##### 



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D. C.
    20549
  Form 10-K/A-1
  (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, 2005ORo

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

39-0126090(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)5075 WESTHEIMER,
    SUITE 890,
    HOUSTON, TEXAS

77056(Zip code)(Address of principal executive
    offices)  (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

American Stock Exchange   SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
    ACT:
 NONE
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  o o þ
  Rule 12b-2 o þ




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##### 



EXPLANATORY
    NOTE
  Form 10-K/A-1 Form 10-K,
  Rule 12b-15 Form 10-K/A-1
  Form 10-K/A-1, Rule 12b-15 Form 10-K Form 10-K/A-1 Form 10-K,
   2




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##### 



2005
    FORM 10-K/A-1
    CONTENTS
  Item



PagePART III10.


Directors and Executive Officers
    of the Registrant

411.


Executive Compensation

1012.


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

1413.


Certain Relationships and Related
    Transactions

1614.


Principal Accountant Fees and
    Services

17 PART IV15.


Exhibits and Financial Statement
    Schedules

18Signatures

19Exhibit Index

20  3




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##### 



PART III  ITEM 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT  Information
    Regarding Board of Directors
  :
  Name

Age

Committee

Director SinceJeffrey R. Freedman


58






January 2005Victor F. Germack


66



(1
)

January 2005Munawar H. Hidayatallah


61






May 2001Thomas E. Kelly


50



(2
)

January 2005John E. McConnaughy, Jr.


76



(1
)

May 2004Jens H. Mortensen, Jr.


52






February 2003Robert E. Nederlander


72



(1
)(3)

May 1989Leonard Toboroff


73






May 1989Thomas O. Whitener, Jr.


58



(2
)(3)

February 2002     (1)
    
    Member of Audit Committee.(2)
    
    Member of Compensation Committee.(3)
    
    Member of Nominating Committee.  Jeffrey R. Freedman
  Victor F. Germack
  Munawar H. Hidayatallah
  Thomas E. Kelly
 4




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##### 



John E. McConnaughy, Jr.
  Jens H. Mortensen, Jr.
  Robert E. Nederlander and/or
  Leonard Toboroff
  Thomas O. Whitener, Jr.
  Board of
    Directors; Committees
   5




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##### 



Audit
    Committee
  Co-Chairmen,
  www.alchenergy.com
      Compensation
    Committee
  www.alchenergy.com
  Nominating
    Committee
  www.alchenergy.com
 6




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##### 



Section 16(a)
    Beneficial Ownership Reporting Compliance
    KnownNumber of



Failures toNumber

Transactions



File aof Late

Not Timely



RequiredName

Reports

Reported

Description of Late
    Reports

FormDavid K. Bryan


2



2


(1) Form 3 reflecting
    Mr. Bryans appointment as an officer of our company;
    and


(2) Form 4 reflecting the
    grant of stock options to Mr. Bryan in May 2005.Alya H. Hidayatallah


1



1


(1) Form 4 reflecting the
    grant of stock options to Ms. Hidayatallah in December 2005.


Munawar H. Hidayatallah


1



1


(1) Form 4 reflecting the
    grant of stock options to Mr. Hidayatallah in December 2005.


Terrence P. Keane


2



2


(1) Form 4 reflecting the
    grant of stock options to Mr. Keane in May 2005; and


(2) Form 4 reflecting the
    grant of stock options to Mr. Keane in December 2005.Victor M. Perez


1



1


(1) Form 4 reflecting the
    grant of stock options to Mr. Perez in December 2005.


Theodore F. Pound III


1



1


(1) Form 4 reflecting the
    grant of stock options to Mr. Pound in December 2005.


Bruce Sauers


1



1


(1) Form 4 reflecting the
    grant of stock options to Mr. Sauers in December 2005.


David Wilde


1



1


(1) Form 4 reflecting the
    grant of stock options to Mr. Wilde in December 2005.


