##### 



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2006o


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-15423
  Grant Prideco, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

76-0312499(State or Other Jurisdiction
    of Incorporation or Organization)

(I.R.S. Employer
    Identification No.)400 N. Sam Houston
    Pkwy. East

77060Suite 900

(Zip Code)Houston,
    Texas(Address of Principal Executive
    Offices)   (281) 878-8000 (Registrants telephone
    number, including area code)
  Securities to be registered pursuant to Section 12(b) of
    the Act:
  Title of Each Class

Name of Each Exchange On Which RegisteredCommon Stock, par value
    $0.01 per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



TABLE OF
    CONTENTS
  PagePART IItem 1.


Business


2General


2Drilling Products and Services
    Segment


2ReedHycalog Segment


4Tubular Technology and Services
    Segment


6Corporate and Other Segment


8Other Business Data


8Item 1A.


Risk Factors


10Item 1B.


Unresolved Staff Comments


14Item 2.


Properties


15Item 3.


Legal Proceedings


16Item 4.


Submission of Matters to a Vote of
    Security Holders


16PART IIItem 5.


Market For Registrants
    Common Equity, Related Stockholder Matters and Issuer Purchases
    of Equity Securities


16Item 6.


Selected Financial Data


18Item 7.


Managements Discussion and
    Analysis of Financial Condition and Results of Operations


19General


20Market Trends


21Future Market Trends and
    Expectations


22Results of Operations


23Liquidity and Capital Resources


26Related-Party Transactions


29Off-Balance Sheet Financing


29Recent Accounting Pronouncements


29Critical Accounting Policies and
    Estimates


30Item 7A.


Quantitative and Qualitative
    Disclosures About Market Risk


34Item 8.


Financial Statements and
    Supplementary Data


36Item 9.


Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure


89Item 9A.


Controls and Procedures


89PART IIIItem 10.


Directors and Executive Officers
    of the Registrant


90Item 11.


Executive Compensation


90Item 12.


Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholder Matters


90Item 13.


Certain Relationships and Related
    Transactions


90Item 14.


Principal Accountant Fees and
    Services


90PART IVItem 15.


Exhibits and Financial Statement
    Schedules


90Valuation and Qualifying Accounts


94Signatures


95  1




---



##### 



FORM 10-K
  PART I
  Item 1.
    Business  General
      Form 10-K.
  Drilling
    Products and Services Segment
      ®
 2




---



##### 



®
      Drill
    Pipe Products
      ® tm 7 8 1 2 5 8
  Drill
    Collars
    Heavyweight
    Drill Pipe and Other Drill Stem Products
      Voest-Alpine
    Tubulars
   3




---



##### 



Operations
    ReedHycalog
    Segment
        cost-per-foot
     4




---



##### 



® tm . tm
  ®
    Fixed-Cutter
    Bits
      ® tm tm
  Roller-Cone
    Bits
  tm .
  tm tm tm .
 5




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##### 



Andergauge
  tm tm
  Operations
      Tubular
    Technology and Services Segment
      year-to-year,
    Atlas
    Bradford®
    Premium Connections and Services
   6




---



##### 



tm
      Tube-AlloytmAccessories
    TCA®
    Premium Casing
    tm
  XL
    Systems
  tm
  3 8
 7




---



##### 



Operations
    Corporate
    and Other Segment
  ®
  Other
    Business Data
  Research
    and Engineering
    Patents
    Backlog
    Insurance
   8




---



##### 



Federal
    Regulation and Environmental Matters
        i.e.
  Employees
    Available
    Information
  1-800-SEC-0330. (http://www.sec.gov)
 9




---



##### 



(http://www.grantprideco.com) Form 10-K, Form 10-Q, Form 8-K,
  Item 1A.
    Risk
    Factors  Risk
    Factors and Exposures
    A
    decline in domestic and worldwide oil and gas drilling activity
    would adversely affect our results of operations.
    
    the level of North American and worldwide oil and gas
    exploration and production activity;
    worldwide economic conditions, particularly economic conditions
    in North America;
    oil and gas production costs;
    the expected costs of developing new reserves;
    national government political requirements and the policies of
    the OPEC;
    the price and availability of alternative fuels;
    environmental regulation; and
    tax policies.    An
    economic downturn could adversely affect demand for our products
    and services and our results of operations.
   10




---



##### 



Increases
    in the prices of our raw materials could affect our results of
    operations.
        Interruptions
    of supply of raw materials could materially adversely affect our
    results of operations.
    Due to
    intense competition in our industry, our revenues may decline if
    we do not develop, produce and commercialize new competitive
    technologies and products or if we are unable to adequately
    protect our current and future intellectual property rights
    relating to our technologies and products.
    start-up
   11




---



##### 



Our
    results of operations and financial condition are dependent upon
    our ability to successfully increase and decrease, without
    material disruption, our manufacturing capacity and expense in
    response to changes in demand and to maintain prices for our
    products, which can be adversely affected by changes in industry
    conditions and competitive forces.
    Our
    results of operations can be adversely affected by adverse
    weather conditions and unexpected stoppages in
    production.
    Our
    international operations may experience severe interruptions due
    to political, economic or other risks, which could adversely
    affect our results of operations and financial
    condition.
    
    changes in foreign tax laws;
    changes in regulations and labor practices;
    currency fluctuations and devaluations;
    currency restrictions, banking crises and limitations on
    repatriation of profits; and
    political instability or military conflict.       12




---



##### 



In
    connection with our business operations, we could be subject to
    substantial liability claims that adversely affect our results
    of operations.
        We are
    subject to environmental, health and safety laws and regulations
    that expose us to potential
 financial liability.
       13




---



##### 



Our
    results of operations could be adversely affected by actions
    under U.S. trade laws and new foreign entrants into
    U.S. markets.
  U.S.-based U.S.-based
      Item 1B.
    Unresolved
    Staff Comments   14




---



##### 



Item 2.
    Properties    FacilitySizeLocation

Tenure

(Sq.Ft.)

UtilizationDrilling Products and
    ServicesNavasota, Texas

Owned


347,000


Manufacture of drill stem productsVeracruz, Mexico

Leased


303,400


Manufacture of tool joints and
    processing of drill pipeBaimi Town, Jiangyan, Jiangsu China

Leased


49,428


Manufacture of drill pipeTianjin, China

Leased


100,912


Manufacture of unfinished upset to
    grade drill pipeTurin, Italy

Owned


60,400


Manufacture of tool jointsJurong, Singapore

Leased


33,600


Manufacture of drill collars,
    accessories and threading servicesBatam Island, Indonesia

Owned


25,984


Manufacture of drill pipeReedHycalogHouston, Texas

Owned


403,000


Manufacture of roller-cone bitsOwned


50,256


Manufacture of fixed-cutter bitsLeased


58,920


Manufacture of bi-center bitsLeased


11,095


Assembly and machining of downhole
    toolsStonehouse, U.K.

Owned


71,000


Manufacture of fixed-cutter bitsJurong, Singapore

Leased


202,431


Manufacture of roller-cone bitsProvo, Utah

Leased


39,038


Manufacture of PDC cuttersAberdeen, Scotland

Owned


29,740


Assembly and machining of downhole
    toolsTubular Technology and
    ServicesMuskogee, Oklahoma

Leased


195,900


Manufacture of TCA premium casing
    and premium threadingHouston, Texas

Leased


249,893


Manufacture of Atlas Bradford
    connectorsOwned


54,500


Premium threading services and
    manufacture of tubular accessoriesHouma, Louisiana

Owned


101,150


Manufacture and threading of
    downhole accessoriesBroussard, Louisiana

Owned


55,920


Premium threading of downhole and
    specialty equipmentCasper, Wyoming

Owned


28,181


Premium threading of casing and
    tubingBeaumont, Texas

Owned


17,838


Premium threading services and
    manufacture of conductorsVlissingen, The Netherlands

Leased


65,800


Premium threading services and
    manufacture of conductorsBatam Island, Indonesia

Owned


14,400


Premium threading services and
    manufacture of conductors 15




---



##### 



FacilitySizeLocation

Tenure

(Sq.Ft.)

UtilizationCorporate and OtherProvo, Utah

Owned


105,604


IntelliServ drill pipeHouston, Texas

Leased


42,534


Corporate headquartersThe Woodlands, Texas

Leased


61,831


Sales and administrative offices   Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders    PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    High


Low2006First quarter

$
51.47


$
35.67Second quarter


55.43



39.70Third quarter


48.33



34.32Fourth quarter


45.32



33.112005First quarter

$
25.50


$
17.83Second quarter


27.47



21.41Third quarter


41.49



26.58Fourth quarter


47.82



32.38   1 8
   16




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##### 



Share
    Repurchases
    Number of





Total Number of SharesShares


Average Price


Purchased as Part of aPeriod

Purchased(a)


Per Share


Publicly Announced Plan(b)October 1 - 31, 2006


352,673


$
37.48



348,885November 1 - 30, 2006


316,843



37.78



313,400December 1 - 31, 2006


3,606



42.66



0Total


673,122


$
37.65



662,285     (a)
    
    Of the 673,122 shares purchased during the three-month
    period ended December 31, 2006, 10,837 shares were
    purchased by the trustee for our executive deferred compensation
    plan for the benefit of the plan participants using funds
    directed by the plan participants and funds matched by us as
    provided in the plan. These share purchases were not part of a
    publicly announced program to purchase common shares.(b)
    
    In February 2006, our Board of Directors approved a stock
    repurchase program that authorizes the repurchase of up to
    $150 million of our common stock with no established
    expiration date. In October 2006, our Board of Directors
    approved an increase in our stock repurchase program by
    $200 million (to $350 million from $150 million).
    For the three-month period ended December 31, 2006, we
    repurchased 0.7 million shares at a total cost of
    $24.9 million. Such shares are reflected in the
    accompanying Consolidated Balance Sheets as Treasury
    Stock. At December 31, 2006, there was
    $188.3 million remaining under this program for future
    repurchases. 17




---



##### 



Five-Year
    Performance Graph
    COMPARISON
    OF FIVE YEAR CUMULATIVE TOTAL RETURN*
    AMONG GRANT PRIDECO, INC., THE S&P 500 INDEX
    AND THE PHLX OIL SERVICE SECTOR INDEX
  
  12/01



12/02



12/03



12/04



12/05



12/06Grant Prideco,
    Inc.



