<PAGE>

                                                                   EXHIBIT 10.51









                                 PREFERRED STOCK
                              CONVERSION AGREEMENT


                                  BY AND AMONG


                           ALLIS-CHALMERS CORPORATION,


                                       AND


                           ENERGY SPECTRUM PARTNERS LP






            --------------------------------------------------------


                               DATED APRIL 2, 2004


            --------------------------------------------------------

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                      PREFERRED STOCK CONVERSION AGREEMENT


         This PREFERRED STOCK CONVERSION AGREEMENT (this "Agreement"), dated
April 2, 2004, is made by and among Allis-Chalmers Corporation, a Delaware
corporation ("A-C"), and Energy Spectrum Partners LP, a Delaware limited
partnership ("Energy Spectrum").

                                    RECITALS

         WHEREAS, A-C proposes to issue to Energy Spectrum 8,590,449 shares of
its Common Stock in consideration of the conversion of all of the outstanding
shares of A-C's Series A 10% Cumulative Convertible Preferred Stock (the
"Preferred Stock") held by Energy Spectrum, along with accrued but unpaid
dividends;

         WHEREAS, it is a condition of the consummation of the transactions
contemplated hereby that A-C will, simultaneously with the Closing (as defined
below): (1) obtain a one year extension on the maturity date of certain loan
obligations, and (2) enter into a Stock and Warrant Purchase Agreement (the "SWP
Agreement"), in the form of Exhibit A hereto, pursuant to which A-C shall issue
3,100,000 shares of its Common Stock and warrants (the "Warrants") to purchase
an additional 4,000,000 shares of Common Stock, pursuant to the terms of a
Warrant in the form of Exhibit B hereto;

         WHEREAS, it is a condition of the consummation of the transactions
contemplated hereby that A-C, the Purchasers, Energy Spectrum and others,
simultaneously with the Closing: (1) enter into a Stockholders Agreement with
respect to the governance of the affairs of A-C, and other matters (the
"Stockholders Agreement"), a copy of which is attached to this Agreement as
Exhibit C hereto, and (2) enter into a Registration Rights Agreement with
respect to the Common Stock of A-C (the "Registration Rights Agreement"), a copy
of which is attached to this Agreement as Exhibit D hereto.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:


         1.       CONVERSION.

         1.1 CONVERSION OF PREFERRED STOCK. Subject to the terms and conditions
herein set forth, Energy Spectrum agrees to convert all of the 3,500,000 shares
of Preferred Stock, Series A held by Energy Spectrum (including all accrued
dividend rights), and in exchange therefore A-C agrees that it will issue to
Energy Spectrum, 8,590,449 shares of Common Stock (the "Conversion"). The
closing (the "Closing") of the Conversion shall be effected by exchange of
electronic documents signature pages on April 2, 2004, or on such other date as


                                      -2-
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may be agreed upon in writing by Purchasers and A-C (the "Closing Date"). Energy
Spectrum shall cancel and return to A-C all certificates issued to Energy
Spectrum representing the Preferred Stock on the Closing Date and A-C shall
deliver original certificates representing the Shares issued to Energy Spectrum
within two business days following the Closing Date.

         1.3 FORM OF CERTIFICATES. Energy Spectrum (as hereinafter defined)
agree to the imprinting, so long as required by law, of a legend on certificates
representing all of the Warrants and Common Shares to the following effect: "THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."


           2. DELIVERY OF OTHER AGREEMENTS. At the Closing, (a) A-C shall
execute and deliver (and shall use its best efforts to cause each other party
thereto other than Energy Spectrum to execute and deliver) to Energy Spectrum
the Registration Rights Agreement and the Stockholders Agreement, and (b) Energy
Spectrum shall execute and deliver to A-C and each other party thereto the
Registration Rights Agreement and the Stockholders Agreement. In addition, A-C
shall use its best efforts to consummate the transactions contemplated by the
SWP Agreement.


         3. REPRESENTATIONS AND WARRANTIES OF A-C. A-C hereby makes the
following representations and warranties to Energy Spectrum:

         3.1 ORGANIZATION, ETC. A-C is a corporation, duly organized and validly
existing and in good standing under the laws of the State of Delaware, and is
qualified or licensed to do business and is in good standing as a foreign
corporation in each other jurisdictions in which the conduct of its business or
the ownership of property requires such qualification or licensing, except where
failure to be so qualified or licensed would not have a material adverse effect
on the financial condition or operations of A-C and its Subsidiaries (as defined
below), taken as a whole (for A-C and its Subsidiaries, a "Material Adverse
Effect"). Each company (each, a "Subsidiary") listed on SCHEDULE 3.1 hereof is
duly organized and validly existing and in good standing under the laws of the
jurisdiction of its organization, and is qualified or licensed to do business
and is in good standing as a foreign corporation in each other jurisdiction in
which the conduct of its business or the ownership of property requires such
qualification or licensing, except where failure to be so qualified or licensed
would not have a Material Adverse Effect on A-C. Except for the Subsidiaries,
A-C does not own, of record or beneficially, the securities of any other entity.
True and correct copies of the Certificate of Incorporation and Bylaws of A-C,
as currently in effect, are among the documents (the "Commission Documents")
that have been filed with the Securities and Exchange Commission (the "SEC") and
are available on the SEC's website (WWW.SEC.GOV) (CIK No. 0000003982).

