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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL
    YEAR ENDED DECEMBER 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD
    FROM          TO   Commission file number 1-2199
  ALLIS-CHALMERS ENERGY
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

39-0126090(I.R.S. Employer
    Identification No.)5075 WESTHEIMER, SUITE 890,
    HOUSTON, TEXAS(Address of principal
    executive offices)

77056(Zip
    code)   (713) 369-0550
 Registrants telephone
    number, including area code
  SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
    ACT:
  Title of Security:

Name of Exchange:Common Stock, par value $0.01 per share

New York Stock Exchange   SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
    ACT:
 NONE
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE:
  Form 10-K




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


5Item 1A.


Risk Factors


12Item 1B.


Unresolved Staff Comments


24Item 2.


Properties


24Item 3.


Legal Proceedings


25Item 4.


[Reserved]


26PART IIItem 5.


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


26Item 6.


Selected Financial Data


29Item 7.


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


29Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


45Item 8.


Financial Statements and Supplementary Data


47Item 9.


Changes and Disagreements with Accountants on
    Accounting and Financial Disclosure


91Item 9A.


Controls and Procedures


91Item 9B.


Other Information


92PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


93Item 11.


Executive Compensation


93Item 12.


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


93Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


93Item 14.


Principal Accounting Fees and Services


93PART IVItem 15.


Exhibits and Financial Statement Schedules


93Signatures and Certifications


95EX-3.7EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1   2




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DEFINITIONS
  blow out preventors
    
    A large safety device placed on the surface of an oil or natural
    gas well to maintain high pressure well bores.booster
    
    A machine that increases the pressure and/or volume of air when
    used in conjunction with a compressor or a group of compressors.capillary tubing
    
    A small diameter tubing installed in producing wells and through
    which chemicals are injected to enhance production and reduce
    corrosion and other problems.casing
    
    A pipe placed in a drilled well to secure the well bore and
    formation.choke manifolds
    
    An arrangement of pipes, valves and special valves on the rig
    floor that controls pressure during drilling by diverting
    pressure away from the blow-out preventors and the annulus of
    the well.coiled tubing
    
    A small diameter tubing used to service producing and
    problematic wells and to work in high pressure applications
    during drilling, production and workover operations.directional drilling
    
    The technique of drilling a well while varying the angle of
    direction of a well and changing the direction of a well to hit
    a specific target.double studded adapter
    
    A device that joins two dissimilar connections on certain
    equipment, including valves, piping and blow-out preventers.drill pipe
    
    A pipe that attaches to the drill bit to drill a well.foam unit
    
    A compressor, a booster, a mist pump and a fuel tank all mounted
    together on one flat bed trailer to be used for completion,
    workover and/or shallow drilling operations. Foam units are
    designed to provide a small footprint and easy transport.horizontal drilling
    
    The technique of drilling wells at a
    90-degree
    angle.land drilling rig
    
    Composed of a drawworks or hoist, a derrick, a power plant,
    rotating equipment and pumps to circulate the drilling fluid and
    the drill string.measurement-while-drilling
    
    The technique used to measure direction and angle while drilling
    a well.mist pump
    
    A drilling pump that uses mist as the circulation medium for
    injecting small amounts of foaming agent, corrosion agent and
    other chemical solutions into the well.pulling rig
    
    A type of well-servicing rig used to pull downhole equipment,
    such as tubing, rods or the pumps from a well, and replace them
    when necessary. A pulling rig is also used to set downhole tools
    and perform lighter jobs.service rig
    
    A type of well-servicing rig which can function as either a
    workover or as a pulling rig.spacer spools
    
    High pressure connections or links which are stacked to elevate
    the blow out preventors to the drilling rig floor. 3




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spiral heavy weight drill pipe
    
    A heavy drill pipe used for special applications primarily in
    directional drilling. The spiral design increases
    flexibility and penetration of the pipe.straight-hole drilling
    
    The technique of drilling that allows very little or no vertical
    deviation.test plugs
    
    A device used to test the connections of well heads and the blow
    out preventors.tubing
    
    A pipe placed inside the casing to allow the well to produce.tubing work strings
    
    The tubing used on workover rigs through which high pressure
    liquids, gases or mixtures are pumped into a well to perform
    production operations.underbalanced drilling
    
    A technique in which oil, natural gas, or geothermal wells are
    drilled by creating a pressure within the well that is lower
    than the reservoir pressure. The result is increased rate of
    penetration, reduced formation damage and reduced drilling costs.wear bushings
    
    A device placed inside a wellhead to protect the wellhead from
    wear.workover rigs
    
    Similar to a land drilling rig, however, they are smaller than
    the drilling rig for the same depth of well. These rigs are used
    to complete the drilled wells or to repair them whenever
    necessary. 4




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SPECIAL
    NOTE
    REGARDING FORWARD-LOOKING STATEMENTS
    
    the impact of the weak economic conditions and the future impact
    of such conditions on the oil and natural gas industry and
    demand for our services;
    unexpected future capital expenditures (including the amount and
    nature thereof);
    unexpected difficulties in integrating our operations as a
    result of any significant acquisitions;
    adverse weather conditions in certain regions;
    the impact of political disturbances, war, or terrorist attacks
    and changes in global trade policies;
    the availability (or lack thereof) of capital to fund our
    business strategy
    and/or
    operations;
    the potential impact of the loss of one or more key employees;
    the effect of environmental liabilities that are not covered by
    an effective indemnity or insurance;
    the impact of current and future laws;
    the impact of customer defaults and related bad debt expense;
    the potential impairment in the carrying value of goodwill and
    other acquired intangible assets;
    the risks associated with doing business outside the U.S.,
    including currency exchange rates;
    the effects of competition; and
    the effects of our indebtedness, which could adversely restrict
    our ability to operate, could make us vulnerable to general
    adverse economic and industry conditions, could place us at a
    competitive disadvantage compared to competitors that have less
    debt, and could have other adverse consequences   PART I.  ITEM 1.
    BUSINESS   5




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Our
    History
            Our
    Industry
     6




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Business
    Segments
    
    Oilfield Services. This segment includes the following oilfield
    service divisions: directional drilling services, casing and
    tubular services, underbalanced drilling services and production
    services.
    Drilling and Completion. This segment includes drilling,
    completion, workover and related services.
    Rental Services. This segment includes the rental of specialized
    oilfield equipment.  Oilfield Services. state-of-the-art
  and/or
         7




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Drilling and Completion.
    Rental Services.
  Competitive
    Strengths
    Strategic position in high growth markets.
 8




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Strong relationships with diversified customer
    base.
  Successful execution of growth strategy.
  Diversified and increased cash flow
    sources.
  Experienced management team.
  Business
    Strategy
    Mitigate cyclical risk through balanced
    operations.
  Expand geographically to provide greater access and service
    to key customer segments.
  Prudently pursue strategic acquisitions.
 9




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Expand products and services provided in existing operating
    locations.
  Increase utilization of assets.
  Customers
    Suppliers
    Competition
       10




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Backlog
    Employees
    Insurance
    Seasonality
    Federal
    Regulations and Environmental Matters
   11




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Intellectual
    Property Rights
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K www.alchenergy.com
  Form 10-K.
  Form 10-K
  ITEM 1A.
    RISK
    FACTORS    Risks
    Associated With Our Industry
  Global
    political, economic and market conditions could negatively
    impact our business.
    Our
    industry is highly competitive, with intense price
    competition.
   12




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Risks
    Associated With Our Company
  Our
    business depends on spending by the oil and natural gas
    industry, and this spending and our business may be adversely
    affected by industry and financial market conditions that are
    beyond our control.
      
    economic conditions in the U.S. and elsewhere;
    changes in global supply and demand for oil and natural gas;
    the level of production of the Organization of Petroleum
    Exporting Countries, commonly called OPEC;
    the level of production of non-OPEC countries;
    the price and quantity of imports of foreign oil and natural gas;
    political conditions, including embargoes, in or affecting other
    oil and natural gas producing activities;
    the level of global oil and natural gas inventories;
    advances in exploration, development and production
    technologies; and
    the availability of capital for exploration and production
    companies.    Historically,
    we have been dependent on a few customers operating in a single
    industry; the loss of one or more customers could adversely
    affect our financial condition and results of
    operations.
   13




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Our
    customers may seek to cancel or renegotiate some of our Drilling
    and Completion contracts during periods of depressed market
    conditions or if we experience operational
    difficulties.
    If we
    are unable to renew or obtain new and favorable contracts for
    rigs whose contracts are expiring or are terminated, our
    revenues and profitability could be materially
    reduced.
    Failure
    to secure a drilling contract prior to deployment of a rig under
    construction or any other rigs we may construct in the future
    prior to their deployment could adversely affect our future
    results of operations.
    An
    oversupply of comparable rigs in the geographic markets in which
    we compete could depress the utilization rates and dayrates for
    our rigs and materially reduce our revenues and
    profitability.
   14




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The
    loss of the services of key executives or our failure to attract
    and retain skilled workers and key personnel could hurt our
    operations.
      The
    operations and financial condition of our Drilling and
    Completion business could be affected by union activity and
    general labor unrest. Additionally, the labor expenses of our
    Drilling and Completion business could increase as a result of
    governmental regulation of payments to employees.
    and/or
  Rig
    upgrade, refurbishment and construction projects are subject to
    risks, including delays and cost overruns, which could have an
    adverse effect on our results of operations and cash
    flows.
   15




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Severe
    weather could have a material adverse impact on our
    business.
    
    curtailment of services;
    weather-related damage to facilities and equipment resulting in
    suspension of operations;
    inability to deliver materials to job sites in accordance with
    contract schedules; and
    loss of productivity.    We
    have recorded substantial goodwill as the result of our
    acquisitive nature and as such goodwill is subject to periodic
    reviews of impairment.
     16




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Failure
    to maintain effective disclosure controls and procedures and/or
    internal controls over financial reporting could have a material
    adverse effect on our operations.
    and/or and/or
  
    could harm our business and operating results,
    cause investors to lose confidence in the accuracy and
    completeness of our financial reports,
    have a material adverse effect on the trading price of our
    common stock or
    adversely affect our ability to timely file our periodic reports
    with the SEC.    Our
    strategic plan may not achieve the intended
    results.
    We do
    business in international jurisdictions whose political and
    regulatory environments and compliance regimes differ from those
    in the U.S:
    
    political instability, terrorist acts, war and civil
    disturbances;
    changes in laws or policies regarding the award of contracts; 17




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
    the inability to collect or repatriate currency, income, capital
    or assets;
    expropriation of assets;
    nationalization of components of the energy industry in the
    geographic areas where we operate;
    foreign currency fluctuations and devaluation; and
    new economic and tax policies.            Devaluation
    of the Argentine Peso, the Mexican Peso or the Brazilian Real
    could adversely affect our results of operations.
    Argentina
    continues to face considerable political and economic
    uncertainty.
   18




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An
    increase in inflation in Argentina could have a material adverse
    effect on our results of operations.
    We are
    subject to numerous governmental laws and regulations, including
    those that may impose significant liability on us for
    environmental and natural resource damages.
    Environmental
    liabilities relating to discontinued operations could result in
    substantial losses.
    Products
    liability claims relating to discontinued operations could
    result in substantial losses.
   19




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We may
    be subject to claims for personal injury and property damage,
    which could materially adversely affect our financial condition
    and results of operations.
      Risks
    Associated With an Investment in Our Common Stock
  Our
    common stock price has been volatile, which could adversely
    affect our business and cause our stockholders to suffer
    significant losses
    
    decreases in prices for oil and natural gas resulting in
    decreased demand for our services;
    variations in our operating results and failure to meet
    expectations of investors and analysts;
    increases in interest rates;
    illiquidity of the market for our common stock;
    developments specifically affecting the economies in Latin
    America;
    sales of common stock by existing stockholders;
    our substantial indebtedness; and
    other developments affecting us or the financial markets. 20




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Substantial
    sales of our common stock could adversely affect our stock
    price.
          The
    DLS sellers and Lime Rock control substantial ownership stakes
    in us and have board nomination rights, and they are therefore
    able to exert significant influence on our affairs and actions,
    including matters submitted for a stockholder
    vote.
     21




