##### 



AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
  Security
Agreement Debtor Secured Party
 RECITALS
 Original Credit Agreement Lender Lenders Administrative Agent Collateral
Agent
 , Amended and Restated Credit Agreement
 , Credit Agreement
    REFERENCE TO CREDIT AGREEMENT




---



##### 



CERTAIN DEFINITIONS provided that Chapter 9 Chapter 9
 Collateral Paragraph 4
 Collateral Note Security Paragraph 4
 Collateral Notes Paragraph 4
 Control Agreement control
 Copyrights Paragraph 4
 Credit Agreement
 Deposit Accounts Paragraph 4
 Intellectual Property Paragraph 4
 Lender Lenders
 Material Agreements Paragraph 4
 Obligations
 Obligor
 Partnerships/Limited Liability Companies Annex B-1
 
 2




---



##### 



Partnership/Limited Liability Company Agreements Annex B-1 Partnerships/Limited Liability Companies Partnership/Limited Liability Company Agreement
 Partnership/Limited Liability Company Interests
 Patents Paragraph 4
 Pledged Securities
 Pledged Shares Paragraph 4
 Rights
 Security Interest Paragraph 3
 Trademarks Paragraph 4
 UCC
 SECURITY INTEREST
 
 3




---



##### 



COLLATERAL Collateral
  Annex B-1 Pledged Shares
 Annex B-1 Collateral Notes Annex B-1 Collateral Note Security
 Annex B-1
 Annex B-2 Copyrights
 
 4




---



##### 



Annex B-2 Patents
 Annex B-2 Trademarks Intellectual Property
 Material Agreements
 Vehicles
 Annex B-1 Deposit Accounts
 
 5




---



##### 



Authorizations
    Paragraph 4
 REPRESENTATIONS AND WARRANTIES
 Credit Agreement
 Binding Obligation/Perfection Annex A Paragraph 5(j)  Annex B-1
 
 6




---



##### 



Debtor Information Annex A
 Location Annex A Annex A Annex A
 Governmental Authority
 Maintenance of Collateral Paragraph 5(d)
 Liens except
 Collateral Annex B-1 Annex E
 Instruments, Chattel Paper, Collateral Notes, and Collateral Note Security together with
 
 7




---



##### 



default event of default
 Pledged Securities, Pledged Shares except together with
 Partnership/Limited Liability Company Interests
 
 8




---



##### 



Accounts Deductions
 Material Agreements Annex E
 Deposit Accounts  Annex B-1 control
 Intellectual Property
 Annex B-2 Annex
B-2
 Paragraph
8(c)
   Annex B-2
 
 9




---



##### 



Annex B-2
 Paragraph 5(o)(vi)
  COVENANTS
 Credit Agreement
 Information/Record of Collateral
 Annexes Section 6. 02(a)
 Perform Obligations
 
 10




---



##### 



Notices Annex A
 Collateral in Trust
 Control transferable record Electronic Signatures in Global and National Commerce Act Uniform
Electronic Transactions Act Electronic Signatures
 
 11




---



##### 



in Global and National Commerce Act Uniform Electronic
Transactions Act
 Further Assurances
 Encumbrances
 Intentionally Deleted
 Intentionally Deleted
 Certificates of Title
 Warehouse Receipts Non-Negotiable negotiable Section 7-104
 Impairment of Collateral
 
 12




---



##### 



Collateral Notes and Collateral Note Security
 Securities
 Partnerships/Limited Liability Companies and Partnership/Limited Liability
Company Interests Annex D
 
 13




---



##### 



Material Agreements
 Depository Bank Annex B-1 depository bank Annex B-1 Annex C provided however,
 Marking of Chattel Paper
 Modification of Accounts
 
 14




---



##### 



Intellectual Property
     Paragraph 8(c)
  Annex B-2
  DEFAULT; REMEDIES
 
 15




---



##### 



Section 8(h)
 Notice provided that
 Condition of Collateral; Warranties
 Compliance with Other Laws
 Sales of Pledged Securities
 Securities
Act
 
 16




---



##### 



17




---



##### 



Application of Proceeds Paragraph 7 first second Paragraph
8 third
 Sales on Credit
 OTHER RIGHTS OF SECURED PARTY.
 Performance
 