         3.2 AUTHORITY. A-C has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and such action
has been duly authorized by all necessary action of A-C's Board of Directors.
The issuance of the Common Stock has been duly authorized and if, as and when
delivered to Energy Spectrum, such shares will be duly and validly issued and
outstanding, fully paid and non-assessable and will be free of any Encumbrance


                                      -3-
<PAGE>

(as defined below), other than those imposed pursuant to this Agreement and
securities laws of general application. As used in this Agreement, "Encumbrance"
shall mean any claim, lien, pledge, option, charge, easement, security interest,
deed of trust, mortgage, right of way, encroachment, private building or use
restriction, conditional sales agreement, encumbrance or other right of third
parties, whether voluntarily incurred or arising by operation of law, and
includes, without limitation, any agreement to give any of the foregoing in the
future, and any contingent sale or other title.

         3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by A-C and constitutes a legal, valid and binding agreement and obligation of
A-C enforceable against it in accordance with its terms subject to: (i) judicial
principles respecting election of remedies or limiting the availability of
specific performance, injunctive relief, or other equitable remedies; (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect generally relating to or affecting creditors' rights; and
(iii) public policy concerns (including, without limitation, the ability of a
court to refuse to enforce unconscionable covenants, indemnification provisions
or similar provisions).

         3.4 NO VIOLATION. Except as set forth on SCHEDULE 3.4, the execution
and the delivery by A-C of this Agreement does not and will not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in a violation of, or (iv) require any
authorization, consent or approval not heretofore obtained pursuant to, any
binding written or oral agreement or instrument including, without limitation,
any charter, bylaw, trust instrument, indenture or evidence of indebtedness,
lease, contract or other obligation or commitment (each, a "Contractual
Obligation") binding upon A-C or any Subsidiary or any of their properties or
assets, or any law, rule, regulation, restriction, order, writ, judgment, award,
determination, injunction or decree of any court or government, or any decision
or ruling of any arbitrator (each, a "Requirement of Law") binding upon or
applicable to A-C or any Subsidiary or any of their properties or assets.

         3.5 LITIGATION. Except as set forth in SCHEDULE 3.5 or the Commission
Documents, there are no pending or overtly threatened actions, claims, orders,
decrees, investigations, suits or proceedings by or before any governmental
authority, arbitrator, court or administrative agency which would have a
Material Adverse Effect.

         3.6 CAPITALIZATION. The authorized capital stock of A-C consists of
100,000,000 shares of Common Stock, par value $0.15 per share, 19,633,340 shares
of which have been validly issued and are outstanding as of the date hereof (and
such issued shares are fully paid and non-assessable), and 10,000,000 shares of
preferred stock, par value $0.01 per share, of which 3,500,000 shares of
Preferred Stock have been issued and are outstanding on the date hereof (and
such issued shares are fully paid and non-assessable). Except as set forth on
SCHEDULE 3.6, A-C owns 100% of the capital stock of each of the Subsidiaries.
Except as set forth on SCHEDULE 3.6 hereto, there do not exist any other
authorized or outstanding securities, options, warrants, calls, commitments,
rights to subscribe or other instruments, agreements or rights of any character,
or any pre-emptive rights, convertible into or exchangeable for, or requiring or
relating to the issuance, transfer or sale of, any shares of capital stock or
other securities of A-C or any Subsidiary.

                                      -4-
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         3.7 ANNUAL REPORT; FINANCIAL STATEMENTS. A-C's Annual Report on Form
10-K for the years ended December 31, 2001 and December 31, 2002 and Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003 and
September 30, 2003 (the "Reports") have been filed with the SEC and the Reports
complied in all material respects with the rules of the SEC applicable to such
Reports on the date filed with the SEC, and the Reports did not contain, on the
date of filing with the SEC, any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not materially misleading. The
Reports have not been amended, nor as of the date hereof has A-C filed any
report on Form 8-K since September 30, 2003 other than a Form 8-K filed November
21, 2003. All of the consolidated financial statements included in the Reports
(the "A-C Financial Statements"): (i) have been prepared from and on the basis
of, and are in accordance with, the books and records of A-C and with generally
accepted accounting principles applied on a basis consistent with prior
accounting periods; (ii) fairly and accurately present in all material respects
the consolidated financial condition of A-C as of the date of each such A-C
Financial Statement and the results of its operations for the periods therein
specified; and (iii), in the case of the annual financial statements, are
accompanied by the audit opinion of A-C's independent public accountants. Except
as set forth in SCHEDULE 3.7 or in the A-C Financial Statements, as of the date
hereof, A-C has no liabilities other than (i) liabilities which are reflected or
reserved against in the A-C Financial Statements and which remain outstanding
and undischarged as of the date hereof, (ii) liabilities arising in the ordinary
course of business of A-C since September 30, 2003, (iii) liabilities incurred
as a result of the transactions contemplated by this Agreement or (iv)
liabilities which were not required by generally accepted accounting principles
to be reflected or reserved on the A-C Financial Statements. Since September 30,
2003, except as set forth on SCHEDULE 3.7 hereto, there has not been any event
or change which has or will have a Material Adverse Effect and A-C has no
knowledge of any event or circumstance that would reasonably be expected to
result in such a Material Adverse Effect.

