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EXHIBIT 4.12

                            ALLIS-CHALMERS ENERGY INC.
                            2003 INCENTIVE STOCK PLAN
                            (as amended May 25, 2005)

         1. PURPOSE. The purpose of the Allis-Chalmers Energy Inc. (the
"Corporation") Incentive Stock Plan (the "Plan") is to encourage key employees,
directors and service providers of the Corporation and such subsidiaries of the
Corporation as the Administrator designates to acquire common stock of the
Corporation (the "Common Stock") or to receive monetary payments based on the
value of such stock or based upon achieving certain goals on a basis mutually
advantageous to such individuals and the Corporation and thus provide an
incentive to contribute to the success of the Corporation and align the
interests of key employees, directors and service providers with the interests
of the shareholders of the Corporation.

         2. ADMINISTRATION. The Plan shall be administered by a committee of two
or more directors, which the board of directors of the Corporation shall appoint
(the "Administrator"). The directors appointed to such committee shall be
Non-Employee Directors as defined in Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 ("Exchange Act") or any successor regulations.

         The authority to select persons eligible to participate in the Plan, to
grant benefits in accordance with the Plan, and to establish the timing,
pricing, amount and other terms and conditions of such grants (which need not be
uniform with respect to the various Participants or with respect to different
grants to the same Participant), may be exercised by the Administrator in its
sole discretion.

         Subject to the provisions of the Plan, the Administrator shall have
exclusive authority to interpret and administer the Plan, to establish
appropriate rules relating to the Plan, to delegate some or all of its authority
under the Plan and to take all such steps and make all such determinations in
connection with the Plan and the benefits granted pursuant to the Plan as he or
she may deem necessary or advisable.

         The board of directors in its discretion may delegate and assign
specified duties and authority of the Administrator to any other committee and
retain other duties and authority. Also, the board of directors in its
discretion may appoint a separate committee of outside directors to make awards
that satisfy the requirements of Section 162(m) of the Internal Revenue Code.

         3. SHARES RESERVED UNDER THE PLAN. Subject to the provisions of Section
12 (relating to adjustment for changes in capital stock) the maximum number of
shares that may be issued under this Plan shall be the lesser of 3,000,000
shares and 15% of the total number of shares of common stock outstanding from
time to time, assuming for this purpose the exercise of all outstanding options,
warrants and other securities exercisable for or convertible into shares of
common stock. Shares issued pursuant to the Plan may be authorized but unissued
or treasury shares.

         As used in this Section 3, the term Plan Maximum shall refer to the
number of shares of Common Stock that are available for grant of awards pursuant
to the Plan. Stock underlying outstanding options, stock appreciation rights, or
performance awards will reduce the Plan Maximum while such options, stock
appreciation rights or performance awards are outstanding. Shares underlying
expired, canceled or forfeited options, stock appreciation rights or performance
awards shall be added back to the Plan Maximum. When the exercise price of stock
options is paid by delivery of shares of Common Stock, or if the Administrator
approves the withholding of shares from a distribution in payment of the
exercise price, the Plan Maximum shall be reduced by the net (rather than the
gross) number of shares issued pursuant to such exercise, regardless of the
number of shares surrendered or withheld in payment. If the Administrator
approves the payment of cash to an optionee equal to the difference between the
fair market value and the exercise price of stock subject to an option, or if a
stock appreciation right is exercised for cash or a performance award is paid in
cash the Plan Maximum shall be increased by the number of shares with respect to
which such payment is applicable. Restricted stock issued pursuant to the Plan
will reduce the Plan Maximum while outstanding even while subject to
restrictions. Shares of restricted stock shall be added back to the Plan Maximum
if such restricted stock is forfeited.

         4. PARTICIPANTS. Participants will consist of such officers, key
employees, directors and service providers of the Corporation or any designated
subsidiary as the Administrator in its sole discretion shall determine.
Designation of a Participant in any year shall not require the Administrator to
designate such person to receive a benefit in any other year or to receive the
same type or amount of benefit as granted to the Participant in any other year
or as granted to any other Participant in any year. The Administrator shall
consider such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective benefits.

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         5. TYPES OF BENEFITS. The following benefits may be granted under the
Plan: (a) stock appreciation rights ("SARs"); (b) restricted stock ("Restricted
Stock"); (c) performance awards ("Performance Awards"); (d) incentive stock
options ("ISOs"); (e) nonqualified stock options ("NQSOs"); and (f) Stock Units,
all as described below ("benefits").

