Stockholders jointly but not
severally represent and warrant) to Purchaser as follows:

Section 6.01 Organization of Sellers; Authority. Lamb Energy is a limited
liability company duly formed, validly existing, and in good standing under the
laws of Delaware. Tong Specialty is a limited liability company duly formed,
validly existing and in good standing under the laws of Louisiana. Sellers have
all requisite power and authority to own and hold the Acquired Assets owned or
held by them, to carry on the Business in each jurisdiction where the Business
is conducted, and to own or lease and operate their properties consistent with
the manner in which the Business is now conducted and such properties are now
owned, leased, or operated. Sellers have all requisite power and authority to
execute and deliver this Agreement and all other agreements, documents, and
instruments contemplated hereby and to carry out all actions required of Sellers
pursuant to the terms of this Agreement and such other agreements. This
Agreement has been duly executed and delivered by Sellers and constitutes the
legal, valid, and binding obligation of Sellers, enforceable against Sellers in
accordance with its terms. All related agreements to be entered into by Sellers
at Closing will, at Closing, have been duly executed and delivered by Sellers
and will constitute the legal, valid and binding obligations of Sellers,
enforceable against Sellers in accordance with their terms.

Section 6.02 Noncontravention. Neither the execution and delivery of this
Agreement by Sellers nor the consummation by Sellers of the transactions
contemplated hereby will constitute a violation of, or be in conflict with, or
constitute or create a default under, or result in the creation or imposition of
any Encumbrance other than a Permitted Encumbrance upon any assets or property
of Sellers (including, without limitation, any of the Acquired Assets) pursuant
to (a) the certificate of formation or articles of organization or limited
liability company or operating agreement, as applicable, of Sellers, each as
amended to date; (b) any Scheduled Contract or any other material contract,
agreement or commitment to which a Seller is a party or by which a Seller or any
of its assets or properties (including, without limitation, any of the Acquired
Assets) are bound or subject to, except as otherwise provided in
Schedule 6.08(b) attached hereto; or (c) any statute or any judgment, decree,
order, regulation, or rule of any court or governmental authority to which
Sellers are subject.

Section 6.03 Title to Acquired Assets. Sellers are the lawful owners of, have
good and valid record and marketable title to, or in the case of leased or
licensed Acquired Assets, have valid leasehold interests in or valid licenses to
use, the Acquired Assets. Except as set forth on Schedule 6.03, all of the
Acquired Assets are held by Sellers free and clear of any security interest,
liens, claims, charges, options, mortgages, debts, leases (or subleases),
conditional sales agreements, title retention agreements, encumbrances of any
kind, or restrictions against the transfer or assignment thereof (collectively,
“Encumbrances”), except for (a) encumbrances or liens created by this Agreement;
(b) mechanics’, carriers’, workmen’s, warehousemen’s,

 

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repairmen’s or other like liens arising in the ordinary course of business and
securing obligations not yet due; (c) encumbrances or liens for taxes and other
governmental obligations not yet due or being contested in good faith and fully
reserved against on the books of the respective Seller of the specific Acquired
Assets to which they relate; and (d) encumbrances or liens listed on
Schedule 6.03 (collectively, “Permitted Encumbrances”). At and as of the
Closing, Sellers will convey the Acquired Assets to Purchaser by deeds, bills of
sale, certificates of title, and instruments of assignment and transfer
effective to vest in Purchaser, and Purchaser will have good and valid record
and marketable title to, or in the case of leased or licensed Acquired Assets,
valid leasehold interests in or valid licenses to use, all of the Acquired
Assets, free and clear of all Encumbrances other than Permitted Encumbrances.

Section 6.04 Ownership; No Equity Interests. Lamb Energy is the beneficial and
record owner of all of the issued and outstanding membership interest of Tong
Specialty. LES is the beneficial and record owner of 45.7% of the issued and
outstanding membership interest of Lamb Energy and SESI is the beneficial and
record owner of 54.3% of the issued and outstanding membership interest of Lamb
Energy. Lamb, Daigle and Reaux are the beneficial and record owners of 60%, 20%
and 20%, respectively, of LES (the “LES Ownership Interests”). Superior Energy
Services, Inc. is the 100% beneficial and record owner of SESI. The Acquired
Assets do not include any equity interest, or any security convertible,
exercisable or exchangeable into any equity interest, in any person.

Section 6.05 Absence of Changes. Except as set forth on Schedule 6.05, since
December 31, 2004:

(a) there has not been any material adverse change in Sellers’ business,
financial condition, assets or operations or any occurrence or circumstance
which could reasonably be expected to have such a material adverse change, other
than a material adverse change arising from events or conditions relating to the
economy in general or the oil and gas industry in general and not specifically
relating to Sellers;

(b) the Acquired Assets and the Business have been operated and maintained in
the ordinary course of business;

(c) there has not been any damage, destruction or casualty loss affecting any
portion of the assets or properties of Sellers related to the Business in any
material respect or affecting any Acquired Asset, whether covered by insurance
or not;

(d) there has not been any sale, transfer, lease, abandonment, or other disposal
of any of the fixed Acquired Assets reflected on the June 30, 2005 balance sheet
of Sellers heretofore provided to the Purchaser, and there has not been any
sale, transfer, lease, abandonment, or other disposal of any other property or
assets of Sellers related to the Business, except in the ordinary course of
business and consistent with past practices where such sale, transfer, lease,
abandonment or disposal would not reasonably be expected to have a material and
adverse impact on the Business or comparable replacement property or assets have
been acquired and are included in the Acquired Assets;

 

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(e) there has been no merger or consolidation of Sellers with any other person
or any agreement with respect thereto;

(f) there have been no distributions declared or made by Sellers;

(g) there has, to the Knowledge of Sellers, not been any actual, pending or
threatened discontinuance of or material and adverse alteration in the
relationship of Seller with any Material Customer or Material Supplier (each as
defined in Section 6.17 below);

(h) Sellers have not entered into any employment, consulting, severance or
indemnification agreement or an agreement with respect to a retention bonus with
any of the employees of the Business;

(i) Sellers have not entered into any collective bargaining agreement or
incurred any other obligation to any labor organization;

(j) there has been no increase in the compensation or benefits of any officer or
employee of the Business not in the ordinary course of business; and

(k) there is no contract or agreement to do any of the foregoing, except as
expressly permitted by this Agreement.

Section 6.06 Personal Property.

(a) Schedule 1.02(a) lists each item of equipment, tools, machinery, parts,
materials, supplies, furniture, cars, trucks, trailers and other rolling stock
and each other item of tangible personal property used or held for use by
Sellers in connection with the Business (excluding any Excluded Assets) which
individually has a book value (as reflected on the books and records of Seller)
in excess of $10,000.

(b) The personal property included in the Acquired Assets, taken as a whole, is
in suitable and adequate condition and working order (subject to ordinary wear
and tear) for use in the Business as same is being conducted at the Effective
Time.

Section 6.07 Permits. Schedule 6.07 lists all material permits, authorizations,
certifications, approvals, ordinances, licenses and other similar rights granted
by any governmental authority and used or held by Sellers in connection with the
ownership and operation of the Acquired Assets or conduct of the Business (the
“Scheduled Permits”). Except as set forth in Schedule 6.07, the Scheduled
Permits are valid and in full force and effect and Sellers are not in default,
and no condition exists that with notice or lapse of time or both would
constitute a default, under any of the Scheduled Permits.

