##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 Form 10-K/A
 Amendment No. 1
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR 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
 o
  Large accelerated filer o
    
    Accelerated
filer þ
    
    Non-accelerated filer o
    
    Smaller reporting
company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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Explanatory Note
     TABLE OF CONTENTS
 PagePART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    - 2 -Item 11.
    
    Executive Compensation
    
    - 7 -Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    - 25 -Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    - 28 -Item 14.
    
    Principal Accounting Fees and Services
    
    - 29 -PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    - 31 -Signatures and Certifications
    
    - 32 -Certification of the Chief Executive Officer Pursuant to Section 302Certification of the Chief Financial Officer Pursuant to Section 302Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906




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PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Information Regarding Directors
    Name
    
    Age
    
    Director SinceBurt A. Adams
    
    
    46
    
    
    December 2006Ali H. M. Afdhal
    
    
    63
    
    
    September 2006Alejandro P. Bulgheroni
    
    
    64
    
    
    August 2006Carlos A. Bulgheroni
    
    
    63
    
    
    August 2006Victor F. Germack
    
    
    68
    
    
    January 2005James M. Hennessy
    
    
    59
    
    
    April 2007Munawar H. Hidayatallah
    
    
    63
    
    
    May 2001John E. McConnaughy, Jr.
    
    
    78
    
    
    May 2004Robert E. Nederlander
    
    
    74
    
    
    May 1989Zane Tankel
    
    
    68
    
    
    February 2007Leonard Toboroff
    
    
    75
    
    
    May 1989
 Burt A. Adams
 Ali H. M. Afdhal
 Alejandro P. Bulgheroni
 -2-




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Carlos A. Bulgheroni
 Victor F. Germack
 James M. Hennessy
 Munawar H. Hidayatallah
 John E. McConnaughy, Jr.
 Robert E. Nederlander
 -3-




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Zane Tankel
 Leonard Toboroff
 Information Regarding Executive Officers
  Name
    
    Age
    
    PositionMunawar H. Hidayatallah
    
    
    63
    
    
    Chairman and Chief Executive OfficerVictor M. Perez
    
    
    55
    
    
    Chief Financial OfficerTheodore F. Pound III
    
    
    53
    
    
    General Counsel and SecretaryBruce Sauers
    
    
    44
    
    
    Vice President and Corporate ControllerTerrence P. Keane
    
    
    56
    
    
    Senior Vice PresidentOilfield ServicesMark C. Patterson
    
    
    49
    
    
    Senior Vice PresidentRental Services; President
of Allis-Chalmers Rental Services LLCDavid K. Bryan
    
    
    51
    
    
    President and Chief Executive Officer of Strata
Directional Technology LLCSteven Collins
    
    
    56
    
    
    President of Allis-Chalmers Production Services LLCGary Edwards
    
    
    56
    
    
    President of Allis-Chalmers Tubular Services LLCJohn A. Meyers
    
    
    47
    
    
    President of AirComp LLC
 Munawar H. Hidayatallah
 -4-




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Victor M. Perez
 Theodore F. Pound III
 Bruce Sauers
 Terrence P. Keane
 Mark C. Patterson
 David K. Bryan
 Steven Collins
 Gary Edwards
 John A. Meyers
 -5-




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Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Business Conduct and Ethics
  
    
    deter wrongdoing;
    
    promote honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional relationships;
    
    promote full, fair, accurate, timely, and understandable disclosure in reports
and documents that we file with the SEC or otherwise communicate to the public;
    
    promote compliance with applicable governmental laws, rules and regulations;
    
    promote prompt internal reporting of violations of the code to an appropriate
person; and
    
    promote accountability for adherence to the code.
  Audit Committee
  -6-




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
    
    the conduct of our accounting and financial reporting process and the integrity
of our financial statements;
    
    the functioning of our systems of internal accounting and financial controls; and
    
    the engagement, compensation, performance, qualifications and independence of our
independent auditors.
  www.alchenergy.com
 
 ITEM 11. EXECUTIVE COMPENSATION
 Compensation Discussion and Analysis
  Executive Compensation Philosophy and Objectives
  
    
    Compensation decisions should reflect our strategy We have experienced rapid growth
in recent years. As we have grown, we have made compensation decisions that reflect our
size and growth.
    
    Total compensation should reflect performanceOur compensation program provides
incentives that reward executives for achieving short-term as well as long-term financial
and operational goals. Our total compensation program is managed so that a significant
amount of executive compensation is considered at risk, and conditioned on performance.
    
    Compensation levels must be competitiveDemand for qualified executive talent in our
industry is high, while the supply for this talent is limited. The level of base salaries,
short-term incentive opportunities, and long-term incentive opportunities established for
our named executive officers are intended to provide a total target compensation
opportunity in the range of the market median for executives in comparable positions and
markets in which we compete for talent.
    
    Executive interests should be aligned with those of our stockholdersThe value of our
executive compensation programs should generally vary as our stockholders experience
increase or decrease in value. Through the use of performance related annual incentives,
stock option grants, and restricted stock grants, we attempt to align the long-term
interests of our executives with those of our stockholders by linking a portion of
executive compensation to our long-term financial performance.
 -7-




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
    
    Compensation programs should motivate executives to stay with us over the long-termIn
addition to providing compensation that is competitive with the market, we attempt to
provide incentive for our executives to stay with the company. We use time vested option
and restricted stock awards in our compensation program, providing retention incentives for
our executives to stay with us. In the last year, we entered into an employment agreement
with each of our named executive officers. Each of these high performing executives have
been retained for three year terms. The Compensation Committee believes that retaining
each of these individuals will play a critical role in our future success.
 Role of Compensation Committee
  
    
    evaluating and approving our overall compensation programs;
    
    annually reviewing the performance of and setting the compensation (i.e., salary,
incentive awards, and all other elements) for our chief executive officer;
    
    annually reviewing the performance of and recommending the compensation for the other
executive officers; and
    
    reviewing and approving annual goals and mechanics along with administering our annual
incentive and equity compensation plans and programs.
 Compensation Governance
   Reviewed andCompensation Element
    
    Plan/Governance
    
    Recommended By:
    
    Approved By:Base Salary
    
    Employment AgreementCEO
    
    Annual Bonus
    
    Employment Agreement
    
    Compensation
    
    CompensationLong-Term Incentives
    
    2006 Incentive Plan
    
    Committee
    
    CommitteeBase Salary
    
    Employment AgreementsNEOs
    
    Annual Bonus
    
    Employment Agreements
    
    CEO & CompensationLong-Term Incentives
    
    2006 Incentive Plan
    
    Committee
    
    Board of Directors
 Role of Compensation Consultants
  -8-




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Role of Our Executive Officers in Establishing Compensation
  Benchmarking
   
    
    Core Laboratories
    
    Gulfmark Offshore Inc.
    