 18




---



##### 



Collection Paragraph 8(f)
 Intellectual Property
 
 19




---



##### 



Record Ownership of Securities
 Voting of Securities provided however provided further
 
 20




---



##### 



Certain Proceeds
     P-1 A-1+
 Use and Operation of Collateral
 
 21




---



##### 



Cash Collateral Account Cash Collateral Account
 Power of Attorney
  clause (b)  clause (i)
  
 22




---



##### 



23




---



##### 



Purchase Money Collateral
 Subrogation
 Indemnification Claims and any of the foregoing arising from the
negligence of Secured Party or any Lender, or any of their respective officers, employees,
agents, advisors, employees, or representatives provided however Paragraph 8(l)
 MISCELLANEOUS
 
 24




---



##### 



Continuing Security Interest clause (ii) Section 10.07
 Loan
Documents Article X
 Term; Release of Liens Section 10. 01(d) provided that
 Actions Not Releases
 
 25




---



##### 



Waivers Except
 Financing Statement; Authorization
 
 26




---



##### 



Amendments
 Multiple Counterparts
 Parties Bound; Assignment
   Governing Law. The substantive laws of the State of Texas, except to
the extent the laws of another jurisdiction govern the creation, perfection, validity, or
enforcement of liens under this Security Agreement, and the applicable federal laws of the
United States, shall govern the validity, construction, enforcement and interpretation of
this security agreement and all of the other loan documents.
 Section 10.10
 
 27




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##### 



Remainder of page Intentionally Blank
Signature Page to Follow.
 
 28




---



##### 



ALLIS-CHALMERS ENERGY INC.,
a Delaware corporationBy:
    /s/ Victor M. PerezVictor M. PerezChief Financial Officer




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Allis-Chalmers Energy Inc.B.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas 77056C.
    
    Type of Entity:
    
    corporationD.
    
    Jurisdiction of Organization:
    
    DelawareE.
    
    State Issued OrganizationalIdentification Number:
    
    0035223F.
    
    Tax ID Number:
    
    39-0126090G.
    
    Location of Books and Records:
    
    5075 WestheimerSuite 890Houston, Texas 77056H.
    
    Location of Collateral:
    
    5075 WestheimerSuite 890Houston, Texas 77056I.
    
    Location of Real Property:
    
    N/A.J.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
  DelawareFixture filings in the relevant counties in which the properties are located: None.




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares:100% of the common stock of Allis-Chalmers Production Services, Inc.100% of the common stock of Allis-Chalmers Rental Services, Inc.100% of the common stock of Allis-Chalmers Tubular Services, Inc.100% of the common stock of Oilquip Rentals, Inc.100% of the common stock of Petro-Rentals, Inc.100% of the common stock of Strata Directional Technology, Inc.65% of the common stock of DLS Drilling Logistics and Services, Corp.C.
    
    Partnership/Limited Liability Company Interests:100% of the membership interest in AirComp L.L.C.
100% of the membership interest Allis-Chalmers GP, LLC
100% of the membership interest Allis-Chalmers LP, LLCD.
    
    Agreements:
 1.
    
    Limited Liability Company Agreement of Allis-Chalmers GP, LLC dated December
28, 20052.
    
    Limited Liability Company Agreement of Allis-Chalmers LP, LLC dated December
28, 2005
 E.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number).
 Allis-Chalmers Energy Inc.
    
    Wells Fargo
    
    4496856592




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None.2.
    
    Issued Patents and Patent Applications.
 PreviousAssignmentSerial No./
    
    Filing Date/
    
    Real/FrameTitle
    
    Country
    
    Patent No.
    
    Grant Date
    
    (if any)Method and
Apparatus for the
Disassembly of
Drill Pipe
    
    USA
    
    
    6,148,924
    
    
    November 21, 2000
    
    009592/0120Drilling Rig, Pipe
and Support
Apparatus
    
    USA
    
    
    6,349,764
    
    
    February 26, 2002
    
    011112/0144Drill Pipe Handling 
Apparatus
    
    USA
    
    
    6,364,012
    
    
    April 2, 2002
    
    011112/0122Method of Landing
Items at a Well
Location
    
    USA
    
    
    6,378,614
    
    
    April 30, 2002
    
    011108/0312Method of Landing
Items at a Well
Location
    
    USA
    
    
    6,644,413
    
    
    November 11, 2003
    
    012675/0941Apparatus for, and
Method of, Landing
Items at a Well
Location
    
    USA
    
    
    7,025,147
    
    
    April 11, 2006
    
    014249/0389Apparatus for, and
Method of, Landing
Items at a Well
Location
    
    USA
    
    
    11/402,302
    
    
    April 10, 2006Pipe Handling
Apparatus and
Method of Landing
Items at a Well
Location
    