100.00




101.22




113.22




174.35




383.65




345.83S&P 500



100.00




77.90




100.24




111.15




116.61




135.03PHLX Oil Service
    Sector



100.00




91.27




105.49




142.69




214.08




242.69   Item 6.
    Selected
    Financial Data   18




---



##### 



Form 10-K.
  Year Ended December 31,2006(a)(b)


2005(c)


2004(a)


2003(d)


2002(e)(In thousands, except per share data)Operating Data:Revenues

$
1,815,693


$
1,349,997


$
945,643


$
803,818


$
609,390Operating Income


564,378



310,953



141,672



45,297



46,995Income from Continuing Operations


464,584



189,004



64,793



4,657



13,690Income Before Cumulative Effect of
    Accounting Change


464,584



189,004



55,266



5,190



13,046
(f)Net Income


464,584



189,004



55,266



5,190



6,634Income Per Share:Income from Continuing Operations:Basic


3.56



1.49



0.53



0.04



0.12Diluted


3.50



1.45



0.51



0.04



0.12Net Income:Basic


3.56



1.49



0.45



0.04



0.06Diluted


3.50



1.45



0.44



0.04



0.06Balance Sheet Data (At End of
    Period):Total Assets

$
2,022,067


$
1,540,284


$
1,344,466


$
1,262,061


$
1,315,349Long-Term Debt


237,212



217,484



377,773



426,853



478,846Stockholders Equity


1,362,883



996,155



705,541



606,114



588,872     (a)
    
    See discussion of other operating items related to 2006 and 2004
    in Note 5 in the accompanying consolidated financial
    statements.(b)
    
    Includes a license and royalty payment in 2006 of
    $20.0 million the Company received in exchange for the use
    of ReedHycalogs patented technology for the shallow
    leaching of PDC cutters (see Note 4 for further discussion).(c)
    
    Includes total refinancing charges of $57.1 million in
    2005, which includes $35.4 million related to replacing our
    previous $190 million credit facility with a new
    $350 million credit facility, and an early redemption of
    our $200 million
    95/8%
    Senior Notes due 2007 and $21.7 million related to the
    repurchase of substantially all of our 9% Senior Notes.(d)
    
    Includes $37.8 million of charges in 2003, which includes
    $24.9 million related to fixed asset write-downs,
    $6.4 million related to inventory reserves for exited
    product lines, $6.4 million related to asset impairments,
    $1.5 million related to stock based compensation expense
    offset by a benefit of $1.4 million related to the
    settlement of a contingent liability.(e)
    
    Includes $7.0 million of charges in 2002. This includes a
    charge of $2.6 million related to fixed asset write-downs
    and a charge of $4.4 million for executive severance costs.(f)
    
    Includes a cumulative effect of accounting change in 2002
    related to Financial Accounting Standards Board (SFAS)
    No. 142, Goodwill and Other Intangible Assets
    of $6.4 million, net of tax.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations   19




---



##### 



Form 10-K.
    General
    License
    and Royalty Agreement
    Acquisitions
    20-year
  5-year
 20




---



##### 



Refinancing
    Charges
  5 8 5 8 5 8 5 8
  Market
    Trends
     21




---



##### 



Year Ended December 31,2006


2005


2004WTI Oil(a)Average

$
66.09


$
56.59


$
41.51Ending


61.05



61.04



43.45Henry Hub Gas(b)Average

$
6.73


$
8.89


$
5.90Ending


5.50



9.52



6.01North American Rig Count(c)Average


2,118



1,838



1,559Ending


2,174



2,045



1,686International Rig Count(c)Average


925



908



836Ending


951



948



869     (a)
    
    Price per barrel of West Texas Intermediate (WTI) crude as of
    the dates presented above. Source: Bloomberg Energy/Commodity
    Service.(b)
    
    Price per MMBtu as of the dates presented above. Source:
    Bloomberg Energy/Commodity Service.(c)
    
    Source: Baker Hughes Rig Count (International Rig Count excludes
    China and the Former Soviet Union).  Future
    Market Trends and Expectations
   22




---



##### 



Results
    of Operations
  Year
    Ended December 31, 2006 Compared to the Year Ended
    December 31, 2005
    Year Ended December 31,2006


2005


% Change(In thousands)Revenues:Drilling Products and Services

$
888,661


$
598,900



48
%ReedHycalog


504,648



398,227



27
%Tubular Technology and Services


420,600



352,870



19
%Corporate and Other


1,784







100
%Total Revenues


1,815,693



1,349,997



34
%Operating Income (Loss):Drilling Products and Services

$
323,189


$
176,181



83
%ReedHycalog


185,087
(a)


98,616



88
%Tubular Technology and Services


119,752



88,286



36
%Corporate and Other


(63,650
)(b)


(52,130
)


22
%Total Operating Income


564,378



310,953



81
%     (a)
    
    Includes a license and royalty payment of $20.0 million we
    received in exchange for the use of ReedHycalog patented
    technology for the shallow leaching of PDC cutters (see
    Note 4 for further discussion).(b)
    
    Includes a $3.9 million benefit from the settlement of a
    trade credit dispute (see Note 5 for further discussion).      year-over-year
    Segment
    Results
  Drilling
    Products and Services
  year-over-year
 23




---



##### 



year-over-year
  ReedHycalog
    Tubular
    Technology and Services
  year-over-year.
  Corporate
    and Other
  start-up
  Year
    Ended December 31, 2005 Compared to the Year Ended
    December 31, 2004
    Year Ended December 31,2005


2004


% Change(In thousands)Revenues:Drilling Products and Services

$
598,900


$
390,617



53
%ReedHycalog


398,227



326,918



22
%Tubular Technology and Services


352,870



226,233



56
%Corporate and Other






1,875



(100
)%Total Revenues


1,349,997



945,643



43
%Operating Income (Loss):Drilling Products and Services

$
176,181


$
90,637
(a)


94
%ReedHycalog


98,616



70,542



40
%Tubular Technology and Services


88,286



20,884
(b)


323
%Corporate and Other


(52,130
)


(40,391
)(c)


29
%Total Operating Income


310,953



141,672



119
%  24




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##### 



(a)
    
    Includes charges of $2.0 million in 2004 related to our
    manufacturing rationalization program, which includes lease
    termination, severance and other exit costs in connection with
    the downsizing of our Drilling Products Canadian operations.(b)
    
    Includes charges of $3.2 million for severance costs
    related to the Tubular Technology and Services organizational
    restructuring.(c)
    
    Includes charges of $3.8 million for the write-off of
    leasehold improvements and furniture and fixtures related to the
    relocation of our corporate offices in September 2004.      year-over-year
    Segment
    Results
  Drilling
    Products and Services
    ReedHycalog
    Tubular
    Technology and Services
   25




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##### 



Corporate
    and Other
  year-over-year. start-up
  Liquidity
    and Capital Resources
  5 8 1 8
        Year Ended December 31,2006


2005


2004(In thousands)Net Cash Provided by Operating
    Activities

$
394,100


$
194,676


$
113,170Net Cash Used in Investing
    Activities


(210,644
)


(69,672
)


(45,381
)Net Cash Used in Financing
    Activities


(154,609
)


(144,180
)


(39,890
)   Operating
    Activities
     26




---



##### 



Investing
    Activities
      Financing
    Activities
    5 8
  Debt
  Credit
    Facility
       27




---



##### 



Liquidity
    Outlook
        AfterTotal


1 Year


2-4 Years


5-6 Years


6 Years(In thousands)Contractual
    Obligations:Long-Term Debt(a)

$
318,409


$
20,719


$
37,397


$
59,410


$
200,883Capital Lease Obligations(a)


1,466



572



894







Operating Leases


50,404



9,991



17,680



6,723



16,010Purchase Obligation(b)


239,437



239,397



40







Total Contractual Obligations

$
609,716


$
270,679


$
56,011


$
66,133


$
216,893   AfterTotal


1 Year


2-4 Years


5-6 Years


6 YearsCommercial
    CommitmentsLetters of Credit

$
9,506


$
7,734


$
1,288


$
484


$
     (a)
    
    Long-term debt and capital lease obligations above include
    estimated interest payments based on principal balances and
    interest rates as of December 31, 2006. 28




---



##### 



(b)
    
    Purchase obligations include agreements to purchase goods or
    services that are enforceable and legally binding and that
    specify all significant terms, including: fixed or minimum
    quantities to be purchased, fixed, minimum or variable price
    provisions, and the appropriate timing of the transaction.  Related-Party
    Transactions
        Off-Balance
    Sheet Financing
    Recent
    Accounting Pronouncements
     29




---



##### 



No. 06-03, (EITF 06-03). EITF 06-03 06-03 06-03
  Critical
    Accounting Policies and Estimates
  Form 10-K.
 30




---



##### 



Revenue
    Recognition
      Stock-Based
    Compensation
         31




---



##### 



Allowance
    for Doubtful Accounts
    Inventories
  first-in,
  Business
    Combinations
    Valuation
    of Long-Lived Assets
    Goodwill
    and Other Intangible Assets
   32




---



##### 



Valuation
    Allowance for Deferred Tax Assets
    Contingent
    Liabilities
      Pension
    Plans
     33




---



##### 



Prior to


Effect of


As ReportedAdopting


Adopting


atSFAS No. 158


SFAS No. 158


December 31, 2006(In thousands)Other Intangible Assets, Net

$
90,026


$
(199
)

$
89,827Other Assets


22,054



796



22,850Accrued Labor and Benefits


78,639



(3,687
)


74,952Deferred Tax Liabilities


66,810



1,500



68,310Accumulated Other Comprehensive
    Loss


(3,745
)


2,785



(960
)     Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Financial
    Instruments
  Form 10-K
  Foreign
    Currency Risk
      Interest
    Rates
   34




---



##### 



2006

2007


2008


2009


2010


2011


Thereafter(In thousands)Long-term debt:Fixed rate

$
8,640


$
535


$
530


$
484


$
294


$
201,034Average interest rate


6.12
%


6.12
%


6.12
%


6.12
%


6.12
%


6.12
%   2005

2006


2007


2008


2009


2010


ThereafterLong-term debt:Fixed rate

$
7,045


$
3,635


$
550


$
634


$
287


$
201,178Average interest rate


6.11
%


6.12
%


6.12
%


6.12
%


6.12
%


6.12
%     1 8
  December 31,2006


2005Carrying


Fair


Carrying


FairValue


Value


Value


Value(In millions)61/8% Senior
    Notes due 2015

$
200.0


$
194.8


$
200.0


$
200.6  35




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data    Managements Annual Report on
    Internal Control Over Financial ReportingReport of Independent Registered
    Public Accounting Firm on Internal Control Over Financial
    Reporting  Deloitte & Touche LLPReport of Independent Registered
    Public Accounting Firm  Deloitte & Touche LLPReport of Independent Registered
    Public Accounting Firm  Ernst & Young LLPConsolidated Statements of
    Operations for each of the three years in the period ended
    December 31, 2006Consolidated Balance Sheets at
    December 31, 2006 and 2005Consolidated Statements of Cash
    Flows for each of the three years in the period ended
    December 31, 2006Consolidated Statements of
    Stockholders Equity for each of the three years in the
    period ended December 31, 2006Notes to Consolidated Financial
    Statements  36




---



##### 



GRANT
    PRIDECO, INC.
    MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL
    OVER FINANCIAL REPORTING
     Rules 13a-15(f) 15d-15(f). Internal Control 
    Integrated Framework
        Internal
    Control  Integrated Framework
    Grant
    Prideco, Inc.
    37




---



##### 



Report of
    Independent Registered Public Accounting Firm
  To the Board
    of Directors and Stockholders of
    Internal Control 
    Integrated Framework
        Internal
    Control  Integrated Framework Internal Control  Integrated
    Framework
  Share-based Payment,
  Deloitte &
    Touche LLP
    38




---



##### 



Report of
    Independent Registered Public Accounting Firm
            ® Share-based Payment,
  Internal Control-Integrated Framework
  Deloitte &
    Touche LLP
    39




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             /s/
    Ernst & Young LLP
    40




---



##### 



GRANT
    PRIDECO, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2006


2005


2004(In thousands, except per share data)Income:Revenues

$
1,815,693


$
1,349,997


$
945,643License and royalty income


20,000







1,835,693



1,349,997



945,643Operating Expenses:Cost of sales


970,255



776,486



560,807Sales and marketing


158,411



137,133



128,585General and administrative


111,426



99,732



85,071Research and engineering


35,123



25,693



20,473Other operating items


(3,900
)






9,0351,271,315



1,039,044



803,971Operating Income


564,378



310,953



141,672Interest Expense


(16,131
)


(29,148
)


(41,889
)Other Income (Expense), Net


(3,684
)


5,655



398Equity Income in Unconsolidated
    Affiliates


125,597



58,259



4,600Refinancing Charges






(57,086
)


Income From Continuing Operations
    Before Income Taxes and Minority Interests


670,160



288,633



104,781Income Tax Provision


(195,215
)


(89,680
)


(34,745
)Income from Continuing Operations
    Before Minority Interests


474,945



198,953



70,036Minority Interests


(10,361
)


(9,949
)