    NATCO Group Inc.
    
    Newpark Resources
    
    Oil States Intl. Inc.
    
    RPC Inc.
    
    Superior Energy Services Inc.
    
    Superior Well Services Inc.
    
    Tesco Corp.
    
    Tetra Technologies Inc.
    
    W-H Energy Services Inc.
  Components of Executive Compensation
  Base Salary
  -9-




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
    
    the executives individual performance;
    
    the performance of the executives business unit within Allis-Chalmers;
    
    company-wide performance;
    
    the executives experience and expertise;
    
    the executives position and job responsibilities;
    
    the executives years of service with us; and
    
    the competitive pay levels for similar positions.
  Annual Incentive Compensation
  Long-Term Incentive Compensation
  Stock Options
 -10-




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Restricted Stock
  Perquisites
    Employee Benefits
  Compensation of the Named Executive Officers
 Chairman & Chief Executive Officer
   -11-




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Chief Financial Officer
   General Counsel & Secretary
   President and CEO of Strata Directional Technology LLC
  -12-




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Senior Vice PresidentOilfield Services
    Executive Compensation Policies and Processes
 Equity Award Grant Practices
  Policy Regarding Section 162(m) of the Internal Revenue Code
  -13-




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
    
    Base salaries for all named executive officers were fully deductible in 2007 as each
of those salaries were under $1 million.
    
    Stock options awards were granted under the stockholder approved 2006 Incentive Plan
and are deductible as performance-based compensation under Section 162(m).
  Executive Stock Ownership Guidelines
  Compensation Committee Report
  The Compensation Committee of the Board of DirectorsAli H. M. AfdhalZane Tankel -14-




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Summary Compensation Table
  Non-EquityStock
    
    Option
    
    Incentive Plan
    
    All OtherSalary
    
    Bonus
    
    Awards(1)
    
    Awards(2)
    
    Compensation
    
    Compensation(5)
    
    TotalName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)(3)
    
    ($)
    
    ($)Munawar H. Hidayatallah
    
    
    2007
    
    
    
    475,000
    
    
    
    100,000
    
    
    
    2,013,444
    
    
    
    547,115
    
    
    
    
    
    
    
    139,034
    
    
    
    3,274,593Chairman & Chief Executive
    
    
    2006
    
    
    
    400,000
    
    
    
    
    
    
    
    
    
    
    
    845,694
    
    
    
    400,000
    
    
    
    88,240
    
    
    
    1,733,934OfficerVictor M. Perez
    
    
    2007
    
    
    
    270,833
    
    
    
    
    
    
    
    63,608
    
    
    
    81,912
    
    
    
    
    
    
    
    43,000
    
    
    
    459,353Chief Financial Officer
    
    
    2006
    
    
    
    248,833
    
    
    
    100,000
    
    
    
    
    
    
    
    212,551
    
    
    
    120,000
    
    
    
    21,801
    
    
    
    703,185Theodore F. Pound
    
    
    2007
    
    
    
    240,833
    
    
    
    
    
    
    
    6,346
    
    
    
    65,852
    
    
    
    
    
    
    
    29,751
    
    
    
    342,782General Counsel and Secretary
    
    
    2006
    
    
    
    205,500
    
    
    
    100,000
    
    
    
    
    
    
    
    230,142
    
    
    
    90,000
    
    
    
    15,923
    
    
    
    641,565David K. Bryan
    
    
    2007
    
    
    
    250,000
    
    
    
    
    
    
    
    309,877
    
    
    
    5,284
    
    
    
    231,250
    
    
    
    21,148
    
    
    
    817,559President and Chief
    
    
    2006
    
    
    
    187,000
    
    
    
    
    
    
    
    
    
    
    
    33,038
    
    
    
    174,996
    
    
    
    12,941
    
    
    
    407,975Executive Officer of Strata
Directional Technology LLCTerrence P. Keane(4)
    
    
    2007
    
    
    
    202,404
    
    
    
    
    
    
    
    287,653
    
    
    
    38,399
    
    
    
    156,250
    
    
    
    40,393
    
    
    
    725,099Senior Vice
PresidentOilfield Services
    
    
    2006
    
    
    
    172,038
    
    
    
    
    
    
    
    
    
    
    
    128,957
    
    
    
    87,500
    
    
    
    16,062
    
    
    
    404,557
 
 (1)
    
    The amounts indicated represent the aggregate dollar amount of compensation expense, excluding the
reduction for risk of forfeiture, related to restricted stock awards recognized in our financial
statements during fiscal year 2007. The expense was determined in accordance with FAS 123(R) as
disclosed in Notes 1 and 10 to our financial statements included in our annual report on Form 10-K for
the year ended December 31, 2007.(2)
    
    The amounts indicated represent the aggregate dollar amount of compensation expense, excluding the
reduction for risk of forfeiture, related to stock option awards recognized in our financial statements
during fiscal year 2007 and includes amounts from awards granted prior to 2007. The expense was
determined in accordance with FAS 123(R) as disclosed in Notes 1 and 10 to our financial statements
included in our annual report on Form 10-K for the year ended December 31, 2007.(3)
    
    The amounts indicated represent annual incentive compensation paid pursuant to each executives
employment agreement.(4)
    
    Mr. Keanes promotion to Senior Vice PresidentOilfield Services was effective January 29, 2008.
During 2007, Mr. Keane served as President and Chief Executive Officer of AirComp LLC.(5)
    
    The following table provides a summary of the All Other Compensation column and includes all perquisites: -15-




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Summary of All Other Compensation
 401(k) plan
    
    
    
    
    
    Allis-ChalmersHealth
    
    Matching
    
    Car
    
    Provided
    
    Other PersonalBenefits (1)
    
    Contributions
    
    Allowance
    
    Car (2)
    
    Benefits (3)
    
    TotalName
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Munawar H. Hidayatallah
    
    
    2007
    
    
    
    62,788
    
    
    
    7,500
    
    
    
    
    
    
    
    12,302
    
    
    
    56,444
    
    
    
    139,0342006
    
    
    
    27,832
    
    
    