    EPO
    
    
    129506
    
    
    April 12, 2006
*designated
France, Germany and
the United Kingdom




---



##### 



PreviousAssignmentSerial No./
    
    Filing Date/
    
    Real/FrameTitle
    
    Country
    
    Patent No.
    
    Grant Date
    
    (if any)Drilling Rig,
Pipe and Support
Apparatus, Pipe
Handling Apparatus
and Method of
Landing Items at a
Well Location
    
    Canada
    
    
    2,410,574Drilling Rig, Pipe
and Support
Apparatus, Pipe
Handling Apparatus
and Method of
Landing Items at a
Well Location
    
    Mexico
    
    PA/a/2002011876
 3.
    
    Registered Trademarks and Trademark Applications. None.




---



##### 



ANNEX C TO SECURITY AGREEMENT
 DEPOSIT ACCOUNT CONTROL AGREEMENT
 
 
  Depository Bank  Security Agreement    Pledgor Pledgee  Account clauses (a), (b) (c) Collateral
  1.
    
    The Depository Bank is instructed to register the pledge on its books and hold the Collateral
in a pledged status account.
 2.
    
    The Depository Bank is instructed to deliver to Pledgee copies of monthly statements on the
account(s) identified below:3.
    
    The Account will be styled:
 4.
    
    All dividends, interest, gains, and other profits on the Collateral will be reported in the
name and tax identification number of Pledgor.
 5.
    
    If so notified by Pledgee, the Depository Bank will not, without the prior written consent of
Pledgee, allow any of the Collateral or any interest therein to be sold, transferred, or
withdrawn by or for the benefit of Pledgor.
 6.
    
    This letter agreement gives Pledgee control of the Account and the Collateral. The
Depository Bank agrees to comply with any order or instruction from Pledgee as to the
withdrawal or disposition of any funds from time to time credited to the Account, or as to any
other matters relating to the Collateral, without the further consent of Pledgor. The
Depository Bank shall be




---



##### 



fully entitled to rely upon such instructions from Pledgee even if such instructions are
contrary to any instructions or demands that Pledgor may give to the Depository Bank.
 7.
    
    Pledgee agrees to indemnify and hold the Depository Bank, its officers and employees,
harmless from and against any and all claims, causes of action, liabilities, lawsuits,
demands, and/or damages, including, without limitation any and all costs, including court
costs and reasonable attorneys fees, that may arise or result from the Depository Bank
complying with the instructions and orders of Pledgee given in connection with Pledgees
exercise of its control over and secured rights in the Account and the Collateral except to
the extent that such claims, causes of action, liabilities, lawsuits, demands, and/or damages
are found in a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Depository Bank.
 8.
    
    Pledgor agrees to indemnify and hold the Depository Bank, its officers and employees,
harmless from and against any and all claims, causes of action, liabilities, lawsuits,
demands, and/or damages, including, without limitation, any and all costs, including court
costs and reasonable attorneys fees, that may arise or result from the Depository Bank
entering into and performing its obligations under this letter agreement except to the extent
that such claims, causes of action, liabilities, lawsuits, demands, and/or damages are found
in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of the Depository Bank.
 9.
    
    The Depository Bank represents that it has not received notice regarding any lien,
encumbrance, or other claim to the Account or the Collateral from any person other than
pursuant to this letter agreement and has not entered into another agreement with any other
party to act on such partys instructions with respect to the Account. The Depository Bank
further agrees not to enter into any such agreement with any other party.
 10.
    
    The Depository Bank subordinates to the security interest of Pledgee any right of recoupment
or set-off, or to assert any security interest or other lien, that it may at any time have
against or in any of the Collateral on account of any credit or other obligations owed to the
Depository Bank by Pledgor or any other person. The Depository Bank may, however, from time to
time debit the Account for any of its customary charges in maintaining the Account or for
reimbursement for the reversal of any provisional credits granted by the Depository Bank to
the Account, to the extent, in each case, that Pledgor has not separately paid or reimbursed
Depository Bank therefor.
 11.
    