(5,243
)Income from Continuing Operations


464,584



189,004



64,793Loss from Discontinued Operations,
    Net of Tax










(9,527
)Net Income

$
464,584


$
189,004


$
55,266Basic Net Income Per Share:Income from continuing operations

$
3.56


$
1.49


$
0.53Loss from discontinued operations










(0.08
)Net income

$
3.56


$
1.49


$
0.45Basic weighted average shares
    outstanding


130,510



127,236



123,325Diluted Net Income Per Share:Income from continuing operations

$
3.50


$
1.45


$
0.51Loss from discontinued operations










(0.07
)Net income

$
3.50


$
1.45


$
0.44Diluted weighted average shares
    outstanding


132,674



130,467



126,091    41




---



##### 



GRANT
    PRIDECO, INC.
  CONSOLIDATED
    BALANCE SHEETS
 (In
    thousands, except par value amounts)
  December 31,2006


2005ASSETSCurrent Assets:Cash

$
57,344


$
28,164Accounts receivable, net of
    allowance for doubtful accounts of $3,523 and $5,856 for 2006
    and 2005, respectively


368,695



268,450Inventories


454,947



360,630Deferred charges


3,964



14,629Current deferred tax assets


48,101



39,957Other current assets


14,395



14,425Total Current Assets


947,446



726,255Property, Plant and Equipment, Net


305,524



238,770Goodwill


520,992



421,627Other Intangible Assets, Net


89,827



58,181Investment in Unconsolidated
    Affiliate


135,428



84,547Other Assets


22,850



10,904Total Assets

$
2,022,067


$
1,540,284LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Short-term borrowings and current
    portion of long-term debt

$
8,640


$
7,045Accounts payable


138,942



92,290Accrued payroll and benefits


74,952



61,863Deferred revenues


18,190



25,336Income taxes payable


33,039



24,708Other current liabilities


33,576



35,404Total Current Liabilities


307,339



246,646Long-Term Debt


237,212



217,484Deferred Tax Liabilities


68,310



38,171Other Long-Term Liabilities


28,801



29,365Commitments and Contingencies
    (Note 17)Minority Interests


17,522



12,463Stockholders Equity:Preferred stock, $0.01 par
    value; authorized 10,000 shares; no shares issued in 2006
    or 2005






Common stock, $0.01 par
    value; authorized 300,000 shares; issued 132,706 and
    130,927 in 2006 and 2005, respectively


1,327



1,309Capital in excess of par value


687,384



647,211Unearned compensation






(6,573
)Retained earnings


845,877



381,293Accumulated other comprehensive
    loss


(960
)


(19,496
)Treasury stock, at cost, 5,017 and
    924 shares in 2006 and 2005, respectively


(180,557
)


(17,862
)Deferred compensation obligation


9,812



10,273Total Stockholders Equity


1,362,883



996,155Total Liabilities and
    Stockholders Equity

$
2,022,067


$
1,540,284    42




---



##### 



GRANT
    PRIDECO, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2006


2005


2004(In thousands)Cash Flows From Operating
    Activities:Net income

$
464,584


$
189,004


$
55,266Adjustments to reconcile net income
    to net cash provided by operating activities:Loss on discontinued operations










11,746Gain on sale of businesses, net






(1,577
)


(774
)Depreciation and amortization


50,255



46,632



43,220Non-cash portion of other items










6,010Debt refinancing charges






51,834



Deferred income tax


9,627



(12,769
)


20,096Equity income in unconsolidated
    affiliates, net of dividends


(37,878
)


(46,218
)


3,490Stock-based compensation expense


11,420



5,564



3,924Excess tax benefits on stock option
    exercises


(15,556
)






Deferred compensation expense


2,279



2,263



1,682Minority interests in consolidated
    subsidiaries, net of dividends


4,726



3,688



2,103(Gain) loss on sale of assets, net


(363
)


1,338



(4,466
)Change in operating assets and
    liabilities, net of effects of businesses acquired:Accounts receivable


(79,428
)


(68,638
)


2,278Inventories


(89,172
)


(68,192
)


(60,039
)Deferred charges


10,665



2,575



(17,204
)Other current assets


1,989



4,397



6,768Other assets


(4,913
)


708



3,087Accounts payable


45,041



18,320



64Deferred revenues


(7,238
)


11



21,413Income taxes payable


23,080



61,558



(7,392
)Other current liabilities


5,286



(4,636
)


17,197Other, net


(304
)


8,814



4,701Net cash provided by operating
    activities


394,100



194,676



113,170Cash Flows From Investing
    Activities:Acquisition of businesses, net of
    cash acquired


(111,998
)


(39,232
)


(33,833
)Proceeds from sales of businesses






2,521



2,180Proceeds from sale of discontinued
    operations, net of cash disposed










19,859Investments in and advances to
    unconsolidated affiliate






(5,273
)


(4,167
)Capital expenditures for property,
    plant and equipment


(100,238
)


(29,501
)


(37,879
)Proceeds from sale of fixed assets


1,592



1,813



8,459Net cash used in investing
    activities


(210,644
)


(69,672
)


(45,381
)Cash Flows From Financing
    Activities:Borrowings (repayments) on credit
    facility, net


23,400



11,200



(14,320
)Repayment on acquisition debt


(46,177
)






Repayments on debt


(1,962
)


(379,315
)


(49,781
)Debt refinancing costs






(43,778
)


Issuance of debt






200,000



Debt issuance costs


(1,032
)


(6,041
)


Excess tax benefits on stock option
    exercises


15,556







Repurchases of common stock


(165,122
)


(3,385
)


(2,508
)Proceeds from issuance of common
    stock


20,728



77,139



26,719Net cash used in financing
    activities


(154,609
)


(144,180
)


(39,890
)Effect of Exchange Rate Changes on
    Cash


333



(212
)


423Net Increase (Decrease) in Cash


29,180



(19,388
)


28,322Cash at Beginning of Year


28,164



47,552



19,230Cash at End of Year

$
57,344


$
28,164


$
47,552    43




---



##### 



GRANT
    PRIDECO, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  AccumulatedCommon


Capital








Other





DeferredStock


in Excess


Unearned


Retained


Comprehensive


Treasury


Compensation$0.01 Par


of Par Value


Compensation


Earnings


Loss


Stock


Obligation


Total(In thousands)Balance at January 1, 2004

$
1,212


$
485,851


$
(3,729
)

$
137,023


$
(16,917
)

$
(6,692
)

$
9,366


$
606,114Components of Comprehensive Income:Net income














55,266















55,266Currency translation adjustment


















3,966











3,966Minimum pension liability, net of
    tax of ($354)


















660











660Total Comprehensive Income






























59,892Stock Grant and Options Exercised


30



25,761























25,791Tax Benefit of Options Exercised






6,717























6,717Compensation Expense for
    Accelerated Vesting






3,304























3,304Issuance of Restricted Stock






5,582



(5,582
)


















Amortization of Restricted Stock










3,510



















3,510Employee Stock Purchase Plan
    Issuance


1



927























928Deferred Compensation Obligation


2



46















717



(1,480
)


(715
)Purchase of Treasury Stock for
    Executive Deferred Compensation Plan






















(2,508
)


2,508



Balance at December 31, 2004

$
1,245


$
528,188


$
(5,801
)

$
192,289


$
(12,291
)

$
(8,483
)

$
10,394


$
705,541Components of Comprehensive Income:Net income














189,004















189,004Currency translation adjustment


















(1,233
)










(1,233
)Other comprehensive loss for
    unconsolidated affiliate, net of tax of $2,610


















(4,847
)










(4,847
)Minimum pension liability, net of
    tax of $606


















(1,125
)










(1,125
)Total Comprehensive Income






























181,799Stock Grant and Options Exercised


56



75,187























75,243Tax Benefit of Options Exercised






35,517























35,517Compensation Expense for
    Accelerated Vesting






1,129























1,129Issuance of Restricted Stock


5



5,202



(5,207
)










(5,365
)






(5,365
)Amortization of Restricted Stock,
    Net










4,435



















4,435Employee Stock Purchase Plan
    Issuance


2



1,894























1,896Deferred Compensation Obligation


1



94















(629
)


(3,506
)


(4,040
)Purchase of Treasury Stock for
    Executive Deferred Compensation Plan






















(3,385
)


3,385



Balance at December 31, 2005

$
1,309


$
647,211


$
(6,573
)

$
381,293


$
(19,496
)

$
(17,862
)

$
10,273


$
996,155Components of Comprehensive Income:Net income














464,584















464,584Currency translation adjustment


















8,569











8,569Other comprehensive income for
    unconsolidated affiliate, net of tax of $3,574


















6,638











6,638Minimum pension liability, net of
    tax of $293


















544











544Total Comprehensive Income






























480,335Adjustment to Initially Apply SFAS
    No. 158, net of tax of $1,500


















2,785











2,785Stock Grant and Options Exercised


16



17,953























17,969Tax Benefit of Options Exercised






14,321























14,321Share Repurchases






















(161,713
)






(161,713
)Issuance of Restricted Stock






49















(234
)






(185
)Employee Stock Purchase Plan
    Issuance


2



2,757























2,759Stock-Based Compensation






11,420























11,420Adoption of
    SFAS 123(R)(Note 2)






(6,573
)


6,573



















Deferred Compensation Obligation






246















2,661



(3,870
)


(963
)Purchase of Treasury Stock for
    Executive Deferred Compensation Plan






















(3,409
)


3,409



Balance at December 31, 2006

$
1,327


$
687,384


$



$
845,877


$
(960
)

$
(180,557
)

$
9,812


$
1,362,883    44




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Organization
    and Summary of Significant Accounting Policies  Nature
    of Operations
    Principles
    of Consolidation
    % OwnershipTianjin Grant Prideco (TGP)


60
%H-Tech


54
%       Use of
    Estimates
    Revenue
    Recognition
   45




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Cash
    Allowance
    for Doubtful Accounts
    Inventories
  first-in,
    December 31,2006


2005(In thousands)Raw Materials, Components and
    Supplies

$
203,368


$
169,966Work in Process


129,966



84,783Finished Goods


97,565



83,189Rental Bits(a)


24,048



22,692$
454,947


$
360,630     (a)
    
    The Company manufactures its rental bit inventory and the cost,
    which includes direct and indirect manufacturing costs, is
    capitalized and carried in inventory. Prior to 2006, the Company
    expensed the cost of rental bits upon the first rental and usage
    of the bit. During the first quarter of 2006, the Company
    completed an 46




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  analysis of historical rental bit usage to determine an estimate
    of rental bit useful life. Effective January 1, 2006,
    manufactured rental bits are now depreciated, based upon
    analysis of historical usage, over their estimated useful life
    of approximately one year.      Property,
    Plant and Equipment
    LifeBuildings and Improvements


15-30 yearsMachinery and Equipment


2-15 yearsFurniture and Fixtures


2-10 years     December 31,2006


2005(In thousands)Land

$
24,915


$
21,534Buildings and Improvements


101,809



86,371Machinery and Equipment


332,401



287,008Furniture and Fixtures


44,267



35,362Construction in Progress


42,864



13,084546,256



443,359Less: Accumulated Depreciation


(240,732
)


(204,589
)$
305,524


$
238,770     Valuation
    of Long-Lived Assets
   47




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
    and Other Intangible Assets
    Stock-Based
    Compensation
       48




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Pension
    Plans
    Contingent
    Liabilities
    Foreign
    Currency Translation
   49




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Fair
    Value of Financial Instruments Other Than
    Derivatives
    Off-Balance
    Sheet Financing
    Accounting
    for Income Taxes
    Net
    Income Per Share
      December 31,2006


2005


2004(In thousands)Basic Weighted Average Number of
    Shares Outstanding


130,510



127,236



123,325Dilutive Effect of Stock Options
    and Restricted Stock, Net of Assumed Repurchase of Treasury
    Shares


2,164



3,231



2,766Dilutive Weighted Average Number
    of Shares Outstanding


132,674



130,467



126,091   Recently
    Issued Accounting Pronouncements
   50




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          No. 06-03, (EITF 06-03). Issue 06-03 EITF 06-03 EITF 06-03
  2.
    Stock-Based
    Compensation   51