         The Administrator may (a) award benefits in the alternative so that
acceptance of or exercise of one benefit cancels the right of a Participant to
another and (b) award benefits in any combination or combinations and subject to
any condition or conditions consistent with the terms of the Plan that the
Administrator in its sole discretion shall determine.

         6. STOCK APPRECIATION RIGHTS. A SAR is the right to receive all or a
portion of the difference between the fair market value of a share of Common
Stock at the time of exercise of the SAR and the exercise price of the SAR
established by the Administrator, subject to such terms and conditions set forth
in a SAR agreement as may be established by the Administrator in its sole
discretion. At the discretion of the Administrator, SARs may be exercised (a) in
lieu of exercise of an option, (b) in conjunction with the exercise of an
option, (c) upon lapse of an option, (d) independent of an option or (e) each of
the above in connection with a previously awarded option under the Plan. If the
option referred to in (a), (b) or (c) above qualified as an ISO pursuant to
Section 422 of the Internal Revenue Code of 1986 (Code), the related SAR shall
comply with the applicable provisions of the Code and the regulations issued
thereunder. At the time of grant, the Administrator may establish, in its sole
discretion, a maximum amount per share which will be payable upon exercise of a
SAR, and may impose conditions on exercise of a SAR. At the discretion of the
Administrator, payment for SARs may be made in cash or shares of Common Stock,
or in a combination thereof. SARs will be exercisable not later than ten years
after the date they are granted and will expire in accordance with the terms
established by the Administrator.

         7. RESTRICTED STOCK. Restricted Stock is Common Stock issued or
transferred under the Plan (other than upon exercise of stock options or as
Performance Awards) at any purchase price less than the fair market value
thereof on the date of issuance or transfer, or as a bonus, subject to such
terms and conditions set forth in a Restricted Stock agreement as may be
established by the Administrator in its sole discretion. In the case of any
Restricted Stock:

                  (a) The purchase price, if any, will be determined by the
Administrator.

                  (b) The period of restriction shall be established by the
Administrator for any grants of Restricted Stock;

                  (c) Restricted Stock may be subject to (i) restrictions on the
sale or other disposition thereof; (ii) rights of the Corporation to reacquire
such Restricted Stock at the purchase price, if any, originally paid therefore
upon termination of the employee's employment within specified periods; (iii)
representation by the recipient that he or she intends to acquire Restricted
Stock for investment and not for resale; and (iv) such other restrictions,
conditions and terms as the Administrator deems appropriate.

                  (d) The Participant shall be entitled to all dividends paid
with respect to Restricted Stock during the period of restriction and shall not
be required to return any such dividends to the Corporation in the event of the
forfeiture of the Restricted Stock.

                  (e) The Participant shall be entitled to vote the Restricted
Stock during the period of restriction.

                  (f) The Administrator shall determine whether Restricted Stock
is to be delivered to the Participant with an appropriate legend imprinted on
the certificate or if the shares are to be issued in the name of a nominee or
deposited in escrow pending removal of the restrictions.

         8. PERFORMANCE AWARDS. Performance Awards are Common Stock, monetary
units or some combination thereof, to be issued without any payment therefore,
in the event that certain performance goals established by the Administrator are
achieved over a period of time designated by the Administrator, but not in any
event more than five years. The goals established by the Administrator may
include return on average total capital employed, earnings per share, increases
in share price or such other goals as may be established by the Administrator.
In the event the minimum corporate goal is not achieved at the conclusion of the
period, no payment shall be made to the Participant. Actual payment of the award
earned shall be in cash or in Common Stock or in a combination of both, as the
Administrator in its sole discretion determines. If Common Stock is used, the
Participant shall not have the right to vote and receive dividends until the
goals are achieved and the actual shares are issued.