    3,750
    
    
    
    
    
    
    
    7,023
    
    
    
    49,635
    
    
    
    88,240Victor M. Perez
    
    
    2007
    
    
    
    23,513
    
    
    
    7,488
    
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    43,0012006
    
    
    
    10,723
    
    
    
    4,578
    
    
    
    6,500
    
    
    
    
    
    
    
    
    
    
    
    21,801Theodore F. Pound
    
    
    2007
    
    
    
    10,001
    
    
    
    7,750
    
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    29,7512006
    
    
    
    9,623
    
    
    
    4,800
    
    
    
    1,500
    
    
    
    
    
    
    
    
    
    
    
    15,923David K. Bryan
    
    
    2007
    
    
    
    10,801
    
    
    
    4,347
    
    
    
    6,000
    
    
    
    
    
    
    
    
    
    
    
    21,1482006
    
    
    
    6,941
    
    
    
    
    
    
    
    6,000
    
    
    
    
    
    
    
    
    
    
    
    12,941Terrence P. Keane
    
    
    2007
    
    
    
    22,418
    
    
    
    5,975
    
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    40,3932006
    
    
    
    5,751
    
    
    
    2,311
    
    
    
    8,000
    
    
    
    
    
    
    
    
    
    
    
    16,062
 
 (1)
    
    The amounts indicated represent actual health benefit premiums and expenses paid by Allis-Chalmers.(2)
    
    We provide a company car and driver to Mr. Hidayatallah for business reasons and for commuting to
and from the office. The cost of the driver was determined by allocating a portion of the total
actual employment costs of the administrative employee based on amount of driving time per
employee. The cost of the company car was determined by allocating a portion of the car purchase
price (total cost divided by three for the expected usage of the car in years), annual cost of
insurance, maintenance and other costs based on mileage incurred for commuting and personal use by
each employee.(3)
    
    Other personal benefits for Mr. Hidayatallah include $23,415 in Allis-Chalmers-paid airline
flights and $33,029 in apartment and utility costs for the corporate apartment in Houston, Texas
for the fiscal year 2007. -16-




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Grant of Plan-Based Awards
  All other stock awards:
    
    All other option awards:
    
    
    
    
    
    Grant Date FairEstimated Future Payouts Under
    
    Estimated Future Payouts Under
    
    Number of shares
    
    Number of Securities
    
    Exercise or
    
    Value of StockNon-Equity Incentive Plan Awards (1)
    
    Equity Incentive Plan Awards (2)
    
    of stock
    
    Underlying
    
    Base Price of
    
    and OptionThreshold
    
    Target
    
    Maximum
    
    Threshold
    
    Target
    
    Maximum
    
    or Units
    
    Options
    
    Option Awards
    
    AwardsName
    
    Grant Date
    
    $
    
    $
    
    $
    
    #
    
    #
    
    #
    
    #(3)
    
    #(4)
    
    $/sh
    
    $(5)Munawar H.
Hidayatallah
    
    
    
    
    
    
    
    
    
    
    475,000
    
    
    
    8/3/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    21.95
    
    
    
    2,607,8249/17/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    685,000
    
    
    
    685,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,390,358Victor M. Perez
    
    
    
    
    
    
    
    
    
    
    139,7508/3/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    21..95
    
    
    
    165,0568/3/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    462,946Theodore F. Pound
    
    
    
    
    
    
    
    
    
    
    120,00012/3/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    231,150David K. Bryan
    
    
    
    
    
    
    
    
    
    
    218,500
    
    
    
    6/14/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,500
    
    
    
    
    
    
    
    
    
    
    
    830,25010/14/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,000
    
    
    
    
    
    
    
    
    
    
    
    1,440,750Terrence P. Keane
    
    
    
    
    
    
    
    
    
    
    212,500
    
    
    
    6/14/2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,000
    
    
    
    
    
    
    
    
    
    
    
    996,300
 
 (1)
    
    Reflects each named executive officers target amount of the annual
cash incentive bonus under our non-equity incentive compensation plan
for 2007. The amounts of the performance bonus awards made to the
named executive officers pursuant to the incentive compensation plan
for 2007 are set forth in the Non-Equity Incentive Plan Compensation
column of the Summary Compensation Table above.(2)
    
    The amounts indicated represent performance based restricted stock
awards and options granted during fiscal year 2007. The vesting
schedules, upon satisfying performance criteria, for the awards
granted during the fiscal year 2007 are disclosed in footnotes 2, 6
and 7 in the following Outstanding Equity Awards table.(3)
    
    The amounts indicated represent restricted stock awards granted during
fiscal year 2007. The vesting schedules for restricted stock awards
granted during the fiscal year 2007 are disclosed in the footnotes in
the following Outstanding Equity Awards table.(4)
    
    The amounts indicated represent options granted during fiscal year
2007. The vesting schedules for option awards granted during the
fiscal year 2007 are disclosed in the footnotes in the following
Outstanding Equity Awards table.(5)
    
    The valuation of restricted stock awards and stock options were
determined in accordance with FAS 123(R) as disclosed in Notes 1 and
10 to our financial statements included in our annual report on Form
10-K for the year ended December 31, 2007. -17-




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Outstanding Equity Awards at Fiscal Year-End 2007
  Options Awards
    
    Stock AwardsEquity IncentiveEquity Incentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity Incentive
    
    Plan Awards:Plan Awards:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan Awards:
    
    Market orNumber of
    
    Number of
    
    Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number
    
    Payout ValueSecurities
    
    Securities
    
    Securities
    
    
    
    
    
    
    
    
    
    Number of
    
    Market Value
    
    of Unearned
    
    of UnearnedUnderlying
    
    Underlying
    
    Underlying
    
    
    
    
    
    
    
    
    
    Shares or
    
    of Shares or
    
    Shares, Units
    
    Shares, UnitsUnexercised
    
    Unexercised
    
    Unexercised
    
    Option
    
    
    
    
    
    Units of Stock
    
    Units of Stock
    
    or Other Rights
    
    or Other RightsOptions
    
    Options
    
    Unearned
    
    Exercise
    
    Option
    
    That Have
    
    That Have
    
    That Have
    
    That Have#
    
    #
    
    Options
    
    Price
    
    Expiration
    
    Not Vested
    
    Not Vested
    
    Not Vested
    
    Not VestedName
    
    Exercisable
    
    Unexercisable
    
    #
    
    $
    
    Date
    
    #
    
    $(1)
    