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2005


2004(In thousands, except per share amounts)Net Income As Reported

$
189,004


$
55,266Add: stock-based employee
    compensation expense included in reported net income, net of
    related tax effects


6,806



4,506Deduct: stock-based employee
    compensation expense determined under the fair value method for
    all awards, net of related tax effects


(11,370
)


(9,276
)Pro Forma Net Income

$
184,440


$
50,496Net Income Per Share:Basic, as reported

$
1.49


$
0.45Basic, pro forma


1.45



0.41Diluted, as reported


1.45



0.44Diluted, pro forma


1.42



0.40       Stock
    Option and Restricted Stock Plans
   52




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Stock
    Option Plans      2006


2005


2004(Actual)


(Pro Forma)


(Pro Forma)Valuation Assumptions Expected Option Term (Years)


5.0



5.0



7.4Expected Volatility


40.02
%


41.00
%


42.50
%Expected Dividend Rate










Risk Free Interest Rate


4.72
%


3.87
%


3.66
%Weighted-Average Grant Date Fair
    Value

$
15.61


$
9.10


$
7.03   5-year 10-year
 53




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     WeightedWeighted


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicShares


Price


Term


ValueOutstanding at the Beginning of
    the Year


4,747,388


$
12.91Options Granted During the Year


326,250



37.02Options Exercised


(1,568,034
)


11.46Options Forfeited


(44,371
)


19.41Outstanding at the End of the
    Period


3,461,233


$
15.76



7.54


$
83,163,951Exercisable at the End of the
    Period


2,609,068


$
12.80



7.17


$
70,363,582       Restricted
    Stock Plans    gross-up
  2004 and 2005 Restricted Stock Awards
  gross-up gross-up gross-up
 54




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   2006 Restricted Stock Award
    WeightedNumber


Averageof


Grant-DateShares


Fair ValueOutstanding at the Beginning of
    the Year


585,550


$
16.56Awarded


287,065



41.05Vested


(10,700
)


42.84Forfeited


(25,875
)


17.16Outstanding at the End of the
    Period


836,040


$
24.62     Employee
    Stock Purchase Plan        2006


2005


2004(Actual)


(Pro Forma)


(Pro Forma)Valuation Assumptions Expected Option Term (Years)


1



1



1Expected Volatility


40
%


41
%


42
%Expected Dividend Rate










Risk Free Interest Rate


4.74
%


2.79
%


1.27
%Weighted-Average Grant Date Fair
    Value

$
12.07


$
6.05


$
4.17  55




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    3.
    Accumulated
    Other Comprehensive Loss      December 31,2006


2005


2004(In thousands)Foreign Currency Translation
    Adjustments

$
(9,319
)

$
(17,888
)

$
(12,289
)Other Comprehensive Income/(Loss)
    for Unconsolidated Affiliate


6,157



(481
)


Unrecognized Pension
    Gains/(Costs), Net


2,202



(1,127
)


(2
)Total Accumulated Other
    Comprehensive Loss

$
(960
)

$
(19,496
)

$
(12,291
)   4.
    License
    and Royalty Agreement    5.
    Other
    Operating Items  2006
    Benefit
    2004
    Charges
    6.
    Acquisitions   56




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    20-year
  5-year
     57




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       7.
    Dispositions      8.
    Discontinued
    Operations      Year EndedDecember 31, 2004(In thousands)Revenues

$
12,833Income Before Income Taxes


1,369Income Tax Provision


(479
)Income from Operations, Net of Tax


890Loss on Disposal, Net of Tax


(10,417
)Loss from Discontinued Operations

$
(9,527
)     9.
    Investments
    in Unconsolidated Affiliate   58




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          December 31,2006


2005(In thousands)Current Assets

$
276,484


$
205,456Other Assets


54,370



48,934$
330,854


$
254,390Current Liabilities

$
64,602


$
66,544Other Liabilities


28,283



21,679Stockholders Equity


237,969



166,167$
330,854


$
254,390   Year Ended December 31,2006


2005


2004(In thousands)Net Sales

$
721,880


$
537,865


$
320,141Gross Profit


261,329



141,803



31,862Net Income


250,753



127,101



20,162Companys Equity Income


125,597



63,978



9,448Dividends Received


87,719



12,041



8,090   Rule 3-09 Regulation S-X Form 10-K
   59




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      10.
    Long-Term
    Debt  Summary
    of Long-term Debt
    December 31,2006


2005(In thousands)Credit Facility (7.4% and 7.5% at
    December 31, 2006 and 2005, respectively)

$
34,600


$
11,20061/8% Senior
    Notes due 2015


200,000



200,0009% Senior Notes due 2009






95Capital Lease Obligations


1,311



2,318Other


9,941



10,916245,852



224,529Less: Current Portion of Long-Term
    Debt


8,640



7,045$
237,212


$
217,484     2007

$
8,6402008


5352009


5302010


3692011


34,744Thereafter


201,034$
245,852   Capital
    Leases
   60




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007

$
5722008


3492009


3092010


236Total Minimum Lease Payments

$
1,466Less: Amounts Representing Interest


155Present Value of Minimum Lease
    Payments


1,311Less: Current Portion of
    Obligations Under Capital Lease


493Long-Term Portion of Obligations
    Under Capital Lease

$
818   Credit
    Facility
        stand-by
 61




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Redemption
    of
    95/8% Senior
    Notes Due 2007
  5 8 5 8 5 8 5 8 5 8
  Issuance
    of
    61/8% Senior
    Notes Due 2015
  1 8 1 8 1 8 1 8
  Year

Percentage2010


103.063
%2011


102.042
%2012


101.021
%2013 and thereafter


100.000
%   1 8 1 8 1 8
 62




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Repurchase
    of 9% Senior Notes Due 2009
    Treasury
    Rate Locks
    11.
    Goodwill
    and Other Intangible Assets      Drilling





TubularProducts and





TechnologyServices


ReedHycalog


and Services


Other


Total(In thousands)Balance, December 31, 2004

$
130,127


$
166,733


$
97,133


$



$
393,993Acquisitions


2,114



5,777







18,840



26,731Translation and Other Adjustments


(1,356
)


2,259











903Balance, December 31, 2005


130,885



174,769



97,133



18,840



421,627Acquisitions


201



100,996







20



101,217Translation and Other Adjustments


1,117



163



20



(3,152
)


(1,852
)Balance, December 31, 2006

$
132,203


$
275,928


$
97,153


$
15,708


$
520,992   EITF 93-7,
 63




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31, 2006


December 31, 2005Gross


Accumulated


Net


Gross


Accumulated


NetIntangibles


Amortization


Intangibles


Intangibles


Amortization


Intangibles(In thousands)Patents

$
71,843


$
(14,449
)

$
57,394


$
58,367


$
(8,174
)

$
50,193Customer Relationships


32,410



(1,514
)


30,896



6,410



(612
)


5,798Trademarks


1,610



(1,250
)


360



1,610



(1,044
)


566Covenants Not To Compete


2,300



(1,890
)


410



3,625



(3,078
)


547Technology Licenses


1,424



(657
)


767



1,438



(583
)


855Pension Asset(a)














222







222$
109,587


$
(19,760
)

$
89,827


$
71,672


$
(13,491
)

$
58,181     (a)
    
    The pension asset is a
    non-amortizing
    intangible asset. Under SFAS 158, which the Company adopted
    at December 31, 2006, the Company no longer has an
    intangible asset related to pensions.    12.
    Supplemental
    Cash Flow Information    Year Ended December 31,2006


2005


2004(In thousands)Interest Paid

$
15,772


$
24,417


$
38,241Income Taxes Paid, Net of Refunds


162,934



40,515



22,369  64




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2006


2005


2004(In thousands)Fair Value of Assets, Net of Cash
    Acquired

$
74,723


$
20,569


$
38,248Goodwill


101,217



26,731



5,089Fair Value of Liabilities Assumed


(63,942
)


(16,263
)


(9,504
)Minority Interests Acquired






8,195



Cash Consideration, Net of Cash
    Acquired

$
111,998


$
39,232


$
33,833     13.
    Stockholders
    Equity  Stock
    Repurchase Program
      Treasury
    Stock
    14.
    Pensions
    Plans     65




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Prior to


Effect of


As ReportedAdopting


Adopting


AtSFAS No. 158


SFAS No. 158


December 31, 2006(In thousands)Other Intangible Assets, Net

$
90,026


$
(199
)

$
89,827Other Assets


22,054



796



22,850Accrued Labor and Benefits


78,639



(3,687
)


74,952Deferred Tax Liabilities


66,810



1,500



68,310Accumulated Other Comprehensive
    Loss


(3,745
)


2,785



(960
)     U.S. Pension
    Plan
   66




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Obligations
    and Funded Status
    2006


2005(In thousands)Change in Benefit Obligation:Benefit obligation at beginning of
    year

$
15,718


$
13,377Service cost


408



382Interest cost


844



841Plan amendments






222Benefits paid


(654
)


(615
)Plan curtailments






(67
)Actuarial (gain) loss


(368
)


1,578Benefit obligation at end of year

$
15,948


$
15,718Change in Plan Assets:Fair value of plan assets at
    beginning of year

$
10,464


$
9,165Actual return on plan assets


1,377



316Employer contributions


3,986



1,658Benefits paid


(654
)


(615
)Administrative expenses


(98
)


(60
)Fair value of plan assets at end
    of year

$
15,075


$
10,464Funded Status at End of Year

$
873


$
(5,254
)Amounts Recognized in the
    Consolidated Balance Sheets:Other intangible assets, net

$



$
222Accrued payroll and benefits






(2,011
)Other long-term liabilities


(873
)


(3,243
)Amounts Recognized in Accumulated
    Other Comprehensive Loss:Net actuarial loss

$
897


$
1,734Prior sevice cost


199



$
1,096


$
1,734     2006


2005(In thousands)Projected Benefit Obligation

$
15,948


$
15,718Accumulated Benefit Obligation


15,948



15,718Fair Value of Plan Assets


15,075



10,464  67




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Components
    of Net Periodic Cost and Other Amounts Recognized in Other
    Comprehensive (Gain) Loss:
    2006


2005


2004(In thousands)Service Cost

$
408


$
382


$
367Interest Cost


844



841



734Expected Return on Plan Assets


(895
)


(595
)


(560
)Amortization of Prior Service Cost


23







Amortization of Net Loss


25



11



Administration Expenses


60



108



51Net Periodic Cost

$
465


$
747


$
592   :
  2006


2005


2004(In thousands)Net (Gain) Loss

$
(812
)

$
1,741


$
(1,014
)Amortization of Loss


(25
)


(11
)


Prior Service Cost


199







Total Recognized in Other
    Comprehensive (Gain) Loss

$
(638
)

$
1,730


$
(1,014
)Total Recognized in Net Periodic
    Cost and Other Comprehensive (Gain) Loss

$
(173
)

$
2,477


$
(422
)   Assumptions
    2006


2005Discount rate


5.75
%


5.50
%Rate of compensation increase


N/A



N/A     2006


2005


2004Discount rate


5.50
%


5.78
%


6.15
%Expected return on plan assets


7.50
%


6.58
%


6.58
%Rate of compensation increase


N/A



N/A



N/A    68




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Asset
    Categories
    ActualDecember 31,Asset Category

Target


2006


2005Equity Securities


50
%


58
%


59
%Fixed Income


40
%


42
%


41
%Other


10
%


0
%


0
%100
%


100
%


100
%     Cash
    Flow
      Fiscal Year Ending

Payments(In thousands)2007

$
8332008


8732009


8982010


9252011


991Next 5 years


5,146Total

$
9,666   Non-U.S. Pension
    Plan
   69




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Obligations
    and Funded Status
    2006