Section 6.08 Contracts.

(a) True and complete copies (including all amendments) of each written
Scheduled Contract, and written summaries of each verbal Scheduled Contract,
have been provided or made available to Purchaser. Except as disclosed in
Schedule 6.08(a): (i) each Scheduled Contract is the legal, valid obligation of
the applicable Seller, and to the Knowledge

 

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of such Seller, any other person party thereto, binding and enforceable against
the applicable Seller and, to the Knowledge of such Seller, any other person
party thereto, in accordance with its terms; (ii) neither the applicable Seller
nor, to the Knowledge of such Seller, any other person is in material breach or
default under a Scheduled Contract, and to the Knowledge of such Seller no event
has occurred that with notice or lapse of time, or both, would constitute a
material breach or default, or permit termination, modification in any manner
adverse to the applicable Seller or acceleration thereunder; and (iii) no party
has asserted or has any right to offset, discount or otherwise abate any amount
owing under the Scheduled Contract except as expressly set forth in such
Scheduled Contract.

(b) Except as disclosed in Schedule 6.08(b), each Scheduled Contract may be
assigned to Purchaser without the consent of any party thereto in connection
with the transactions contemplated by this Agreement. Except as disclosed in
Schedule 6.08(b), the assignment of any Scheduled Contract will not provide any
party thereto the right to terminate such Scheduled Contract or alter the rights
and obligations of the parties thereto or the terms of such Scheduled Contract
in any material respect.

(c) Schedule 6.08(c) attached hereto lists each material written contract or
agreement (other than a Scheduled Contract) to which a Seller is party or by
which the Acquired Assets are bound that (i) involves the borrowing of money by
any Seller or the guarantee of any obligation for the borrowing of money by any
Seller, (ii) involves the purchase or commitment for the purchase or sale of
goods, materials, supplies or services involving payments of more than $125,000
in any 12 month period; (iii) grants a security interest involving the borrowing
of money by, or an extension of credit (other than trade credit) to, a Seller;
(iv) involves the commitment to make a capital expenditure in excess of $100,000
with respect to the Business; (v) involves the sale, lease or other disposition
of any assets or properties of the Sellers other than in the ordinary course of
business; (vi) grants any Person an exclusive right to sell products or provide
services in any geographical region; (vii) purports to limit the freedom of any
Seller or the Business to compete in any line of business or to conduct business
in any geographical location, which right or limitation would burden the Buyer
or the Business as continued following the Closing; (viii) is a joint venture or
partnership agreement or (ix) master service agreements with third parties.

(d) Sellers acknowledge and agree that all Retained Contracts shall remain the
obligation of Sellers, and Purchaser shall have no liability or obligations
arising out of or related thereto.

Section 6.09 Intellectual Property.

(a) Schedule 6.09 identifies all material Intellectual Property owned or used in
the conduct of the Business (the “Seller Intellectual Property”), other than
Intellectual Property that is generally commercially available. The Seller
Intellectual Property constitutes all Intellectual Property Rights necessary for
the continued operation of the Business consistent with the past practices of
the Business since December 31, 2004.

(b) Sellers have ownership of, or valid licenses to use, all Intellectual
Property, free and clear of all Encumbrances other than Permitted Encumbrances.
Upon the

 

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consummation of the transactions contemplated by this Agreement and receipt of
all required consents, Purchaser will have good and marketable title to the
Seller Intellectual Property free and clear of all Encumbrances, other than
Permitted Encumbrances, or in the case of licensed Seller Intellectual Property,
valid licenses to use such Seller Intellectual Property.

(c) To the Knowledge of Sellers, there has been no material infringement or
misappropriation (or facts that are reasonably likely to give rise to a material
infringement or misappropriation) by Sellers of any patents, trademarks,
technology, know-how, data, copyrights, tradenames, service marks, licenses and
other intellectual property of third persons or of any continuing material
infringement or misappropriation (or facts that are reasonably likely to give
rise to a material infringement or misappropriation) by any other person of any
of the Intellectual Property. No Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof.

(d) Except as set forth on Schedule 6.09, all fees, annuities and other payments
which are due on or before the Closing Date for any of the Seller Intellectual
Property including, without limitation, all United States or foreign patents,
patent applications, trademark registrations, service mark registrations,
copyright registrations and any applications for any of the preceding, have been
met or paid in full.

Section 6.10 Brokers’ Fees. Neither Sellers nor any of their Affiliates has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
Purchaser or any of its Affiliates could become liable or obligated.

Section 6.11 Taxes. (a) Except as set forth on Schedule 6.11, (i) all tax
returns required to be filed by Sellers with respect to any of the Acquired
Assets or the Business have been duly and timely filed with the appropriate
governmental authority, (ii) all tax items required to be included in each such
tax return have been so included and all such tax items and any other
information provided in each such tax return is true, correct and complete in
all material respects, (iii) all taxes owed by Sellers with respect to any of
the Acquired Assets or the Business that are or have become due have been timely
paid in full, (iv) all tax withholding and deposit requirements imposed with
respect to any of the Acquired Assets or the Business have been satisfied in
full in all respects, (v) there is no claim pending or, to the Knowledge of
Sellers, threatened by any governmental authority in connection with any such
tax, and (vi) none of such tax returns are now under audit or examination by any
governmental authority.

(b) Sellers acknowledge and agree that all taxes relating to the ownership of
the Acquired Assets or conduct of the Business prior to the Effective Time shall
remain the obligation of Sellers, and Purchaser shall have no liability or
obligations arising out of or related thereto.

(c) For purposes of this Agreement, the terms “taxes,” “tax items” and “tax
returns” shall have the meanings prescribed below:

(i) “tax” or “taxes” means any taxes, assessments, fees and other governmental
charges imposed by any governmental authority, including without

 

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limitation income, profits, gross receipts, net proceeds, alternative or add-on
minimum, ad valorem, value added, turnover, sales, use, property, personal
property (tangible and intangible), environmental, stamp, leasing, lease, user,
excise, duty, franchise, capital stock, transfer, registration, license,
withholding, social security (or similar), unemployment, disability, payroll,
employment, fuel, excess profits, occupational, premium, severance, estimated,
or other charge of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not;

(ii) “tax items” means all items of income, gain, loss, deduction and credit and
other tax items; and

(iii) “tax return” means any return, declaration, report, claim for refund, or
information return or statement relating to taxes, including any schedule or
attachment thereto, and including any amendment thereof.

Section 6.12 Product and Service Warranty. No warranty claims have been asserted
during the three year period prior to the date hereof in connection with the
operation of the Acquired Assets or the Business from which any Seller has
incurred costs in excess of $25,000.

Section 6.13 Employees; Employee Relations.

(a) Neither of Sellers nor any of their Affiliates is a party to or bound by any
collective bargaining agreement applicable to any employee of Sellers involved
in the Business (“Business Employee”), nor have Sellers experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes with respect to any Business Employee during the five-year period prior
to the date of this Agreement. To Seller’s Knowledge, neither Seller has
committed any unfair labor practice with respect to any Business Employee during
such five year period which practice could reasonably be expected to have an
adverse impact on the conduct of the Business by Purchaser following Closing. To
the Knowledge of Sellers, no organizational efforts are presently being made or
threatened by or on behalf of any labor union with respect to any Business
Employees.