   Code of
    Ethics
   7




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##### 



(713) 369-0550. www.alchenergy.com
  Information
    Regarding Executive Officers
    Name

Age

PositionMunawar H. Hidayatallah


61


Chairman and Chief Executive
    OfficerDavid Wilde


51


President and Chief Operating
    OfficerVictor M. Perez


53


Chief Financial OfficerTheodore F. Pound III


51


General Counsel and SecretaryBruce Sauers


42


Vice President and Corporate
    ControllerAlya H. Hidayatallah


30


Vice
    President  Planning and DevelopmentDavid K. Bryan


48


President and Chief Operating
    Officer of Strata Directional Technology, Inc.Steve Collins


54


President of Allis-Chalmers
    Production Services, Inc.James Davey


52


President of Allis-Chalmers Rental
    Tools Inc.Gary Edwards


54


President of Allis-Chalmers
    Tubular Services Inc.Terrence P. Keane


53


President and Chief Executive
    Officer of AirComp L.L.C.   Munawar H. Hidayatallah
  David Wilde
  Victor M. Perez
  Theodore F. Pound III
 8




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##### 



Bruce Sauers
  Alya H. Hidayatallah
  David K. Bryan
  Steven Collins
  James Davey
  Gary Edwards
  Terrence P. Keane
 9




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##### 



ITEM 11.
    EXECUTIVE
    COMPENSATION    Summary
    Compensation Table
  Long TermCompensationAnnual Compensation

AwardsSalary

Bonus

Other Annual

Securities UnderlyingName and Principal
    Position

Year

($)

($)

Compensation(1)

Options/SARs (#)Munawar H. Hidayatallah,


2005



395,833



200,000



3,000



725,000Chairman & Chief Executive
    Officer


2004



337,500



580,000
(2)(3)


3,375



2003



300,000
(4)


81,775
(3)


3,000



400,000David Wilde,


2005



299,004



100,000



2,340



290,000President and Chief Operating


2004



209,964



275,000
(6)


1,672



110,000Officer(5)


2003



137,500



75,445
(7)


1,876



100,000Victor M. Perez,


2005



240,000



60,000



600



45,000Chief Financial Officer(8)


2004



105,000



5,500



2,500



55,000Terrence P. Keane,


2005



164,000



82,000
(10)


1,640



50,000Divisional President and Chief


2004



146,308



51,650
(11)






Executive Officer of AirComp(9)


2003



68,440











David Bryan,


2005



176,917



150,000
(13)


1,849



40,000President and Chief Operating
    Officer


2004



156,050



100,000
(14)


1,800



of Strata(12)


2003



140,000



14,000
(15)


4,050



30,000     (1)
    
    Represents contributions to 401(k) plans. We match contributions
    made by all employees up to a maximum 1% of each employees
    salary.(2)
    
    Of this amount $175,000 was paid in 2005.(3)
    
    The bonus awarded to Mr. Hidayatallah for fiscal year 2003
    was determined pursuant to his 2001 employment agreement, based
    on acquisitions completed for fiscal year 2003, and the bonus
    for fiscal year 2004 was based on Mr. Hidayatallahs
    attaining certain strategic objectives set forth in his 2004
    employment agreement (see  Employment
    Agreements with Management below).(4)
    
    Of this amount, $60,000 was deferred and paid during 2004.(5)
    
    Mr. Wilde was President and Chief Executive Officer of
    Strata, one of our subsidiaries, until February 2005, when he
    was named as our President and Chief Operating Officer.(6)
    
    Of this amount, $62,500 was paid in 2005.(7)
    
    Of this amount, $30,000 was paid in 2004.(8)
    
    Mr. Perez became our Chief Financial Officer in August 2004.(9)
    
    Mr. Keane serves as the President and Chief Executive
    Officer of AirComp, one of our subsidiaries and, as such, is
    considered an executive officer.(10)
    
    Of this amount, $82,000 was paid in 2006.(11)
    
    Of this amount, $16,150 was paid in 2005.(12)
    
    Mr. Bryan serves as the President and Chief Operating
    Officer of Strata and, as such, is considered an executive
    officer.(13)
    
    Of this amount, $20,794 was paid in 2006.(14)
    
    Of this amount, $31,250 was paid in 2005.(15)
    