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and/or
  Existing
    stockholders interest in us may be diluted by additional
    issuances of equity securities.
    Risks
    Associated With Our Indebtedness
  We are
    a holding company, and as a result we are dependent on dividends
    from our subsidiaries to meet our obligations, including with
    respect to the notes.
    We
    have a substantial amount of debt, which could adversely affect
    our financial health and prevent us from making principal and
    interest payments on the notes and our other debt.
         22




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If we
    fail to obtain additional financing, we may be unable to
    refinance our existing debt, expand our current operations or
    acquire new businesses, which could result in a failure to grow
    or result in defaults in our obligations under our credit
    agreement, our 9.0% senior notes, our 8.5% senior
    notes or our other debt securities.
    The
    indenture governing our 9.0% senior notes, the indenture
    governing our 8.5% senior notes and our credit agreement
    impose restrictions on us that may limit the discretion of
    management in operating our business and that, in turn, could
    impair our ability to meet our obligations.
    
    incur additional debt;
    make certain investments or pay dividends or distributions on
    our capital stock or purchase or redeem or retire capital stock;
    sell assets, including capital stock of our restricted
    subsidiaries;
    restrict dividends or other payments by restricted subsidiaries;
    create liens;
    enter into transactions with affiliates; and
    merge or consolidate with another company.    and/or
 23




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Business Segment

Location

Owned/LeasedOilfield Services

Searcy, Arkansas

LeasedBroussard, Louisiana

OwnedYoungsville, Louisiana

OwnedCarlsbad, New Mexico

LeasedFarmington, New Mexico

LeasedElk City, Oklahoma

LeasedMcAlester, Oklahoma

LeasedOklahoma City, Oklahoma

LeasedMt Morris, Pennsylvania

LeasedConroe, Texas

LeasedCorpus Christi, Texas

Leased  2 locationsFort Stockton, Texas

LeasedHouston, Texas

LeasedKilgore, Texas

LeasedLongview, Texas

LeasedSan Angelo, Texas

LeasedDrilling and Completion

Buenos Aires, Argentina

LeasedComodoro Rivadavia, Argentina

OwnedNeuquen, Argentina

OwnedRincon de los Sauces, Argentina

OwnedTartagal, Argentina

OwnedSanta Cruz, Bolivia

LeasedCatu, Bahia, Brazil

OwnedAracuja, Sergipe, Brazil

LeasedMacae, Rio de Janeiro, Brazil

LeasedMossoro, Rio Grande de Norte, Brazil

LeasedRio de Janeiro, Rio de Janeiro, Brazil

LeasedSao Mateus, Espirito Santo, Brazil

LeasedRental Services

Victoria, Texas

OwnedBroussard, Louisiana

LeasedMorgan City, Louisiana

Owned  24




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ITEM 3.
    LEGAL
    PROCEEDINGS               25




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ITEM 4.
    [RESERVED] PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES.  MARKET
    PRICE INFORMATION
    Calendar Quarter

High


Low2009First Quarter

$
6.07


$
0.71Second Quarter


4.53



1.80Third Quarter


4.94



2.01Fourth Quarter


4.87



3.062008First Quarter

$
15.21


$
9.56Second Quarter


18.50



13.01Third Quarter


18.00



9.76Fourth Quarter


12.68



3.69   Holders
    Dividends
   26




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EQUITY
    COMPENSATION PLAN INFORMATION
    Number of SecuritiesRemaining AvailableNumber of





for Future IssuanceSecurities to be


Weighted


Under EquityIssued Upon


Average Exercise


Compensation PlansExercise of


Price of


(excludingOutstanding


Outstanding


securitiesOptions, Warrants


Options, Warrants


reflected in firstPlan Category

And Rights


and Rights


column)Equity compensation plans approved by security holders


1,179,398


$
6.27



7,454,989Equity compensation plans not approved by security holders


4,000


$
13.75



Total


1,183,398


$
6.31



7,454,989   Equity
    Compensation Plans Not Approved By Security Holders
     27




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PERFORMANCE
    GRAPH
      
  
  COMPARISON
    OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
    COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD
    MARKETS
   Fiscal Year EndingCompany/Index/Market

12/31/2004


12/31/2005


12/30/2006


12/29/2007


12/31/2008


12/31/2009Allis-Chalmers Energy Inc.


100.00



254.49



470.20



301.02



112.24



80.18Russell 2000 Index


100.00



104.55



123.76



121.82



80.66



102.58Oil & Gas Equipment/Svcs


100.00



151.13



177.92



254.37



102.83



166.75  28




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ITEM 6.
    SELECTED
    FINANCIAL DATA.    Years Ended December 31,2009


2008


2007


2006


2005Statement of Operations DataRevenues

$
506,253


$
675,948


$
570,967


$
310,964


$
108,022Impairment of goodwill

$



$
115,774


$



$



$
Income (loss) from operations

$
(8,547
)

$
(13,520
)

$
124,782


$
67,730


$
13,518Net income (loss) from continuing operations

$
(21,190
)

$
(39,464
)

$
50,440


$
35,626


$
7,175Net income (loss) attributed to common stockholders

$
(22,492
)

$
(39,464
)

$
50,440


$
35,626


$
7,175Per Share Data:Net income (loss) from continuing operations per common share:Basic

$
(0.42
)

$
(1.13
)

$
1.48


$
1.73


$
0.48Diluted

$
(0.42
)

$
(1.13
)

$
1.45


$
1.66


$
0.44Weighted average number of common shares outstanding:Basic


53,669



35,052



34,158



20,548



14,832Diluted


53,669



35,052



34,701



21,410



16,238   As of December 31,2009


2008


2007


2006


2005Balance Sheet DataTotal assets

$
1,080,620


$
1,115,051


$
1,053,585


$
908,326


$
137,355Long-term debt classified as:Current

$
17,027


$
14,617


$
6,434


$
6,999


$
5,632Long-term

$
475,206


$
579,044


$
508,300


$
561,446


$
54,937Redeemable convertiblePreferred stock

$
34,183


$



$



$



$
Stockholders equity

$
483,647


$
383,409


$
414,329


$
253,933


$
60,875Book value per common share

$
6.78


$
10.75


$
11.80


$
8.99


$
3.61   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  The following discussion and analysis should be read in
    conjunction with our selected historical financial data and our
    accompanying financial statements and the notes to those
    financial statements included elsewhere in this document. The
    following discussion contains forward-looking statements within
    the meaning of the
 29




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Private Securities Litigation Reform Act of 1995 that reflect
    our plans, estimates and beliefs. Our actual results could
    differ materially from those anticipated in these
    forward-looking statements as a result of risks and
    uncertainties, including, but not limited to, those discussed
    under Item 1A. Risk Factors.
  Overview
    of Our Business
          Company
    Outlook
   30




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Results
    of Operations
          Comparison
    of Years Ended December 31, 2009 and December 31,
    2008
   31




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32




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33




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Revenues


Income (Loss) from Operations2009


2008


Change


2009


2008


Change(In thousands)Oilfield Services

$
143,564


$
280,835


$
(137,271
)

$
(14,691
)

$
38,643


$
(53,334
)Drilling & Completion


303,975



291,335



12,640



19,222



40,226



(21,004
)Rental Services


58,714



103,778



(45,064
)


140



(74,361
)


74,501General Corporate














(13,218
)


(18,028
)


4,810Total

$
506,253


$
675,948


$
(169,695
)

$
(8,547
)

$
(13,520
)

$
4,973   Oilfield Services.
  Drilling and Completion.
  Rental Services.
 34




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General Corporate.
  Comparison
    of Years Ended December 31, 2008 and December 31,
    2007
     35




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36




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Revenues


Income (Loss) from Operations2008


2007


Change


2008


2007


Change(In thousands)Oilfield Services

$
280,835


$
233,986


$
46,849


$
38,643


$
53,218


$
(14,575
)Drilling & Completion


291,335



215,795



75,540



40,226



38,839



1,387Rental Services


103,778



121,186



(17,408
)


(74,361
)


49,139



(123,500
)General Corporate














(18,028
)


(16,414
)


(1,614
)Total

$
675,948


$
570,967


$
104,981


$
(13,520
)

$
124,782


$
(138,302
)   Oilfield Services.
  Drilling and Completion.
 37




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Rental Services.
  General Corporate.
  Liquidity
    and Capital Resources
         38




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Operating
    Activities
             39




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Investing
    Activities
  lost-in-hole
  lost-in-hole lost-in-hole
    
    In June 2007, we acquired Coker for a purchase price of
    approximately $3.6 million in cash and a promissory note
    for $350,000. 40




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
    In July 2007, we acquired Diggar for a purchase price of
    approximately $6.7 million in cash, the payment of
    approximately $2.8 million of debt and a promissory note
    for $750,000.
    In October 2007, we acquired Rebel for a purchase price of
    approximately $5.0 million in cash, the payment of
    approximately $1.8 million of debt and escrow, and
    promissory notes for an aggregate of $500,000.
    In November 2007, we acquired substantially all of the assets of
    Diamondback for a purchase price of approximately
    $23.1 million in cash.  lost-in-hole lost-in-hole
  Financing
    Activities
         41




---



##### Table of Contents



42




---



##### Table of Contents



Payments by PeriodLess ThanTotal


1 Year


1-3 Years


3-5 Years


After 5 Years(In thousands)Contractual ObligationsLong-term debt

$
491,979


$
16,778


$
30,033


$
236,738


$
208,430Capital leases(a)


254



249



5







Interest payments on long-term debt


215,805



40,931



79,482



57,450



37,942Operating leases


7,987



2,670



3,212



1,504



601Purchase obligations


19,186



19,186











Employment contracts


2,434



2,104



330







Total contractual cash obligations

$
737,645


$
81,918


$
113,062


$
295,692


$
246,973     (a)
    
    These amounts represent our minimum capital lease obligations,
    net of interest payments totaling $18,000.  Critical
    Accounting Policies
   43




---



##### Table of Contents



Allowance For Doubtful Accounts.
  Revenue Recognition.
  Impairment Of Long-Lived Assets.
  Goodwill and Other Intangibles.
  and/or
  Purchase Price Allocation of Acquired
    Businesses.
 44




---



##### Table of Contents



Income Taxes.
  non-U.S. subsidiaries non-U.S. subsidiaries.
  Recently
    Issued Accounting Standards
    Off-Balance
    Sheet Arrangements
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.    Interest
    Rate Risk
       45




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##### Table of Contents



Foreign
    Currency Exchange Rate Risk
   46




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  INDEX TO
    FINANCIAL STATEMENTS
  ALLIS-CHALMERS
    ENERGY INC. AND SUBSIDIARIES
  PageManagements Report to the Stockholders of
    Allis-Chalmers Energy Inc.