(b) No legal proceedings, charges, complaints, grievances or similar actions
have been commenced with respect to Sellers under any laws or regulations
affecting the employment relationship, and, to the Knowledge of Sellers, no
proceedings, charges, or complaints are threatened under any such laws or
regulations and no facts or circumstances exist which would give rise to any
such proceedings, charges, complaints, or claims. Sellers are not subject to any
settlement or consent decree with any present or former employee, employee
representative or any governmental authority relating to claims of
discrimination or other claims in respect to employment practices and policies.
No governmental authority has issued a judgment, order, decree or finding with
respect to the labor and employment practices (including practices relating to
discrimination) of Sellers.

(c) Schedule 6.13 sets forth a true, correct and complete list, as of the date
of this Agreement, of all Business Employees. The list described in the
preceding sentence shows each Business Employee’s name, job title, original hire
date, bonus paid or payable for calendar

 

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year 2004 and current base salary or base wages. As of the date of this
Agreement, no current or former Business Employee of Sellers is on a disability
leave of absence, is receiving disability benefits, or is in an elimination or
other waiting period with respect to his or her receipt of disability benefits.
There are no loans or other obligations payable or owing by Sellers to any
Business Employee, except salaries, wages and salary advances and reimbursement
of expenses incurred and accrued in the ordinary course of business, nor are any
loans or debts payable or owing by any such individuals to Sellers, nor have
Sellers guaranteed any of such individual’s respective loans or obligations.
There are no contracts of employment with any of the Business Employees except
as listed on Schedule 6.13. True and complete copies (including all amendments)
of each such contract of employment with any of the Business Employees have been
provided to Purchaser.

Section 6.14 Employee Benefit Plans. There are no existing employee benefit
plans relating to the Business or covering any Business Employees for which
Purchaser will have any responsibility or liability from and after the Effective
Time.

Section 6.15 Environmental Matters.

(a) None of the Acquired Assets or other property used in the Business is
subject to any Encumbrance imposed by or arising under any environmental law,
and there are no proceedings pending or threatened for imposition of any such
Encumbrance.

(b) The Business and the Acquired Assets are currently, and have at all times in
the past been operated by Sellers, in compliance in all material respects with
the requirements of applicable environmental laws. Sellers have not received any
communication in any form from any governmental authority or any other person
alleging that Sellers are not in compliance with any environmental law
applicable to the Business.

(c) There are no present or past actions, activities, circumstances, conditions,
events or incidents, including, without limitation, any release of any hazardous
materials, with respect to the Business or the Acquired Assets that could
reasonably be expected to form the basis for assertion of any environmental
liability against any owner or operator of the Business or the Acquired Assets.
There has been no release of hazardous materials in connection with the Business
for which all clean-up, remediation and restoration actions required under
environmental laws have not been performed and completed to the satisfaction of
the relevant governmental authority. To the Knowledge of Sellers, there is no
asbestos contained in or forming part of any equipment property, building,
building component, structure or office space used in connection with the
Business.

(d) There are no proceedings pending or, to the Knowledge of Sellers, threatened
against Sellers or any predecessor with respect to the operation of the
Business, against the Business itself or any property or assets used therein, in
which any violation of any environmental law is alleged or any environmental
liability is asserted.

(e) Sellers have provided or made available to Purchaser all internal and
external environmental audits, assessments, reports, studies, documents, and
correspondence on

 

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environmental matters and compliance with environmental laws relating to the
operation of the Business and use of the Acquired Assets that are in the
possession or control of Sellers.

Section 6.16 Property Matters.

(a) Except for the real property listed on Schedule 6.16 (which are Excluded
Assets) and the Scheduled Leasehold Interests, Sellers do not own or have any
interest in any real property (beneficially or of record).

(b) Sellers have a valid leasehold estate in and to the Scheduled Leasehold
Interests, in each case, free and clear of Encumbrances, other than Permitted
Encumbrances. Sellers have provided Purchaser with true and complete copies
(including all amendments) of each Lease Agreement. Sellers validly occupy the
improvements located on the lands covered by each of the Lease Agreements in
accordance with the terms thereof, unencumbered by any Encumbrances, other than
Permitted Encumbrances.

(c) Other than Sellers and except as set forth on Schedule 6.16, there are no
parties physically occupying or using any portion of any real property covered
by the Lease Agreements, nor do any other parties have the right to physically
occupy or use any portion of the real property covered by the Lease Agreements
Sellers have such rights of entry to and exit from the real property covered by
the Lease Agreements and the facilities located thereon as is necessary to carry
on the Business consistent with past practices.

Section 6.17 Customers, Vendors and Suppliers. Schedule 6.17 sets forth a list
of the top 10 customers (“Material Customers”) and top 10 vendor/suppliers
(“Material Suppliers”) of the Business for the fiscal year ended December 31,
2004 and for the nine months ended September 30, 2005. To the Knowledge of
Sellers, no such customer, vendor or supplier has communicated any present
intention to discontinue or materially and adversely alter its relationship as
such with the Business or Purchaser upon consummation of the transactions
contemplated hereby.

Section 6.18 Insurance. The Insurance Policies constitute all policies, binders,
and insurance contracts under which the Business or any of the Acquired Assets
is insured, all of which provide for coverage in customary amounts for companies
in the same industry and of the same or substantially similar size as Sellers.

Section 6.19 Inventories. Except as disclosed on Schedule 6.19, the Inventories
were acquired for sale in the ordinary course of business and are in good and
saleable condition. None of such Inventories is subject to any consignment,
bailment, warehousing or similar arrangement.

Section 6.20 Assets Necessary to the Business. At the Closing, the Acquired
Assets transferred to Purchaser pursuant hereto and the Excluded Assets
constitute all of the assets of Sellers and their Affiliates used in the
Business presently and since December 31, 2004 other than immaterial assets
disposed of in the ordinary course of business.

Section 6.21 Conformity to Law. Sellers have complied in all material respects
with, and are in compliance in all material respects with, (a) all laws,
statutes, governmental

 

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regulations, and all judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees, or similar commands applicable to the Business or
any of the Acquired Assets (including, without limitation, any labor,
environmental, occupational health, zoning, or other law, regulation, or
ordinance); and (b) their certificate of formation or articles of organization,
limited liability company or operating agreement, as applicable, or other
organizational documents, each as amended to date. Sellers have not been charged
with, or to the Knowledge of Sellers been under investigation with respect to,
any violation of any provision of any law or regulation in respect of the
Business or any of the Acquired Assets.

Section 6.22 Accounts Receivable. All accounts receivable of Sellers
constituting part of the Acquired Assets represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business, free and clear of all Encumbrances.

Section 6.23 Financial Statements. Attached hereto as Schedule 6.23 are copies
of the unaudited consolidated balance sheet of Lamb Energy at September 30, 2005
(the “Reference Balance Sheet”) and the related unaudited statements of income
for the nine-months then ended (collectively, the “Financial Statements”).
Except as set forth on Schedule 6.23, the Financial Statements (including any
related notes thereto) (i) have been prepared in accordance with generally
accepted accounting principles, consistently applied throughout the period
covered thereby, except as otherwise noted therein, (ii) fairly present the
financial condition, assets and results of operations of Sellers as of the
respective dates thereof and for the respective periods covered thereby, and
(iii) have been prepared from, and are in accordance with, the books and records
of Sellers.