         3.8 [INTENTIONALLY LEFT BLANK]

         3.9 INCOME TAX RETURNS. A-C and the Subsidiaries have filed all federal
and state income tax returns which are required to be filed, and have paid, or
made provision for the payment of, all taxes which have become due pursuant to
said returns or pursuant to any assessment received by A-C or any Subsidiary,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. A-C has no knowledge of any pending
assessments or adjustments of the income tax payable of A-C or its Subsidiaries
with respect to any year.

         3.10 PERMITS, COMPLIANCE WITH LAW. A-C and each Subsidiary possesses,
and will hereafter possess, all permits, consents, approvals, franchises and
licenses required and rights to all trademarks, trade names, patents, and
fictitious names, if any, necessary to enable them to conduct the business in
which it is now engaged in compliance with applicable law, except where failure
to do so would not have a Material Adverse Effect. A-C and each Subsidiary are
in compliance with all Requirements of Law in the conduct of its business and
corporate affairs, except where failure to comply, singly or in the aggregate,
would not have a Material Adverse Effect.

                                      -5-
<PAGE>

         3.11 ERISA. Except as set forth on SCHEDULE 3.11, A-C and each
Subsidiary is in compliance in all material respects with all applicable
provisions of ERISA; A-C and each Subsidiary has not violated any provision of
any Plan maintained or contributed to by it; no Reportable Event as defined in
ERISA has occurred and is continuing with respect to any Plan initiated by A-C
or any Subsidiary; A-C and each Subsidiary has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles. SCHEDULE 3.11
describes each Plan maintained by A-C and each of its Subsidiaries.

         3.12 CONTRACTS. SCHEDULE 3.12 sets forth a description of each
Contractual Obligation not included in the Commission Documents which provides
for payments to or by A-C or any Subsidiary in excess of $25,000, or is
otherwise material to the operations of A-C or any Subsidiary. Except as set
forth on Schedule 3.4, neither A-C nor any Subsidiary is in default on any
Contractual Obligation, except for such defaults which would not have a Material
Adverse Effect.

         3.13 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 3.13, since
January 1, 1989, A-C and its subsidiaries (including the Subsidiaries) have at
all times been in compliance in all material respects with all applicable
Environmental Laws. Except as described in the Commission Documents or as set
forth on SCHEDULE 3.13, none of the operations of A-C or any Subsidiary is the
subject of any federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of any
toxic or hazardous waste or substance into the environment. To A-C's knowledge,
except as set forth on SCHEDULE 3.13, neither A-C nor any Subsidiary has
received notice of any actual or threatened claim, investigation, proceeding,
order or decree in connection with any release of any toxic or hazardous waste
or substance into the environment. This Section 3.13 shall be the sole
representation and warranty of A-C concerning environmental matters, and no
other representation and warranty in this Agreement shall apply to environmental
matters.

         3.14 TRADEMARKS, ETC. A-C and the Subsidiaries own, have sufficient
title to, or have the right to use (or can obtain the right to use on reasonable
commercial terms), all patents, trademarks, service marks, trade names,
copyrights, licenses, trade secrets or other proprietary rights (collectively,
the "Proprietary Rights") necessary to their business as now conducted without
infringing upon the right of any person. Except for employee confidentiality
agreements with employees and consultants, there are no outstanding material
options, licenses or agreements relating to intellectual property rights of A-C
or any Subsidiary necessary to their business as now conducted, nor is A-C or
any Subsidiary bound by or a party to any material options, licenses or


                                      -6-
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agreements with respect to the Proprietary Rights of any other person or entity.
Neither A-C nor any Subsidiary has received any communications alleging that A-C
has violated or, by conducting its business as proposed, would violate, any of
the Proprietary Rights of any other person or entity. A-C and the Subsidiaries
are not aware of any material violation by a third party of any of their
Proprietary Rights necessary to their business as now conducted.

         3.15 REAL PROPERTY. SCHEDULE 3.15 sets forth all of the real property
which is owned and/or leased by each of A-C and the Subsidiaries (collectively,
the "Real Property"). The Real Property constitutes all of the real property now
used in and necessary for the conduct of the business of A-C and the
Subsidiaries as presently conducted. A-C has delivered to Energy Spectrum true
and complete copies of all leases relating to such properties (the "Leases").
The Leases are in full force and effect and are valid, binding, and enforceable
in accordance with their terms, and no event of default has occurred which
(whether with or without notice, lapse of time or both or the happening or
occurrence of any other event) would constitute a default on the part of any
party.

         Except as set forth in SCHEDULE 3.15, all real property, buildings and
structures owned or used by A-C and the Subsidiaries are in good condition and
suitable for the purpose or purposes for which it is being used, reasonable wear
and tear excepted, and is in such condition and repair as to permit the
continued operation of said businesses. None of the Real Property, buildings or
structures is in need of material maintenance or repairs except for ordinary,
routine maintenance and repairs.