2005(In thousands)Change in Benefit Obligation:Benefit obligation at beginning of
    year

$
21,686


$
20,648Service cost


17



Interest cost


940



917Benefits paid


(1,214
)


(234
)Actuarial (gain) loss


(1,392
)


2,480Exchange rate changes


2,508



(2,125
)Benefit obligation at end of year

$
22,545


$
21,686Change in Plan Assets:Fair value of plan assets at
    beginning of year

$
21,388


$
21,129Actual return on plan assets


(216
)


2,633Employer contributions


838



Benefits paid


(1,214
)


(234
)Exchange rate changes


2,545



(2,140
)Fair value of plan assets at end
    of year

$
23,341


$
21,388Funded Status at End of Year

$
796


$
(298
)Amounts Recognized in the
    Consolidated Balance Sheets:Other assets

$
796


$
Accrued payroll and benefits






(4,089
)Amounts Recognized in Accumulated
    Other Comprehensive Loss:Net actuarial gain

$
(4,535
)

$
Prior service cost


52



$
(4,483
)

$
     2005(In thousands)Projected Benefit Obligation

$
21,686Accumulated Benefit Obligation


21,686Fair Value of Plan Assets


21,388    70




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Components
    of Net Periodic Cost and Other Amounts Recognized in Other
    Comprehensive Gain:
    2006


2005


2004(In thousands)Service Cost

$
16


$



$
Interest Cost


941



917



863Expected Return on Plan Assets


(924
)


(939
)


(927
)Amortization of Prior Service Cost


118



235



Amortization of Net Actuarial Gain


(151
)


(213
)


(293
)Net Periodic Cost

$



$



$
(357
)     2006(In thousands)Net Gain

$
(4,535
)Prior Service Cost


52Total Recognized in Other
    Comprehensive Gain

$
(4,483
)Total Recognized in Net Periodic
    Benefit and Other Comprehensive Gain

$
(4,483
)     Additional
    Information
      Assumptions
    2006


2005Discount rate


4.65
%


4.25
%Rate of compensation increase


N/A



N/A     2006


2005


2004Discount rate


4.25
%


4.75
%


5.00
%Expected return on plan assets


4.25
%


4.75
%


5.00
%Rate of compensation increase


N/A



N/A



N/A  71




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Asset
    Categories
    ActualDecember 31,Asset Category

Target


2006


2005Equity Securities


0
%


0
%


0
%Fixed Income


100
%


100
%


100
%Other


0
%


0
%


0
%100
%


100
%


100
%   Cash
    Flow
      Fiscal Year Ending

Payments(In thousands)2007

$
2712008


2772009


2992010


3162011


336Next 5 years


2,750Total

$
4,249   15.
    Other
    Retirement and Employee Benefit Plans  Executive
    Deferred Compensation Plan
     72




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Non-Qualified
    Deferred Compensation Plans
    Defined
    Contribution Plans
    16.
    Income
    Taxes    Year Ended December 31,2006


2005


2004(In thousands)Domestic

$
303,045


$
82,877


$
39,339Foreign


367,115



205,756



65,442Total Income Before Income Taxes

$
670,160


$
288,633


$
104,781  73




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2006


2005


2004(In thousands)Current:U.S. federal and state income
    taxes

$
(92,234
)

$
(55,401
)

$
(460
)Foreign


(93,354
)


(47,048
)


(14,189
)(185,588
)


(102,449
)


(14,649
)Deferred:U.S. federal and state income
    taxes


(13,049
)


16,640



(14,879
)Foreign


3,422



(3,871
)


(5,217
)(9,627
)


12,769



(20,096
)Total Income Tax Provision(a)

$
(195,215
)

$
(89,680
)

$
(34,745
)     (a)
    
    Excludes $0.9 million of deferred taxes from the income
    from discontinued operations for 2004 (see Note 8).    Year Ended December 31,2006


2005


2004(In thousands)Provision for Income Taxes at
    Statutory Rates

$
(234,556
)

$
(101,022
)

$
(35,610
)Effect of Foreign Income Tax, Net


21,352



8,249



4,233Change in Valuation Allowance


14,749



1,726



(4,523
)Increased Research Expenditures
    Credit


5,623







Preferred Supplier Credit






1,421



1,339Extraterritorial Income and
    Manufacturing Deduction Benefit


4,854



1,223



1,145Amortization of Restricted Stock
    Award


(3,887
)


(423
)


(2,220
)State and Local Income Taxes, Net
    of U.S. Federal Income Tax Benefit


(3,302
)


(100
)


900Other Permanent Items


(48
)


(754
)


(9
)Provision for Income Taxes

$
(195,215
)

$
(89,680
)

$
(34,745
)      74




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31,2006


2005(In thousands)Deferred Tax Assets:Foreign tax credits

$
7,604


$
28,532Domestic and foreign operating
    losses


3,034



1,416Accrued liabilities and reserves


14,409



24,372Inventory basis differences


24,347



7,422Investments in unconsolidated subs


5,734



2,018Tax on non-repatriated foreign
    income


3,209



Total deferred tax assets


58,337



63,760Deferred Tax Liabilities:Goodwill and other intangibles


(33,855
)


(16,562
)Property and equipment and other


(25,048
)


(24,044
)Foreign taxes


(18,243
)


(6,828
)Tax on non-repatriated foreign
    income






(2,120
)Total deferred tax liabilities


(77,146
)


(49,554
)Valuation Allowance:Foreign tax credits






(14,749
)Total valuation allowance






(14,749
)Net deferred tax liabilities

$
(18,809
)

$
(543
)        75




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      17.  Disputes,
    Litigation and Contingencies
  Litigation
    and Other Disputes
    Insurance
    18.
    Commitments  Operating
    Leases
      2007

$
9,9912008


7,4302009


5,3342010


4,9162011


3,786Thereafter


18,947$
50,404  76




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    Commitments
  30-year
  19.
    Related
    Parties      20.
    Segment
    Information  Business
    Segments
      77




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Drilling





Tubular


CorporateProducts





Technology


andand Services


ReedHycalog


and Services


Other


Total(In thousands)2006Revenues from Unaffiliated Customers

$
888,661


$
504,648


$
420,600


$
1,784


$
1,815,693Intersegment Revenues


1,075



91



6,753







7,919Depreciation and Amortization


13,495



18,620



11,319



6,821



50,255Other Operating Items














3,900
(a)


3,900Operating Income (Loss)(b)


323,189



185,087
(c)


119,752



(63,650
)


564,378Interest Expense


(87
)


354



121



15,743



16,131Equity Income in Unconsolidated
    Affiliate


125,597















125,597Income (Loss) from Continuing
    Operations(b)


295,761



118,866
(c)


70,857



(20,900
)


464,584Capital Expenditures for Property,
    Plant and Equipment


28,019



24,847



18,256



29,116



100,238Total Assets


801,830



780,635



314,914



124,688



2,022,0672005Revenues from Unaffiliated Customers

$
598,900


$
398,227


$
352,870


$



$
1,349,997Intersegment Revenues


178



99



8,116







8,393Depreciation and Amortization


13,884



15,939



11,667



5,142



46,632Operating Income (Loss)


176,181



98,616



88,286



(52,130
)


310,953Interest Expense


483



240



132



28,293



29,148Equity Income (Loss) in
    Unconsolidated Affiliates


63,977











(5,718
)


58,259Income (Loss) from Continuing
    Operations


158,838



60,258



52,793



(82,885
)(d)


189,004Capital Expenditures for Property,
    Plant and Equipment


10,456



6,224



7,775



5,046



29,501Total Assets


592,054



538,734



315,144



94,352



1,540,2842004Revenues from Unaffiliated Customers

$
390,617


$
326,918


$
226,233


$
1,875


$
945,643Intersegment Revenues










348







348Depreciation and Amortization


15,109



12,121



12,751



3,239



43,220Other Operating Items


2,051







3,207



3,777



9,035Operating Income (Loss)


90,637



70,542



20,884



(40,391
)


141,672Interest Expense


614



110



213



40,952



41,889Equity Income (Loss) in
    Unconsolidated Affiliates


9,448











(4,848
)


4,600Income (Loss) from Continuing
    Operations


63,772



39,453



9,573



(48,005
)


64,793Capital Expenditures for Property,
    Plant and Equipment


8,808



18,794



4,986



5,291



37,879Total Assets


489,684



519,258



258,517



77,007



1,344,466     (a)
    
    Includes a $3.9 million benefit from the settlement of a
    trade credit dispute.(b)
    
    Includes non-cash items of $11.4 million related to
    stock-based compensation.(c)
    
    Includes a license and royalty payment of $20.0 million the
    Company received in exchange for the use of ReedHycalogs
    patented technology for the shallow leaching of PDC cutters. See
    Note 4 for further discussion.(d)
    
    Includes non-cash items in Corporate and Other of
    $57.1 million related refinancing charges and
    $5.6 million related to stock-based compensation. 78




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Foreign
    Operations and Export Sales
      Year Ended December 31,2006


2005


2004United States

$
1,113,736


$
864,470


$
577,479Canada


78,939



66,487



72,950Italy


55,834



39,561



20,938China


110,895



69,382



56,005Singapore


161,406



99,361



49,755Other Countries


294,883



210,736



168,516Total

$
1,815,693


$
1,349,997


$
945,643     December 31,2006


2005United States

$
614,392


$
492,835Canada


33,250



22,809Mexico


79,363



72,098Italy


40,533



40,618China


38,756



33,037Singapore


49,496



42,249United Kingdom


183,925



73,862Other Countries


33,506



35,032Total

$
1,073,221


$
812,540   Major
    Customers and Credit Risk
     79




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   21.
    Selected
    Quarterly Financial Data (Unaudited)    2006First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In thousands, except per share data)Revenues

$
414,425


$
431,784


$
451,349


$
518,135Gross Profit


185,896



204,419



231,863
(a)


243,260Operating Income


114,380



130,063



160,441
(a)


159,494
(b)Net Income


92,430



105,587



126,472
(a)


140,095
(b)Basic Net Income Per Share(c)

$
0.70


$
0.80


$
0.97


$
1.09Diluted Net Income Per Share(c)


0.69



0.79



0.95



1.07   2005First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In thousands, except per share data)Revenues

$
292,096


$
316,947


$
352,228


$
388,726Gross Profit


124,180



136,670



150,790



161,871Operating Income


62,191



71,273



84,851



92,638Net Income


36,666



25,828
(d)


48,114
(e)


78,396Basic Net Income Per Share(c)

$
0.29


$
0.21


$
0.37


$
0.60Diluted Net Income Per Share(c)


0.29



0.20



0.37



0.59     (a)
    
    Includes a license and royalty payment of $20.0 million the
    Company received from a competitor in exchange for the use of
    ReedHycalogs patented technology for the shallow leaching
    of PDC cutters (see Note 4 for further discussion).(b)
    
    Includes a $3.9 million benefit from the settlement of a
    trade credit dispute (see Note 5 for further discussion)(c)
    
    Earnings per share (EPS) in each quarter is computed using the
    weighted average number of shares outstanding during that
    quarter while EPS for the full year is computed by taking the
    average of the weighted average number of shares outstanding
    each quarter. Thus, the sum of the four quarters EPS may
    not equal the full-year EPS.(d)
    
    Includes $35.4 million of refinancing charges related to
    replacing the Companys previous $190 million credit
    facility with a new $350 million credit facility, and an
    early redemption of the Companys $200 million
    95/8% Senior
    Notes due 2007.(e)
    
    Includes $21.7 million of refinancing charges related to
    the repurchase of substantially all of the Companys
    9% Senior Notes in the third quarter of 2005.  22.
    Subsidiary
    Guarantor Financial Information  1 8
 80




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GRANT
    PRIDECO INC.
  CONDENSED
    STATEMENT OF OPERATIONS
 Year
    Ended December 31, 2006
  Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Income:Revenues