Section 6.24 Safety Performance. Sellers and the Business are in compliance in
all material respects with all laws and regulations applicable to Sellers or the
Business which impose safety standards or safety compliance requirements.
Attached as Schedule 6.24 hereto are accurate and complete reportable incident
reports and safety statistics of Sellers for the periods designated in such
schedule.

Section 6.25 Condition of Assets.

(a) PURCHASER ACKNOWLEDGES THAT (I) IT HAS HAD ACCESS TO SELLERS AND THE
OFFICERS AND EMPLOYEES OF SELLERS AND (II) IN MAKING THE DECISION TO ENTER INTO
THIS AGREEMENT AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED UNDER THIS
AGREEMENT, PURCHASER HAS RELIED SOLELY ON ITS OWN INDEPENDENT INVESTIGATION AND
UPON THE EXPRESS REPRESENTATIONS, WARRANTIES, COVENANTS, AND AGREEMENTS SET
FORTH IN THIS AGREEMENT. WITHOUT LIMITING THE ABOVE, PURCHASER HAS, PRIOR TO THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, (A) CONDUCTED DUE DILIGENCE TO ITS
SATISFACTION AND (B) HAD FULL OPPORTUNITY TO CONDUCT TO ITS SATISFACTION
INSPECTIONS OF THE ACQUIRED ASSETS AND THE BUSINESS, AND FULLY COMPLETED AND
APPROVED THE RESULTS OF ALL SUCH INSPECTIONS. PURCHASER ACKNOWLEDGES, AFTER SUCH
REVIEW AND INSPECTIONS, THAT NO FURTHER INVESTIGATION OF THE ACQUIRED ASSETS OR
THE BUSINESS IS NECESSARY FOR PURPOSES OF

 

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ACQUIRING THE ACQUIRED ASSETS FOR PURCHASER’S INTENDED USE. PURCHASER
ACKNOWLEDGES THAT THERE ARE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.

(b) EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE EQUIPMENT AND
INVENTORIES INCLUDED IN THE ACQUIRED ASSETS ARE CONVEYED “AS IS, WHERE IS, WITH
ALL FAULTS” WITHOUT ANY EXPRESS OR IMPLIED WARRANTY, INCLUDING WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER SORT OF
WARRANTY WHATSOEVER, WHETHER OF TITLE, OPERATING CONDITION, SAFETY OR COMPLIANCE
WITH GOVERNMENTAL REGULATIONS.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF BUYER

Purchaser represents and warrants to Sellers as follows:

Section 7.01 Organization of Purchaser; Authority. Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of
Alberta, Canada. Purchaser has all requisite power and authority to execute and
deliver this Agreement and all other agreements, documents and instruments
contemplated hereby and to carry out all actions required of Purchaser pursuant
to the terms of this Agreement and such other agreements. This Agreement has
been duly executed and delivered by Purchaser and constitutes the legal, valid,
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms. All related agreements to be entered into by Purchaser at
Closing will, at Closing, have been duly executed and delivered by Purchaser and
will constitute the legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their terms.

Section 7.02 Noncontravention. Neither the execution and delivery of this
Agreement by Purchaser nor the consummation by Purchaser of the transactions
contemplated hereby will constitute a violation of, or be in conflict with,
constitute, or create a default under, or result in the creation or imposition
of any Encumbrances upon any assets or property of Purchaser pursuant to (a) the
charter documents, bylaws or other organizational documents of Purchaser, each
as amended to date; (b) any contract, agreement or commitment to which Purchaser
is a party or by which Purchaser or any of its assets or properties is bound or
to which Purchaser or any of such assets or properties is subject; or (c) any
statute or any judgment, decree, order, regulation, or rule of any court or
governmental authority to which Purchaser is subject.

Section 7.03 Brokers. Neither Purchaser nor any of its Affiliates has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
Sellers or any of their Affiliates could become liable or obligated.

 

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ARTICLE VIII

COVENANTS

Section 8.01 Conduct of Business. (a) From the date of this Agreement through
the Closing, except as set forth on Schedule 8.01, as contemplated by this
Agreement, or as consented to by Purchaser in writing, (a) Sellers shall
(x) operate the Business in the ordinary course of business and (y) use
reasonable efforts to preserve intact the Business and its relationship with
customers, suppliers and others having relationships with the Business and
(b) Sellers shall not:

(i) change their accounting methods, policies or practices relating to the
Business, except as required by generally accepted accounting principles;

(ii) make, amend or revoke any election with respect to taxes relating to the
Business or Acquired Assets;

(iii) sell, assign, transfer, lease or otherwise dispose of any assets used or
usable in the Business in excess of $25,000 individually or $100,000 in the
aggregate, except in the ordinary course of business;

(iv) create any Encumbrances on any of the Acquired Assets, other than Permitted
Encumbrances;

(v) merge into or with or consolidate with any other person or acquire all or
substantially all of the business or assets of any person;

(vi) declare or pay any dividend on, or make any other distribution with respect
to, the securities of Lamb Energy;

(vii) make any change to their certificate of formation or articles of
organization, limited liability company or operating agreement, as applicable,
or other organizational documents;

(viii) purchase any securities of any person;

(ix) take any action or enter into any commitment as part of any liquidation,
dissolution, recapitalization, reorganization or other winding up of their
business or operations;

(x) enter into any settlement of any pending or threatened litigation involving
amounts of $25,000 or more;

(xi) incur any indebtedness, except for any such indebtedness that will be
repaid in full at Closing or that will not become an obligation of Purchaser and
will not create an Encumbrance on any Acquired Asset that is not released at
Closing;

 

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(xii) terminate or cancel any insurance coverage, except for terminations that
occur in the ordinary course of business and that are renewed in connection
therewith;

(xiii) make any changes to their billing or pricing methods or practices;

(xiv) materially change the timing and recognition of allowances, rebates or
concessions from suppliers;

(xv) hire or terminate any employee or take any actions that would lead to
significant loss of services of employees, except, in both cases, for
terminations for cause;

(xvi) take any actions that would materially and adversely change the
relationships with providers, suppliers and customers of the Business;

(xvii) change or implement severance compensation benefits for any employee,
increase compensation payable or that could become payable, directly or
indirectly, to any employee or increase benefits under, or adopt any bonus,
insurance, pension or other employee benefit plan payments or arrangement for or
with any employees, all except as are consistent with past practices, or
otherwise amend any such plan, payments or arrangements, all except as required
by law;

(xviii) acquire any asset that would require the payment of $100,000 or more for
any such asset, except for acquisitions of inventory in the ordinary course of
business consistent with past practices;

(xix) write down Inventories except in each case in accordance with generally
accepted accounting principles; or

(xx) agree, whether in writing or otherwise, to do any of the foregoing.

Section 8.02 Access. From the date hereof through the Closing, Sellers shall
afford to Purchaser and its authorized representatives reasonable access, during
normal business hours and in such manner as not to unreasonably interfere with
normal operation of the Business, to the properties, books, contracts, records
and appropriate officers and employees of Sellers to the extent related to the
Business and Acquired Assets, and shall furnish such authorized representatives
with all financial and operating data and other information concerning the
affairs of Sellers to the extent related to the Business as Purchaser and such
representatives may reasonably request.