         3.16 EMPLOYEES. Except as set forth on SCHEDULE 3.16, all employees of
A-C and each Subsidiary are employed "at will" and may be terminated without
payment of severance or incurrence of any other liability of A-C or the
Subsidiaries; no employee of A-C is in violation of any term of any material
employment contract, confidentiality agreement or any other material Contractual
Obligation relating to the right of any such employee to be employed by A-C or
any Subsidiary; and neither A-C nor any Subsidiary has any employee severance
agreement covering any of its employees. There are no labor disputes or union
organization activities pending or threatened between A-C or the Subsidiaries
and their employees. A-C and the Subsidiaries require each employee and
consultant to execute an employee inventions and proprietary rights assignment
and confidentiality agreement, and copies of such agreements have been made
available to Energy Spectrum.

         3.17 INSURANCE. A-C and the Subsidiaries currently maintain, in full
force and effect, all insurance policies that are reasonably required to be
maintained for the conduct of its business or the ownership of its properties
(both real and personal) (collectively, the "Insurance Policies"). A-C (a) is
not in default regarding the provisions of any Insurance Policy; (b) has paid
all premiums due thereunder; and (c) has not failed to present any notice or
material claim thereunder in a due and timely fashion. The coverage provided by
the Insurance Policies, with respect to any insured act or event occurring on or
prior the Effective Date, will not in any way be affected by or terminate or
lapse by reason of the transactions contemplated hereby. SCHEDULE 3.17 sets
forth a listing of all policies maintained by A-C and a listing, by policy, of
all outstanding claims and the amount thereof made by A-C under each such
policy.

         3.18 [INTENTIONALLY LEFT BLANK]

         3.19 TITLE TO PROPERTIES. The assets owned or leased by A-C and its
Subsidiaries are all of the assets necessary to conduct the business of A-C and
its Subsidiaries as currently being conducted. A-C and its Subsidiaries have
good and marketable title to substantially all of the assets they own, real and
personal, movable and immovable, tangible and intangible, free and clear of all
Encumbrances, except for: (a) liens for taxes not yet due and payable, (b)
Encumbrances described on SCHEDULE 4.19 hereto, or (c) minor imperfections of
title and encumbrances, if any, which (i) are not substantial in amount, (ii) do
not detract from the value of the property subject thereto, impair the
operations of the business of A-C, or the use or license of certain of the
assets of A-C, and (iii) have arisen in the ordinary course of business
consistent with past practice.

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         3.20 RELATED PARTY TRANSACTIONS. Except for those contracts described
in the Commission Documents or on SCHEDULE 3.20 hereto, no existing Contractual
Obligation of A-C or its Subsidiaries is with or for the direct benefit of (i)
any party owning, or formerly owning, beneficially or of record, directly or
indirectly, in excess of five percent (5%) of the outstanding capital stock of
A-C, (ii) any director, officer or similar representative of A-C, (iii) any
natural person related by blood, adoption or marriage to any party described in
(i) or (ii), or (iv) any entity in which any of the foregoing parties has,
directly or indirectly, at least a five percent (5%) beneficial interest (a
"Related Party"). Without limiting the generality of the foregoing, no Related
Party, directly or indirectly, owns or controls any material assets or material
properties which are used in A-C's business and to the knowledge of A-C, no
Related Party, directly or indirectly, engages in or has any significant
interest in or connection with any business which is, or has been within the
last two years, a competitor, customer or supplier of A-C or has done business
with A-C or which currently sells or provides products or services which are
similar or related to the products or services sold or provided in connection
with the Business.

         3.21 BROKERS. The transactions contemplated hereby have been carried
out by A-C directly with Energy Spectrum without the intervention of any person
on behalf of A-C in such manner as to give rise to any valid claim against A-C
for a finder's fee, brokerage commission or similar payment.

         3.22 SECURITIES LAW MATTERS. To the best of its knowledge and except
for A-C's failure to hold annual meetings of its stockholders, since January 1,
1999 A-C has filed all reports, registration statements, proxy statements and
other materials, together with any amendments required to be made with respect
thereto, that were required to be filed with (i) the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act of 1934, as
amended (the "Exchange Act"), and (ii) any applicable state securities
authorities. To the knowledge of A-C, no such Commission Filing, as of the date
it was filed, contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Subject
to the accuracy of the representations and warranties of Energy Spectrum set
forth in Section 4, the offer and issuance of the Shares to Energy Spectrum will
be exempt from the Securities Act.

         3.23 NO ANTI-DILUTION RIGHTS. Except as set forth on Schedule 3.23, the
transactions contemplated hereby will not trigger any anti-dilution provisions
contained in any existing agreements.

         3.24 FULL DISCLOSURE. No representation, warranty, schedule or
certificate of A-C made or delivered pursuant to this agreement contains or will
contain any untrue statement of fact, or omits or will omit to state a material
fact the absence of which makes such representation, warranty or other statement
misleading.