    To the extent a conflict exists between the terms of this letter agreement and any account
agreement between Pledgor and the Depository Bank, the terms of this letter agreement will
control.
 12.
    
    The terms of this letter agreement will in no way be modified except by a writing signed by
all parties hereto.
 13.
    
    Each of the parties executing this letter agreement represents that he has the proper
authority to execute this letter agreement.
 [Remainder of page intentionally blank. Signature page follows.]




---



##### 



Pledgor:
 [NAME OF ENTITY]
 By:Name:Title:Pledgee:ROYAL BANK OF CANADA,
as Administrative Agent and Collateral AgentBy:Name:Title:
 
 Depository Bank:[NAME OF ENTITY]By:Name:Title:




---



##### 



ANNEX D TO SECURITY AGREEMENT
  
 Partnership/Limited Liability Company Pledgee  Security Agreement   Interest Owner Partnership/Limited Liability
Company Interest
 Pledge Records
 Partnership/Limited Liability Company Distributions, Accounts, and Correspondence th
 Remainder of Page Intentionally Blank.
Signature Page to Follow.




---



##### 



By:Name:Title:
 [PARTNERSHIP/LIMITED LIABILITY
COMPANY]By:By:Name:Title:




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
 1.
    
    Indenture among the Debtor, its Subsidiaries party thereto and Wells Fargo Bank, N.A., as
trustee, dated January 18, 2006 pursuant to which the 9.0% senior notes due 2014 of the Debtor
were issued
 2.
    
    Indenture among the Debtor, its Subsidiaries party thereto and Wells Fargo Bank, N.A., as
trustee, dated January 29, 2007 pursuant to the 8.5% senior notes due 2017 of the Debtor were
issued
 3.
    
    Stock Purchase Agreement among Bridas International Holdings Ltd., Bridas Central Company,
Ltd., Associated Petroleum Investors Limited and Debtor
 4.
    
    Strategic Agreement with Pan American Energy (pursuant to which a majority of DLS revenues
are received)




---



##### 



1.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
AIRCOMP L.L.C., a Delaware limited liability company, for the benefit of Royal Bank of
Canada, as administrative agent and collateral agent for the lenders named thereto.2.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
Allis-Chalmers GP, LLC, a Delaware limited liability company, for the benefit of Royal Bank
of Canada, as administrative agent and collateral agent for the lenders named thereto.3.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
Allis-Chalmers LP, LLC, a Delaware limited liability company, for the benefit of Royal Bank
of Canada, as administrative agent and collateral agent for the lenders named thereto.4.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
Allis-Chalmers Management, LP, a Delaware limited partnership, for the benefit of Royal
Bank of Canada, as administrative agent and collateral agent for the lenders named thereto.5.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
Allis-Chalmers Production Services, Inc., a Texas corporation, for the benefit of Royal
Bank of Canada, as administrative agent and collateral agent for the lenders named thereto.6.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
Allis-Chalmers Rental Services, Inc., a Texas corporation, for the benefit of Royal Bank of
Canada, as administrative agent and collateral agent for the lenders named thereto.7.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
Allis-Chalmers Tubular Services, Inc., a Texas corporation, for the benefit of Royal Bank
of Canada, as administrative agent and collateral agent for the lenders named thereto.8.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
Mountain Compressed Air, Inc., a Texas corporation, for the benefit of Royal Bank of
Canada, as administrative agent and collateral agent for the lenders named thereto.9.
    
    Pledge and Security Agreement, dated as of April 26, 2007, by Petro-Rentals, Inc., a
Louisiana corporation, for the benefit of Royal Bank of Canada, as administrative agent and
collateral agent for the lenders named thereto.10.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
OilQuip Rentals, Inc., a Delaware corporation, for the benefit of Royal Bank of Canada, as
administrative agent and collateral agent for the lenders named thereto.11.
    
    Amended and Restated Pledge and Security Agreement, dated as of April 26, 2007, by
Strata Directional Technology, Inc., a Texas corporation, for the benefit of Royal Bank of
Canada, as administrative agent and collateral agent for the lenders named thereto.
 Schedule 10.3 - Page 1




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##### 



Schedule 10.3 - Page 2




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    AirComp L.L.C.B.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    limited liability companyD.
    