Section 8.03 Third Party Approvals. Purchaser and Sellers shall (and shall each
cause their respective Affiliates to) use reasonable efforts to obtain all
consents and approvals of third parties that any of Purchaser, Sellers or their
respective Affiliates are required to obtain in order to consummate the
transactions contemplated hereby.

 

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Section 8.04 Non-Competition and Non-Solicitation.

(i) Each Seller, Stockholder and Restricted Party, in order to induce Purchaser
to enter into this Agreement, expressly covenants and agrees that during the
Prohibited Period (as defined below), such Seller, Stockholder or Restricted
Party will not, and such Seller, Stockholder and each Restricted Party will
cause its respective Affiliates and equityholders not to, directly or
indirectly, own, manage, operate, control or participate in, hold itself as, or
loan money to, any business, individual, partnership, firm, corporation or other
entity, which wholly or in any significant part, engages in providing casing,
tubular or testing services required in or related to the drilling, completion
and production of oil and gas wells (a “Competing Business”) any place within
the states of Texas and Louisiana and any offshore area in the Gulf of Mexico
(the “Territory”); provided, however, that the foregoing shall not preclude or
prohibit: (i) SESI or any of its Affiliates from continuing their existing
businesses of providing services requiring the use of tongs, power swivels and
related equipment to customers for the following purposes: (A) completions and
recompletions, (B) snubbing and well control operations, (C) hydraulic
workovers, (D) fishing jobs, (E) mechanical cutting and (F) plug and abandonment
operations; provided, that the foregoing activities are permitted only to the
extent that the related casing or tubular services being provided by SESI and
its Affiliates are provided as an ancillary component to SESI’s or its
Affiliates existing businesses and SESI and its Affiliates are not
(x) participating in a call-out business the primary focus of which is the
provision of casing or tubular services of the type performed by Sellers prior
to the Effective Time, and (y) are not marketing or soliciting customers for
casing or tubular services as a primary service; (ii) SESI or any of their
Affiliates from directly or indirectly acquiring any third party or its business
if such third party engages in or such business includes a Competing Business so
long as the revenue derived from such acquired Competing Business during the
three years prior to such acquisition does not exceed 10% of the total revenues
of such third party or business, as applicable, for such three year period,
provided that SESI or such Affiliate disposes of the acquired Competing Business
within 180 days following closing of such acquired business; (iii) LES or any of
its Affiliates from continuing their existing businesses of (A) buying and
selling, but not renting (except renting, on an occasional basis, to service
providers engaged in the Business), casing and tubing equipment within the
Territory and (B) engaging in a Competing Business involving the renting of
casing and tubing equipment in Mexico or the Mexican portion of the Gulf of
Mexico or (iv) any entity who becomes an Affiliate of SESI as a result of a
Change of Control Transaction (as defined below) from continuing to engage in a
Competing Business if , but only to the extent that , such entity was engaged in
the Competing Business in the ordinary course prior to completion of the Change
of Control Transaction. “Prohibited Period” shall mean four years from and after
the Closing Date. “Change of Control Transaction” means any transaction or event
pursuant to which (i) the equity owners of Superior Energy Services, Inc.
(“SPN”) as of October 31, 2005 (the “Current Holders”) cease to collectively own
more than fifty percent (50%) of the equity interests in SPN (on an as converted
basis); (ii) any acquisition by any person or “group” (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, other than
the Current Holders of more than fifty percent (50%) of the equity interests (on
an as converted basis) of SPN, (iii) any person or “group” (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) other
than the Current Holders acquires or receives the right to designate a majority
of the board of directors of SPN or (iv) all or substantially all of the assets
of SPN are transferred to an entity that is not owned (in substantially the same
proportions) by the holders of equity securities of SPN immediately prior to
such transaction.

 

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(ii) Each Seller, Stockholder and Restricted Party further expressly covenants
and agrees that during the Prohibited Period, it will not, and such Seller,
Stockholder, and each Restricted Party will cause its respective Affiliates and
shareholders not to, (A) engage or employ, or solicit or contact with a view to
the engagement or employment of any person who is an officer or employee of
Purchaser or any of its Affiliates engaged in the Business; or (B) criticize or
disparage, whether in writing or orally, Purchaser or any of its Affiliates with
respect to their conduct of the Business from and after the Effective Time;
provided, however, that clause (B) shall not prohibit any Seller, Stockholder or
Restricted Party from asserting its rights under this Agreement and nothing
herein will restrict or prohibit any Seller, any Stockholder or Restricted Party
from hiring any of the Business Employees listed on Schedule 8.4(a)(ii)
following the earlier of (w) the first anniversary of the Closing, (x) any
termination by the Purchaser of such Business Employee’s employment
relationship, (y) any termination by such Business Employee of its employment
relationship with the Purchaser following a requirement that such Business
Employee relocate more than 100 miles from his or her business location at the
Effective Time or any material reduction in the responsibilities and duties of
such Business Employee or (z) receipt from Purchaser of a waiver of this
Section 8.4(a)(ii) as it relates to such specific Business Employee.

(iii) To the extent that any part of this Section 8.04(i) may be invalid,
illegal or unenforceable for any reason, it is intended that such part shall be
enforceable to the extent that a court of competent jurisdiction shall determine
that such part, if more limited in scope, would have been enforceable, and such
part shall be deemed to have been so written and the remaining parts shall as
written be effective and enforceable in all events.

(b) The parties agree and acknowledge that the limitations as to time,
geographical area and scope of activity to be restrained as set forth in
Section 8.04(i) are reasonable and do not impose any greater restraint than is
necessary to protect the legitimate business interests of Purchaser. The parties
further agree and acknowledge that, in the event of a breach or threatened
breach of any of the provisions of this Section 8.04, Purchaser shall be
entitled to immediate injunctive relief, as any such breach would cause
Purchaser irreparable injury for which they would have no adequate remedy at
law. Nothing herein shall be construed so as to prohibit Purchaser from pursuing
any other remedies available to it hereunder, at law or in equity for any such
breach or threatened breach.

(c) Each Seller, Stockholder and Restricted Party hereby represents to Purchaser
that it has read and understands and agrees to be bound by, the terms of this
Section 8.04. Each Seller, Stockholder and Restricted Party acknowledges that
the geographic scope and duration of the covenants contained in this
Section 8.04 are the result of arm’s-length bargaining and are fair and
reasonable in light of (i) the nature and geographic scope of the operations of
the Business, (ii) Sellers’, Stockholders’ and the Restricted Parties’ level of
control

 

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over and contact with the Business in all jurisdictions in which it is
conducted, (iii) the fact that the Business is conducted throughout the
geographic area where competition is restricted by this Agreement, and (iv) the
amount of consideration that Sellers, Stockholders and the Restricted Parties
are receiving in connection with the transactions contemplated by this Agreement
and the amount of goodwill for which Purchaser is paying. It is the desire and
intent of the parties that the provisions of this Agreement be enforced to the
fullest extent permitted under applicable legal requirements, whether now or
hereafter in effect and therefore, to the extent permitted by applicable legal
requirements, the parties hereto waive any provision of applicable legal
requirements that would render any provision of this Section 8.04 invalid or
unenforceable.