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         9. INCENTIVE STOCK OPTIONS. ISOs are stock options to purchase shares
of Common Stock at not less than 100% of the fair market value of the shares on
the date the option is granted (110% if the optionee owns stock possessing more
than 10% of the combined voting power of all owners of stock of the Corporation
or a subsidiary), subject to such terms and conditions set forth in an option
agreement as may be established by the Administrator in its sole discretion that
conform to the requirements of Section 422 of the Code. Said purchase price may
be paid (a) by check or (b), in the discretion of the Administrator, by the
delivery of shares of Common Stock then owned by the Participant, or (c), in the
discretion of the Administrator, by a combination of any of the foregoing, in
the manner provided in the option agreement. The aggregate fair market value
(determined as of the time an option is granted) of the stock with respect to
which ISOs are exercisable for the first time by an optionee during any calendar
year (under all option plans of the Corporation and its subsidiary corporations)
shall not exceed $100,000 or such other maximum applicable to ISOs as may be in
effect from time to time under the Code. ISOs shall be granted only to employees
of the Corporation and designated subsidiaries. The maximum term of an ISO shall
be ten years from the date it was granted (five years if the optionee owns more
than 10% of the total combined voting power of all classes of stock of the
Corporation or a subsidiary). No ISO shall be awarded after the date preceding
the tenth anniversary of the effective date of the Plan.

         10. NONQUALIFIED STOCK OPTIONS. NQSOs are nonqualified stock options to
purchase shares of Common Stock at purchase prices established by the
Administrator on the date the options are granted, subject to such terms and
conditions set forth in an option agreement as may be established by the
Administrator in its sole discretion. The purchase price may be paid (a) by
check or (b), in the discretion of the Administrator, by the delivery of shares
of Common Stock then owned by the Participant, or (c), in the discretion of the
Administrator, by a combination of any of the foregoing, in the manner provided
in the option agreement. NQSOs shall be exercisable no later than ten years
after the date they are granted.

         11. STOCK UNITS. A Stock Unit represents the right to receive a share
of Common Stock from the Corporation at a designated time in the future, subject
to such terms and conditions set forth in a Stock Unit agreement as may be
established by the Administrator in its sole discretion. The Participant
generally does not have the rights of a shareholder until receipt of the Common
Stock. The Administrator may in its discretion provide for payments in cash, or
adjustment in the number of Stock Units, equivalent to the dividends the
Participant would have received if the Participant had been the owner of shares
of Common Stock instead of the Stock Units.

         12. ADJUSTMENT PROVISIONS.

                  (a) If the Corporation shall at any time change the number of
issued shares of Common Stock without new consideration to the Corporation (such
as by stock dividends or stock splits), the total number of shares reserved for
issuance under this Plan and the number of shares covered by each outstanding
benefit shall be adjusted so that the aggregate consideration payable to the
Corporation, if any, and the value of each such benefit shall not be changed.
Benefits may also contain provisions for their continuation or for other
equitable adjustments after changes in the Common Stock resulting from
reorganization, sale, merger, consolidation, issuance of stock rights or
warrants, or similar occurrence.

                  (b) Notwithstanding any other provision of this Plan, and
without affecting the number of shares reserved or available hereunder, the
board of directors may authorize the issuance or assumption of benefits in
connection with any merger, consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem appropriate.

         13. CHANGE IN CONTROL. Notwithstanding any other provision of the Plan
to the contrary, in the event of a change in control of the Corporation, as
defined below, all outstanding SARs, ISOs and NQSOs shall be immediately fully
vested and exercisable and any restrictions on Restricted Stock issued under the
Plan shall lapse.

         Change in control means:

                  (a) The acquisition on or after March 6, 2003 by any
individual, entity or group, or a Person (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) other than an excluded person (as defined
below), of ownership of more than 50% of either: (i) the then outstanding shares
of Common Stock ("Outstanding Common Stock"); or (ii) the combined voting power
of the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors ("Outstanding Voting Securities");

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                  (b) Individuals who, as of the date of approval of the Plan by
the board of directors of the Corporation, constitute the board of directors of
the Corporation ("Incumbent Board") cease for any reason to constitute at least
a majority of the board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Corporation's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, as a member of the Incumbent Board, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or

                  (c) Approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) more than 50% of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Corporation Common Stock
and Outstanding Corporation Voting Securities immediately prior to such
reorganization, merger or consolidation, in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, or at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent Board at
the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or

                  (d) Approval by the stockholders of the Corporation of (i) a
complete liquidation or dissolution of the Corporation or (ii) the sale or other
disposition of all or substantially all of the assets of the Corporation, other
than to a corporation, with respect to which following such sale or other
disposition, (1) more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election for directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities, as the
case may be, or (2) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Corporation.