    Jurisdiction of Organization:
    
    DelawareE.
    
    State Issued OrganizationalIdentification Number:
    
    3657139F.
    
    Tax ID Number:
    
    01-0784140G.
    
    Location of Books and Records:
    
    1034 Regional Park Drive, Houston, TX  77060H.
    
    Location of Collateral:
    
    1034 Regional Park Drive, Houston, TX  770601200 17th Street, Suite 1000, Denver, CO 802021215 Mission Avenue, Farmington, NM 87401702 Railroad Avenue, Fort Stockton, TX 797352896 I-70 Business Loop, Grand Junction, CO 815011205 Highway 2 North, Wilburton, OK 745481400 Commerce Drive, Carlsbad, NM  882204202 Old Christoval Road, San Angelo, TX 769031169 Hwy 227 SouthSonora, Texas  769505509 Old Grandbury RoadGrandbury, Texas  76049I.
    
    Location of Real Property:
    
    N/A.J.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    DelawareFixture filings in the relevant counties in which the properties are located: None.
 Schedule 10.3 - Page 3




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares: None.C.
    
    Partnership/Limited Liability Company Interests: None.D.
    
    Agreements: None.E.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number).
 AirComp LLC
    
    Wells Fargo
    
    4945074375
 Schedule 10.3 - Page 4




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None.2.
    
    Issued Patents and Patent Applications. None.3.
    
    Registered Trademarks and Trademark Applications. None.
 Schedule 10.3 - Page 5




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
 NONE
 Schedule 10.3 - Page 6




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Allis-Chalmers GP, LLCB.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    limited liability companyD.
    
    Jurisdiction of Organization:
    
    DelawareE.
    
    State Issued OrganizationalIdentification Number:
    
    4085493F.
    
    Tax ID Number:
    
    20-4002547G.
    
    Location of Books and Records:
    
    5075 Westheimer, Suite 890, Houston, TX  77056H.
    
    Location of Collateral:
    
    5075 Westheimer, Suite 890, Houston, TX  77056I.
    
    Location of Real Property:
    
    None.J.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    DelawareFixture filings in the relevant countiesin which the properties are located:
    
    N/A
 Schedule 10.3 - Page 7




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: NONE.B.
    
    Pledged Shares: NONE.C.
    
    Partnership/Limited Liability Company Interests:100% of the general partnership interest in Allis-Chalmers Management, LP, a Texas limited
partnershipD.
    
    Agreements:Agreement of Limited Partnership of Allis-Chalmers Management, LP dated December 28, 2005.E.
    
    Commercial Tort Claims: NONE.F.
    
    Deposit Accounts (including name of bank address and account number): NONE.
 Schedule 10.3 - Page 8




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. NONE.2.
    
    Issued Patents and Patent Applications. NONE.3.
    
    Registered Trademarks and Trademark Applications. NONE.
 Schedule 10.3 - Page 9




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
  Schedule 10.3 - Page 10




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Allis-Chalmers LP, LLCB.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    limited liability companyD.
    
    Jurisdiction of Organization:
    
    DelawareE.
    
    State Issued OrganizationalIdentification Number:
    
    4085497F.
    
    Tax ID Number:
    
    20-4002534G.
    
    Location of Books and Records:
    
    5075 Westheimer, Suite 890, Houston, TX  77056H.
    
    Location of Collateral:
    
    5075 Westheimer, Suite 890, Houston, Texas  77056I.
    
    Location of Real Property:
    
    None.J.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    DelawareFixture filings in the relevant countiesin which the properties are located:
    
    N/A.
 Schedule 10.3 - Page 11




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: NONE.B.
    
    Pledged Shares: NONE.C.
    
    Partnership/Limited Liability Company Interests:100% of the limited partnership interest in Allis-Chalmers Management, LP, a Texas limited
partnershipD.
    
    Agreements:Agreement of Limited Partnership of Allis-Chalmers Management, LP dated December 28, 2005.E.
    
    Commercial Tort Claims: NONE.F.
    
    Deposit Accounts (including name of bank address and account number): NONE.
 Schedule 10.3 - Page 12




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. NONE.2.
    
    Issued Patents and Patent Applications. NONE.3.
    