48Reports of Independent Registered Public
    Accounting Firm


49Consolidated Balance Sheet


51Consolidated Statement of Operations


52Consolidated Statement of Stockholders
    Equity


53Consolidated Statement of Cash Flows


54Notes to Consolidated Financial Statements


55Supplemental Information to Consolidated
    Financial Statements  Summarized Quarterly Financial
    Data


90  47




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##### Table of Contents



MANAGEMENTS
    REPORT TO THE STOCKHOLDERS OF ALLIS-CHALMERS ENERGY
    INC.  Managements
    Report on Internal Control Over Financial Reporting
  Internal Control-Integral Framework
  Internal
    Control-Integrated Framework
  Managements
    Certifications
  Form 10-K.
  ALLIS-CHALMERS
    ENERGY INC.
  By:

/s/ Munawar H. Hidayatallah



By:

/s/ Victor M. PerezMunawar H. Hidayatallah





Victor PerezChief Executive Officer





Chief Financial Officer  48




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control-Integrated Framework
      49




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control-Integrated
    Framework
                50




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
    CONSOLIDATED BALANCE SHEETS  December 31,2009


2008(In thousands, exceptfor share and per share amounts)ASSETSCash and cash equivalents

$
41,072


$
6,866Trade receivables, net of allowance for doubtful accounts of
    $4,923 and $4,205 at December 31, 2009 and 2008,
    respectively


105,059



157,871Inventories


34,528



39,087Deferred income tax asset


3,790



6,176Prepaid expenses and other


13,799



15,238Total current assets


198,248



225,238Property and equipment, at cost net of accumulated depreciation
    of $209,782 and $137,180 at December 31, 2009 and 2008,
    respectively


746,478



760,990Goodwill


40,639



43,273Other intangible assets, net of accumulated amortization of
    $13,973 and $9,251 at December 31, 2009 and 2008,
    respectively


32,649



37,371Debt issuance costs, net of accumulated amortization of $6,314
    and $4,806 at December 31, 2009 and 2008, respectively


9,545



12,664Deferred income tax asset


22,047



3,993Other assets


31,014



31,522Total assets

$
1,080,620


$
1,115,051LIABILITIES AND STOCKHOLDERS EQUITYCurrent maturities of long-term debt

$
17,027


$
14,617Trade accounts payable


34,839



62,078Accrued salaries, benefits and payroll taxes


22,854



20,192Accrued interest


15,821



18,623Accrued expenses


21,918



26,642Total current liabilities


112,459



142,152Deferred income tax liability


8,166



8,253Long-term debt, net of current maturities


475,206



579,044Other long-term liabilities


1,142



2,193Total liabilities


596,973



731,642Commitments and ContingenciesStockholders EquityPreferred stock, $0.01 par value (25,000,000 shares
    authorized, 36,393 shares issued and outstanding at
    December 31, 2009 and no shares issued and outstanding at
    December 31, 2008)


34,183



Common stock, $0.01 par value (200,000,000 shares
    authorized; 71,378,529 issued and outstanding at
    December 31, 2009 and 35,674,742 issued and outstanding at
    December 31, 2008)


714



357Capital in excess of par value


422,823



334,633Retained earnings


25,927



48,419Total stockholders equity


483,647



383,409Total liabilities and stockholders equity

$
1,080,620


$
1,115,051    51




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##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS  Years Ended December 31,2009


2008


2007(In thousands, except pershare amounts)Revenues

$
506,253


$
675,948


$
570,967Operating costs and expensesDirect costs


379,437



443,414



338,835Depreciation


78,276



63,460



50,914Selling, general and administrative


50,763



62,774



61,237Loss (gain) on asset dispositions


1,602



(166
)


(8,868
)Impairment of goodwill






115,774



Amortization


4,722



4,212



4,067Total operating costs and expenses


514,800



689,468



446,185Income (loss) from operations


(8,547
)


(13,520
)


124,782Other income (expense):Interest expense


(48,145
)


(48,411
)


(49,534
)Interest income


72



5,617



3,259Gain on debt extinguishment


26,365







Other


(798
)


(563
)


776Total other expense


(22,506
)


(43,357
)


(45,499
)Income (loss) before income taxes


(31,053
)


(56,877
)


79,283Income tax benefit (expense)


9,863



17,413



(28,843
)Net income (loss)


(21,190
)


(39,464
)


50,440Preferred stock dividend


(1,302
)






Net income (loss) attributed to common stockholders

$
(22,492
)

$
(39,464
)

$
50,440Income (loss) per common share:Basic

$
(0.42
)

$
(1.13
)

$
1.48Diluted

$
(0.42
)

$
(1.13
)

$
1.45Weighted average number of common shares outstanding:Basic


53,669



35,052



34,158Diluted


53,669



35,052



34,701    52




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##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
    CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY  Capital in


Retained


TotalPreferred Stock


Common Stock


Excess of


Earnings


StockholdersShares


Amount


Shares


Amount


Par Value


(Deficit)


Equity(In thousands, except share amounts)Balances, December 31, 2006





$




28,233,411


$
282


$
216,208


$
37,443


$
253,933Net income






















50,440



50,440Issuance of common stock:Secondary public offering, net of offering costs










6,000,000



60



99,995







100,055Issuance under stock plans










882,624



9



3,310







3,319Stock-based compensation


















4,863







4,863Tax benefits on stock plans


















1,719







1,719Balances, December 31, 2007










35,116,035



351



326,095



87,883



414,329Net loss






















(39,464
)


(39,464
)Issuance of common stock:Issuance under stock plans










558,707



6



627







633Stock-based compensation


















7,902







7,902Tax benefits on stock plans


















9







9Balances, December 31, 2008










35,674,742



357



334,633



48,419



383,409Net loss






















(21,190
)


(21,190
)Preferred stock dividend






















(1,302
)


(1,302
)Issuance of common stock:Rights offering, net of offering costs


36,393



34,183



35,683,688



357



85,683







120,223Issuance under stock plans










20,099







43







43Stock-based compensation


















4,799







4,799Tax benefits on stock plans


















(2,335
)






(2,335
)Balances, December 31, 2009


36,393


$
34,183



71,378,529


$
714


$
422,823


$
25,927


$
483,647    53




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##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS  Years Ended December 31,2009


2008


2007(In thousands)Cash Flows from Operating Activities:Net income (loss)

$
(21,190
)

$
(39,464
)

$
50,440Adjustments to reconcile net income (loss) to net cash provided
    by 
    operating activities:Depreciation and amortization


82,998



67,672



54,981Amortization and write-off of deferred issuance costs


2,231



2,089



3,197Gain on debt extinguishment


(26,365
)






Impairment of goodwill






115,774



Stock-based compensation


4,799



7,902



4,863Allowance for bad debts


2,835



3,283



1,309Deferred income taxes


(17,883
)


(29,949
)


8,017Gain on sale of property and equipment


(948
)


(1,762
)


(2,323
)Loss (gain) on asset dispositions


1,602



(166
)


(8,868
)Changes in operating assets and liabilities, net of acquisitions:Decrease (increase) in trade receivable


49,977



(27,499
)


(31,404
)Decrease (increase) in inventories


4,559



(9,719
)


(5,375
)Decrease (increase) in prepaid expenses and other assets


4,628



(1,623
)


8,202Decrease (increase) in other assets


1,648



1,224



(4,492
)(Decrease) increase in trade accounts payable


(27,588
)


21,903



10,732(Decrease) increase in accrued interest


(2,802
)


567



5,950(Decrease) increase in accrued expenses


(4,607
)


1,131



1,508(Decrease) increase in other liabilities


(1,051
)


(1,130
)


2,700Increase in accrued salaries, benefits and payroll taxes


2,662



3,452



4,031Net cash provided by operating activities


55,505



113,685



103,468Cash Flows from Investing Activities:Acquisitions, net of cash acquired






(53,709
)


(41,000
)Net sales (purchases) of investment interests


(1,102
)


1,374



(498
)Purchases of property and equipment


(78,067
)


(154,468
)


(113,151
)Deposits on asset commitments


2,685



(9,901
)


(11,488
)Proceeds from asset dispositions


3,916



3,000



16,250Proceeds from sale of property and equipment


8,581



11,480



12,811Net cash used in investing activities


(63,987
)


(202,224
)


(137,076
)Cash Flows from Financing Activities:Proceeds from issuance of long-term debt


25,000



25,000



250,000Payments on long-term debt


(64,755
)


(9,905
)


(309,745
)Net (repayments) borrowings on lines of credit


(36,500
)


36,500



Proceeds from issuance of stock, net of offering costs


120,223







100,055Payment of preferred stock dividend


(665
)






Proceeds from exercise of options and warrants


43



633



3,319Tax benefit on stock plans






9



1,719Debt issuance costs


(658
)


(525
)


(7,792
)Net cash provided by financing activities


42,688



51,712



37,556Net increase (decrease) in cash and cash equivalents


34,206



(36,827
)


3,948Cash and cash equivalents at beginning of year


6,866



43,693



39,745Cash and cash equivalents at end of year

$
41,072


$
6,866


$
43,693    54




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##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.



Notes to
    Consolidated Financial Statements  NOTE 1 
    NATURE OF
    BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES  Organization
    of Business
      Use of
    Estimates
    Principles
    of Consolidation
    Revenue
    Recognition
  out-of-pocket out-of-pocket lost-in-hole
 55




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  lost-in-hole
  Allowance
    for Doubtful Accounts
      Cash
    Equivalents
    Inventories
    Property
    and Equipment
       56




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Goodwill,
    Intangible Assets and Amortization
    and/or
  Impairment
    of Long-Lived Assets
    Financial
    Instruments
    Concentration
    of Credit and Customer Risk
   57




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Debt
    Issuance Costs
    Income
    Taxes
        non-U.S. subsidiaries non-U.S. subsidiaries
 58




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Stock-Based
    Compensation
        For the Years Ended December 31,2009


2007Expected dividend yield






Expected price volatility


77.32
%


66.21
%Risk-free interest rate


1.37
%


4.8
%Expected life of options


5 years



5 yearsWeighted average fair value of options granted at market value

$
0.77


$
12.86   Income
    (Loss) Per Common Share
   59




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    For the Years Ended December 31,2009


2008


2007Numerator:Net income (loss)

$
(21,190
)

$
(39,464
)

$
50,440Preferred stock dividend


(1,302
)






Net income (loss) attributed to common stockholders

$
(22,492
)

$
(39,464
)

$
50,440Denominator:Weighted average common shares outstanding excluding nonvested
    restricted stock


53,669



35,052



34,158Effect of potentially dilutive common shares:Warrants and share based compensation shares










543Weighted average common shares outstanding and assumed
    conversions


53,669



35,052



34,701Income (loss) per common share:Basic

$
(0.42
)

$
(1.13
)

$
1.48Diluted

$
(0.42
)

$
(1.13
)

$
1.45Potentially dilutive securities excluded as anti-dilutive


15,059



1,041



1,108     Segments
    of an Enterprise and Related Information
    Reclassification
    New
    Accounting Pronouncements
     60




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
               61




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    NOTE 2 
    EMPLOYEE
    BENEFIT PLANS  401(k)
    Savings Plan
    NOTE 3 
    ACQUISITIONS
    AND ASSET DISPOSITIONS    Property and equipment

$
3Intangible assets, including goodwill


3,902Net assets acquired

$
3,905       Current assets

$
1,113Property and equipment


7,204Intangible assets, including goodwill


2,675Total assets acquired


10,992Current liabilities


622Net assets acquired

$
10,370  62




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Current assets

$
944Land, Property and equipment


8,736Intangible assets, including goodwill


1,144Total assets acquired


10,824Current liabilities


218Deferred tax liabilities


3,095Total liabilities assumed


3,313Net assets acquired

$
7,511       Current assets

$
3,350Property and equipment


8,701Intangible assets, including goodwill


12,232Other noncurrent assets


10Total assets acquired


24,293Current liabilities


1,160Net assets acquired

$
23,133    63




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Current assets

$
7,622Property and equipment


53,369Intangible assets, including goodwill


26,199Total assets acquired


87,190Current liabilities


14,456Long-term debt, less current portion


16,364Total liabilities assumed


30,820Net assets acquired

$
56,370         90-day 10-year 10-year
   64




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 4 
    INVENTORIES    2009


2008ManufacturedFinished goods

$
2,983


$
2,821Work in process


2,299



1,654Raw materials


884



2,499Total manufactured


6,166



6,974Rig parts and related inventory


10,654



13,097Shop supplies and related inventory


7,762



7,778Chemicals and drilling fluids


4,381



3,698Rental supplies


2,134



3,023Hammers


2,257



2,257Coiled tubing and related inventory


939



1,817Drive pipe


235



443Total inventories

$
34,528


$
39,087   NOTE 5 
    PROPERTY
    AND OTHER INTANGIBLE ASSETS    DepreciationPeriod


2009


2008Land





$
2,211


$
2,214Building and improvements


15-20 years



8,611



8,387Transportation equipment


2-10 years



33,353



34,493Drill pipe and rental equipment


2-20 years



380,185



373,064Drilling, workover and pulling rigs


20 years



248,780



228,857Machinery and equipment


2-20 years



226,601



212,594Furniture, computers, software and leasehold improvements


3-10 years



9,128



8,711Construction in progress  equipment


N/A



47,391



29,850Total






956,260



898,170Less: accumulated depreciation






(209,782
)


(137,180
)Property and equipment, net





$
746,478


$
760,990    65




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    AmortizationPeriod


2009


2008Intellectual property


10-20 years


$
3,829


$
3,829Non-compete agreements


3-5 years



2,640



2,640Customer relationships


10-15 years



38,033



38,033Patents


12-15 years



1,327



1,327Other intangible assets


2-10 years



793



793Total






46,622



46,622Less: accumulated amortization






(13,973
)