         4. REPRESENTATIONS AND WARRANTIES OF ENERGY SPECTRUM. Energy Spectrum
hereby makes the following representations and warranties:

         4.1 ORGANIZATION. Energy Spectrum is a duly organized and validly
existing and in good standing under the laws of the state of its organization.

         4.2 AUTHORITY. Energy Spectrum has the corporate or other authority to
execute and deliver this Agreement and to perform its obligations hereunder.

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         4.3 NO VIOLATION. The execution and the delivery by Energy Spectrum of
this Agreement, and the conversion of its Preferred Stock into Common Stock do
not and will not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) constitute a default under, (c) result in a
violation of, or (d) require any authorization, consent or approval not
heretofore obtained pursuant to, any Contractual Obligation or Requirement of
Law to which Energy Spectrum is a party or is otherwise subject.

         4.4 ENFORCEABILITY. This Agreement constitutes the legal, valid and
binding obligation of Energy Spectrum and is enforceable against Energy Spectrum
in accordance with its terms, subject to: (i) judicial principles respecting
election of remedies or limiting the availability of specific performance,
injunctive relief, or other equitable remedies; (ii) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
generally relating to or affecting creditors' rights; and (iii) public policy
concerns (including, without limitation, the ability of a court to refuse to
enforce unconscionable covenants, indemnification provisions or similar
provisions).

         4.5 INVESTMENT INTENT. Energy Spectrum is acquiring the Shares for its
own account for investment and not with a view to, or for resale in connection
with, any "distribution" thereof for purposes of the Securities Act. Energy
Spectrum is an "accredited investor" as such term is defined in Regulation D
under the Securities Act. Energy Spectrum acknowledges that the Shares and
Warrants shall be "restricted securities" within the meaning of Rule 144 ("Rule
144") under the Securities Act, will contain a transfer restriction legend and
may only be resold pursuant to an effective registration statement filed with
the SEC under the Securities Act, or pursuant to Rule 144 or another valid
exemption from the registration requirements of the Act as established by an
opinion of counsel reasonably acceptable to A-C.

         4.6 INVESTIGATION. Energy Spectrum is familiar with, and its
representatives prior to Closing will have been given full access by A-C to all
information concerning the business and financial condition, properties,
operations and prospects of A-C that Energy Spectrum has deemed relevant for
purposes of making the investment contemplated by this Agreement. By reason of
Energy Spectrum's knowledge and experience in financial and business matters in
general, the business of A-C and investments of the type contemplated by this
Agreement in particular, Energy Spectrum is capable of evaluating the merits and
risks of making the investment in the Shares and/or the Warrants and is able to
bear the economic risk of the investment (including a complete loss of its
investment in the Shares and/or the Warrants). Subject to the truth and accuracy
of the representations and warranties made by A-C hereunder, Energy Spectrum has
conducted such investigation as it deems relevant in connection with its
consummation of the transactions contemplated by this Agreement.

         5. CONDITIONS TO THE OBLIGATIONS OF A-C. The obligations of A-C to
consummate the transactions contemplated by this Agreement on the Closing Date
shall be subject to the satisfaction of each of the conditions set forth in this
Section 5, unless waived by A-C, on or prior to the Closing Date.

         5.1 REPRESENTATIONS AND WARRANTIES. If this Agreement is not signed on
the Closing Date, the representations and warranties of Energy Spectrum set
forth in Section 4 shall be true and correct in all material respects as of the
Closing Date as though made on and as of such date; Energy Spectrum shall have
performed all obligations and complied with all covenants required to be


                                      -9-
<PAGE>

performed or complied with by Energy Spectrum under this Agreement on or prior
to the Closing Date; and A-C shall have received from Energy Spectrum a
certificate to such effect with respect to such Energy Spectrum's
representations, warranties, obligations and covenants, dated the Closing Date,
signed by an agent duly authorized to act on its behalf.

         5.2 NO PROCEEDINGS. No order, injunction, decree or other action or
legal, administrative, arbitration or other proceeding by any person other than
A-C or investigation by any governmental agency or authority shall be pending or
threatened, challenging or imposing a material limitation on the execution,
delivery or performance of this Agreement, or the consummation of any of the
transactions contemplated hereby.

         5.3 EXECUTION AND DELIVERY OF OTHER AGREEMENTS. Energy Spectrum and the
other parties thereto other than A-C shall execute and deliver the agreements
described in Section 2 that are intended to be executed and delivered at the
Closing.

         5.4 APPROVAL OF DOCUMENTS. All proceedings taken in connection with the
transactions contemplated hereby and all documents incident to such transactions
shall be reasonably satisfactory in form and substance to A-C and its counsel.

         6. CONDITIONS TO THE OBLIGATIONS OF ENERGY SPECTRUM. The obligations of
Energy Spectrum to consummate the transactions under this Agreement on the
Closing Date shall be subject to the satisfaction of each of the conditions set
forth in this Section 6, unless waived by Energy Spectrum , on or prior to the
Closing Date.