    Registered Trademarks and Trademark Applications. NONE.
 Schedule 10.3 - Page 13




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
  Schedule 10.3 - Page 14




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Allis-Chalmers Management, LPB.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    limited partnershipD.
    
    Jurisdiction of Organization:
    
    TexasE.
    
    State Issued OrganizationalIdentification Number:
    
    800591175F.
    
    Tax ID Number:
    
    20-4002561G.
    
    Location of Books and Records:
    
    5075 Westheimer, Suite 890, Houston, TX  77056H.
    
    Location of Collateral:
    
    5075 Westheimer, Suite 890, Houston, TX  77056I.
    
    Location of Real Property:
    
    None.J.
    
    Jurisdiction(s) for Filing FinancingStatements:
    
    TexasFixture filings in the relevant countiesin which the properties are located:
    
    None.
 Schedule 10.3 - Page 15




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: NONE.B.
    
    Pledged Shares: NONE.C.
    
    Partnership/Limited Liability Company Interests: NONE.D.
    
    Agreements: NONE.E.
    
    Commercial Tort Claims: NONE.F.
    
    Deposit Accounts (including name of bank address and account number).
 Depositors Name
    
    Depository Bank
    
    Account No.Allis-Chalmers Management, LP
    
    Wells Fargo Bank, National
    
    4121243190Association1000 Louisiana Street9th FloorHouston, Texas  77002
 Schedule 10.3 - Page 16




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. NONE.2.
    
    Issued Patents and Patent Applications. NONE.3.
    
    Registered Trademarks and Trademark Applications. NONE.
 Schedule 10.3 - Page 17




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
  Schedule 10.3 - Page 18




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Allis-Chalmers Production Services, Inc.B.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    corporationD.
    
    Jurisdiction of Organization:
    
    TexasE.
    
    State Issued OrganizationalIdentification Number:
    
    800000213F.
    
    Tax ID Number:
    
    75-2956148G.
    
    Location of Books and Records:
    
    301 Cargill RoadKilgore, Texas  75662H.
    
    Location of Collateral:
    
    301 Cargill RoadKilgore, Texas 756636997 Highway 42 NorthSuite 4DKilgore, Texas  756621800 South MidkiffMidland, Texas 797061110 CR 202Carthage, Texas 756631112 FM 517Alvin, Texas  77512322 OmahaCorpus Christi, TX  784085997 Hwy. 80Arcadia, Louisiana  710011933 Hwy. 89Broussard, Louisiana  70518RR2 Box 27Cordell, Oklahoma  736322134 Bayou Blue Rd.
 Schedule 10.3 - Page 19




---



##### 



Houma, Louisiana  70364Debtor has one capillary unit located in Mexico andone capillary unit in the UAE, Sharjah.I.
    
    Location of Real Property:
    
    1933 Hwy. 89Broussard, Louisiana  70518J.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    TexasFixture filings in the relevant counties in which the properties are located: None.
 Schedule 10.3 - Page 20




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares:100 shares of the common stock of Petro-Rentals, IncorporatedC.
    
    Partnership/Limited Liability Company Interests: None.D.
    
    Agreements: None.E.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number).Allis-Chalmers Production Systems, Inc.                 Wells Fargo                
4121095426Previously Downhole Injection Systems account
 Schedule 10.3 - Page 21




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None.2.
    
    Issued Patents and Patent Applications. None.3.
    
    Registered Trademarks and Trademark Applications. None.
 Schedule 10.3 - Page 22




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
 NONE
 Schedule 10.3 - Page 23




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Allis-Chalmers Rental Services, Inc.B.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    corporationD.
    
    Jurisdiction of Organization:
    
    TexasE.
    
    State Issued OrganizationalIdentification Number:
    
    46281400F.
    
    Tax ID Number:
    
    74-2005637G.
    
    Location of Books and Records:
    
    21131 HardyHouston, Texas  77073H.
    
    Location of Collateral:
    
    16740 Hardy RoadHouston, Texas 770371235 Evangelene ThroughwayBroussard, Louisiana 705181401 Westgate RoadHighway 93Lafayette, Louisiana 7050-1821208 Bon Crest AvenueBroussard, Louisiana 70518I.
    
    Location of Real Property:
    
    N/AJ.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    Texas.Fixture filings in the relevant counties in which the properties are located: None.
 Schedule 10.3 - Page 24




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares: None.C.
    