Section 8.05 Retained Employees. With respect to the Business Employees:

(a) Effective as of the Closing, Purchaser shall offer employment to all of the
current Business Employees at substantially the same base compensation as they
are currently employed by Sellers. Each such Business Employee who accepts a
position shall hereinafter be referred to as a “Retained Employee” and shall
become an employee of Purchaser. From and after the Closing, Retained Employees
shall be entitled to participate in employee benefit plans, programs and
arrangements that Purchaser maintains or shall establish for similarly situated
employees of Purchaser. Retained Employees shall receive service credit under
Purchaser’s plans for service with Sellers, for purposes of vesting and
determining whether preexisting conditions shall be satisfied with respect to
such plans, programs and arrangements to the extent permitted under Purchaser’s
benefit plans. Purchaser shall further implement and maintain the current bonus
program of Sellers with respect to Retained Employees through 2005, and shall
make payments to Retained Employees in the amounts and on the dates that Sellers
would otherwise have made pursuant to such bonus program for Retained Employees
service during 2005.

(b) Notwithstanding anything to the contrary contained in this Section 8.05, the
parties acknowledge and agree that they do not intend to create any third-party
beneficiary rights respecting any Business Employee as a result of the
provisions hereof and specifically hereby negate any intention to so create any
third-party beneficiary rights.

(c) Sellers agree that they shall be solely responsible for all liability, costs
and expenses (including attorneys’ fees) for all employment claims
(collectively, the “Employment Claims”) by any employee or former employee of
Sellers which accrued prior to the Closing relating to arbitrations, unfair
labor practice charges, employment discrimination charges, wrongful termination
claims, workers’ compensation claims, any employment-related tort claim or other
claims or charges of or by employees of Sellers. Purchaser agrees that it shall
be responsible for all Employment Claims by any Retained Employee which accrue
after the Closing relating to arbitrations, unfair labor practice charges,
employment discrimination charges, wrongful termination claims, workers’
compensation claims, any employment-related tort claim or other claims or
charges of or by the Retained Employee.

Section 8.06 Use of Name.

(a) From and after the Closing Date, Sellers, Stockholders, the Restricted
Parties and their Affiliates will not, directly or indirectly, use in any manner
the name “Tong

 

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Specialty” or any derivatives thereof or any other trade name, trademark,
service mark or logo used by Sellers, or any word or logo, that is similar in
sound or appearance, in the Business. Within 60 days after the Closing Date,
Tong Specialty shall provide Purchaser with a certified copy of its
organizational documents indicating that it has changed its name in accordance
with the foregoing sentence.

(b) LES shall retain the name “Lamb Energy Services, Inc.” provided (i) such
name shall not be used in connection with any business enterprise or venture
which could reasonably be expected to compete with the Business conducted by
Purchaser and (ii) Purchaser shall be entitled to use the logo described on
Schedule 8.06(b) in its conduct of the Business for a six month period from and
after the Closing Date.

Section 8.07 Further Assurances. Each party hereto will, at the request of the
other, take such further actions as are requested and execute any additional
documents, instruments or conveyances of any kind which may be reasonably
necessary to further effect the transactions contemplated by this Agreement;
provided, however, that no such action, document, instrument or conveyance shall
increase a party’s liability beyond that contemplated by this Agreement.

Section 8.08 Confidentiality. Sellers, Stockholders and the Restricted Parties
agree that after the Closing Date any facts, information, know-how, processes,
trade secrets, customer lists or confidential matters that relate in any way to
the Acquired Assets or the Business shall be maintained in confidence and shall
not be divulged by Sellers, Stockholders, the Restricted Parties or any of their
Affiliates to any party unless and until they shall become public knowledge
(other than by disclosure in breach of this Section 8.08) or as required by
applicable law, including applicable securities laws and regulations; provided,
before Sellers, Stockholders, the Restricted Parties or any of their Affiliates
discloses any of the foregoing as may be required by applicable law, such person
shall give Purchaser reasonable advance notice and take such reasonable actions
as Purchaser may propose, at Purchaser’s expense, to minimize the required
disclosure.

Section 8.09 Exclusivity. From the date of this Agreement through the Closing
Date, Sellers, Stockholders and the Restricted Parties will not (and Sellers,
Stockholders and the Restricted Parties will not permit any of Sellers’
officers, directors, managers or advisors to), directly or indirectly, solicit,
initiate, encourage, negotiate with, engage in discussions with, accept any
proposal or offers from, or provide any information or access to any person
relating to a, direct or indirect, acquisition of all or substantially all of
the Acquired Assets or the Business (by stock purchase, merger, consolidation or
otherwise) by such person.

Section 8.10 Access to Former Business Records. For a period of three years
after the Closing Date, or until any audits of Sellers’ tax returns relating to
periods prior to the Closing Date (that Sellers have notified Purchaser of in
writing during such three year period) are completed, whichever occurs later,
Purchaser will retain all books, records, papers and files constituting part of
the Acquired Assets. During such period, Purchaser will afford duly authorized
representatives of Sellers free and full access during normal business hours to
all of such records and will permit such representatives, at Sellers’ expense,
to make copies of any of such records, or to obtain temporary possession of any
thereof as may be reasonably required by

 

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Sellers. Such access will be conducted in a manner which does not unreasonably
interfere with the Purchaser’s business and operations.

Section 8.11 Accounts Receivable. To the extent that any of the Accounts
Receivable included in the Acquired Assets are not fully collected (without any
set off or reduction) within 120 days following the Closing, then Purchaser may
(within 150 days following the Closing) assign such uncollected Accounts
Receivable to Sellers. In the event of any such assignment, the Sellers will pay
to Purchaser an amount equal to the face amount of all such Accounts Receivable
less the applicable reserve for doubtful accounts contained in the Final
Effective Time Net Working Capital calculation.

ARTICLE IX

INDEMNIFICATION

Section 9.01 Survival. All representations and warranties of Sellers and
Stockholders contained in this Agreement and all covenants contained in this
Agreement that are to be performed prior to the Closing shall survive the
Closing until eighteen (18) months after the Closing Date, except that (i) the
representations and warranties in Sections 6.01, 6.02 and 6.03 shall survive
indefinitely, (ii) the representations and warranties in Section 6.15 shall
survive for three (3) years following Closing and (iii) the representations and
warranties in Section 6.11 shall survive for until the longer of eighteen
(18) months after the Closing Date or the applicable statute of limitations.
Sellers and Stockholders shall not have any liability for indemnification claims
made under this Article IX with respect to any such representation, warranty or
pre-closing covenant unless a claim notice is provided by the Purchaser to
Sellers or Stockholders prior to the expiration of the applicable survival
period for such representation, warranty or pre-closing covenant. If a claim
notice has been timely given in accordance with this Agreement prior to the
expiration of the applicable survival period for such representation, warranty
or pre-closing covenant, then the applicable representation, warranty or
pre-closing covenant shall survive as to such claim, until such claim has been
finally resolved.

Section 9.02 Sellers Indemnity. Sellers and Stockholders (the “Seller
Indemnitors”) agree to jointly and severally indemnify and hold Purchaser and
its Affiliates (the “Purchaser Indemnitees”) harmless from and with respect to
any and all claims, liabilities, losses, damages, costs, and expenses,
including, without limitation, the reasonable fees and disbursements of counsel
(collectively, “Losses”), related to or arising directly or indirectly out of
any of the following:

(a) any inaccuracies in any representation or warranty made by Sellers or
Stockholders in or pursuant to this Agreement or any failure or breach by
Sellers or Stockholders of any pre-closing covenant, obligation, or undertaking
made by Sellers or Stockholders in this Agreement;

(b) any failure or breach by Sellers or Stockholders of any post-closing
covenant/obligation or undertaking made by Sellers or Stockholders in this
Agreement;

(c) any claim or liability arising out of or with respect to any Retained
Contract;

 

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(d) any claim or liability arising out of or with respect to any Plan; and

(e) any claim or liability arising out of or with respect to Retained
Liabilities.