$



$
1,346,398


$
797,559


$
(328,264
)


1,815,693License and royalty income










20,000







20,000



1,346,398



817,559



(328,264
)


1,835,693Operating Expenses:Cost of sales






824,966



419,394



(274,105
)


970,255Selling, general and administrative


220



217,404



87,336







304,960Other operating items






(3,900
)










(3,900
)220



1,038,470



506,730



(274,105
)


1,271,315Operating Income (Loss)


(220
)


307,928



310,829



(54,159
)


564,378Interest Expense


(15,394
)


(537
)


(200
)






(16,131
)Other Income (Expense), Net


5,219



7,427



(16,330
)






(3,684
)Equity Income in Unconsolidated
    Affiliate






125,772







(175
)


125,597Equity in Subsidiaries, Net of
    Taxes


533,385



24,275







(557,660
)


Income Before Income Taxes and
    Minority Interest


522,990



464,865



294,299



(611,994
)


670,160Income Tax Provision


(58,406
)


(79,828
)


(56,981
)






(195,215
)Income Before Minority Interests


464,584



385,037



237,318



(611,994
)


474,945Minority Interests










(10,361
)






(10,361
)Net Income

$
464,584


$
385,037


$
226,957


$
(611,994
)

$
464,584  81




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    BALANCE SHEET
    As of December 31, 2006
  Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)ASSETSCurrent Assets:Cash

$



$
12,529


$
44,815


$



$
57,344Accounts receivable, net






240,407



128,288







368,695Inventories






334,242



178,667



(57,962
)


454,947Deferred charges






3,712



252







3,964Current deferred tax assets


131



28,082



19,888







48,101Other current assets






6,450



7,945







14,395131



625,422



379,855



(57,962
)


947,446Property, Plant and Equipment, Net






170,965



134,559







305,524Goodwill






249,976



271,016







520,992Investment In and Advances to
    Subsidiaries


1,569,776



79,185







(1,648,961
)


Investment In Unconsolidated
    Affiliate






135,428











135,428Other Assets


6,830



61,376



44,471







112,677$
1,576,737


$
1,322,352


$
829,901


$
(1,706,923
)

$
2,022,067LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Short-term borrowings and current
    portion of long-term debt

$
7,924


$
716


$



$



$
8,640Accounts payable






94,649



44,293







138,942Deferred revenues






14,259



3,931







18,190Income taxes payable


(48,719
)


59,800



21,958







33,039Intercompany liabilities (assets)


61,345



(302,256
)


240,911







Other current liabilities


4,815



70,031



33,682







108,52825,365



(62,801
)


344,775







307,339Long-Term Debt


200,000



37,212











237,212Deferred Tax Liabilities


(11,511
)


40,916



38,905







68,310Other Long-Term Liabilities






28,151



650







28,801Commitments and Contingencies


















Minority Interests










17,522







17,522Stockholders Equity


1,362,883



1,278,874



428,049



(1,706,923
)


1,362,883$
1,576,737


$
1,322,352


$
829,901


$
(1,706,923
)

$
2,022,067  82




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    STATEMENT OF CASH FLOWS
    Year Ended December 31, 2006
  Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Cash Flows From Operating
    Activities:Net cash provided by operating
    activities

$
285,420


$
143,919


$
50,750


$
(85,989
)

$
394,100Cash Flows From Investing
    Activities:Acquisition of businesses, net of
    cash acquired


(111,797
)






(201
)






(111,998
)Capital expenditures for property,
    plant and equipment






(76,103
)


(24,135
)






(100,238
)Other, net






1,462



130







1,592Net cash used in investing
    activities


(111,797
)


(74,641
)


(24,206
)






(210,644
)Cash Flows From Financing
    Activities:Repayments on revolver debt, net






34,600



(11,200
)






23,400Repayments on debt, net


(46,272
)


(1,867
)










(48,139
)Borrowings (repayments) on debt
    between subs, net


2,519



(102,570
)


100,051







Debt issue costs


(1,032
)














(1,032
)Excess tax benefits on stock
    option exercises


15,556















15,556Repurchase of common stock


(165,122
)














(165,122
)Proceeds from issuance of common
    stock


20,728















20,728Dividends paid










(85,989
)


85,989



Net cash (used in) provided by
    financing activities


(173,623
)


(69,837
)


2,862



85,989



(154,609
)Effect of Exchange Rate Changes on
    Cash










333







333Net (Decrease) Increase in Cash






(559
)


29,739







29,180Cash at Beginning of Period






13,088



15,076







28,164Cash at End of Period

$



$
12,529


$
44,815


$



$
57,344  83




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GRANT
    PRIDECO INC.
  CONDENSED
    STATEMENT OF OPERATIONS
 Year
    Ended December 31, 2005
  Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Revenues

$



$
1,067,952


$
552,591


$
(270,546
)

$
1,349,997Operating Expenses:Cost of sales






710,905



285,575



(219,994
)


776,486Selling, general and administrative






185,141



77,417







262,558



896,046



362,992



(219,994
)


1,039,044Operating Income






171,906



189,599



(50,552
)


310,953Interest Expense


(27,284
)


(1,301
)


(563
)






(29,148
)Other Income (Expense), Net


2,269



60,310



(56,924
)






5,655Equity Income in Unconsolidated
    Affiliates






58,259











58,259Refinancing Charges


(49,541
)


(7,545
)










(57,086
)Equity in Subsidiaries, Net of
    Taxes


281,213



17,400







(298,613
)


Income Before Income Taxes and
    Minority Interest


206,657



299,029



132,112



(349,165
)


288,633Income Tax Provision


(17,653
)


(35,123
)


(36,904
)






(89,680
)Income Before Minority Interests


189,004



263,906



95,208



(349,165
)


198,953Minority Interests










(9,949
)






(9,949
)Net Income

$
189,004


$
263,906


$
85,259


$
(349,165
)

$
189,004  84




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GRANT
    PRIDECO INC.
  CONDENSED
    BALANCE SHEET
 As of
    December 31, 2005
  Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)ASSETSCurrent Assets:Cash

$



$
13,088


$
15,076


$



$
28,164Accounts receivable, net






164,375



104,075







268,450Inventories






272,914



140,256



(52,540
)


360,630Deferred charges






14,397



232







14,629Current deferred tax assets


(2,671
)


30,721



11,907







39,957Other current assets






4,963



9,462







14,425(2,671
)


500,458



281,008



(52,540
)


726,255Property, Plant and Equipment, Net






133,677



105,093







238,770Goodwill






229,837



191,790







421,627Investment In and Advances to
    Subsidiaries


1,063,749



54,590







(1,118,339
)


Investment In Unconsolidated
    Affiliates






84,547











84,547Other Assets


6,630



48,192



14,263







69,085$
1,067,708


$
1,051,301


$
592,154


$
(1,170,879
)

$
1,540,284LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Short-term borrowings and current
    portion of long-term debt

$



$
7,045


$



$



$
7,045Accounts payable






64,343



27,947







92,290Deferred revenues






24,932



404







25,336Income taxes payable


9,573



(8,018
)


23,153







24,708Current deferred tax liabilities


















Intercompany liabilities (assets)


(147,863
)


(10,728
)


151,814



6,777



Other current liabilities


5,512



58,641



33,114







97,267(132,778
)


136,215



236,432



6,777



246,646Long-Term Debt


200,095



6,189



11,200







217,484Deferred Tax Liabilities


4,236



9,031



24,904







38,171Other Long-Term Liabilities






28,072



1,293







29,365Commitments and ContingenciesMinority Interests










12,463







12,463Stockholders Equity


996,155



871,794



305,862



(1,177,656
)


996,155$
1,067,708


$
1,051,301


$
592,154


$
(1,170,879
)

$
1,540,284  85




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    STATEMENT OF CASH FLOWS
    Year Ended December 31, 2005
  Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Cash Flows From Operating
    Activities:Net cash provided by operating
    activities

$
172,285


$
297


$
37,094


$
(15,000
)

$
194,676Cash Flows From Investing
    Activities:Acquisition of businesses, net of
    cash acquired


(28,725
)






(10,507
)






(39,232
)Proceeds from sale of businesses,
    net of cash disposed






2,521











2,521Investment in unconsolidated
    affiliates






(5,273
)










(5,273
)Capital expenditures for property,
    plant and equipment






(18,806
)


(10,695
)






(29,501
)Other, net






1,682



131







1,813Net cash used in investing
    activities


(28,725
)


(19,876
)


(21,071
)






(69,672
)Cash Flows From Financing
    Activities:Borrowings on revolver debt, net










11,200







11,200Repayments on debt, net


(174,905
)


(4,410
)










(179,315
)Borrowings (Repayments) between
    subsidiaries, net


7,410



6,356



(13,766
)






Debt refinancing costs


(43,778
)














(43,778
)Debt issue costs


(6,041
)














(6,041
)Repurchases of common stock


(3,385
)














(3,385
)Proceeds from stock option
    exercises


77,139















77,139Dividends paid










(15,000
)


15,000



Net cash (used in) provided by
    financing activities


(143,560
)


1,946



(17,566
)


15,000



(144,180
)Effect of Exchange Rate Changes on
    Cash










(212
)






(212
)Net Decrease in Cash






(17,633
)


(1,755
)






(19,388
)Cash at Beginning of Period






30,721



16,831







47,552Cash at End of Period

$



$
13,088


$
15,076


$



$
28,164  86




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    STATEMENT OF OPERATIONS
    Year Ended December 31, 2004
  Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Revenues

$



$
649,202


$
296,441


$



$
945,643Operating Expenses:Cost of sales






397,176



163,631







560,807Selling, general and administrative






160,536



73,593







234,129Other operating items






6,984



2,051







9,035



564,696



239,275







803,971Operating Income






84,506



57,166







141,672Interest Expense


(36,758
)


(4,486
)


(645
)






(41,889
)Other Income (Expense), Net






2,425



(2,027
)






398Equity Income in Unconsolidated
    Affiliates






4,600











4,600Equity in Subsidiaries, Net of
    Taxes


80,383











(80,383
)


Income From Continuing Operations
    Before Income Taxes and Minority Interest


43,625



87,045



54,494



(80,383
)


104,781Income Tax (Provision) Benefit


11,641



(33,135
)


(13,251
)






(34,745
)Income From Continuing Operations
    Before Minority Interests


55,266



53,910



41,243



(80,383
)


70,036Minority Interests










(5,243
)






(5,243
)Income From Continuing Operations


55,266



53,910



36,000



(80,383
)


64,793Loss From Discontinued Operations,
    Net of Tax






(9,527
)










(9,527
)Net Income

$
55,266


$
44,383


$
36,000


$
(80,383
)

$
55,266  87




---



##### 



GRANT
    PRIDECO, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  CONDENSED
    STATEMENT OF CASH FLOWS
    Year Ended December 31, 2004
  Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Cash Flows From Operating
    Activities:Net cash (used in) provided by
    operating activities

$
(24,211
)

$
116,546


$
20,835


$



$
113,170Cash Flows From Investing
    Activities:Acquisition of businesses, net of
    cash acquired






(33,833
)










(33,833
)Proceeds from sales of businesses,
    net of cash disposed






1,349



831







2,180Proceeds from sale of discontinued
    operations, net of cash disposed






19,859











19,859Investments in and advances to
    unconsolidated affiliates






(4,167
)










(4,167
)Capital expenditures for property,
    plant and equipment






(18,592
)


(19,287
)






(37,879
)Proceeds from sale of fixed assets






6,911



1,548







8,459Net cash used in investing
    activities






(28,473
)


(16,908
)






(45,381
)Cash Flows From Financing
    Activities:Repayments on debt, net






(59,972
)


(4,129
)






(64,101
)Repurchase of common stock


(2,508
)














(2,508
)Proceeds from issuance of common
    stock


26,719















26,719Net cash provided by (used in)
    financing activities


24,211



(59,972
)