    Partnership/Limited Liability Company Interests: None.D.
    
    Agreements: None.E.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number).Allis-Chalmers Rental Services, Inc.           Wells Fargo                 529962680Allis-Chalmers Rental Services, Inc.            Wells Fargo                 4121126528(former Delta Rentals
account)
 Schedule 10.3 - Page 25




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None.2.
    
    Issued Patents and Patent Applications. None.3.
    
    Registered Trademarks and Trademark Applications. None.
 Schedule 10.3 - Page 26




---



##### 



ANNEX E TO SECURITY AGREEMENT
 MATERIAL AGREEMENTS
  Schedule 10.3 - Page 27




---



##### 



ANNEX A TO SECURITY AGREEMENT  DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Allis-Chalmers Tubular Service, Inc.B.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    corporationD.
    
    Jurisdiction of Organization:
    
    TexasE.
    
    State Issued OrganizationalIdentification Number:
    
    588803300F.
    
    Tax ID Number:
    
    74-2212869G.
    
    Location of Books and Records:
    
    212 Flat roadCorpus Christi, Texas  78405H.
    
    Location of Collateral:
    
    5205 West University DriveEdinburg, Texas 785401907 Hwy. 182Houma, Louisiana  703642 Mile North Highway 81Pearsall, Texas 78061212 Flat RoadCorpus Christi, Texas  784051530 St. Etienne RoadBroussard, Louisiana 705183000 Hwy. 42 NorthKilgore, Texas  75663In addition, Debtor has approximately $15M of fairmarket value equipment located in Mexico under leaseto Maytep.I.
    
    Location of Real Property:
    
    5205 West University DriveEdinburg, Texas  78540J.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    TexasFixture filings in the relevant counties in which the properties are located: Hidalgo County, TX.
 Schedule 10.3 - Page 28




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares: None.C.
    
    Partnership/Limited Liability Company Interests: None.D.
    
    Agreements: Maytep Lease Agreement.E.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number).Allis-Chalmers Tubular Services, Inc.            Wells Fargo            
          4171374481Allis-Chalmers Tubular Services, Inc.            Bank One, n/k/a                7001412195(former Rogers Oil Tool Services,                   JPMorgan Chase Bank, N.A.Inc. account)
 Schedule 10.3 - Page 29




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None.2.
    
    Issued Patents and Patent Applications. None.3.
    
    Registered Trademarks and Trademark Applications. None.
 Schedule 10.3 - Page 30




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
 1.
    
    Lease Agreement between Jens Oil Field Service, Inc. and Materiales y Equipo Petroleo,
S.A. de C.V.
 Schedule 10.3 - Page 31




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Mountain Compressed Air, Inc.B.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    corporationD.
    
    Jurisdiction of Organization:
    
    TexasE.
    
    State Issued OrganizationalIdentification Number:
    
    161385000F.
    
    Tax ID Number:
    
    51-0006522G.
    
    Location of Books and Records:
    
    5075 WestheimerSuite 890Houston, Texas  77056H.
    
    Location of Collateral:
    
    N/AI.
    
    Location of Real Property:
    
    N/AJ.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    TexasFixture filings in the relevant counties in which the properties are located: None.
 Schedule 10.3 - Page 32




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares: None.C.
    
    Partnership/Limited Liability Company Interests: Owns 100% of AirComp limited liability
company interests.D.
    
    Agreements: NoneE.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number). None.
 Schedule 10.3 - Page 33




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None.2.
    
    Issued Patents and Patent Applications. None.3.
    
    Registered Trademarks and Trademark Applications. None.
 Schedule 10.3 - Page 34




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
 1.
    
    Business Venture Agreement dated June 27, 2003 by and between Mountain Compressed Air,
Inc. and M-I L.L.C.
 Schedule 10.3 - Page 35




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Petro-Rentals, IncorporatedB.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    corporationD.
    
    Jurisdiction of Organization:
    
    LouisianaE.
    
    State Issued OrganizationalIdentification Number:
    
    0009787906F.
    
    Tax ID Number:
    
    72-1121087G.
    