Section 9.03 Limitations on Liability of Sellers and Stockholders.
Notwithstanding anything to the contrary herein, Seller Indemnitors’ obligation
to indemnify a Purchaser Indemnitee pursuant to Section 9.02(a) are subject to
the following limitations:

(a) No indemnification shall be made by a Seller Indemnitor pursuant to
Section 9.02(a) unless and until the aggregate amount of all Losses to be
indemnified by the Seller Indemnitors to the Purchaser Indemnitees actually
incurred exceeds $210,000 and, in such event, indemnification shall be made by
such Seller Indemnitor only to the extent such Losses exceed $210,000; provided,
however, that any Losses actually incurred by a Purchaser Indemnitee arising out
of or related to Sections 6.01, 6.03, 6.10, 6.11 and 6.14 shall not be subject
to the foregoing limitation;

(b) In no event shall the aggregate obligations of the Seller Indemnitors to
indemnify the Purchaser Indemnitees pursuant to Section 9.02(a) exceed
$15,000,000; provided, however, that any Losses actually incurred by a Purchaser
Indemnitee arising out of or related to Sections 6.01, 6.03, 6.11 and 6.14 shall
not be subject to the foregoing limitation; and

(c) Except for Losses arising out of or related to a willful or knowing breach
of Section 8.04, in no event shall a Seller Indemnitor be obligated to indemnify
a Purchaser Indemnitee for any Losses that are speculative or consequential such
as lost business opportunities or lost profits.

Section 9.04 Purchaser Indemnity. Purchaser agrees to indemnify and hold Seller,
Stockholders and their Affiliates (the “Seller Indemnitees”) harmless from and
with respect to any and all Losses related to or arising directly or indirectly
out of any of the following:

(a) any inaccuracies in any representation or warranty made by Purchaser in or
pursuant to this Agreement or any failure or breach by Purchaser of any
pre-closing covenant, obligation, or undertaking made by Purchaser in this
Agreement;

(b) any failure or breach by Purchaser of any post-closing covenant/obligation
or undertaking made by Purchaser in this Agreement;

(c) any claim or liability arising out of or with respect to Assumed
Liabilities; and

(d) the business, operations or activities conducted by Purchaser or any
Affiliate in connection with the Business or the Acquired Assets from and after
the Closing other than matters for which Sellers have retained responsibility or
otherwise have an obligation to indemnify Purchaser under this Agreement.

Section 9.05 Limitations on Liability of Purchaser. Notwithstanding anything to
the contrary herein, no indemnification shall be made by Purchaser pursuant to
Section 9.04(a) unless and until the aggregate amount of all Losses to be
indemnified by Purchaser to the Seller

 

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Indemnitees actually incurred exceeds $210,000 and, in such event,
indemnification shall be made by Purchaser only to the extent such Losses exceed
$210,000; provided, however, that any Losses actually incurred by a Seller
Indemnitee arising out of or related to Section 7.01 shall not be subject to the
foregoing limitation.

Section 9.06 Restricted Party Obligations.

(a) Each Restricted Party agrees and acknowledges that Sellers and Stockholders
have certain liabilities and obligations under this Agreement. If LES fails to
timely discharge its liabilities or perform its obligations under this
Agreement, then such Restricted Party will be responsible for its Pro Rata Share
of any liability resulting from LES’s failure; provided, however, that each
Restricted Party will only have such liability to the extent of any payment or
distribution such Restricted Party (directly or indirectly) receives from LES
from and after the Closing. In the event that LES elects to dissolve or
otherwise wind up its affairs following the Closing, then in connection with any
such dissolution or winding-up, each Restricted Party hereby agrees to
severally, but not jointly, assume LES’s liabilities and obligations under this
Agreement; provided, however, that each such Restricted Party will only have
such liability to the extent of any payment or distribution such Restricted
Party (directly or indirectly) receives from LES from and after the Closing in
respect of such dissolution or winding-up. For purposes hereof, “Pro Rata Share”
means, with respect to each Restricted Party, the portion of the Purchase Price
allocable to such Restricted Party in accordance with the organizational
documents of LES. Each Restricted Party’s Pro Rata Share shall be such
Restricted Partner’s LES Ownership Interest.

(b) Each Restricted Party agrees to indemnify and hold the Purchaser Indemnitees
harmless from and with respect to any and all Losses related to or arising
directly or indirectly out of any of the following:

(i) any failure or breach by such Restricted Party of any pre-closing covenant,
obligation, or undertaking made by such Restricted Party in this Agreement; and

(ii) any failure or breach by such Restricted Party of any post-closing
covenant/obligation or undertaking made by such Restricted Party in this
Agreement.

Section 9.07 Claims.

(a) In the event that any party desires to make a claim under Sections 9.02,
9.04 or 9.06 hereof in connection with any action, suit, proceeding, or demand
at any time instituted against or made upon any party for which such party may
seek indemnification hereunder (a “Claim”), the party or parties entitled to
indemnification hereunder (the “Indemnified Party”) shall promptly notify the
party or parties required to provide indemnification hereunder (the
“Indemnifying Party”) of such Claim and the claim of indemnification with
respect thereto, provided that failure of the Indemnified Party to give such
prompt notice shall not relieve the Indemnifying Parties of their obligations
under this Article IX, except to the extent, if at all, that the Indemnifying
Parties shall have been prejudiced thereby.

 

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(b) Upon receipt of notice from the Indemnified Party pursuant to
Section 9.07(a), the Indemnifying Parties will, subject to the provisions of
Section 9.07(c), assume the defense and control of such Claim, but shall allow
the Indemnified Party a reasonable opportunity to participate in the defense of
such Claim with its own counsel and at its own expense (except as provided in
Section 9.07(d)). The Indemnifying Parties shall select counsel, contractors and
consultants of recognized standing and competence after consultation with the
Indemnified Party; shall take all steps necessary in the defense or settlement
of such Claim; and shall at all times diligently and promptly pursue the
resolution of such Claim. The Indemnified Party shall, and shall cause each of
its Affiliates and representatives to, cooperate fully with the Indemnifying
Parties in the defense of any Claim defended by the Indemnifying Parties.

(c) The Indemnifying Parties shall be authorized to consent to a settlement of,
or the entry of any judgment arising from, any Claim, without the consent of any
Indemnified Party; but only if the Indemnifying Parties shall (i) pay or cause
to be paid all amounts arising out of such settlement or judgment concurrently
with the effectiveness of such settlement; (ii) not encumber any of the assets
of any Indemnified Party or agree to any restriction or condition that would
apply to or adversely affect any Indemnified Party or to the conduct of any
Indemnified Party’s business; and (iii) obtain, as a condition of any settlement
or other resolution, a complete release of any Indemnified Party potentially
affected by such Claim.

(d) The Indemnifying Parties shall also be liable for the reasonable fees and
expenses of counsel incurred by an Indemnified Party in defending any Claim if
such Claim, if successful, is likely to result in a judgment, decree or order of
injunction or other equitable relief or relief for other than money damages
against such Indemnified Party.