    #
    
    $(1)Munawar H.
Hidayatallah
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    3.86
    
    
    
    2/2/201583,333
    
    
    
    
    
    
    
    
    
    
    
    10.85
    
    
    
    12/15/2015200,000
    
    
    
    
    
    
    
    21.95
    
    
    
    8/3/2017685,000
    (6)
    
    
    10,103,750Victor M. Perez
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    4.85
    
    
    
    11/13/201445,000
    
    
    
    
    
    
    
    
    
    
    
    10.85
    
    
    
    12/15/201515,000
    (2)
    
    
    21.95
    
    
    
    8/3/201725,000
    (7)
    
    
    368,750Theodore F. Pound
III
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    4.85
    
    
    
    11/13/201450,000
    
    
    
    
    
    
    
    
    
    
    
    10.85
    
    
    
    12/15/201515,000
    (3)
    
    
    221,250David K. Bryan
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    4.87
    
    
    
    5/24/201537,500
    (4)
    
    
    553,12575,000
    (5)
    
    
    1,106,250Terrence P. Keane
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    4.87
    
    
    
    5/24/201525,000
    
    
    
    
    
    
    
    
    
    
    
    10.85
    
    
    
    12/15/201545,000
    (4)
    
    
    663,750
 
 (1)
    
    The values represented have been calculated by multiplying $14.75, the
closing price of our common stock on December 31, 2007, by the number
of shares of restricted stock.(2)
    
    The performance-based stock options were granted on August 3, 2007 and
vest 20% on August 3, 2008, 20% on August 3, 2009 and 60% on August 3,
2010. Alternatively, the award vests 100% on August 3, 2010 if
certain performance goals are met. Vesting is also contingent on
continued employment.(3)
    
    The restricted stock awards were granted on December 3, 2007 and vest
20% on December 3, 2008, 20% on December 3, 2009 and 60% on December
3, 2010.(4)
    
    The restricted stock awards were granted on June 14, 2007 and vest 20%
on June 14, 2008, 20% on June 14, 2009 and 60% on June 14, 2010.(5)
    
    The restricted stock awards were granted on October 4, 2007 and vest
20% on October 4, 2008, 20% on October 4, 2009 and 60% on October 4,
2010.(6)
    
    The performance-based restricted stock awards were granted on
September 17, 2007 and vest one-third each on April 1, 2008, 2009 and
2010 if certain performance goals are met. Alternatively, the award
vests 100% on April 1, 2010 if certain performance goals are met.
Vesting is also contingent on continued employment, except in the case
of death or disability.(7)
    
    The performance-based restricted stock awards were granted on August
3, 2007 and vest 20% on August 3, 2008, 20% on August 3, 2009 and 60%
on August 3, 2010. Alternatively, the award vests 100% on the third
anniversary date if certain performance goals are met. Vesting is
also contingent on continued employment. -18-




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##### Table of Contents



Option Exercises and Stock Vested During Fiscal Year 2007
  Option AwardsNumber of Shares
    
    Value RealizedAcquired on Exercise
    
    on ExerciseName
    
    (#)
    
    ($)Munawar H. Hidayatallah
    
    
    
    
    
    
    Victor M. Perez
    
    
    18,000
    
    
    $
    271,616Theodore F. Pound III
    
    
    10,000
    
    
    $
    161,538David K. Bryan
    
    
    35,000
    
    
    $
    536,099Terrence P. Keane
    
    
    10,000
    
    
    $
    146,315
 Director Compensation for Fiscal Year 2007
   Fees Earned or
    
    Stock
    
    Option
    
    All OtherPaid in Cash
    
    Awards(1)
    
    Awards
    
    Compensation
    
    TotalName
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Burt A.
Adams(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ali H.M. Afdhal
    
    
    50,000
    
    
    
    63,104
    (4)
    
    
    
    
    
    
    
    
    
    
    113,104Alejandro Bulgheroni
    
    
    35,000
    
    
    
    63,104
    (4)
    
    
    
    
    
    
    
    
    
    
    98,104Carlos Bulgheroni
    
    
    35,000
    
    
    
    63,104
    (4)
    
    
    
    
    
    
    
    
    
    
    98,104Victor F. Germack
    
    
    90,000
    
    
    
    63,104
    (4)
    
    
    
    
    
    
    
    
    
    
    153,104James M. Hennessy
    
    
    26,250
    
    
    
    37,655
    (5)
    
    
    
    
    
    
    
    
    
    
    63,905Munawar H.
Hidayatallah(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 -19-




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##### Table of Contents



Fees Earned or
    
    Stock
    
    Option
    
    All OtherPaid in Cash
    
    Awards(1)
    
    Awards
    
    Compensation
    
    TotalName
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)John E. McConnaughy Jr.
    
    
    50,000
    
    
    
    63,104
    (4)
    
    
    
    
    
    
    
    
    
    
    113,104Robert E. Nederlander
    
    
    55,000
    
    
    
    63,104
    (4)
    
    
    
    
    
    
    
    
    
    
    118,104Zane Tankel
    
    
    38,913
    
    
    
    46,888
    (6)
    
    
    
    
    
    
    
    
    
    
    85,801Leonard
Toboroff(2)
    
    
    156,250
    (3)
    
    
    64,934
    (4)
    
    
    
    
    
    
    23,683
    (7)
    
    
    244,867
 
 (1)
    
    The amounts indicated represent the aggregate dollar amount of
compensation expense, excluding the reduction for risk of forfeiture,
related to restricted stock awards recognized in our financial
statements during fiscal year 2007 and includes amounts from awards
granted prior to 2007. The expense was determined in accordance with
FAS 123(R) as disclosed in Notes 1 and 10 to our financial statements
included in our annual report on Form 10-K for the year ended December
31, 2007. As of December 31, 2007, each of our directors, except for
Messrs. Adams and Hidayatallah, owned 4,000 shares of restricted stock
that vests on October 4, 2008.(2)
    
    Employee directors do not receive any additional compensation
for serving on the board of directors.(3)
    
    This amount includes consulting fees paid to Mr. Toboroff of $12,500
per month from January 2007 through September 2007 and $15,000 per
month beginning October 2007, pursuant to an oral consulting agreement
with Mr. Toboroff.(4)
    
    Directors were granted 4,000 restricted stock awards on October 4,
2007 with a grant date fair value of $76,840. The valuation of
restricted stock awards were determined in accordance with FAS 123(R)
as disclosed in Notes 1 and 10 to our financial statements included in
our annual report on Form 10-K for the year ended December 31, 2007.(5)
    