    Location of Books and Records:
    
    5075 Westheimer, Suite 890, Houston, TX  77056H.
    
    Location of Collateral:
    
    1112 FM 517Alvin, Texas  775121933 Hwy. 89Broussard, Louisiana  70518I.
    
    Location of Real Property:
    
    NoneJ.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    Louisiana.Fixture filings in the relevant countiesin which the properties are located:
    
    None
 Schedule 10.3 - Page 36




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares: None.C.
    
    Partnership/Limited Liability Company Interests: NoneD.
    
    Agreements: None.E.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number).Depositors Name                          Depository
Bank            Account No.Petro-Rentals, Incorporated
 Schedule 10.3 - Page 37




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None.2.
    
    Issued Patents and Patent Applications. None.3.
    
    Registered Trademarks and Trademark Applications. None.
 Schedule 10.3 - Page 38




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
 NONE
 Schedule 10.3 - Page 39




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Oilquip Rentals Inc.B.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    corporationD.
    
    Jurisdiction of Organization:
    
    DelawareE.
    
    State Issued OrganizationalIdentification Number:
    
    3170954F.
    
    Tax ID Number:
    
    76-0632145G.
    
    Location of Books and Records:
    
    5075 WestheimerSuite 890Houston, Texas  77056H.
    
    Location of Collateral:
    
    N/AI.
    
    Location of Real Property:
    
    N/AJ.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    Delaware.Fixture filings in the relevant counties in which the properties are located: None.
 Schedule 10.3 - Page 40




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares:OilQuip owns 8,030,000 shares of common stock of Mountain Compressed Air, Inc. (MCA).
There is a warrant issued to Houlihan, Lokey, Howard & Zukin Inc. for 620,000 shares of
common stock of MCA at a purchase price of $.01 per share.C.
    
    Partnership/Limited Liability Company Interests: None.D.
    
    Agreements: None.E.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number).None.
 Schedule 10.3 - Page 41




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None2.
    
    Issued Patents and Patent Applications. None.3.
    
    Registered Trademarks and Trademark Applications. None.
 Schedule 10.3 - Page 42




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
 NONE
 Schedule 10.3 - Page 43




---



##### 



ANNEX A TO SECURITY AGREEMENT
 DEBTOR INFORMATION AND LOCATION OF COLLATERAL
 A.
    
    Exact Legal Name of Debtor:
    
    Strata Directional Technology, Inc.B.
    
    Mailing Address of Debtor:
    
    5075 WestheimerSuite 890Houston, Texas  77056C.
    
    Type of Entity:
    
    corporationD.
    
    Jurisdiction of Organization:
    
    TexasE.
    
    State Issued OrganizationalIdentification Number:
    
    138384700F.
    
    Tax ID Number:
    
    76-0490913G.
    
    Location of Books and Records:
    
    1034 Regional Park DriveHouston, Texas 77060H.
    
    Location of Collateral:
    
    1034 Regional Park DriveHouston, Texas 770601125 Regional Park DriveHouston, Texas  77060100 Asma Blvd.Suite 203Lafayette, Louisiana  70508500 N. Water St.South Tower , Suite 404Corpus Christi, Texas8601 N.W. ExpresswaySuite 714WOklahoma City. Oklahoma  73112I.
    
    Location of Real Property:
    
    None.J.
    
    Jurisdiction(s) for FilingFinancing Statements:
    
    TexasFixture filings in the relevant counties in which the properties are located: None.
 Schedule 10.3 - Page 44




---



##### 



ANNEX B-1 TO SECURITY AGREEMENT
 COLLATERAL DESCRIPTIONS
 A.
    
    Collateral Notes and Collateral Note Security: None.B.
    
    Pledged Shares: None.C.
    
    Partnership/Limited Liability Company Interests: None.D.
    
    Agreements: NoneE.
    
    Commercial Tort Claims: None.F.
    
    Deposit Accounts (including name of bank address and account number).Strata Wells                Fargo                 4588527473
 Schedule 10.3 - Page 45




---



##### 



ANNEX B-2 TO SECURITY AGREEMENT
 INTELLECTUAL PROPERTY
 1.
    
    Registered Copyrights and Copyright Applications. None.2.
    
    Issued Patents and Patent Applications. None.3.
    
    Registered Trademarks and Trademark Applications. None.
 Schedule 10.3 - Page 46




---



##### 



ANNEX E TO SECURITY AGREEMENT  MATERIAL AGREEMENTS
 NONE.
 Schedule 10.3 - Page 47