ARTICLE X

TERMINATION

Section 10.01 Termination. At any time prior to the Closing, this Agreement may
be terminated and the transactions contemplated hereby abandoned:

(a) by the mutual consent of Purchaser and Sellers as evidenced in writing
signed by each of Purchaser and Sellers;

(b) by Purchaser, if there has been a material breach by Sellers, Stockholders
or the Restricted Parties of any representation, warranty or covenant contained
in this Agreement which has prevented the satisfaction of any condition to the
obligations of Purchaser at the Closing and, if such breach is of a character
that it is capable of being cured, such breach has not been cured by Sellers,
Stockholders or the Restricted Parties within 30 days after written notice
thereof from Purchaser;

(c) by Sellers, if there has been a material breach by Purchaser of any
representation, warranty or covenant contained in this Agreement which has
prevented the satisfaction of any condition to the obligations of Sellers at the
Closing and, if such breach is of a

 

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character that it is capable of being cured, such breach has not been cured by
Purchaser within 30 days after written notice thereof from Sellers;

(d) by either Purchaser or Sellers if any governmental authority having
competent jurisdiction has issued a final, non-appealable order, decree, ruling
or injunction (other than a temporary restraining order) or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement; or

(e) by either Purchaser or Sellers, if the Closing has not occurred on or before
November 10, 2005, or such later date as the parties may agree upon.

Section 10.02 Effect of Termination. In the event of termination and abandonment
of this Agreement pursuant to Section 10.01, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
hereto; provided, however, that if this Agreement is validly terminated by a
party as a result of breach of this Agreement by one or more non-terminating
parties, then the terminating party shall be entitled to all rights and remedies
available under applicable law or equity. The provisions of this Section 10.02
hereof shall survive any termination of this Agreement.

ARTICLE XI

GENERAL

Section 11.01 Expenses. All expenses of the preparation, execution, and
consummation of this Agreement and of the transactions contemplated hereby,
including, without limitation, attorneys’, accountants’, and outside advisers’
fees and disbursements, shall be borne by the party incurring such expenses.

Section 11.02 Notices. All notices, demands, and other communications hereunder
shall be in writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally, or if mailed by certified mail, return
receipt requested, postage prepaid, or sent by written telecommunication, as
follows:

If to Sellers (with required copies to SESI), to:

5801 Highway 90 East

Broussard, LA 70518

If to LES, to:

Lamb Energy Services, LLC

5801 Highway 90 East

Broussard, LA 70518

Attn: Rusty Lamb

If to SESI, to:

SESI, L.L.C.

1105 Peters Road

 

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Harvey, Louisiana 70058

Attn: Guy Cook

If to any Restricted Party, to the address of such Restricted Party set forth on
the signature page to this Agreement.

If to Purchaser, to:

Tesco Corporation

6204 6A Street SE

Calgary, Alberta T2H 2B7 Canada

Attention: General Counsel

with a copy to:

Tesco Corporation

c/o Tesco Corporation US

11330 Brittmore Park Drive

Houston, Texas 77041

Attention: Associate General Counsel

or to such other address or telecommunication number and with such other copies
as such party may hereafter specify for the purpose by notice to the other
parties. Each such notice, demand or other communication shall be effective
(i) if given by telecommunication device, when such written telecommunication is
transmitted to the telecommunication number specified in this Section and
evidence of receipt is confirmed or (ii) if given by any other means, upon
delivery or refusal of delivery at the address specified in this Section.

Section 11.03 Entire Agreement. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof, and shall not be amended except by a written
instrument hereafter signed by all of the parties hereto. The confidentiality
letter agreement, dated April 5, 2005, by and between Tesco Corporation and
Superior Energy Services, Inc. shall terminate effective as of the Closing.

Section 11.04 Governing Law. The validity and construction of this Agreement
shall be governed by the laws of the State of Texas.

Section 11.05 Sections and Section Headings. All enumerated subdivisions of this
Agreement are herein referred to as “section” or “subsection.” The headings of
sections and subsections are for reference only and shall not limit or control
the meaning thereof.

Section 11.06 Assigns. This Agreement shall be binding upon and inure to the
benefit of the heirs and successors of each of the parties. Neither this
Agreement nor the obligations of any party hereunder shall be assignable or
transferable by such party without the prior written consent of the other party
hereto. Notwithstanding the foregoing, Purchaser may, with or without the
consent of Sellers, Stockholders or the Restricted Parties, transfer and assign
this Agreement and all, but not less than all, of its rights and obligations
hereunder to an Affiliate of Purchaser; provided, however, that no such transfer
or assignment shall relieve Purchaser of its obligations hereunder.

 

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Section 11.07 No Third Party Rights or Remedies. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any person, firm, or corporation, other than
Sellers and Purchaser and their respective shareholders, any rights or remedies
under or by reason of this Agreement.

Section 11.08 Rules of Construction.

(a) In this Agreement, unless the context otherwise requires, words in the
singular number or in the plural number shall each include the singular number
and the plural number and words of the masculine gender shall include the
feminine and the neuter, and, when the sense so indicates, words of the neuter
gender may refer to any gender.

(b) The terms “Affiliate” or “Affiliates” as used in this Agreement shall mean
with respect to any person, any person which, directly or indirectly, controls,
is controlled by, or is under a common control with, such person. The term
“control” (including the terms “controlled by” and “under common control with”)
as used in this definition means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.

(c) The term “person” shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

(d) The term “Knowledge” as to either Seller shall mean the actual knowledge of
the persons reflected on Schedule 11.08(d).

(e) Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation,” if such words are not already present.

(f) The terms “dollars” and “$” mean United States dollars.

Section 11.09 Waiver. Any provision of this Agreement may be waived if, and only
if, such waiver is in writing and signed, in the case of a waiver, by the party
against whom the waiver is to be effective. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

Section 11.10 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto
have caused this Agreement to be duly executed and delivered by their respective
duly authorized officers as of the date and year first above written.

 

PURCHASER: TESCO CORPORATION By:   /s/ Julio M. Quintana Name:   Julio M.
Quintana Title:   President and Chief Executive Officer

 

SELLERS: LAMB ENERGY SERVICES, L.L.C. By:   /s/ Edward R. Lamb Name:   Edward R.
Lamb Title:   Member

 

TONG SPECIALTY, L.L.C. By:   /s/ Edward R. Lamb Name:   Edward R. Lamb Title:  
President

 

STOCKHOLDERS:

 

LES, INC.

By:   /s/ Edward R. Lamb Name:   Edward R. Lamb Title:   Member

SIGNATURE PAGE TO

ASSET PURCHASE AGREEMENT

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SESI, L.L.C. By:   /s/ Robert S. Taylor Name:   Robert S. Taylor Title:   Vice
President and Treasurer

 

RESTRICTED PARTIES:     /s/ Edward R. Lamb   Edward Lamb     Address:   402
Woods Crossing     Lafayette, LA 70508

 

  /s/ Donald Daigle        Donald Daigle     Address:   14727 Hwy.190 West    
Opelousas, LA 70570

 

  /s/ Stacey Reaux   Stacey Reaux     Address:   103 Winslow Blvd.    
Lafayette, LA 70508

SIGNATURE PAGE TO

ASSET PURCHASE AGREEMENT