    Mr. Hennessy was granted 4,000 shares of restricted stock on October
4, 2007 with a grant date fair value of $76,840 and 1,200 shares of
restricted stock on December 20, 2007 with a grant date fair value of
$18,468. The valuation of restricted stock awards were determined in
accordance with FAS 123(R) as disclosed in Notes 1 and 10 to our
financial statements included in our annual report on Form 10-K for
the year ended December 31, 2007.(6)
    
    Mr. Tankel was granted 4,000 shares of restricted stock on October 4,
2007 with a grant date fair value of $76,840 and 1,800 shares of
restricted stock on December 20, 2007 with a grant date fair value of
$27,702. The valuation of restricted stock awards were determined in
accordance with FAS 123(R) as disclosed in Notes 1 and 10 to our
financial statements included in our annual report on Form 10-K for
the year ended December 31, 2007.(7)
    
    This amount includes actual health benefit premiums paid by
Allis-Chalmers. Employment Agreements and Change-in-Control Arrangements with Management
  Employment Agreements
 Munawar H. Hidayatallah
 -20-




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##### Table of Contents



Victor M. Perez
 Theodore F. Pound III
 David K.
Bryan
 Terrence P. Keane
 Severance and Change in Control Arrangements
   -21-




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##### Table of Contents




    
    the commission of any act of dishonesty, fraud, misrepresentation,
misappropriation, or embezzlement involving Allis-Chalmers;
    
    the unauthorized use or disclosure of any confidential information or trade
secrets of Allis-Chalmers;
    
    any violation of a law or regulation applicable to our business, which violation
does or is reasonably like to cause material injury to Allis-Chalmers;
    
    executives conviction of, or plea of nolo contendereor guilty to (a) a felony
or (b) any other crime which involves moral turpitude;
    
    executives continued failure, in the sole discretion of the board, to perform
the principal duties, functions and responsibilities of his position (other than any
such failure resulting from executives disability) or to follow the directives of
the board after written notice from Allis-Chalmers identifying the deficiencies in
performance and a reasonable cure period of not less than thirty (30) days of any
breach capable of cure;
    
    gross negligence or willful misconduct in the performance of executives duties;
or
    
    a material and willful breach of executives fiduciary duties to Allis-Chalmers.
  
    
    demote the executive to a lesser position, either in title or responsibility;,
    
    decrease the executives salary or benefits below the highest level in effect at
anytime during his employment;,
    
    require the executive to relocate to a principal place of business more than 50
miles from our current principal place of business, with certain exceptions;,
    
    are subject to a change in control (as defined below), unless executive accepts
employment with the successor; or
    
    breach any other material term of the employment agreement which is not cured
within 30 days after receiving notice of such breach.
  -22-




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##### Table of Contents




    
    the acquisition by any individual, entity or group, or person of ownership of
more than 50% of either (1) the then outstanding shares of common stock or (2) the
combined voting power of our then outstanding voting securities entitled to vote,
with certain exceptions;
    
    individuals who currently constitute the board of directors cease for any reason
to constitute at least a majority of the board, with several exceptions;
    
    a complete liquidation or dissolution of Allis-Chalmers; or
    
    (a) the consummation of a reorganization, merger or consolidation or (b) the sale
or other disposition of all or substantially all of our assets unless, in each case,
immediately following the event
 
    
    Our stockholders immediately before the event own, directly or indirectly,
at least 50% of the combined voting power of our then outstanding voting
securities in substantially the same proportion as their ownership of us, or
    
    At least a majority of the members of the board of directors of the entity
resulting from the transaction were members of the incumbent board at the time
of the execution of the agreement providing for the transaction.
 -23-




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##### Table of Contents



Value of Unvested
    
    Value of UnvestedEquity Awards if
    
    Equity Awards if
    
    
    
    
    
    Total ifSalary
    
    Change of
    
    Terminated Without
    
    Total if Change
    
    TerminatedName
    
    Continuation
    
    Control(1)
    
    Cause
    
    of Control
    
    Without CauseVictor M. Perez,
    
    $
    286,000
    
    
    $
    368,750
    
    
    
    
    
    
    $
    654,750
    
    
    $
    286,000Chief Financial
OfficerTheodore F. Pound
    
    $
    250,000
    
    
    $
    221,250
    (2)
    
    
    
    
    
    $
    471,250
    
    
    $
    250,000III, General
Counsel and
SecretaryDavid Bryan,
    
    $
    625,000
    
    
    $
    1,659,375
    (2)
    
    
    
    
    
    $
    2,284,375
    
    
    $
    625,000President and Chief
Executive Officer
of Strata
Directional
Technology LLCTerrence P. Keane,
    
    $
    562,500
    
    
    $
    663,750
    (2)
    
    
    
    
    
    $
    1,226,250
    
    
    $
    562,500Senior Vice
PresidentOilfield
Services
 
 (1)
    
    The amounts in this column represent unvested restricted
stock that have been valued by multiplying $14.75, the
closing price of a share of our common stock on December 31, 2007, by the number of shares
of restricted stock held by each named executive officer that would vest.(2)
    
    The equity awards represented by this column would vest only if there was a change of
control of Allis-Chalmers and the successor company refused to assume or continue the
agreement covering these shares. -24-




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##### Table of Contents



Salary
    
    Value of UnvestedEvent
    
    Continuation
    
    Equity Awards (1)
    
    TotalDeath
    
    
    
    
    
    $
    10,103,750
    
    
    $
    10,103,750Disability
    
    
    
    
    
    $
    10,103,750
    
    
    $
    10,103,750For Cause
    
    
    
    
    
    
    
    
    
    
    Without Cause
    
    $
    1,500,000
    
    
    $
    10,103,750
    
    
    $
    11,603,750Change of Control
    
    $
    1,500,000
    
    
    $
    10,103,750
    
    
    $
    11,603,750
 
 (1)
    
    This amount represents 685,000 shares of performance-based restricted stock
multiplied by $14.75, the closing price of a share of our common stock on December 31,
2007. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTER
 Securities Authorized for Issuance Under Equity Compensation Plans
  Number ofSecurities to be
    
    WeightedIssued Upon
    
    Average Exercise
    
    Number of SecuritiesExercise of
    
    Price of
    
    Remaining AvailableOutstanding
    
    Outstanding
    
    for Future IssuanceOptions, Warrants
    
    Options, Warrants
    
    Under EquityPlan Category
    
    And Rights
    
    and Rights
    
    Compensation PlansEquity compensation plans approved by security holders
    
    
    1,696,763
    
    
    $
    6.86
    
    
    