(4,129
)






(39,890
)Effect of Exchange Rate Changes on
    Cash










423







423Net Increase in Cash






28,101



221







28,322Cash at Beginning of Year






2,620



16,610







19,230Cash at End of Year

$



$
30,721


$
16,831


$



$
47,552  88




---



##### 



Item 9.
    Changes
    in and Disagreements With Accountants On Accounting and
    Financial Disclosure  Form 8-K, Form 10-K.
  Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Design
    and Evaluation of Internal Control Over Financial
    Reporting
    Changes
    in Internal Control Over Financial Reporting
   89




---



##### 



PART III
  Item 10.
    Directors
    and Executive Officers of the Registrant    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accountant Fees and Services    PART IV
  Item 15.
    Exhibits
    and Financial Statement Schedules  The following documents are filed as a part of this
    report or incorporated herein by reference:
        Regulation S-X
    Exhibits:
  2
.1

Distribution Agreement, dated as
    of March 22, 2000, between Weatherford and Grant Prideco,
    Inc. (incorporated by Reference to Exhibit 2.1 to Grant
    Prideco, Inc.s Registration Statement on
    Form S-3,
    Reg.
    No. 333-35272).2
.2

Purchase Agreement, dated as of
    October 25, 2002, among Grant Prideco, Inc., as purchaser,
    and Schlumberger Technology Corporation, as seller,
    (incorporated by reference to Exhibit 2.1 to Grant Prideco,
    Inc.s Current Report on
    Form 8-K,
    File
    No. 001-15423,
    filed on October 28, 2002). 90




---



##### 



3
.1

Restated Certificate of
    Incorporation of Grant Prideco, Inc. (incorporated by reference
    to Exhibit 3.1 to Grant Prideco, Inc.s Registration
    Statement on
    Form S-3,
    Reg.
    No. 333-35272).3
.2

Restated Bylaws of Grant Prideco,
    Inc. (incorporated by reference to Exhibit 3.2 to Grant
    Prideco, Inc.s Registration Statement on Form 10,
    File
    No. 1-15423,
    as amended).4
.1*

Grant Prideco, Inc. 2000
    Non-Employee Director Stock Option Plan (incorporated by
    reference to Exhibit 10.6 to Grant Prideco, Inc.s
    Annual Report on
    Form 10-K
    for the year ended December 31, 2000, File
    No. 1-15423).4
.2*

Grant Prideco, Inc. 2000 Employee
    Stock Option and Stock Plan (incorporated by reference to
    Exhibit 10.5 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).4
.3*

Grant Prideco, Inc. Executive
    Deferred Compensation Plan (incorporated by reference to
    Exhibit 10.9 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).4
.4*

Grant Prideco, Inc. Foreign
    Executive Deferred Compensation Plan (incorporated by reference
    to Exhibit 10.8 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).4
.5*

Grant Prideco, Inc. Deferred
    Compensation Plan for Non-Employee Directors (incorporated by
    reference to Exhibit 10.10 to Grant Prideco, Inc.s
    Registration Statement on Form 10, File
    No. 1-15423,
    as amended).4
.6*

Grant Prideco, Inc. 401(k) Savings
    Plan (incorporated by reference to Exhibit 10.11 to Grant
    Prideco, Inc.s Registration Statement on Form 10,
    File
    No. 1-15423,
    as amended).4
.7*

Grant Prideco, Inc. 2001 Stock
    Option and Restricted Stock Plan (incorporated by reference to
    Exhibit 10.16 to Grant Prideco, Inc.s Annual Report
    on
    Form 10-K
    for the year ended December 31, 2001, File
    No. 1-15423).4
.8

Indenture relating to the
    61/8% Senior
    Notes due 2015, dated as of July 27, 2005, among Grant
    Prideco, Inc., certain subsidiary guarantors and Wells Fargo
    Bank, N.A., as Trustee (including form of note) (incorporated by
    reference to Exhibit 4.1 to Grant Prideco, Inc.s
    Current Report on
    Form 8-K,
    filed on July 29, 2005).4
.9

Registration Rights Agreement
    relating to the
    61/8% Senior
    Notes due 2015, dated as of July 27, 2005, among Grant
    Prideco, Inc., certain subsidiary guarantors and Banc of America
    Securities LLC, as representative of the initial purchasers
    (incorporated by reference to Exhibit 4.2 to Grant Prideco,
    Inc.s Current Report on
    Form 8-K,
    filed on July 29, 2005).4
.10

Amended and Restated Credit
    Agreement, dated as of August 31, 2006, among Grant
    Prideco, Inc., certain subsidiaries of Grant Prideco, Inc. party
    thereto, each lender from time to time party thereto, Bank of
    America, N.A., as Syndication Agent, Wells Fargo Bank, National
    Association, as Administrative Agent (incorporated by reference
    to Exhibit 10.1 to Grant Prideco, Inc.s Current
    Report on
    Form 8-K,
    filed on September 6, 2006).4
.11*

Employee Stock Purchase Plan
    (incorporate by reference to Exhibit 4.21 of Grant
    Pridecos Annual Report on Form 10K for the year ended
    December 31, 2003, File
    No. 1-15423).4
.12*

Form of Executive Restricted-Stock
    Agreement (with tandem tax rights incorporated by reference to
    Exhibit 4.21 to Grant Prideco, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).4
.13*

Form of Executive Restricted-Stock
    Agreement (incorporated by reference to Exhibit 4.22 to
    Grant Prideco, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).4
.14*

Form of Executive Stock Option
    Agreement (with accelerated vesting upon termination
    incorporated by reference to Exhibit 4.23 to Grant Prideco,
    Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).4
.15*

Form of Executive Stock Option
    Agreement (without accelerated vesting upon termination
    incorporated by reference to Exhibit 4.24 to Grant Prideco,
    Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423). 91




---



##### 



4
.16*

Grant Prideco 2006 Long-Term
    Incentive Plan (incorporated by reference to Exhibit 99.1
    to Grant Pridecos Current Report on
    Form 10-K,
    File No. 1-5423, filed on May 11, 2006)10
.1

See Exhibits 2.1 and 4.1
    through 4.16 for certain items material contracts.10
.2*

Employment Agreement with Michael
    McShane dated June 26, 2002 (incorporated by reference to
    Exhibit 10.1 to Grant Prideco, Inc.s Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2002, File
    No. 1-15423).10
.3*

Employment Agreement with Matthew
    Fitzgerald dated January 12, 2004 (incorporated by
    reference from Exhibit 10.3 to the Grant Prideco Annual
    Report on
    Form 10-K
    for the year ended December 31, 2004).10
.4*

Employment Agreement with Philip
    Choyce dated April 14, 2000 (incorporated by reference to
    Exhibit 10.26 to Grant Prideco, Inc.s Registration
    Statement on
    Form S-4,
    Reg.
    No. 333-102635).10
.5*

Form of Change of Control
    Agreement with William Chunn, Dan Latham, Warren Avery and
    Philip Choyce (incorporated by reference to Exhibit 10.6 to
    Grant Prideco, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2000, File
    No. 1-15423).10
.6*

Form of Change of Control
    Agreement with David Black, Jim Breihan, Greg Boane, Jay
    Mitchell, and John Deane (incorporated by reference to
    Exhibit 10.12 to Grant Prideco, Inc.s Annual Report
    on 10-K for
    the year ended December 31, 2001, File
    No. 1-15423).10
.7

Tax Allocation Agreement dated
    April 14, 2000 between Grant Prideco, Inc. and Weatherford
    (incorporated by reference to Exhibit 10.13 to Weatherford
    International, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2000, File
    No. 1-13086).10
.8

Investment Agreement, dated as of
    April 29, 1999, by and between Grant Prideco, Inc. and VAT
    Schienen GmbH & Co KG (incorporated by reference to
    Exhibit 10.12 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).10
.9

Operating Agreement, dated as of
    July 23, 1999, by and Grant Prideco, Inc. and VAT Schienen
    GmbH & CoKG (incorporated by reference to
    Exhibit 10.13 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File No. 1 -15423, as amended).10
.10

Supply Agreement, dated as of
    August 1, 2003, by and between VAT Stahlrohr Kindberg
    GmbH & Co KG and Grant Prideco, Inc. (Incorporated by
    reference to Exhibit 10.12 of Grant Pridecos Annual
    Report on
    Form 10-K
    for the year ended December 31, 2003, File
    No. 1-15423).10
.11

Amendment No. 1 to VAT Supply
    Agreement (incorporated by reference to Exhibit 10.13 to
    Grant Prideco, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).10
.12

Amendment No. 2 to VAT Supply
    Agreement (incorporated by reference to Exhibit 10.14 to
    Grant Prideco, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).10
.13

Stock Purchase Agreement, dated as
    of June 19, 1998, by and between Weatherford, Pridecomex
    Holding, S.A. de C.V., Tubos de Acero de Mexico S.A. and
    Tamsider S.A. de C.V. (incorporated by reference to
    Exhibit 10.16 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).10
.14

Master Technology License
    Agreement, dated as of June 19, 1998, by and between Grant
    Prideco, Inc. and DST Distributors of Steel Tubes Limited
    (incorporated by reference to Exhibit 10.17 to Grant
    Prideco, Inc.s Registration Statement on Form 10,
    File
    No. 1-15423,
    as amended).10
.15

Agreement, dated as of
    November 12, 1998, by and between Tubos de Acero de Mexico,
    Tamsider S.A. de C.V., DST Distributors of Steel Tubes Limited,
    Techint Engineering Company, Weatherford, Grand Prideco,
    Pridecomex Holding, S.A. de C.V. and Grant Prideco, S.A. de C.V.
    (incorporated by reference to Exhibit 10.18 to Grant
    Prideco, Inc.s Registration Statement on Form 10,
    File
    No. 1-15423,
    as amended).10
.16

Agreement, dated as of
    December 1, 1998, by and between Tubos de Acero de Mexico,
    Tamsider S.A. de C.V., Weatherford and Pridecomex Holdings, S.A.
    de C.V. (incorporated by reference to Exhibit 10.19 to
    Grant Prideco, Inc.s Registration Statement on
    Form 10, File
    No. 1-15423,
    as amended).10
.17*

Nonqualified Deferred Compensation
    Plan (incorporated by reference to Exhibit 10.17 of Grant
    Pridecos Annual Report on Form 10K for the year ended
    December 31, 2003, File
    No. 1-15423). 92




---



##### 



21
.1

Subsidiaries of Registrant
    (incorporated by reference to Exhibit 21.1 of Grant
    Pridecos Annual Report on Form 10K for the year ended
    December 31, 2003, File
    No. 1-15423).23
.1

Consent of Deloitte &
    Touche LLP.23
.2

Consent of Ernst & Young
    LLP.31
.1

Certification of Michael McShane.31
.2

Certification of Matthew D.
    Fitzgerald.32
.1

Section 906 Certification.     *
    
    Designates a management or compensatory plan or arrangement. 93




---



##### 



SCHEDULE II
  VALUATION
    AND QUALIFYING ACCOUNTS
    For the Years Ended December 31, 2006, 2005 and
    2004
  AdditionsBalance At


Charged to


Charged to





BalanceBeginning


Cost and


Other





At EndDescriptions

of Year


Expenses


Accounts(a)


Deductions(b)


of Year(In thousands)2006:Allowance for Uncollectible
    Accounts

$
5,856


$
1,805


$
135


$
4,273


$
3,523Inventory Reserves


17,600



8,514







5,119



20,9952005:Allowance for Uncollectible
    Accounts

$
8,024


$
1,682


$
210


$
4,060


$
5,856Inventory Reserves


13,013



9,572



6



4,991



17,6002004:Allowance for Uncollectible
    Accounts

$
3,539


$
3,844


$
1,141


$
500


$
8,024Inventory Reserves


14,910



6,961



226



9,084



13,013     (a)
    
    Represents currency translation adjustments and reclasses.(b)
    
    Primarily represents the elimination of accounts receivable and
    inventory deemed uncollectible or worthless and, for accounts
    receivable, represents reversals of prior accruals as
    receivables are collected or deemed collectible. 94




---



##### 



SIGNATURES
      By:
    /s/  Michael
    McShane   Chief Executive Officer, President,
 and Chairman of the Board
      Signature

Capacity in Which Signed

Date/s/  Michael
    McShaneMichael
    McShane

Chief Executive Officer, President
    and Chairman of the Board 
    (Principal Executive Officer)

March 1, 2007/s/  Matthew
    D. FitzgeraldMatthew
    D. Fitzgerald

Senior Vice President and Chief
    Financial Officer 
    (Principal Financial Officer)

March 1, 2007/s/  Greg
    L. BoaneGreg
    L. Boane

Corporate Controller 
    (Principal Accounting Officer)

March 1, 2007/s/  David
    J. ButtersDavid
    J. Butters

Director

March 1, 2007/s/  Eliot
    M. FriedEliot
    M. Fried

Director

March 1, 2007/s/  Dennis
    R. HendrixDennis
    R. Hendrix

Director

March 1, 2007/s/  Harold
    E. LaymanHarold
    E. Layman

Director

March 1, 2007/s/  Sheldon
    B. LubarSheldon
    B. Lubar

Director

March 1, 2007/s/  Robert
    K. Moses, Jr.Robert
    K. Moses, Jr.