         6.1 REPRESENTATIONS AND WARRANTIES. If this Agreement is not signed on
the Closing Date, the representations and warranties of A-C set forth in Section
2 shall be true and correct in all material respects as of the Closing Date as
though made on and as of such date; A-C shall have performed all obligations and
complied with all covenants required to be performed or complied with by A-C
under this Agreement on or prior to the Closing Date; and Energy Spectrum shall
have received on the Closing Date from A-C a certificate or certificates, dated
the Closing Date, to such effect, which certificate or certificates shall be
signed by an authorized officer of A-C.

         6.2 NO PROCEEDINGS. No order, injunction, decree or other action or
legal, administrative, arbitration or other proceeding by any person or
investigation by any governmental agency or authority shall be pending or, to
the knowledge of A-C, threatened, challenging or imposing a material limitation
on the execution, delivery or performance of this Agreement, the consummation of
any of the transactions contemplated hereby or the operation by A-C of its
businesses as now conducted.

         6.3 APPROVAL OF DOCUMENTS. All proceedings taken in connection with the
transactions contemplated hereby and all documents incident to such transactions
shall be reasonably satisfactory in form and substance to Energy Spectrum and
its counsel.

         6.4 DELIVERY OF OTHER AGREEMENTS. A-C and the other parties thereto
other than Energy Spectrum shall execute and deliver the agreements described in
Section 2 that are intended to be executed and delivered at the Closing.

                                      -10-
<PAGE>

         6.5 EXTENSION OF MATURITY DATE ON FINANCING. Wells Fargo Business
Credit and Wells Fargo Energy Capital shall have granted an extension of the
maturity date of all senior debt and subordinated debt maturities for a period
of one year.

         6.7 NO MATERIAL ADVERSE CHANGE. Except as described in the Commission
Documents or in SCHEDULE 3.7, there shall have been no material adverse change,
nor shall any such change be threatened, in the Condition of A-C since September
30, 2003.

         6.8 OPERATION IN ORDINARY COURSE. Other than actions related to the
consummation of the transactions contemplated hereby, A-C shall have conducted
its business in the ordinary course from the date hereof to the Closing Date,
and no extraordinary or other material transactions not in the ordinary course
of business shall have occurred without Energy Spectrum's consent.

         7. CERTAIN COVENANTS OF A-C.

         7.1 RESERVATION OF SHARES. The Company shall at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issue or delivery upon exercise of the Warrants, such number of shares of Common
Stock as shall then be issuable or deliverable upon the exercise of all
Warrants. Such shares of Common Stock shall, when issued or delivered in
accordance with the terms of the Warrants, be duly and validly issued and fully
paid and non-assessable.

         7.2 REGISTRATION AND LISTING. If any shares of Common Stock required to
be reserved for purposes of exercise of the require registration with or
approval of any Governmental Authority under any federal or state or other
applicable law before such Common Stock may be issued or delivered upon
conversion or exchange, A-C will in good faith and as expeditiously as possible
endeavor to cause such Common Stock to be duly registered or approved, as the
case may be, unless such registration or approval is required solely because of
a breach of Energy Spectrum's representation contained in Article 4. So long as
the Common Stock is quoted on the OTC Bulletin Board, NASDAQ or listed on any
national securities exchange, A-C will, if permitted by the rules of such system
or exchange, quote or list and keep quoted or listed on such system or exchange
all Common Stock issuable hereunder.

         8. INDEMNIFICATION.

         8.1 INDEMNIFICATION BY A-C. In addition to all other sums due hereunder
or provided for in this Agreement, A-C agrees to indemnify and hold harmless
Energy Spectrum and its "Affiliates" (as defined in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act) and their respective officers,
directors, agents, representatives, employees, subsidiaries, partners and
controlling persons (each, an "indemnified party") from and against any and all
losses, claims, damages, expenses (including reasonable fees, disbursements and
other charges of counsel) or other liabilities ("Liabilities") resulting from
any breach of any covenant, agreement, representation or warranty of A-C in this
Agreement; PROVIDED, HOWEVER, that A-C shall not be liable under this Section 8:
(a) for any amount paid in settlement of claims without A-C's consent (which
consent shall not be unreasonably withheld) or (b) to the extent that it is


                                      -11-
<PAGE>

finally judicially determined that such Liabilities resulted primarily from the
willful misconduct or bad faith of such indemnified party; PROVIDED, FURTHER,
that if and to the extent that such indemnification is held, by final judicial
determination to be unenforceable, in whole or in part, for any reason, A-C
shall make the maximum contribution to the payment and satisfaction of such
indemnified Liability. Notwithstanding the foregoing, with respect to claims
made under this Section 8 for damages not resulting from an actual or threatened
third party claim ("Third Party Claims"), A-C shall not be obligated to provide
indemnity hereunder until the aggregate of all such claims for indemnification
made by Energy Spectrum (excluding damage for Third Party Claims) exceeds
$200,000, and then shall be obligated to provide indemnity hereunder only to the
extent the damages exceed $200,000. In connection with the obligation of A-C to
indemnify for expenses as set forth above, A-C further agrees to reimburse each
indemnified party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
indemnified party; PROVIDED, HOWEVER, that if an indemnified party is reimbursed
hereunder for any expenses, such reimbursement of expenses shall be refunded to
the extent it is finally judicially determined that the Liabilities in question
resulted primarily from the willful misconduct or bad faith of such indemnified
party.