(9,251
)Other intangibles assets, net





$
32,649


$
37,371   2009


2008Gross


Accumulated


Gross


AccumulatedValue


Amortization


Value


AmortizationIntellectual property

$
3,829


$
823


$
3,829


$
507Non-compete agreements


2,640



1,879



2,640



1,198Customer relationships


38,033



10,209



38,033



6,676Patents


1,327



382



1,327



279Other intangible assets


793



680



793



591Total

$
46,622


$
13,973


$
46,622


$
9,251     Intangible Amortization by PeriodYears Ended December 31,2014 and2010


2011


2012


2013


ThereafterIntellectual property

$
316


$
316


$
316


$
316


$
1,742Non-compete agreements


489



248



24







Customer relationships


3,532



3,532



3,532



3,532



13,696Patents


102



102



102



102



537Other intangible assets


83



28



2







Total intangible amortization

$
4,522


$
4,226


$
3,976


$
3,950


$
15,975   NOTE 6 
    INCOME
    TAXES  non-U.S. countries
 66




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Years Ended December 31,2009


2008


2007Current income tax expense (benefit):Federal

$
8


$
(1,525
)

$
6,814State


324



471



1,053Foreign


7,688



13,590



12,9598,020



12,536



20,826Deferred income tax expense (benefit):Federal


(15,185
)


(28,462
)


7,081State


(1,626
)


(1,149
)


349Foreign


(1,072
)


(338
)


587(17,883
)


(29,949
)


8,017$
(9,863
)

$
(17,413
)

$
28,843  67




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2009


2008Deferred income tax assets:Amortization

$
30,902


$
32,081Net operating loss carryforwards


40,752



15,552Share-based compensation


2,199



2,691Foreign tax credits


992



760A-C Product Liability Trust


803



2,448Other net future deductible items


3,083



3,303Valuation allowance


(13,999
)


(13,265
)Gross deferred income tax assets


64,732



43,570Deferred income tax liabilitiesDepreciation


(46,050
)


(40,524
)Other net future taxable items


(1,011
)


(1,130
)Gross deferred income tax liabilities


(47,061
)


(41,654
)Net deferred income tax assets

$
17,671


$
1,916Net current deferred income tax assets

$
3,790


$
6,176Net noncurrent deferred income tax assets


22,047



3,993Net noncurrent deferred income tax liabilities


(8,166
)


(8,253
)Net deferred income tax assets

$
17,671


$
1,916     Years Ended December 31,2009


2008


2007Statutory income tax rate


34.0
%


34.0
%


35.0
%State taxes, net of federal benefit


1.7



0.4



1.8Foreign currency remeasurement


0.3



2.1



Nondeductible goodwill, permanent differences and other


(4.2
)


(5.9
)


(0.4
)Effective tax rate


31.8
%


30.6
%


36.4
%      68




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      NOTE 7 
    DEBT    2009


2008Senior notes

$
430,238


$
505,000Revolving line of credit






36,500Bank term loans


60,744



49,609Seller notes






750Notes payable to former directors






32Insurance premium financing notes


997



991Capital lease obligations


254



779Total debt


492,233



593,661Less: current maturities of long-term debt


17,027



14,617Long-term debt

$
475,206


$
579,044       Debt


Capital Leases


TotalYear Ending:December 31, 2010

$
16,778


$
249


$
17,027December 31, 2011


15,752



5



15,757December 31, 2012


14,281







14,281December 31, 2013


7,378







7,378December 31, 2014


229,360







229,360Thereafter


208,430







208,430Total

$
491,979


$
254


$
492,233   Senior
    notes, term loans and line of credit agreements
   69




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
             70




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Notes
    payable
        Other
    debt
    NOTE 8 
    COMMITMENTS
    AND CONTINGENCIES     71




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Years Ending:December 31, 2010

$
2,670December 31, 2011


2,016December 31, 2012


1,196December 31, 2013


872December 31, 2014


632Thereafter


601Total

$
7,987   NOTE 9 
    STOCKHOLDERS
    EQUITY          winding-up,
 72




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        NOTE 10 
    STOCK
    OPTIONS       73




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      December 31, 2009


December 31, 2008


December 31, 2007Shares


Weighted Ave.


Shares


Weighted Ave.


Shares


Weighted Avg.Under


Exercise


Under


Exercise


Under


ExerciseOption


Price


Option


Price


Option


PriceBeginning balance


901,732


$
10.95



986,763


$
10.77



1,350,365


$
6.88Granted


125,000



1.23











220,000



21.83Canceled


(305,000
)


18.18



(13,328
)


8.87



(17,334
)


8.45Exercised


(20,000
)


2.75



(71,703
)


8.83



(566,268
)


5.86Ending balance


701,732


$
6.31



901,732


$
10.95



986,763


$
10.77       Options Outstanding


Options ExercisableWeighted Average


Weighted





Weighted Average


WeightedRange of





Remaining


Average





Remaining


AverageExercise


Number of


Contractual Life


Exercise


Number of


Contractual Life


ExercisePrices


options


(in Years)


Price


options


(in Years)


Price$
1.23-2.75



127,300



9.09


$
1.26



2,300



3.96


$
2.753.86-4.87



296,500



5.07



4.18



296,500



5.07



4.1810.85-14.74



277,932



5.88



10.90



277,932



5.88



10.901.23-14.74



701,732



6.12


$
6.31



576,732



5.46


$
7.42     Restricted
    Stock Awards
   74




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      December 31, 2009


December 31, 2008


December 31, 2007Number


Weighted Ave.


Number


Weighted Ave.


Number


Weighted Ave.of


Grant Date Fair


of


Grant Date Fair


of


Grant Date FairShares


Value Per Share


Shares


Value Per Share


Shares


Value Per ShareBeginning balance


953,102


$
15.34



993,203


$
17.45



27,000


$
18.30Granted


17,000



1.23



258,670



9.47



996,203



17.44Vested


(122,276
)


11.68



(298,771
)


17.26



(30,000
)


18.01Forfeited


(10,200
)


12.05















Ending balance


837,626


$
15.63



953,102


$
15.34



993,203


$
17.45     NOTE 11 
    STOCK
    PURCHASE WARRANTS        NOTE 12 
    GAIN ON
    DEBT EXTINGUISHMENT   75




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 13 
    CONDENSED
    CONSOLIDATED FINANCIAL INFORMATION    CONDENSED
    CONSOLIDATING BALANCE SHEETS
    December 31, 2009
  Allis-Chalmers





Subsidiary(Parent/


Subsidiary


Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors


Adjustments


TotalAssetsCash and cash equivalents

$



$
31,858


$
9,214


$



$
41,072Trade receivables, net






47,358



58,962



(1,261
)


105,059Inventories






16,271



18,257







34,528Intercompany receivables






79,521



767



(80,288
)


Note receivable from affiliate


28,379











(28,379
)


Prepaid expenses and other


891



6,826



9,872







17,589Total current assets


29,270



181,834



97,072



(109,928
)


198,248Property and equipment, net






489,921



256,557







746,478Goodwill






23,251



17,388







40,639Other intangible assets, net


460



25,236



6,953







32,649Debt issuance costs, net


9,408



137











9,545Note receivable from affiliates


4,415











(4,415
)


Investments in affiliates


942,378











(942,378
)


Other assets


24,366



25,039



3,656







53,061Total assets

$
1,010,297


$
745,418


$
381,626


$
(1,056,721
)

$
1,080,620Liabilities and Stockholders EquityCurrent maturities of long-term debt

$



$
4,444


$
12,583


$



$
17,027Trade accounts payable






12,195



23,905



(1,261
)


34,839Accrued salaries, benefits and payroll taxes






2,762



20,092







22,854Accrued interest


15,372



228



221







15,821Accrued expenses


752



11,608



9,558







21,918Intercompany payables


80,288











(80,288
)


Note payable to affiliate










28,379



(28,379
)


Total current liabilities


96,412



31,237



94,738



(109,928
)


112,459Long-term debt, net of current maturities


430,238



19,941



25,027







475,206Note payable to affiliate










4,415



(4,415
)


Deferred income tax liability










8,166







8,166Other long-term liabilities










1,142







1,142Total liabilities


526,650



51,178



133,488



(114,343
)


596,973Commitments and contingenciesStockholders EquityPreferred Stock


34,183















34,183Common stock


714



3,526



42,963



(46,489
)


714Capital in excess of par value


422,823



570,512



137,439



(707,951
)


422,823Retained earnings


25,927



120,202



67,736



(187,938
)


25,927Total stockholders equity


483,647



694,240



248,138



(942,378
)


483,647Total liabilities and stock holders equity

$
1,010,297


$
745,418


$
381,626


$
(1,056,721
)

$
1,080,620  76




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    CONSOLIDATING INCOME STATEMENTS
    For the Year Ended December 31, 2009
  Allis-Chalmers





Subsidiary(Parent/


Subsidiary


Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors


Adjustments


TotalRevenues

$



$
202,727


$
303,579


$
(53
)

$
506,253Operating costs and expensesDirect costs






133,629



245,861



(53
)


379,437Depreciation






56,886



21,390







78,276Selling, general and administrative


4,054



32,592



14,117







50,763Loss on asset dispositions










1,602







1,602Amortization


46



3,907



769







4,722Total operating costs and expenses


4,100



227,014



283,739



(53
)


514,800Income (loss) from operations


(4,100
)


(24,287
)


19,840







(8,547
)Other income (expense):Equity earnings in affiliates, net of tax


1,051











(1,051
)


Interest, net


(44,568
)


(25
)


(3,480
)






(48,073
)Gain on debt extinguishment


26,365















26,365Other


62



(155
)


(705
)






(798
)Total other income (expense)


(17,090
)


(180
)


(4,185
)


(1,051
)


(22,506
)Income (loss) before income taxes


(21,190
)


(24,467
)


15,655



(1,051
)


(31,053
)Income tax benefit (expense)






15,590



(5,727
)






9,863Net income (loss)


(21,190
)


(8,877
)


9,928



(1,051
)


(21,190
)Preferred stock dividend


(1,302
)














(1,302
)Net income (loss) attributed to common stockholders

$
(22,492
)

$
(8,877
)

$
9,928


$
(1,051
)

$
(22,492
)  77




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENTS OF CASH FLOW
    For the Year Ended December 31, 2009
  Allis-





OtherChalmers





Subsidiaries(Parent/


Subsidiary


(Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors)


Adjustments


TotalCash Flows from Operating Activities:Net income (loss)

$
(21,190
)

$
(8,877
)

$
9,928


$
(1,051
)

$
(21,190
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation & amortization


46



60,793



22,159







82,998Amortization and write-off of deferred financing fees


2,215



16











2,231Gain on debt extinguishment


(26,365
)














(26,365
)Stock based compensation


4,799















4,799Allowance for bad debts






2,835











2,835Equity earnings in affiliates


(1,051
)










1,051



Deferred income taxes


(18,173
)


1,569



(1,279
)






(17,883
)Gain (loss) on sale of equipment






(957
)


9







(948
)Gain on asset dispositions










1,602







1,602Changes in operating assets and liabilities, net of acquisitions:Decrease in accounts receivables






38,074



11,903







49,977Decrease in inventories






3,111



1,448







4,559Decrease (increase) in other current assets


7,369



3,279



(6,020
)






4,628Decrease (increase) in other assets


(111
)


223



1,536







1,648(Decrease) in accounts payable






(13,346
)


(14,242
)






(27,588
)(Decrease) increase in accrued interest


(2,560
)


228



(470
)






(2,802
)(Decrease) in accrued expenses


(632
)


(2,233
)


(1,742
)






(4,607
)(Decrease) in other liabilities






(64
)


(987
)






(1,051
)(Decrease) increase in accrued salaries, benefits and payroll
    taxes






(1,171
)


3,833







2,662Net cash provided (used) by operating activities


(55,653
)


83,480



27,678







55,505 78




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Allis-





OtherChalmers





Subsidiaries(Parent/


Subsidiary


(Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors)


Adjustments


TotalCash Flows from Investing Activities:Net sales (purchases) of investment interests


(2,393
)






1,291







(1,102
)Purchase of property and equipment






(58,142
)