    527,131Equity compensation plans not approved by security holders
    
    
    4,000
    
    
    $
    13.75
    
    
    
    Total
    
    
    1,700,763
    
    
    $
    10.78
    
    
    
    527,131
 Equity Compensation Plans Not Approved By Security Holders
   -25-




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##### Table of Contents



Securities Ownership of Management and Certain Beneficial Owners
  
    
    each of the named executive officers;
    
    each of our directors;
    
    all of our directors and executive officers as a group; and
    
    each other person known by us to be a beneficial owner of more than 5% of our
outstanding common stock.
  Shares Beneficially Owned(2)Name and Address(1)
    
    Number
    
    PercentageNamed Executive Officers:Munawar H. Hidayatallah(3)
    
    
    1,551,044
    
    
    
    4.4Victor M. Perez(4)
    
    
    70,000
    
    
    
    *Theodore F. Pound III(5)
    
    
    105,000
    
    
    
    *David Bryan(6)
    
    
    132,500
    
    
    
    *Terrence P. Keane(7)
    
    
    85,000
    
    
    
    *Directors:Burt A. Adams Ali H. M. Afdhal
    
    
    289,391
    
    
    
    *Ali H. M. Afdhal(8)
    
    
    7,000
    
    
    
    *Alejandro P. Bulgheroni(9)
    
    
    2,307,000
    
    
    
    6.5Carlos A. Bulgheroni(10)
    
    
    1,007,000
    
    
    
    2.9Victor F. Germack(11)
    
    
    13,000
    
    
    
    *James M. Hennessy(12)
    
    
    20,200
    
    
    
    *John E. McConnaughy, Jr.(13)
    
    
    94,000
    
    
    
    *Robert E. Nederlander(14)
    
    
    654,732
    
    
    
    1.9Zane Tankel(15)
    
    
    13,800
    
    
    
    *Leonard Toboroff(16)
    
    
    702,594
    
    
    
    2.0All directors and executive officers as a group
(20 persons)
    
    
    7,119,927
    
    
    
    20.3Other 5% Holders:Palo Alto Investors(17)
    
    
    3,990,817
    
    
    
    11.4Artisan Partners Limited Partnership (18).
    
    
    1,864,600
    
    
    
    5.3Grupo Carso, S.A.B. de C.V. (19)
    
    
    2,100,000
    
    
    
    6.0
 
 *
    
    Less than one percent.(1)
    
    Except as otherwise noted, the address of the directors and executive officers is c/o
Allis-Chalmers Energy Inc., 5075 Westheimer, Suite 890, Houston, Texas 77056.(2)
    
    Based on an aggregate of 35,130,914 shares issued and outstanding as of April 10, 2008. -26-




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##### Table of Contents



(3)
    
    Includes 1,259,711 shares of common stock owned of record by the Hidayatallah Family Trust,
of which Mr. Hidayatallah is the trustee, and 8,000 shares of common stock owned of record by
Munawar Hidayatallah SEP IRA. These shares also include options to purchase 283,333 shares of common stock, which are exercisable within 60 days.
1,259,711 of these shares are held in a margin account.(4)
    
    Includes options to purchase 70,000 shares of common stock, which are exercisable within 60 days.(5)
    
    Includes 15,000 shares of restricted stock of which 3,000 shares vest on December 3, 2008,
3,000 shares vest on December 3, 2009 and 9,000 shares vest on December 3, 2010. Also
includes options to purchase 90,000 shares of common stock, which are exercisable within 60
days.(6)
    
    Includes options to purchase 20,000 shares of common stock, which are exercisable within 60
days. Also includes 37,500 shares of restricted stock of which 7,500 shares vest on June 14,
2008, 7,500 shares vest on June 14, 2009 and 22,500 shares vest on June 14, 2010. Also
includes 75,000 shares of restricted stock of which 7,500 shares vests on October 4, 2009,
15,000 shares vests on October 4, 2010, 30,000 shares vests on October 4, 2011, and 22,500
shares vests on October 4, 2012.(7)
    
    Includes 45,000 shares of restricted stock of which 9,000 shares vest on June 14, 2008, 9,000
shares vest on June 14, 2009 and 27,000 shares vest on June 14, 2010. Also includes options
to purchase 40,000 shares of common stock, which are exercisable within 60 days.(8)
    
    Includes 4,000 shares of restricted stock that vest on October 4, 2008.(9)
    
    Includes (i) 1,000,000 shares held of record by Global Oilfield Holdings Ltd. and (ii)
1,300,000 shares held of record by Associated Petroleum Investors Ltd. Each such entity is
indirectly beneficially owned by Mr. Bulgheroni. Mr. Bulgheroni disclaims beneficial
ownership of these securities except to the extent of his pecuniary interest therein. Also
includes 4,000 shares of restricted stock that vest on October 4, 2008.(10)
    
    Includes 1,000,000 shares held of record by Central Holdings Company Ltd., a British Virgin
Islands international business company, which is indirectly beneficially owned by Mr.
Bulgheroni. Mr. Bulgheroni disclaims beneficial ownership of these securities except to the
extent of his pecuniary interest therein. Also includes 4,000 shares of restricted stock that
vest on October 4, 2008.(11)
    
    Includes 4,000 shares of restricted stock that vest on October 4, 2008. Mr. Germacks
address is 845 3rd Avenue, Suite 1410, New York, NY 10022.(12)
    
    Includes 4,000 shares of restricted stock that vest on October 4, 2008. Mr. Hennessys
address is 7837 N. 54th Street, Paradise Valley, AZ 85253.(13)
    
    Includes 4,000 shares of restricted stock that vest on October 4, 2008. Mr. McConnaughys
address is 2 Parklands Drive, Darien, CT 06820. 90,000 of these share are held in a margin
account.(14)
    
    206,666 of these shares are owned by RER Corp., a corporation controlled by Mr. Nederlander.
Includes 4,000 shares of restricted stock that vest on October 4, 2008. Mr. Nederlanders
address is 1450 Broadway, Suite 2001, New York, NY 10018.(15)
    
    Includes 4,000 shares of restricted stock that vest on October 4, 2008. Mr. Tankels address
is 325 North LaSalle Street, Suite 500, Chicago, Illinois 60610.(16)
    