Director

March 1, 2007 95




---



##### 



Signature

Capacity in Which Signed

Date/s/  Joseph
    E. ReidJoseph
    E. Reid

Director

March 1, 2007/s/  David
    A. TriceDavid
    A. Trice

Director

March 1, 2007  96




---



##### 



EXHIBIT
    INDEX:
  2
.1

Distribution Agreement, dated as
    of March 22, 2000, between Weatherford and Grant Prideco,
    Inc. (incorporated by Reference to Exhibit 2.1 to Grant
    Prideco, Inc.s Registration Statement on
    Form S-3,
    Reg.
    No. 333-35272).2
.2

Purchase Agreement, dated as of
    October 25, 2002, among Grant Prideco, Inc., as purchaser,
    and Schlumberger Technology Corporation, as seller,
    (incorporated by reference to Exhibit 2.1 to Grant Prideco,
    Inc.s Current Report on
    Form 8-K,
    File
    No. 001-15423,
    filed on October 28, 2002).3
.1

Restated Certificate of
    Incorporation of Grant Prideco, Inc. (incorporated by reference
    to Exhibit 3.1 to Grant Prideco, Inc.s Registration
    Statement on
    Form S-3,
    Reg.
    No. 333-35272).3
.2

Restated Bylaws of Grant Prideco,
    Inc. (incorporated by reference to Exhibit 3.2 to Grant
    Prideco, Inc.s Registration Statement on Form 10,
    File
    No. 1-15423,
    as amended).4
.1*

Grant Prideco, Inc. 2000
    Non-Employee Director Stock Option Plan (incorporated by
    reference to Exhibit 10.6 to Grant Prideco, Inc.s
    Annual Report on
    Form 10-K
    for the year ended December 31, 2000, File
    No. 1-15423).4
.2*

Grant Prideco, Inc. 2000 Employee
    Stock Option and Stock Plan (incorporated by reference to
    Exhibit 10.5 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).4
.3*

Grant Prideco, Inc. Executive
    Deferred Compensation Plan (incorporated by reference to
    Exhibit 10.9 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).4
.4*

Grant Prideco, Inc. Foreign
    Executive Deferred Compensation Plan (incorporated by reference
    to Exhibit 10.8 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).4
.5*

Grant Prideco, Inc. Deferred
    Compensation Plan for Non-Employee Directors (incorporated by
    reference to Exhibit 10.10 to Grant Prideco, Inc.s
    Registration Statement on Form 10, File
    No. 1-15423,
    as amended).4
.6*

Grant Prideco, Inc. 401(k) Savings
    Plan (incorporated by reference to Exhibit 10.11 to Grant
    Prideco, Inc.s Registration Statement on Form 10,
    File
    No. 1-15423,
    as amended).4
.7*

Grant Prideco, Inc. 2001 Stock
    Option and Restricted Stock Plan (incorporated by reference to
    Exhibit 10.16 to Grant Prideco, Inc.s Annual Report
    on
    Form 10-K
    for the year ended December 31, 2001, File
    No. 1-15423).4
.8

Indenture relating to the
    61/8% Senior
    Notes due 2015, dated as of July 27, 2005, among Grant
    Prideco, Inc., certain subsidiary guarantors and Wells Fargo
    Bank, N.A., as Trustee (including form of note) (incorporated by
    reference to Exhibit 4.1 to Grant Prideco, Inc.s
    Current Report on
    Form 8-K,
    filed on July 29, 2005).4
.9

Registration Rights Agreement
    relating to the
    61/8% Senior
    Notes due 2015, dated as of July 27, 2005, among Grant
    Prideco, Inc., certain subsidiary guarantors and Banc of America
    Securities LLC, as representative of the initial purchasers
    (incorporated by reference to Exhibit 4.2 to Grant Prideco,
    Inc.s Current Report on
    Form 8-K,
    filed on July 29, 2005).4
.10

Amended and Restated Credit
    Agreement, dated as of August 31, 2006, among Grant
    Prideco, Inc., certain subsidiaries of Grant Prideco, Inc. party
    thereto, each lender from time to time party thereto, Bank of
    America, N.A., as Syndication Agent, Wells Fargo Bank, National
    Association, as Administrative Agent (incorporated by reference
    to Exhibit 10.1 to Grant Prideco, Inc.s Current
    Report on
    Form 8-K,
    filed on September 6, 2006).4
.11*

Employee Stock Purchase Plan
    (incorporate by reference to Exhibit 4.21 of Grant
    Pridecos Annual Report on Form 10K for the year ended
    December 31, 2003, File
    No. 1-15423).4
.12*

Form of Executive Restricted-Stock
    Agreement (with tandem tax rights incorporated by reference to
    Exhibit 4.21 to Grant Prideco, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).4
.13*

Form of Executive Restricted-Stock
    Agreement (incorporated by reference to Exhibit 4.22 to
    Grant Prideco, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).




---



##### 



4
.14*

Form of Executive Stock Option
    Agreement (with accelerated vesting upon termination
    incorporated by reference to Exhibit 4.23 to Grant Prideco,
    Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).4
.15*

Form of Executive Stock Option
    Agreement (without accelerated vesting upon termination
    incorporated by reference to Exhibit 4.24 to Grant Prideco,
    Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).4
.16*

Grant Prideco 2006 Long-Term
    Incentive Plan (incorporated by reference to Exhibit 99.1
    to Grant Pridecos Current Report on
    Form 10-K,
    File No. 1-5423, filed on May 11, 2006)10
.1

See Exhibits 2.1 and 4.1
    through 4.16 for certain items material contracts.10
.2*

Employment Agreement with Michael
    McShane dated June 26, 2002 (incorporated by reference to
    Exhibit 10.1 to Grant Prideco, Inc.s Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2002, File
    No. 1-15423).10
.3*

Employment Agreement with Matthew
    Fitzgerald dated January 12, 2004 (incorporated by
    reference from Exhibit 10.3 to the Grant Prideco Annual
    Report on
    Form 10-K
    for the year ended December 31, 2004).10
.4*

Employment Agreement with Philip
    Choyce dated April 14, 2000 (incorporated by reference to
    Exhibit 10.26 to Grant Prideco, Inc.s Registration
    Statement on
    Form S-4,
    Reg.
    No. 333-102635).10
.5*

Form of Change of Control
    Agreement with William Chunn, Dan Latham, Warren Avery and
    Philip Choyce (incorporated by reference to Exhibit 10.6 to
    Grant Prideco, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2000, File
    No. 1-15423).10
.6*

Form of Change of Control
    Agreement with David Black, Jim Breihan, Greg Boane, Jay
    Mitchell, and John Deane (incorporated by reference to
    Exhibit 10.12 to Grant Prideco, Inc.s Annual Report
    on 10-K for
    the year ended December 31, 2001, File
    No. 1-15423).10
.7

Tax Allocation Agreement dated
    April 14, 2000 between Grant Prideco, Inc. and Weatherford
    (incorporated by reference to Exhibit 10.13 to Weatherford
    International, Inc.s Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2000, File
    No. 1-13086).10
.8

Investment Agreement, dated as of
    April 29, 1999, by and between Grant Prideco, Inc. and VAT
    Schienen GmbH & Co KG (incorporated by reference to
    Exhibit 10.12 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).10
.9

Operating Agreement, dated as of
    July 23, 1999, by and Grant Prideco, Inc. and VAT Schienen
    GmbH & CoKG (incorporated by reference to
    Exhibit 10.13 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).10
.10

Supply Agreement, dated as of
    August 1, 2003, by and between VAT Stahlrohr Kindberg
    GmbH & Co KG and Grant Prideco, Inc. (Incorporated by
    reference to Exhibit 10.12 of Grant Pridecos Annual
    Report on
    Form 10-K
    for the year ended December 31, 2003, File
    No. 1-15423).10
.11

Amendment No. 1 to VAT Supply
    Agreement (incorporated by reference to Exhibit 10.13 to
    Grant Prideco, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).10
.12

Amendment No. 2 to VAT Supply
    Agreement (incorporated by reference to Exhibit 10.14 to
    Grant Prideco, Inc.s Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-5423).10
.13

Stock Purchase Agreement, dated as
    of June 19, 1998, by and between Weatherford, Pridecomex
    Holding, S.A. de C.V., Tubos de Acero de Mexico S.A. and
    Tamsider S.A. de C.V. (incorporated by reference to
    Exhibit 10.16 to Grant Prideco, Inc.s Registration
    Statement on Form 10, File
    No. 1-15423,
    as amended).10
.14

Master Technology License
    Agreement, dated as of June 19, 1998, by and between Grant
    Prideco, Inc. and DST Distributors of Steel Tubes Limited
    (incorporated by reference to Exhibit 10.17 to Grant
    Prideco, Inc.s Registration Statement on Form 10,
    File
    No. 1-15423,
    as amended).10
.15

Agreement, dated as of
    November 12, 1998, by and between Tubos de Acero de Mexico,
    Tamsider S.A. de C.V., DST Distributors of Steel Tubes Limited,
    Techint Engineering Company, Weatherford, Grand Prideco,
    Pridecomex Holding, S.A. de C.V. and Grant Prideco, S.A. de C.V.
    (incorporated by reference to Exhibit 10.18 to Grant
    Prideco, Inc.s Registration Statement on Form 10,
    File
    No. 1-15423,
    as amended).




---



##### 



10
.16

Agreement, dated as of
    December 1, 1998, by and between Tubos de Acero de Mexico,
    Tamsider S.A. de C.V., Weatherford and Pridecomex Holdings, S.A.
    de C.V. (incorporated by reference to Exhibit 10.19 to
    Grant Prideco, Inc.s Registration Statement on
    Form 10, File
    No. 1-15423,
    as amended).10
.17*

Nonqualified Deferred Compensation
    Plan (incorporated by reference to Exhibit 10.17 of Grant
    Pridecos Annual Report on Form 10K for the year ended
    December 31, 2003, File
    No. 1-15423).21
.1

Subsidiaries of Registrant
    (incorporated by reference to Exhibit 21.1 of Grant
    Pridecos Annual Report on Form 10K for the year ended
    December 31, 2003, File
    No. 1-15423).23
.1

Consent of Deloitte &
    Touche LLP.23
.2

Consent of Ernst & Young
    LLP.31
.1

Certification of Michael McShane.31
.2

Certification of Matthew D.
    Fitzgerald.32
.1

Section 906 Certification.     *
    
    Designates a management or compensatory plan or arrangement.