(19,925
)






(78,067
)Deposits on asset commitments






1,995



690







2,685Investment in affiliates


(4,100
)










4,100



Notes receivable from affiliates


(2,069
)










2,069



Proceeds from asset dispositions










3,916







3,916Proceeds from sale of equipment






8,400



181







8,581Net cash provided (used) in investing activities


(8,562
)


(47,747
)


(13,847
)


6,169



(63,987
)Cash Flows from Financing Activities:Proceeds from issuance of long-term debt






25,000











25,000Payments on long-term debt


(47,167
)


(4,811
)


(12,777
)






(64,755
)Net repayments on lines of credit


(36,500
)














(36,500
)Proceeds from issuance of stock, net of offering costs


120,223















120,223Payment of preferred stock dividend


(665
)














(665
)Proceeds from parent contributions










4,100



(4,100
)


Accounts receivable from affiliates






(26,834
)


(1,952
)


28,786



Accounts payable to affiliates


28,786











(28,786
)


Note payable to affiliate










2,069



(2,069
)


Proceeds from exercise of options


43















43Debt issuance costs


(505
)


(153
)










(658
)Net cash provided (used) by financing activities


64,215



(6,798
)


(8,560
)


(6,169
)


42,688Net change in cash and cash equivalents






28,935



5,271







34,206Cash and cash equivalents at beginning of year






2,923



3,943







6,866Cash and cash equivalents at end of period

$



$
31,858


$
9,214


$



$
41,072  79




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  December 31,
    2008
  Allis-Chalmers





Subsidiary(Parent/


Subsidiary


Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors


Adjustments


TotalAssetsCash and cash equivalents

$



$
2,923


$
3,943


$



$
6,866Trade receivables, net






88,528



70,865



(1,522
)


157,871Inventories






19,382



19,705







39,087Intercompany receivables






51,038







(51,038
)


Note receivable from affiliate


20,680











(20,680
)


Prepaid expenses and other


8,798



8,074



4,542







21,414Total current assets


29,478



169,945



99,055



(73,240
)


225,238Property and equipment, net






499,704



261,286







760,990Goodwill






23,251



20,022







43,273Other intangible assets, net


506



29,143



7,722







37,371Debt issuance costs, net


12,664















12,664Note receivable from affiliates


10,045











(10,045
)


Investments in affiliates


937,227











(937,227
)


Other assets


3,837



27,663



4,015







35,515Total assets

$
993,757


$
749,706


$
392,100


$
(1,020,512
)

$
1,115,051Liabilities and Stockholders EquityCurrent maturities of long-term debt

$
782


$
992


$
12,843


$



$
14,617Trade accounts payable






27,759



35,841



(1,522
)


62,078Accrued salaries, benefits and payroll taxes






3,933



16,259







20,192Accrued interest


17,932







691







18,623Accrued expenses


281



13,841



12,520







26,642Intercompany payables


49,853







1,185



(51,038
)


Note payable to affiliate










20,680



(20,680
)


Total current liabilities


68,848



46,525



100,019



(73,240
)


142,152Long-term debt, net of current maturities


541,500







37,544







579,044Note payable to affiliate










10,045



(10,045
)


Deferred income tax liability










8,253







8,253Other long-term liabilities






64



2,129







2,193Total liabilities


610,348



46,589



157,990



(83,285
)


731,642Commitments and contingenciesStockholders EquityCommon stock


357



3,526



42,963



(46,489
)


357Capital in excess of par value


334,633



570,512



133,339



(703,851
)


334,633Retained earnings


48,419



129,079



57,808



(186,887
)


48,419Total stockholders equity


383,409



703,117



234,110



(937,227
)


383,409Total liabilities and stock holders equity

$
993,757


$
749,706


$
392,100


$
(1,020,512
)

$
1,115,051  80




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    CONSOLIDATING INCOME STATEMENTS
    For the Year Ended December 31, 2008
  Allis-Chalmers





Subsidiary(Parent/


Subsidiary


Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors


Adjustments


TotalRevenues

$



$
384,649


$
291,335


$
(36
)

$
675,948Operating costs and expensesDirect costs






217,360



226,090



(36
)


443,414Depreciation






49,177



14,283







63,460Selling, general and administrative


6,924



45,147



10,703







62,774Gain on asset dispositions






(166
)










(166
)Impairment of goodwill






115,774











115,774Amortization


46



4,133



33







4,212Total operating costs and expenses


6,970



431,425



251,109



(36
)


689,468Income (loss) from operations


(6,970
)


(46,776
)


40,226







(13,520
)Other income (expense):Equity earnings in affiliates, net of tax


9,161











(9,161
)


Interest, net


(41,727
)


57



(1,124
)






(42,794
)Other


72



88



(723
)






(563
)Total other income (expense)


(32,494
)


145



(1,847
)


(9,161
)


(43,357
)Income (loss) before income taxes


(39,464
)


(46,631
)


38,379



(9,161
)


(56,877
)Income tax benefit (expense)






29,580



(12,167
)






17,413Net income (loss)

$
(39,464
)

$
(17,051
)

$
26,212


$
(9,161
)

$
(39,464
)  81




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENTS OF CASH FLOW
    For the Year Ended December 31, 2008
  Allis-





OtherChalmers





Subsidiaries(Parent/


Subsidiary


(Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors)


Adjustments


TotalCash Flows from Operating Activities:Net income (loss)

$
(39,464
)

$
(17,051
)

$
26,212


$
(9,161
)

$
(39,464
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation & amortization


46



53,310



14,316







67,672Amortization and write-off of debt issuance costs


2,089















2,089Impairment of goodwill






115,774











115,774Stock based compensation


7,902















7,902Allowance for bad debts






3,283











3,283Equity earnings in affiliates


(9,161
)










9,161



Deferred income taxes


(13,620
)


(16,959
)


630







(29,949
)Gain on sale of equipment






(1,485
)


(277
)






(1,762
)Gain on asset dispositions






(166
)










(166
)Changes in operating assets and liabilities, net of acquisitions:Increase in trade receivables






(7,168
)


(20,331
)






(27,499
)Increase in inventories






(7,037
)


(2,682
)






(9,719
)(Increase) decrease in other current assets


211



219



(2,053
)






(1,623
)(Increase) decrease in other assets


(138
)


(83
)


1,445







1,224Increase in accounts payable






9,427



12,476







21,903(Decrease) increase in accrued interest


223



(33
)


377







567(Decrease) increase in accrued expenses


(1,379
)


3,823



(1,313
)






1,131(Decrease) in other liabilities


(31
)


(178
)


(921
)






(1,130
)Increase in accrued salaries, benefits and payroll taxes






221



3,231







3,452Net cash provided (used) by operating activities


(53,322
)


135,897



31,110







113,685 82




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Allis-





OtherChalmers





Subsidiaries(Parent/


Subsidiary


(Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors)


Adjustments


TotalCash Flows from Investing Activities:Acquisitions, net of cash acquired










(53,709
)






(53,709
)Net sales (purchases) of investment interests






1,374











1,374Purchase of property and equipment






(81,724
)


(72,744
)






(154,468
)Deposits on asset commitments






(20,667
)


10,766







(9,901
)Investment in affiliates


(58,370
)










58,370



Notes receivable from affiliates


(6,075
)










6,075



Proceeds from asset dispositions






3,000











3,000Proceeds from sale of equipment






11,046



434







11,480Net cash provided (used) in investing activities


(64,445
)


(86,971
)


(115,253
)


64,445



(202,224
)Cash Flows from Financing Activities:Proceeds from issuance of long-term debt










25,000







25,000Payments on long-term debt






(6,029
)


(3,876
)






(9,905
)Net borrowings on lines of credit


36,500















36,500Proceeds from parent contributions










58,370



(58,370
)


Accounts receivable from affiliates


81,150











(81,150
)


Accounts payable to affiliates






(81,150
)






81,150



Note payable to affiliate










6,075



(6,075
)


Proceeds from exercise of options


633















633Tax benefit on stock plans


9















9Debt issuance costs


(525
)














(525
)Net cash provided (used) by financing activities


117,767



(87,179
)


85,569



(64,445
)


51,712Net change in cash and cash equivalents






(38,253
)


1,426







(36,827
)Cash and cash equivalents at beginning of year






41,176



2,517







43,693Cash and cash equivalents at end of period

$



$
2,923


$
3,943


$



$
6,866  83




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##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    CONSOLIDATING INCOME STATEMENTS
    For the Year Ended December 31, 2007
  Allis-Chalmers





Subsidiary(Parent/


Subsidiary


Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors


Adjustments


TotalRevenues

$



$
355,172


$
215,795


$



$
570,967Operating costs and expensesDirect costs






183,002



155,833







338,835Depreciation






39,659



11,255







50,914General and administrative


4,349



47,054



9,834







61,237Gain on asset disposition






(8,868
)










(8,868
)Amortization


46



3,988



33







4,067Total operating costs and expenses


4,395



264,835



176,955







446,185Income (loss) from operations


(4,395
)


90,337



38,840







124,782Other income (expense):Equity earnings in affiliates, net of tax


102,208











(102,208
)


Interest, net


(47,677
)


2,796



(1,394
)






(46,275
)Other


304



336



136







776Total other income (expense)


54,835



3,132



(1,258
)


(102,208
)


(45,499
)Income before income taxes


50,440



93,469



37,582



(102,208
)


79,283Provision for income taxes






(16,085
)


(12,758
)






(28,843
)Net income (loss)

$
50,440


$
77,384


$
24,824


$
(102,208
)

$
50,440  84




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##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENTS OF CASH FLOW
    For the Year Ended December 31, 2007
  Allis-





OtherChalmers





Subsidiaries(Parent/


Subsidiary


(Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors)


Adjustments


TotalCash Flows from Operating Activities:Net income (loss)

$
50,440


$
77,384


$
24,824


$
(102,208
)

$
50,440Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation & amortization


46



43,647



11,288







54,981Amortization and write-off of debt issuance costs


3,197















3,197Stock based compensation


4,863















4,863Allowance for bad debts






1,309











1,309Equity earnings in affiliates


(102,208
)










102,208



Deferred income taxes


7,430







587







8,017Gain on sale of equipment






(2,182
)


(141
)






(2,323
)Gain on capillary asset sale






(8,868
)










(8,868
)Changes in operating assets and liabilities, net of acquisitions:Increase in trade receivables






(18,402
)


(13,002
)






(31,404
)Increase in inventories






(4,286
)


(1,089
)






(5,375
)(Increase) decrease in other current assets


(3,003
)


12,075



(870
)






8,202(Increase) decrease in other assets


242







(4,734
)






(4,492
)(Decrease) increase in accounts payable


(31
)


2,234



8,529







10,732(Decrease) increase in accrued interest


5,954



33



(37
)






5,950(Decrease) increase in accrued expenses


1,525



(3,912
)


3,895







1,508(Decrease) increase in other liabilities


(273
)


(77
)


3,050







2,700Increase in accrued salaries, benefits and payroll taxes






355



3,676







4,031Net cash provided (used) by operating activities


(31,818
)


99,310



35,976







103,468Cash Flows from Investing Activities:Acquisitions, net of cash acquired






(41,000
)










(41,000
)Purchase of investment interests






(498
)










(498
)Purchase of property and equipment






(84,240
)


(28,911
)






(113,151
)Deposits on asset commitments










(11,488
)






(11,488
)Investment in affiliates


(44,919
)










44,919



Notes receivable from affiliates


(6,809
)










6,809



Proceeds from sale of capillary assets






16,250











16,250Proceeds from sale of property and equipment






12,666



145







12,811Net cash provided (used) in investing activities


(51,728
)


(96,822
)


(40,254
)


51,728



(137,076
)  85




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  CONDENSED
    CONSOLIDATING STATEMENTS OF CASH FLOW 
    (Continued)
  Allis-





OtherChalmers





Subsidiaries(Parent/


Subsidiary


(Non-


Consolidating


ConsolidatedGuarantor)


Guarantors


Guarantors)


Adjustments


TotalCash Flows from Financing Activities:Proceeds from issuance of long-term debt


250,000















250,000Payments on long-term debt


(300,000
)


(6,587
)


(3,158
)






(309,745
)Proceeds from parent contributions






44,919







(44,919
)