         8.2 NOTIFICATION; PROCEDURE. Each indemnified party under this Section
8 will, promptly after the receipt of notice of the commencement of any action
or other proceeding against such indemnified party in respect of which indemnity
may be sought from A-C under this Section 8, notify A-C in writing of the
commencement thereof. The omission of any indemnified party so to notify A-C of
any such action shall not relieve A-C from any liability which it may have to
such indemnified party (i) other than pursuant to this Section 8 or (ii) under
this Section 8 unless, and only to the extent that, such omission results in
A-C's forfeiture of substantive rights or defenses. In case any such action or
other proceeding shall be brought against any indemnified party and it shall
notify A-C of the commencement thereof, A-C shall be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER,
that any indemnified party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action or
proceeding in which both A-C and an indemnified party is, or is reasonably
likely to become, a party, such indemnified party shall have the right to employ
separate counsel at A-C's expense and to control its own defense of such action
or proceeding if, in the reasonable opinion of counsel to such indemnified
party, (a) there are or may be legal defenses available to such indemnified
party or to other indemnified parties that are different from or additional to
those available to A-C or (b) any conflict or potential conflict exists between
A-C and such indemnified party that would make such separate representation
advisable; PROVIDED, HOWEVER, that in no event shall A-C be required to pay fees
and expenses under this sentence of this Section 8 for more than one firm of
attorneys in any jurisdiction in any one legal action or group of related legal
actions. The Company agrees that A-C will not, without the prior written consent
of Energy Spectrum, settle, compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding relating to the matters
contemplated hereby (if any indemnified party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of Energy Spectrum and
each other indemnified party from all liability arising or that may arise out of
such claim, action or proceeding. The rights accorded to indemnified parties
hereunder shall be in addition to any rights that any indemnified party may have
at common law, by separate agreement or otherwise.

                                      -12-
<PAGE>

         8.3 REGISTRATION RIGHTS AGREEMENT. Notwithstanding anything to the
contrary in this Section 8, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.

         8.4 CERTAIN LIABILITIES. Notwithstanding any provision in this
Agreement to the contrary, A-C makes no representations or warranties hereunder
to Energy Spectrum to the extent any such representation or warranty is
applicable to, and Energy Spectrum shall not be entitled to indemnification by
A-C hereunder for any breach of any representation or warranty made by Energy
Spectrum regarding, any matters with respect to the financial condition or
results of operations taken as a whole of Strata Directional Drilling, Inc.
("Strata") , for periods ending prior to the date of acquisition of the capital
stock of Strata by A-C;

         9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and agreements made by A-C and Energy Spectrum in this Agreement or
in any certificate or other instrument delivered pursuant hereto shall survive
the Closing and any investigation and discovery by A-C or by Energy Spectrum, as
the case may be, made at any time with respect thereto; PROVIDED, HOWEVER, that,
other than with respect to the second sentence of Section 3.2 (for which there
shall be no time limit), neither Energy Spectrum nor A-C shall have any
liability to the other for any misrepresentation, inaccuracy or omission in any
representation or warranty, or any breach of any representation or warranty,
unless the party asserting a claim with respect to any thereof gives to the
other written notice of such claim on or before the date which is two years
following the Closing Date.

         10.      MISCELLANEOUS PROVISIONS.

         10.1 DELIVERIES. A-C and Energy Spectrum hereby covenant and agree to
use their respective best efforts to perform each of their obligations
hereunder, to deliver all certificates and to satisfy all other conditions set
forth in this Agreement and to close the transactions contemplated by this
Agreement on the Closing Date.

         10.2 SUCCESSORS AND ASSIGNS. This Agreement is executed by, and shall
be binding upon and inure to the benefit of, the parties hereto and each of
their respective successors and assigns; PROVIDED, HOWEVER, that neither this
Agreement nor any right pursuant hereto nor interest herein shall be assignable
by (a) A-C without the prior written consent of Energy Spectrum, except as
expressly permitted herein or (b) Energy Spectrum without the prior written
consent of A-C, except to an Affiliate of Energy Spectrum or as otherwise
expressly permitted herein. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any other person.

         10.3 NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:

                           if to A-C at the following address:

                           Allis-Chalmers Corporation
                           7660 Woodway, Suite 200
                           Houston, Texas  77063
                           Attn:  President
                           Fax: (713) 369-0555

                                      -13-
<PAGE>

                           with a copy to:

                           Spolin Silverman Cohen & Bartlett LLP
                           1620 26th Street, Suite 2000N
                           Santa Monica, California 90404
                           Attn:  Joseph P. Bartlett
                           Fax:  310 586 2444


                           if to Energy Spectrum at the following address:

                           Energy Spectrum Partners LP
                           5956 Sherry Lane, Suite 900
                           Dallas, TX  75225
                           Attn:  Thomas Whitener
                           Fax: (214) 987-6110

                           with a copy to:

                           Jackson Walker L.L.P.
                           901 Main Street, Suite 6000
                           Dallas, Texas 75202-3797
                           Attn:  Frank P. McEachern
                           Fax: (214) 953-5822

All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; when delivered by courier, if
delivered by commercial overnight courier service; five Business Days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.