         Excluded person means any Person who beneficially owns more than 10% of
the outstanding shares of the Corporation on the date hereof or at any time
prior to the first anniversary of the adoption of this plan.

         14. NONTRANSFERABILITY. Each benefit granted under the Plan shall not
be transferable otherwise than by will or the laws of descent and distribution;
provided, however, NQSOs granted under the Plan may be transferred, without
consideration, to a Permitted Transferee (as defined below). Benefits granted
under the Plan shall be exercisable, during the Participant's lifetime, only by
the Participant or a Permitted Transferee. In the event of the death of a
Participant, exercise or payment shall be made only:

                  (a) By or to the Permitted Transferee, executor or
administrator of the estate of the deceased Participant or the person or persons
to whom the deceased Participant's rights under the benefit shall pass by will
or the laws of descent and distribution; and

                  (b) To the extent that the deceased Participant or the
Permitted Transferee, as the case may be, was entitled thereto at the date of
his death.

         For purposes of this Section 14, Permitted Transferee shall include (i)
one or more members of the Participant's family, (ii) one or more trusts for the
benefit of the Participant and/or one or more members of the Participant's
family, or (iii) one or more partnerships (general or limited), corporations,
limited liability companies or other entities in which the aggregate interests
of the Participant and members of the Participant's family exceed 80% of all
interests. For this purpose, the Participant's family shall include only the
Participant's spouse, children and grandchildren.

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         15. TAXES. The Corporation shall be entitled to withhold the amount of
any tax attributable to any amounts payable or shares deliverable under the Plan
after giving the person entitled to receive such payment or delivery notice as
far in advance as practicable, and the Corporation may defer making payment or
delivery as to any benefit if any such tax is payable until indemnified to its
satisfaction. The person entitled to any such delivery may, with the consent of
the Administrator, elect to have such withholding satisfied by a reduction of
the number of shares otherwise so deliverable, such reduction to be calculated
based on a closing market price on the date of such notice.

         16. TENURE. A Participant's right, if any, to continue to serve the
Corporation and its subsidiaries as an officer, employee, or otherwise, shall
not be enlarged or otherwise affected by his or her designation as a Participant
under the Plan.

         17. RULES OF CONSTRUCTION. The terms of the Plan shall be constructed
in accordance with the laws of the State of Delaware; provided that the terms of
the Plan as they relate to ISOs shall be construed first in accordance with the
meaning under and in a manner that will result in the Plan satisfying the
requirements of the provisions of the Code governing incentive stock options.

         18. DURATION, AMENDMENT AND TERMINATION. No benefit shall be granted
more than ten years after the date of adoption of this Plan; provided, however,
that the terms and conditions applicable to any benefit granted within such
period may thereafter be amended or modified by mutual agreement between the
Corporation and the Participant or such other person as may then have an
interest therein. Also, by mutual agreement between the Corporation and a
Participant hereunder, stock options or other benefits may be granted to such
Participant in substitution and exchange for, and in cancellation of, any
benefits previously granted such Participant under this Plan.

         The board of directors may amend the Plan from time to time or
terminate the Plan at any time. However, no action authorized by this paragraph
shall reduce the amount of any existing benefit or change the terms and
conditions thereof without the Participant's consent. No amendment of the Plan
shall, without approval of the stockholders of the Corporation, (a) increase the
total number of shares which may be issued under the Plan or increase the amount
or type of benefits that may be granted under the Plan; or (b) modify the
requirements as to eligibility for benefits under the Plan.

         19. GRANTS TO DIRECTORS. The Administrator shall be authorized to award
benefits in reasonable amounts as compensation for services provided by the
directors of the Company, including directors who serve on the Compensation
Committee or otherwise act as the Administrator. The foregoing sentence shall
not be deemed to limit or define the other circumstances in which benefits may
be awarded to directors of the Company.

         20. EFFECTIVE DATE. This Plan shall become effective as of the date it
is adopted by the board of directors of the Corporation subject only to approval
by the holders of a majority of the outstanding voting stock of the Corporation
within twelve months before or after the adoption of the Plan by the board of
directors. In the event that the shareholders fail to approve the Plan within
twelve (12) months after its adoption by the Board, any grants made pursuant to
the Plan or sales of Option Shares that have already occurred shall be
rescinded, and no additional grants, sales or awards shall be made thereafter
under the Plan.

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