Accounts receivable from affiliates


36,245











(36,245
)


Accounts payable to affiliates






(37,413
)


1,168



36,245



Note payable to affiliate










6,809



(6,809
)


Proceeds from issuance of common stock, net of offering costs


100,055















100,055Proceeds from exercise of options and warrants


3,319















3,319Tax benefit on stock plans


1,719















1,719Debt issuance costs


(7,792
)














(7,792
)Net cash provided (used) by financing activities


83,546



919



4,819



(51,728
)


37,556Net change in cash and cash equivalents






3,407



541







3,948Cash and cash equivalents at beginning of year






37,769



1,976







39,745Cash and cash equivalents at end of period

$



$
41,176


$
2,517


$



$
43,693   NOTE 14 
    RELATED
    PARTY TRANSACTIONS       86




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##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    NOTE 15 
    SEGMENT
    INFORMATION    Years Ended December 31,2009


2008


2007Revenues:Oilfield Services

$
143,564


$
280,835


$
233,986Drilling & Completion


303,975



291,335



215,795Rental Services


58,714



103,778



121,186Total revenues

$
506,253


$
675,948


$
570,967Operating Income (Loss):Oilfield Services

$
(14,691
)

$
38,643


$
53,218Drilling & Completion


19,222



40,226



38,839Rental Services


140



(74,361
)


49,139General corporate


(13,218
)


(18,028
)


(16,414
)Total income (loss) from operations

$
(8,547
)

$
(13,520
)

$
124,782Depreciation and Amortization Expense:Oilfield Services

$
30,589


$
24,725


$
16,838Drilling & Completion


22,321



14,316



11,288Rental Services


29,791



28,131



26,353General corporate


297



500



502Total depreciation and amortization expense

$
82,998


$
67,672


$
54,981Capital Expenditures:Oilfield Services

$
11,357


$
58,400


$
48,610Drilling & Completion


58,393



73,362



28,911Rental Services


8,230



22,550



34,883General corporate


87



156



747Total capital expenditures

$
78,067


$
154,468


$
113,151   87




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##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  As of December 31,2009


2008


2007Goodwill:Oilfield Services

$
23,250


$
23,250


$
30,493Drilling & Completion


17,389



20,023



1,523Rental Services










106,382General corporate










Total goodwill

$
40,639


$
43,273


$
138,398   As of December 31,2009


2008


2007Assets:Oilfield Services

$
255,899


$
309,901


$
299,300Drilling & Completion


441,482



411,486



235,020Rental Services


307,283



360,376



454,216General corporate


75,956



33,288



65,049Total assets

$
1,080,620


$
1,115,051


$
1,053,585   Years Ended December 31,2009


2008


2007Revenues:United States

$
188,436


$
365,529


$
339,476Argentina


243,913



288,792



207,491Brazil


43,564







Other international


30,340



21,627



24,000Total revenues

$
506,253


$
675,948


$
570,967   As of December 31,2009


2008


2007Long Lived Assets:United States

$
572,727


$
573,975


$
655,513Argentina


168,681



212,456



166,972Brazil


82,477



79,568



Other international


58,487



23,814



13,206Total long lived assets

$
882,372


$
889,813


$
835,691   88




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Oilfield


Drilling &


RentalServices


Completion


Services


TotalGoodwill:Balance as of December 31, 2007

$
30,493


$
1,523


$
106,382


$
138,398Goodwill acquired during period


3,000



18,500







21,500Asset dispositions


(851
)










(851
)Impairment charges


(9,392
)






(106,382
)


(115,774
)Balance as of December 31, 2008


23,250



20,023







43,273Purchase price and other adjustments






(2,634
)






(2,634
)Balance as of December 31, 2009

$
23,250


$
17,389


$



$
40,639   NOTE 16 
    SUPPLEMENTAL
    CASH FLOWS INFORMATION (in thousands)  Years Ended December 31,2009


2008


2007Interest paid

$
49,605


$
46,541


$
40,363Income taxes paid

$
6,242


$
20,670


$
17,272Other non-cash investing and financing transactions:Insurance premiums financed

$
3,204


$
2,995


$
4,434Assets transferred as investment in joint venture


1,639







Preferred stock dividend


637







Tax benefit on stock plans


2,335







Non-cash investing and financing transactions in connection
    with acquisitions:Fair value of Property and equipment

$



$



$
4,345Fair value of goodwill and other intangibles


(1,343
)


3,000



350$
(1,343
)

$
3,000


$
4,695Seller financed note

$



$



$
1,600Deferred tax liability










3,095Accrued expenses


(1,343
)


3,000



$
(1,343
)

$
3,000


$
4,695Non-cash investing and financing transactions in connection
    with asset disposition:Value of goodwill and other intangibles disposed

$



$
2,246


$
Value of inventory financed






509



Value of property and equipment disposed






337



Accrued expenses






10



Fair value of note receivable

$



$
3,102


$
  89




---



##### Table of Contents



ALLIS-CHALMERS
    ENERGY INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   NOTE 17 
    LEGAL
    MATTERS      NOTE 18 
    SUMMARIZED
    QUARTERLY FINANCIAL DATA (UNAUDITED) (in thousands, except per
    share amounts)  First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterYear 2009Revenues

$
145,103


$
112,505


$
120,016


$
128,629Operating income (loss)


7,771



(12,543
)


(3,070
)


(705
)Net loss attributed to common stockholders

$
(2,605
)

$
(125
)

$
(10,280
)

$
(9,482
)Income (loss) per common share:Basic

$
(0.07
)

$
0.00


$
(0.14
)

$
(0.13
)Diluted

$
(0.07
)

$
0.00


$
(0.14
)

$
(0.13
)   First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterYear 2008Revenues

$
153,182


$
163,135


$
178,265


$
181,366Operating income (loss)


23,582



27,668



29,033



(93,803
)Net income (loss)

$
8,050


$
10,558


$
12,312


$
(70,384
)Income (loss) per common share:Basic

$
0.23


$
0.30


$
0.35


$
(2.00
)Diluted

$
0.23


$
0.30


$
0.35


$
(2.00
)  90




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  (a)
    Evaluation
    Of Disclosure Controls And Procedures  Rules 13a-15(e) 15d-15(e)),
  (b)
    Managements
    Report on Internal Control Over Financial Reporting  Rule 13a-15(f).
     91




---



##### Table of Contents



Management
    Report on Internal Control Over Financial
    Reporting.
    (c) Change
    in Internal Control Over Financial Reporting.
    ITEM 9B.
    OTHER
    INFORMATION              Against orFor


Withheld


Abstentions


Broker Non-Vote1.


Election of DirectorsSaad Bargach


67,260,499



6,623,976







Alejandro P. Bulgheroni


72,420,667



1,463,808







Giovanni DellOrto


72,247,860



1,636,615







Victor F. Germack


65,840,516



8,043,959







James M. Hennessy


72,650,559



1,233,916







Munawar H. Hidayatallah


72,731,336



1,153,139







Robert E. Nederlander


70,593,523



3,290,952







John T. Reynolds


70,505,725



3,378,750







Zane Tankel


65,892,555



7,991,920







2.


Approve amendment to our Amended and Restated Certificate of
    Incorporation


69,218,356



4,588,897



77,220



3.


Approve Second Amended and Restated 2006 Incentive Plan


43,648,673



11,700,743



706,256



17,828,8044.


Ratification of UHY LLP as our independent accountants


72,598,329



1,025,715



260,426



  92




---



##### Table of Contents



PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Form 10-K
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Form 10-K
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Form 10-K
  ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES  Form 10-K
 PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Financial Statements:
  Consolidated Balance Sheets as of December 31, 2009 and
    2008.Consolidated Statements of Operations for the years ended
    December 31, 2009, 2008 and 2007.Consolidated Statement of Stockholders Equity for the
    years ended December 31, 2009, 2008 and 2007.Consolidated Statements of Cash Flows for the years ended
    December 31, 2009, 2008 and 2007.Notes to Consolidated Financial Statements.(2) Financial Statement SchedulesSchedule II  Valuation and Qualifying Accounts    93




---



##### Table of Contents



Exhibits
  Form 10-K.
  (2)
    Financial
    Statement Schedule:  Schedule II 
    Valuation and Qualifying Accounts
    Allis-Chalmers Energy Inc.
    Valuation and Qualifying Accounts
  Additions


AdditionsBalance at


Charged to


Charged to





Balance atBeginning


Costs and


Other





End ofDescription

of Period


Expense


Account


Deductions


Period(In thousands)Year Ended December 31, 2009:Allowance for doubtful accounts

$
4,205


$
2,835


$



$
(2,117
)

$
4,923Deferred tax assets valuation allowance


13,265



2,076



(1,342
)






13,999Year Ended December 31, 2008:Allowance for doubtful accounts


1,924



3,283







(1,002
)


4,205Deferred tax assets valuation allowance










13,265







13,265Year Ended December 31, 2007:Allowance for doubtful accounts


826



1,309







(211
)


1,924Deferred tax assets valuation allowance


















    94




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##### Table of Contents



SIGNATURES    ALLIS-CHALMERS ENERGY INC.
  MUNAWAR
    H. HIDAYATALLAH
  Munawar H. Hidayatallah
 Chief Executive Officer and Chairman
    Name

Title

Date/s/  MUNAWAR
    H. HIDAYATALLAHMunawar
    H. Hidayatallah

Chairman and Chief Executive Officer (Principal Executive
    Officer)

March 9, 2010/s/  VICTOR
    M. PEREZVictor
    M. Perez

Chief Financial Officer
    (Principal Financial Officer)

March 9, 2010/s/  BRUCE
    SAUERSBruce
    Sauers

Chief Accounting Officer 
    (Principal Accounting Officer)

March 9, 2010/s/  SAAD
    BARGACHSaad
    Bargach

Director

March 9, 2010/s/  ALEJANDRO
    P. BULGHERONIAlejandro
    P. Bulgheroni

Director

March 9, 2010/s/  GIOVANNI
    DELLORTOGiovanni
    Dellorto

Director

March 9, 2010/s/  VICTOR
    F. GERMACKVictor
    F. Germack

Director

March 9, 2010/s/  JAMES
    M. HENNESSYJames
    M. Hennessy

Director

March 9, 2010/s/  ROBERT
    E. NEDERLANDERRobert
    E. Nederlander

Director

March 9, 2010/s/  JOHN
    T. REYNOLDSJohn
    T. Reynolds

Director

March 9, 2010/s/  ZANE
    TANKELZane
    Tankel

Director

March 9, 2010  95




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit

Description2
.1

First Amended Disclosure Statement pursuant to Section 1125
    of the Bankruptcy Code, dated September 14, 1988, which
    includes the First Amended and Restated Joint Plan of
    Reorganization dated September 14, 1988 (incorporated by
    reference to Registrants Current Report on
    Form 8-K
    dated December 1, 1988).2
.2

Reorganization Trust Agreement dated September 14,
    1988 by and between Registrant and John T. Grigsby, Jr., Trustee
    (incorporated by reference to Exhibit D of the First
    Amended and Restated Joint Plan of Reorganization dated
    September 14, 1988 included in Registrants Current
    Report on
    Form 8-K
    dated December 1, 1988).2
.3

Agreement and Plan of Merger dated as of May 9, 2001 by and
    among Registrant, Allis-Chalmers Acquisition Corp. and Oil Quip
    Rentals, Inc. (incorporated by reference to Exhibit 2.1 to
    the Registrants Current Report on
    Form 8-K
    filed May 15, 2001).2
.4

Stock Purchase Agreement dated February 1, 2002 by and
    between Registrant and Jens H. Mortensen, Jr. (incorporated by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    filed February 21, 2002).2
.5

Stock Purchase Agreement dated February 1, 2002 by and
    among Registrant, Energy Spectrum Partners LP, and Strata
    Directional Technology, Inc. (incorporated by reference to
    Exhibit 2.10 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001).2
.6

Stock Purchase Agreement dated August 10, 2004 by and among
    Allis-Chalmers Corporation and the investors named thereto
    (incorporated by reference to Exhibit 10.37 to the
    Registration Statement on
    Form S-1
    (Registration No. 118916) filed on September 10,
    2004).2
.7