         10.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart will for all purposes be deemed an
original, and all such counterparts shall constitute one and the same
instrument.

         10.5 GOVERNING LAW; FORUM. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas
applicable to contracts entered into and to be wholly performed therein. Each
party to this Agreement hereby irrevocably agrees that any legal action or
proceeding arising out of or relating to this Agreement or any agreements or
transactions contemplated hereby shall be brought in the in the courts of the
State of Texas located in Houston or of the United States of America for the
Southern District of Texas and hereby expressly submits to the personal
jurisdiction and venue of such courts for the purposes thereof and expressly
waives any claim of improper venue and any claim that such courts are an
inconvenient forum. Each party hereby irrevocably consents to the service of
process of any of the aforementioned courts in any such suit, action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 10.3, such service to
become effective 10 days after such mailing.

                                      -14-
<PAGE>

         10.6 ATTORNEYS' FEES. If any party should institute any action to
enforce or interpret any term or provision of this Agreement, the party
prevailing in such action, after all appeals have been exhausted, shall be
entitled to its attorneys' fees, out-of-pocket disbursements and all other
expenses from the non-prevailing party in such action.

         10.7 ENTIRE AGREEMENT. This Agreement (together with all Exhibits and
Schedules hereto) constitutes the entire understanding and agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous written and oral negotiations, discussions, agreements
and understandings with respect to such subject matter.

         10.8 [INTENTIONALLY LEFT BLANK].

         10.9 EXPENSES OF ENERGY SPECTRUM. A-C agrees to promptly pay all
reasonable legal expenses of Energy Spectrum and any director designated or
nominated for service on A-C's Board of Directors by Energy Spectrum pursuant to
Section 2.2 of the Stockholders Agreement related to (i) the transactions
contemplated by this Agreement, the Registration Rights Agreement, the Warrants
and the Stockholders Agreement (including Section 4), (ii) any amendments to any
of the foregoing documents initiated by A-C or which A-C otherwise requests
Energy Spectrum to consider or agree to, (iii) any other transaction or matter
initiated by A-C or which A-C otherwise requests Energy Spectrum to consider or
agree to, or (iv) the service of any such director on A-C's Board of Directors.

         10.10 INTERPRETATION. Each of Energy Spectrum and A-C have participated
in the negotiation and drafting of this Agreement. Accordingly, each of the
parties hereby waives any statutory provision, judicial precedent or other rule
of law to the effect that contractual ambiguities are to be construed against
the party who shall have drafted the same.

         10.11 TERMINATION. This Agreement may be terminated by any party if the
Closing does not occur on or before April 2, 2004.

         10.12 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement except
to the extent that any provision would clearly be contemplated by the parties to
be conditioned upon the validity and enforceability of such invalid or
prohibited provision.

         10.13 SECTION HEADINGS. The section and subsection headings contained
in this Agreement are included for convenience only and form no part of the
agreement between the parties.

                                      -15-
<PAGE>

         10.14 PUBLICITY. Except as may be required by applicable law, no party
hereto shall issue a publicity release or announcement or otherwise make any
public disclosure concerning this Agreement or the transactions contemplated
hereby, without prior approval by the other parties hereto. If any announcement
is required by law to be made by any party hereto, prior to making such
announcement such party will deliver a draft of such announcement to the other
parties and shall give the other parties a reasonable opportunity under the
circumstances to comment thereon.

         10.15 BROKERS AND FINDERS. Neither A-C nor any of Energy Spectrum , nor
any person acting on behalf of any of them, has employed any broker, agent or
finder, or incurred any liability for any brokerage fees, agents' commissions,
finders' fees or advisory fees in connection with the transactions contemplated
hereby; and A-C shall indemnify and hold Energy Spectrum harmless in respect of
any "Damages" (as defined in Section 8.6 hereof) arising out of any agreements,
arrangements or understandings claimed to have been made by A-C, or any person
acting on its behalf, with any third party; and Energy Spectrum shall indemnify
and hold A-C harmless in respect of any Damages arising out of any agreements,
arrangements or understandings claimed to have been made by Energy Spectrum, or
any person acting on its behalf, with any third party.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective representatives hereunto duly authorized as of
the date first above written.

                                 ALLIS-CHALMERS CORPORATION,
                                 a Delaware corporation


                                 /S/ MUNAWAR H. HIDAYATALLAH
                                 -----------------------------------------------
                                 Munawar H. Hidayatallah, President

                                 ENERGY SPECTRUM PARTNERS LP
                                 By: Energy Spectrum Capital LP, General Partner
                                 By: Energy Spectrum LLC, General Partner


                                 By:    /S/ JAMES W. SPANN
                                        ----------------------------------------
                                 Name:  JAMES W. SPANN
                                        ----------------------------------------
                                 Title: CHIEF INVESTMENT OFFICER
                                        ----------------------------------------


                                      -16-