    42,860 of these shares are owned by the Leonard Toboroff P.C. Profit Sharing Trust, of which
Mr. Toboroff is the sole trustee and beneficiary, and 5,001 of these shares are owned by Lenny
Corp., of which Mr. Toboroff is the sole shareholder. 655,734 of these shares are held in a
margin account. Includes 4,000 shares of restricted stock that vest on October 4, 2008. Mr.
Toboroffs address is 1450 Broadway, Suite 2001, New York, NY 10018. -27-




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##### Table of Contents



(17)
    
    Based on information contained in a Schedule 13G/A filed on February 13, 2008, by Palo Alto
Investors, LLC (PAI), Palo Alto Investors, William Leland Edwards and Palo Alto Small Cap
Master Fund, L.P. (Small Cap Master). PAI is a registered investment adviser and is the
general partner and investment adviser of Small Cap Master and other
investment limited partnerships and the investment adviser to other investment funds. Palo Alto
Investors is the manager of PAI. Mr. Edwards is the controlling shareholder and President of
Palo Alto Investors. PAIs clients have the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, the shares. No client, other than Small
Cap Master, separately holds more than five percent of the outstanding shares. Each of PAI,
Palo Alto Investors and Mr. Edwards have shared voting and dispositive power over all of the
shares, Mr. Edwards has sole voting power over 6,500 shares and Small Cap Master has shared
voting and dispositive power over 1,861,050 of the shares. The principal business address of
each of PAI, Palo Alto Investors and Mr. Edwards is 470 University Avenue, Palo Alto, CA 94301.
The principal business address of Small Cap Master is c/o Citco Fund Services (Bermuda)
Limited, Washington Mall West, 2nd Floor, 7 Reid Street, Hamilton HM11, Bermuda.(18)
    
    Based on information contained in a Schedule 13G filed on February 13, 2008 by Artisan
Partners Limited Partnership, or Artisan Partners, Artisan Investment Corporation, or Artisan
Corp., ZFIC, Inc., or ZFIC, Andrew A. Ziegler and Carlene M. Ziegler. Artisan Partners is an
investment adviser registered under section 203 of the Investment Advisers Act of 1940;
Artisan Corp. is the general partner of Artisan Partners; ZFIC is the sole stockholder of
Artisan Corp. and Mr. Ziegler and Ms. Ziegler are the principal stockholders of ZFIC. Each of
these reporting persons has shared voting power over 1,629,500 of the shares and shared
dispositive power over all of the shares. The principal business address of these reporting
persons is 875 East Wisconsin Avenue, Suite 800, Milwaukee, WI 53202.(19)
    
    Based on information contained in a Schedule 13G/A filed on February 13, 2008, these shares
are owned directly by Carso Infraestructura y Construcción, S.A.B. de C.V., or Carso
Infraestructura, and indirectly by Grupo Carso, S.A.B. de C.V., or Grupo Carso and each of
Carlos Slim Helú, Carlos Slim Domit, Marco Antonio Slim Domit, Patrick Slim Domit, María
Soumaya Slim Domit, Vanessa Paola Slim Domit and Johanna Monique Slim Domit (such individuals
are collectively referred to as the Slim Family). Grupo Carso owns a majority of the
outstanding voting securities of Carso Infraestructura, and the members of the Slim Family
beneficially own, directly and indirectly, a majority of the outstanding voting equity
securities of Grupo Carso. As a result, each of Carso Infraestructura, Grupo Carso and the
members of the Slim Family may be deemed to have shared voting and dispositive power over the
reported shares. The principal business address for Carso Infraestructura and Grupo Carso is
Miguel de Cervantes Saveedra #255, Col. Granada CP, 11520 México, D.F., México. The principal
business address for each member of the Slim Family is Paseo de las Palmas 736, Colonia Lomas
de Chapultepec, 11000 México, D.F., México. 
 ITEM 13 . CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 Certain Relationships and Related Party Transactions
    -28-




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##### Table of Contents



Related Party Transaction Approval Policy
  Director Independence
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
 Principal Accounting Fees and Services
  Fiscal YearFee Category
    
    2007
    
    
    2006Audit Fees(1)
    
    $
    1,235,999
    
    
    $
    629,778Audit Related Fees(2)
    
    
    331,657
    
    
    
    220,445Tax Fees(3)
    
    
    
    
    
    
    48,230All Other Fees(4)
    
    
    86,078
    
    
    
    296,138$
    1,653,734
    
    
    $
    1,194,591
 
 (1)
    
    Includes fees paid for audit of our annual financial statements and reviews of the related
quarterly financial statements.(2)
    
    Includes fees paid for assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and are not reported under
Audit Fees. These services include accounting and
reporting consultations.(3)
    
    Includes tax planning and tax return preparation fees.(4)
    
    Includes fees for the review and issuance of consents related to our registration statements
and other SEC filings -29-




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Pre-Approval Policies and Procedures
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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    (1)Financial StatementsNone.
 (2)
    
    Financial Statement SchedulesNone.
 (3)
    
    Exhibits
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SIGNATURES
  /s/ Munawar H. HidayatallahMunawar H. HidayatallahChief Executive Officer and Chairman  Name
    
    Title
    
    Date/s/ Munawar H. Hidayatallah
    
    Chairman and Chief Executive Officer
    
    April 29, 2008Munawar H. Hidayatallah
    
    (Principle Executive Officer)/s/ Victor M. Perez
    
    Chief Financial Officer
    
    April 29, 2008Victor M. Perez
    
    (Principal Financial Officer)/s/ Bruce Sauers
    
    Chief Accounting Officer
    
    April 29, 2008Bruce Sauers
    
    (Principal Accounting Officer)/s/ Burt A. Adams
    
    Director
    
    April 29, 2008Burt A. Adams/s/ Ali H. M. Afdhal
    
    Director
    
    April 29, 2008Ali H. M. Afdhal/s/ Alejandro P. Bulgheroni
    
    Director
    
    April 29, 2008Alejandro P. Bulgheroni/s/ Carlos A. Bulgheroni
    
    Director
    
    April 29, 2008Carlos A. Bulgheroni/s/ Victor F. Germack
    
    Director
    
    April 29, 2008Victor F. Germack/s/ James M. Hennessy
    
    Director
    
    April 29, 2008James M. Hennessy/s/ John E. McConnaughy, Jr.
    