Amendment to Stock Purchase Agreement dated August 10, 2004
    (incorporated by reference to Exhibit 10.38 to the
    Registration Statement on
    Form S-1
    (Registration No. 118916) filed on September 10,
    2004).2
.8

Addendum to Stock Purchase Agreement dated September 24,
    2004 (incorporated by reference to Exhibit 10.55 to
    Registrants Current Report on
    Form 8-K
    filed on September 30, 2004).2
.9

Asset Purchase Agreement dated November 10, 2004 by and
    among AirComp LLC, a Delaware limited liability company, Diamond
    Air Drilling Services, Inc., a Texas corporation, and Marquis
    Bit Co., L.L.C., a New Mexico limited liability company, Greg
    Hawley and Tammy Hawley, residents of Texas and Clay Wilson and
    Linda Wilson, residents of New Mexico (incorporated by reference
    to Exhibit 10.61 to the Registrants Current Report on
    Form 8-K
    filed on November 16, 2004).2
.10

Purchase Agreement and related Agreements by and among
    Allis-Chalmers Corporation, Chevron USA, Inc., Dale Redman and
    others dated December 10, 2004 (incorporated by reference
    to Exhibit 10.63 to the Registrants Current Report on
    Form 8-K
    filed on December 16, 2004).2
.11

Stock Purchase Agreement dated April 1, 2005, by and among
    Allis-Chalmers Energy Inc., Thomas Whittington, Sr., Werlyn R.
    Bourgeois and SAM and D, LLC. (incorporated by reference to
    Exhibit 10.51 to the Registrants Current Report on
    Form 8-K
    filed on April 5, 2005).2
.12

Stock Purchase Agreement effective May 1, 2005, by and
    among Allis-Chalmers Energy Inc., Wesley J. Mahone, Mike T.
    Wilhite, Andrew D. Mills and Tim Williams (incorporated by
    reference to Exhibit 10.51 to the Registrants Current
    Report on
    Form 8-K
    filed on May 6, 2005).2
.13

Purchase Agreement dated July 11, 2005 among Allis-Chalmers
    Energy Inc., Mountain Compressed Air, Inc. and M-I, L.L.C.
    (incorporated by reference to Exhibit 10.42 to the
    Registrants Current Report on
    Form 8-K
    filed on July 15, 2005).2
.14

Asset Purchase Agreement dated July 11, 2005 between
    AirComp LLC, W.T. Enterprises, Inc. and William M. Watts
    (incorporated by reference to Exhibit 10.43 to the
    Registrants Current Report on
    Form 8-K
    filed on July 15, 2005).2
.15

Asset Purchase Agreement by and between Patterson Services, Inc.
    and Allis-Chalmers Tubular Services, Inc. (incorporated by
    reference to Exhibit 10.44 to the Registrants Current
    Report on
    Form 8-K
    filed on September 8, 2005).2
.16

Stock Purchase Agreement dated as of December 20, 2005
    between the Registrant and Joe Van Matre (incorporated by
    reference to Exhibit 10.33 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2005). 96




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Exhibit

Description2
.17

Stock Purchase Agreement, dated as of April 27, 2006, by
    and among Bridas International Holdings Ltd., Bridas Central
    Company Ltd., Associated Petroleum Investors Limited, and the
    Registrant. (incorporated by reference to Exhibit 2.3 to
    the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006)2
.18

Stock Purchase Agreement, dated as of October 17, 2006, by
    and between Allis-Chalmers Production Services, Inc. and
    Randolph J. Hebert (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on October 19, 2006).2
.19

Asset Purchase Agreement, dated as of October 25, 2006, by
    and between Allis-Chalmers Energy Inc. and Oil & Gas
    Rental Services, Inc. (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on October 26, 2006).2
.20

Agreement and Plan of Merger by and among the Registrant, Bronco
    Drilling Company, Inc. and Elway Merger Sub, Inc., dated as of
    January 23, 2008 (incorporated by reference to
    Exhibit 2.1 to the Registrants Current Report on
    Form 8-K
    filed on January 24, 2008).2
.21

First Amendment, dated as of June 1, 2008, to the Agreement
    and Plan of Merger, by and among Allis-Chalmers Energy Inc.,
    Elway Merger Sub, Inc. and Bronco Drilling Company, Inc.
    (incorporated by reference to Exhibit 2.1 to the
    Registrants Current Report on
    Form 8-K
    filed on June 2, 2008).2
.22

Stock Purchase Agreement, dated December 19, 2008, by and
    between the Registrant and BrazAlta Resources Corp.
    (incorporated by reference to Exhibit 2.22 to the
    Registrants Annual Report on
    Form 10-K
    filed on March 9, 2009).3
.1

Amended and Restated Certificate of Incorporation of Registrant
    (incorporated by reference to Exhibit 3.1 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001).3
.2

Certificate of Designation, Preferences and Rights of the
    Series A 10% Cumulative Convertible Preferred Stock($.01 Par Value) of Registrant (incorporated by
    reference to Exhibit 3.1 to the Registrants Current
    Report on
    Form 8-K
    filed February 21, 2002).3
.3

Second Amended and Restated By-laws of Registrant (incorporated
    by reference to Exhibit 3.1. to the Registrants
    Current Report of
    Form 8-K
    filed April 3, 2008).3
.4

Certificate of Amendment of Certificate of Incorporation filed
    with the Delaware Secretary of State on June 9, 2004
    (incorporated by reference to Exhibit 3.3 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).3
.5

Certificate of Amendment of Certificate of Incorporation filed
    with the Delaware Secretary of State on January 5, 2005
    (incorporated by reference to Exhibit 3.5 to the
    Registrants Current Report on
    Form 8-K
    filed January 11, 2005).3
.6

Certificate of Amendment of Certificate of Incorporation filed
    with the Delaware Secretary of State on August 16, 2005
    (incorporated by reference to Exhibit 3.5 to the
    Registrants Current Report on
    Form 8-K
    filed August 17, 2005).3
.7

Certificate of Amendment to Amended and Restated Certificate of
    Incorporation filed with the Delaware Secretary of State on
    November 9, 2009.3
.8

Certificate of Designations of 7% Convertible Perpetual
    Preferred Stock (incorporated by reference to Exhibit 3.1
    to the Registrants Current Report on
    Form 8-K
    filed July 1, 2009).4
.1

Specimen Stock Certificate of Common Stock of Registrant
    (incorporated by reference to Exhibit 4.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).4
.2

Registration Rights Agreement dated as of March 31, 1999,
    by and between Allis-Chalmers Corporation and the Pension
    Benefit Guaranty Corporation (incorporated by reference to
    Exhibit 10.3 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 1999).4
.3

Registration Rights Agreement dated as of January 29, 2007
    by and among Allis-Chalmers Energy Inc., the Guarantors named
    therein and the Initial Purchasers named therein (incorporated
    by reference to Exhibit 10.2 to the Registrants
    Current Report on
    Form 8-K
    filed on January 29, 2007).4
.4

Registration Rights Agreement dated as of January 18, 2006
    by and among Allis-Chalmers Energy Inc., the Guarantors named
    therein and the Initial Purchasers named therein (incorporated
    by reference to Exhibit 10.2 to the Registrants
    Current Report on
    Form 8-K
    filed on January 24, 2006). 97




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##### Table of Contents



Exhibit

Description4
.5

Registration Rights Agreement dated as of August 14, 2006
    by and among the Registrant, the guarantors listed on
    Schedule A thereto and RBC Capital Markets Corporation
    (incorporated by reference to Exhibit 10.1 to the
    Registrants
    Form 8-K
    filed on August 14, 2006).4
.6

Indenture dated as of January 18, 2006 by and among the
    Registrant, the Guarantors named therein and Wells Fargo Bank,
    N.A., as trustee (incorporated by reference to Exhibit 4.1
    to the Registrants Current Report on
    Form 8-K
    filed on January 24, 2006).4
.7

First Supplemental Indenture dated as of August 11, 2006 by
    and among Allis-Chalmers GP, LLC, Allis-Chalmers LP, LLC,
    Allis-Chalmers Management, LP, Rogers Oil Tool Services, Inc.,
    the Registrant, the other Guarantors (as defined in the
    Indenture referred to therein) and Wells Fargo Bank, N.A
    (incorporated by reference to Exhibit 4.2 to the
    Registrants Current Report on
    Form 8-K
    filed on August 14, 2006).4
.8

Second Supplemental Indenture dated as of January 23, 2007
    by and among Petro-Rentals, Incorporated, the Registrant, the
    other Guarantor parties thereto and Wells Fargo Bank, N.A., as
    trustee (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on January 24, 2007).4
.9

Indenture, dated as of January 29, 2007, by and among the
    Registrant, the Guarantors named therein and Wells Fargo Bank,
    N.A. (incorporated by reference to Exhibit 4.1 to the
    Registrants Current Report on
    Form 8-K
    filed on January 29, 2007).4
.10

Form of 9.0% Senior Note due 2014 (incorporated by
    reference to Exhibit A to Exhibit 4.1 to the
    Registrants Current Report on
    Form 8-K
    filed on January 24, 2006).4
.11

Form of 8.5% Senior Note due 2017 (incorporated by
    reference to Exhibit A to Exhibit 4.1 to the
    Registrants Current Report on
    Form 8-K
    filed on January 29, 2007).4
.12

Investment Agreement, dated May 20, 2009, between
    Allis-Chalmers Energy Inc. and Lime Rock Partners V, L.P.
    (incorporated by reference to Exhibit 4.1 to Allis-Chalmers
    Energy Inc.s Current Report on
    Form 8-K
    filed on May 27, 2009).4
.13

First Amendment to Investment Agreement, dated June 25,
    2009, between Allis-Chalmers Energy Inc. and Lime Rock
    Partners V, L.P. (incorporated by reference to
    Exhibit 4.1 to Allis-Chalmers Energy Inc.s Current
    Report on
    Form 8-K
    filed on July 1, 2009).4
.14

Second Amendment to Investment Agreement, dated
    September 1, 2009, between Allis-Chalmers Energy Inc. and
    Lime Rock Partners V, L.P. (incorporated by reference to
    Exhibit 4.1 to Allis-Chalmers Energy Inc.s Current
    Report on
    Form 8-K
    filed on September 2, 2009).4
.15

Third Amendment to Investment Agreement, dated September 1,
    2009, between Allis-Chalmers Energy Inc. and Lime Rock
    Partners V, L.P. (incorporated by reference to
    Exhibit 4.1 to Allis-Chalmers Energy Inc.s Current
    Report on
    Form 8-K
    filed on January 5, 2010).4
.16

Registration Rights Agreement, dated June 26, 2009, between
    Allis-Chalmers Energy Inc. and Lime Rock Partners V, L.P.
    (incorporated by reference to Exhibit 4.2 to Allis-Chalmers
    Energy Inc.s Current Report on
    Form 8-K
    filed on July 1, 2009).10
.1

Amended and Restated Retiree Health Trust Agreement dated
    September 14, 1988 by and between Registrant and Wells
    Fargo Bank (incorporated by reference to
    Exhibit C-1
    of the First Amended and Restated Joint Plan of Reorganization
    dated September 14, 1988 included in Registrants
    Current Report on
    Form 8-K
    dated December 1, 1988).10
.2

Amended and Restated Retiree Health Trust Agreement dated
    September 18, 1988 by and between Registrant and Firstar
    Trust Company (incorporated by reference to
    Exhibit C-2
    of the First Amended and Restated Joint Plan of Reorganization
    dated September 14, 1988 included in Registrants
    Current Report on
    Form 8-K
    dated December 1, 1988).10
.3

Product Liability Trust Agreement dated September 14,
    1988 by and between Registrant and Bruce W. Strausberg, Trustee
    (incorporated by reference to Exhibit E of the First
    Amended and Restated Joint Plan of Reorganization dated
    September 14, 1988 included in Registrants Current
    Report on
    Form 8-K
    dated December 1, 1988).10
.4*

Allis-Chalmers Savings Plan (incorporated by reference to
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1988). 98




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##### Table of Contents



Exhibit

Description10
.5*

Allis-Chalmers Consolidated Pension Plan (incorporated by
    reference to Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1988).10
.6

Agreement dated as of March 31, 1999 by and between
    Registrant and the Pension Benefit Guaranty Corporation
    (incorporated by reference to Exhibit 10.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 1999).10
.7

Letter Agreement dated May 9, 2001 by and between
    Registrant and the Pension Benefit Guarantee Corporation
    (incorporated by reference to Exhibit 99.1 to the
    Registrants Current Report on
    Form 8-K
    filed May 15, 2001).10
.8

Termination Agreement dated May 9, 2001 by and between
    Registrant, the Pension Benefit Guarantee Corporation and others
    (incorporated by reference to Exhibit 99.2 to the
    Registrants Current Report on
    Form 8-K
    filed on May 15, 2001).10
.9*

Executive Employment Agreement, dated April 1, 2007, by and
    between the Registrant and Munawar H. Hidayatallah (incorporated
    by reference to Exhibit 10.3 to the Registrants
    Current Report on
    Form 8-K
    filed on November 6, 2007).10
.10*

Amendment to Executive Employment Agreement, dated as of
    December 31, 2008, by and between the Registrant and
    Munawar H. Hidayatallah (incorporated by reference to
    Exhibit 10.2 to the Registrants Current Report on
    Form 8-K
    filed on January 7, 2009).10
.11*

Amended and Restated Employment Agreement, dated August 5,
    2009, between Allis-Chalmers Energy Inc. and Victor M. Perez.
    (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on August 11, 2009).10
.12*

Executive Employment Agreement, effective July 1, 2007, by
    and between the Registrant and Terrence P. Keane (incorporated
    by reference to Exhibit 10.1 to the Registrants
    Current Report on
    Form 8-K
    filed on July 24, 2007).10
.13*

Amendment to Employment Agreement among the Registrant, AirComp
    LLC and Terrence P. Keane, effective April 1, 2008
    (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on May 1, 2008).10
.14*

Second Amendment to Executive Employment Agreement, dated
    December 31, 2008, by and between the Registrant and
    Terrence P. Keane (incorporated by reference to
    Exhibit 10.14 to the Registrants Annual Report on
    Form 10-K
    filed on March 9, 2009).10
.15*

Executive Employment Agreement, dated December 3, 2007, by
    and between the Registrant and Theodore F. Pound III
    (incorporated by reference to Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K
    filed on December 6, 2007).10
.16*

Executive Employment Agreement, effective July 1, 2007, by
    and between Strata Directional Technology LLC and David K. Bryan
    (incorporated by reference to Exhibit 10.17 to the
    Registrants Annual Report on
    Form 10-K
    filed on March 9, 2009).10
.17*

Amendment to Executive Employment Agreement, dated
    December 31, 2008, by and between Strata Directional
    Technology LLC and David K. Bryan (incorporated by reference to
    Exhibit 10.17 to the Registrants Annual Report on
    Form 10-K
    filed on March 9, 2009).10
.18*

Executive Employment Agreement, effective January 1, 2008,
    by and between the Registrant and Mark C. Patterson
    (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on February 25, 2008).10
.19

Strategic Agreement dated July 1, 2003 between Pan American
    Energy LLC Sucursal Argentina and DLS Argentina Limited Sucursal
    Argentina (incorporated by reference to Exhibit 10.13 to
    the Registrants Quarterly Report on
    Form 10-Q
    filed on December 29, 2006).10
.20

Amendment No. 1 dated May 18, 2005 to Strategic
    Agreement between Pan American Energy LLC Sucursal Argentina and
    DLS Argentina Limited Sucursal Argentina (incorporated by
    reference to Exhibit 10.14 to the Registrants
    Quarterly Report on
    Form 10-Q
    filed on December 29, 2006).10
.21

Amendment No. 2 dated January 1, 2006 between Pan
    American Energy LLC Sucursal Argentina and DLS Argentina Limited
    Sucursal Argentina (incorporated by reference to
    Exhibit 10.15 to the Registrants Quarterly Report on
    Form 10-Q
    filed on December 29, 2006). 99




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##### Table of Contents



Exhibit

Description10
.22

Investor Rights Agreement, dated December 18, 2006, by and
    between the Registrant and Oil & Gas Rental Services,
    Inc. (incorporated by reference to Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K
    filed on December 19, 2006).10
.23

First Amendment to Investor Rights Agreement, by and among
    Allis-Chalmers Energy Inc. and the holders named thereto, dated
    June 23, 2008 (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on June 26, 2008).10
.24

Investors Rights Agreement dated as of August 18, 2006 by
    and among the Registrant and the investors named on
    Exhibit A thereto (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on August 14, 2006).10
.25*

2003 Incentive Stock Plan (incorporated by reference to
    Exhibit 4.12 to the Registrants Current Report on
    Form 8-K
    filed August 17, 2005).10
.26*

Form of Option Certificate issued pursuant to 2003 Incentive
    Stock Plan (incorporated by reference to Exhibit 10.41 to
    the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2003).10
.27*

Second Amended and Restated 2006 Incentive Plan (incorporated by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    filed on November 12, 2009).10
.28*

Form of Employee Restricted Stock Agreement pursuant to the
    Registrants 2006 Incentive Plan (incorporated by reference
    to Exhibit 10.2 to the Registrants Current Report on
    Form 8-K
    filed on September 18, 2006).10
.29*

Form of Employee Nonqualified Stock Option Agreement pursuant to
    the Registrants 2006 Incentive Plan (incorporated by
    reference to Exhibit 10.3 to the Registrants Current
    Report on
    Form 8-K
    filed on September 18, 2006).10
.30*

Form of Employee Incentive Stock Option Agreement pursuant to
    the Registrants 2006 Incentive Plan (incorporated by
    reference to Exhibit 10.4 to the Registrants Current
    Report on
    Form 8-K
    filed on September 18, 2006).10
.31*

Form of Non-Employee Director Restricted Stock Agreement
    pursuant to the Registrants 2006 Incentive Plan
    (incorporated by reference to Exhibit 10.5 to the
    Registrants Current Report on
    Form 8-K
    filed on September 18, 2006).10
.32*

Form of Non-Employee Director Nonqualified Stock Option
    Agreement pursuant to the Registrants 2006 Incentive Plan
    (incorporated by reference to Exhibit 10.6 to the
    Registrants Current Report on
    Form 8-K
    filed on September 18, 2006).10
.33*

Form of Performance Award Agreement, as amended and restated
    effective March 3, 2010, pursuant to the Registrants
    2006 Incentive Plan (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on March 9, 2010).10
.34

Second Amended and Restated Credit Agreement, dated as of
    April 26, 2007, by and among the Registrant, as borrower,
    Royal Bank of Canada, as administrative agent and collateral
    agent, RBC Capital Markets, as lead arranger and sole
    bookrunner, and the lenders party thereto (incorporated by
    reference to Exhibit 10.1 to the Registrants
    Quarterly Report
    Form 10-Q
    filed on May 10, 2007).10
.35

First Amendment to Second Amended and Restated Credit Agreement,
    dated as of December 3, 2007, by and among the Registrant,
    the guarantors named thereto, Royal Bank of Canada and the
    lenders named thereto (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on December 6, 2007).10
.36

Second Amendment to Second Amended and Restated Credit
    Agreement, dated as of December 29, 2008, by and among the
    Registrant, as borrower, Royal Bank of Canada, as administrative
    agent, and the lenders named thereto (incorporated by reference
    to Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on January 7, 2009).10
.37

Third Amendment to Second Amended and Restated Credit Agreement,
    dated as of April 9, 2009, by and among the Company, as
    borrower, certain subsidiaries of the Company, as guarantors,
    Royal Bank of Canada, as administrative agent, and the lenders
    named thereto (incorporated by reference to Exhibit 10.1 to
    the Registrants Current Report on
    Form 8-K
    filed on April 9, 2009). 100




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##### Table of Contents



Exhibit

Description10
.38

Fourth Amendment to Second Amended and Restated Credit
    Agreement, dated May 20, 2009, by and among Allis-Chalmers
    Energy Inc., the subsidiary guarantors party thereto, Royal Bank
    of Canada, as Administrative Agent and Collateral Agent, and the
    lenders party thereto (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on May 27, 2009).10
.39

Fifth Amendment to Second Amended and Restated Credit Agreement,
    dated as of October 13, 2009, by and among the Company, as
    borrower, certain subsidiaries of the Company, as guarantors,
    Royal Bank of Canada, as administrative agent, and the lenders
    named thereto (incorporated by reference to Exhibit 10.1 to
    the Registrants Current Report on
    Form 8-K
    filed on October 16, 2009).10
.40

Sixth Amendment to Second Amended and Restated Credit Agreement,
    dated as of February 25, 2010, by and among the Company, as
    borrower, certain subsidiaries of the Company as guarantors,
    Royal Bank of Canada, as administrative agent, and the lenders
    named thereto (incorporated by reference to Exhibit 10.1 to
    the Registrants Current Report on
    Form 8-K
    filed on March 2, 2010).10
.41

Master Loan and Security Agreement, dated as of January 23,
    2009, by and among Allis-Chalmers Drilling LLC, as borrower,
    Allis-Chalmers Energy Inc., as guarantor, and Caterpillar
    Financial Services Corporation, as lender (incorporated by
    reference to Exhibit 10.2 to the Registrants Current
    Report on
    Form 8-K
    filed on May 27, 2009).10
.42

Amended and Restated Guaranty, dated April 26, 2007, by
    each of the guarantors named thereto in favor of Royal Bank of
    Canada, as administrative agent and collateral agent
    (incorporated by reference to Exhibit 10.2 to the
    Registrants Quarterly Report on
    Form 10-Q
    filed on May 10, 2007).10
.43

Amended and Restated Pledge and Security Agreement, dated
    April 26, 2007, by the Registrant in favor of Royal Bank of
    Canada, as administrative agent and collateral agent
    (incorporated by reference to Exhibit 10.3 to the
    Registrants Quarterly Report on
    Form 10-Q
    filed on May 10, 2007).10
.44

Credit Agreement, dated January 31, 2008, among the
    Registrant, as lender, BCH Ltd., as borrower, and BCH Energy do
    Brasil Servicos de Petroleo Ltda. as guarantor (incorporated by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    filed on February 6, 2008).10
.45

Option to Purchase and Governance Agreement, dated
    January 31, 2008, among the Registrant, BrazAlta Resources
    Corp. and BCH Ltd. (incorporated by reference to
    Exhibit 10.2 to the Registrants Current Report on
    Form 8-K
    filed on February 6, 2008).10
.46

Subordination Agreement, dated January 31, 2008, among the
    Registrant, Standard Bank PLC, BCH Ltd., BCH Energy do Brasil
    Servicos de Petroleo Ltda. and BrazAlta Resources Corp.
    (incorporated by reference to Exhibit 10.3 to the
    Registrants Current Report on
    Form 8-K
    filed on February 6, 2008).10
.47

Form of Convertible Subordinated Secured Debenture (incorporated
    by reference to Schedule E to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on February 6, 2008).10
.48

Mutual Termination and Release Agreement, dated August 8,
    2008, by and among Allis-Chalmers Energy Inc., Bronco Drilling
    Company, Inc. and Elway Merger Sub LLC (incorporated by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    filed on August 8, 2008).10
.49

Amended and Restated Performance award Agreement, dated
    March 11, 2009, between Allis-Chalmers Energy Inc. and
    Munawar H. Hidayatallah (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on March 13, 2009).10
.50

Amended and Restated Performance Award Agreement, dated
    August 5, 2009, between Allis-Chalmers Energy Inc. and
    Victor M. Perez (incorporated by reference to Exhibit 10.2
    to the Registrants Current Report on
    Form 8-K
    filed on August 11, 2009).10
.51

Letter agreements dated March 9, 2009, by each of Munawar
    H. Hidayatallah, Victor M. Perez, Theodore F. Pound III, David
    Bryan, Terrence P. Keane and Mark Patterson (incorporated by
    reference to Exhibit 10.2 to the Registrants Current
    Report on
    Form 8-K
    filed on March 13, 2009).21
.1

Subsidiaries of Registrant.23
.1 

Consent of UHY LLP.31
.1 

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002. 101




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##### Table of Contents



Exhibit

Description31
.2 

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1 

Certification of the Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Compensation Plan or Agreement
    
    Filed herewith. 102