    Director
    
    April 29, 2008John E. McConnaughy, Jr./s/ Robert E. Nederlander
    
    Director
    
    April 29, 2008Robert E. Nederlander/s/ Zane Tankel
    
    Director
    
    April 29, 2008Zane Tankel/s/ Leonard Toboroff
    
    Director
    
    April 29, 2008Leonard Toboroff
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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 the
Current Report on Form 8-K filed on November 15, 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).
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Exhibit
    
    Description2.16
    
    
    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).2.17
    
    
    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 Form 8-K filed on January 24, 2008).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
    
    
    Amended and Restated By-laws of Registrant (incorporated by
reference to Exhibit 3.3. to the Registrants Annual Report of
Form 10-K for the year ended December 31, 2001).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).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 April 2, 2004 by and between
Registrant and the Stockholder signatories thereto (incorporated
by reference to Exhibit 10.43 to Amendment No. 1 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2003).4.4
    
    
    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).4.5
    
    
    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).
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Exhibit
    
    Description4.6
    
    
    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).4.7
    
    
    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).4.8
    
    
    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 Form 8-K filed on
August 14, 2006).4.9
    
    
    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).4.10
    
    
    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).4.11
    
    
    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).4.12
    
    
    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).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).10.5*
    
    
    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).
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Exhibit
    
    Description10.7
    
    
    Letter Agreement dated May 9, 2001 by and between Registrant and the Pension Benefit Guarantee
Corporation (incorporated by reference to Registrants Quarterly Report on Form 10-Q for the quarter
ended March 31, 2002).10.8
    
    
    Termination Agreement dated May 9, 2001 by and between Registrant, the Pension Benefit Guarantee
Corporation and others (incorporated by reference to Registrants Current Report on Form 8-K filed on
May 15, 2002).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 Form 8-K filed on November
6, 2007).10.10*
    
    
    Executive Employment Agreement, effective April 3, 2007, by and between the Registrant and Victor M.
Perez (incorporated by reference to Exhibit 10.4 to the Registrants Form 8-K filed on November 6,
2007).10.11*
    
    
    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 Form 8-K filed on July 24, 2007).10.12*
    
    
    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 Form 8-K filed on December 6,
2007).10.13*
    
    
    Executive Employment Agreement, effective July 1, 2007, by and between the Registrant and David K.
Bryan (incorporated by reference to Exhibit 10.1 to the Registrants Form 8-K filed on July 13, 2007).10.14*
    
    
    Employment Agreement, dated December 18, 2006, by and between the Registrant and Burt A. Adams
(incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K filed on
December 19, 2006).10.15
    
    
    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 Form 8-K filed on February 25,
2008).10.16
    
    
    Purchase Agreement dated as of January 12, 2006 by and among Allis-Chalmers Energy Inc, the Guarantors
named therein and the Initial Purchasers named therein (incorporated by reference to Exhibit 10.1 to
the Registrants Current Report on Form 8-K filed on January 24, 2006).10.17
    
    
    Purchase Agreement dated as of August 8, 2006 by and between the Registrant, the guarantors listed on
Schedule B thereto and RBC Capital Markets Corporation (incorporated by reference to Exhibit 10.4 to
the Registrants Form 8-K filed on August 14, 2006).10.18
    
    
    Purchase Agreement dated as of January 24, 2007 by and among Allis-Chalmers Energy Inc., the Guarantors
named therein and the Initial Purchasers named therein (incorporated by reference to Exhibit 10.1 to
the Registrants Current Report on Form 8-K filed on January 29, 2007).10.19
    
    
    Amended and Restated Credit Agreement dated as of January 18, 2006 by and among Allis-Chalmers Energy
Inc., 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 10.3 to the Registrants Current Report on Form 8-K filed on January 24, 2006).10.20
    
    
    First Amendment to Amended and Restated Credit Agreement dated as of August 8, 2006, by and among the
Registrant, the guarantors named thereto and Royal Bank of Canada (incorporated by reference to Exhibit
10.3 to the Registrants Form 8-K filed on August 14, 2006).10.21
    
    
    Senior Unsecured Bridge Loan Agreement, dated December 18, 2006, by and among the Registrant, Royal
Bank of Canada, as administrative agent, RBC Capital Markets Corporation, as exclusive lead arranger
and sole bookrunner, and the guarantors and institutional lenders named thereto (incorporated by
reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on December 19, 2006).10.22
    
    
    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).
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Exhibit
    
    Description10.23
    
    
    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).10.24
    
    
    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).10.25
    
    
    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).10.26
    
    
    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 Form 8-K
filed on August 14, 2006).10.27*
    
    
    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).10.28*
    
    
    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).10.29*
    
    
    2006 Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrants Form 8-K filed on
September 18, 2006).10.30*
    
    
    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 Form 8-K filed on September 18, 2006).10.31*
    
    
    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 Form 8-K filed on September 18, 2006).10.32*
    
    
    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 Form 8-K filed on September 18, 2006).10.33
    
    
    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 Form 8-K filed on September 18,
2006).10.34*
    
    
    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 Form 8-K filed on
September 18, 2006).10.35
    
    
    Form of Performance Award Agreement pursuant to the Registrants 2006 Incentive Plan (incorporated by
reference to Exhibit 10.5 to the Registrants Form 8-K filed on November 6, 2007).10.36
    
    
    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 Form 8-K filed on May 10, 2007).10.37
    
    
    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 Form 8-K filed on December 6, 2007).10.38
    
    
    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 Form 8-K filed on May 10, 2007).10.39
    
    
    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 Form 8-K filed on May 10, 2007).
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Exhibit
    
    Description10.40
    
    
    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 Form 8-K filed on February 6, 2008).10.41
    
    
    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 Form 8-K
filed on February 6, 2008).10.42
    
    
    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 Form 8-K filed on February 6, 2008).10.43
    
    
    Form of Convertible Subordinated Secured
Debenture (incorporated by reference to Schedule E to Exhibit
10.1 to the Registrants Form 8-K filed on February 6, 2008).10.44
    
    
    Agreement, dated April 1, 2007, by and between the Registrant and David Wilde (incorporated by
reference to Exhibit 99.1 to the Registrants Form 8-K filed on April 3, 2007).21.1
    
    
    Subsidiaries of Registrant (filed as Exhibit 21.1 to the Registrants Form 10-K filed on March 7, 2008).23.1
    
    
    Consent of UHY LLP (filed as Exhibit 23.1 to the Registrants Form 10-K filed on March 7, 2008).31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    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 -38-