    Of this amount, $14,000 was paid in 2004. 10




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##### 



Option
    Grants In Last Fiscal Year
    Individual Grants

Potential RealizedNumber of

% of Total





Value at Assumed AnnualSecurities

Options/SARs

Exercise



Rates of Stock PriceUnderlying

Granted to

Price



Appreciation for OptionOptions/SARs

Employees

per Share

Expiration

Terms(3)Name

Granted(1)

in 2005

($/Sh)(2)

Date

5% ($)

10% ($)Munawar H. Hidayatallah


125,000



7.47
%

$
10.85



12/16/2015


$
852,938


$
2,161,513600,000



35.86
%

$
3.86



2/02/2015


$
1,456,520


$
3,691,108David Wilde


90,000



5.38
%

$
10.85



12/16/2015


$
614,116


$
1,556,290200,000



11.95
%

$
3.86



2/02/2015


$
485,507


$
1,230,369Victor M. Perez


45,000



2.69
%

$
10.85



12/16/2015


$
307,058


$
778,145Terrence P. Keane


25,000



1.49
%

$
4.87



5/25/2015


$
76,568


$
194,03825,000



1.49
%

$
10.85



12/16/2015


$
170,588


$
432,303David Bryan


20,000



1.20
%

$
3.86



2/02/2015


$
48,551


$
123,03720,000



1.20
%

$
4.87



5/25/2015


$
61,254


$
155,231     (1)
    
    All options were granted under our 2003 Incentive Stock Plan.
    All options granted by us to date vest and become exercisable in
    three equal installments, one of which vested upon the grant of
    the options and one of which will vest upon each of the first
    and second anniversaries of the date of grant of option,
    provided that all options will become fully exercisable upon the
    occurrence of a change of control (as defined in the 2003
    Incentive Stock Plan).(2)
    
    The exercise price for these options is equal to the fair market
    value of the common stock on the date of grant. The exercise
    price may be paid in cash or in shares of common stock valued at
    the fair market value on the exercise date.(3)
    
    The 5% and 10% assumed rates of appreciation are prescribed by
    the rules and regulations of the SEC and do not represent our
    estimate or projection of the future trading prices of our
    common stock. The calculations assume annual compounding and
    continued retention of the options or the underlying common
    stock by the optionee for the full option term of ten years.
    Unless the market price of the common stock actually appreciates
    over the option term, no value will be realized by the optionee
    from these option grants. Actual gains, if any, on stock option
    exercises are dependent on numerous factors, including, without
    limitation, our future performance, overall business and market
    conditions, and the optionees continued employment with us
    throughout the entire vesting period and option term, which
    factors are not reflected in this table. 11




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##### 



Option
    Exercises and Year-End Option Values
    Aggregated
    Option/ SAR Exercises In Last Fiscal Year
    and FY-End Option/ SAR Values
  Number of Securities


Value of UnexercisedUnderlying Unexercised


In-the-MoneyOptions/SARs


Options/SARsShares


Value Realized


at Fiscal Year-End (#)


at Fiscal Year-End
    ($)(1)Name

Acquired (#)


($)


Exercisable


Unexercisable


Exercisable


UnexercisableMunawar H. Hidayatallah










841,667



283,333



7,399,501



1,856,995David Wilde










336,666



163,334



2,727,395



950,605Victor M. Perez










51,667



48,333



303,703



188,297Terrence P. Keane










16,666



33,334



76,830



153,620David Bryan










50,000



20,000



457,066



158,734     (1)
    
    Based on a value of $12.47 per share, the closing price per
    share on the American Stock Exchange on December 31, 2005,
    less the exercise price.  Employment
    Agreements With Management
         12




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##### 















Board
    Compensation




out-of-pocket








Compensation
    Committee Interlocks and Insider Participation














13



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##### 



|         |                                                                                                       
|-------- | ------------------------------------------------------------------------------------------------------
|ITEM 12. | SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS



Security
    Ownership of Certain Beneficial Owners and Management








| |   |                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------
| |  | our named executive officers;                                                                                
|
| |  | each of our other 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 5.0% of our outstanding common stock.







|                                                                |  |                    |           |  |            |  |      | 
|--------------------------------------------------------------- |  | ------------------ | --------- |  | ---------- |  | ---- | 
|                                                                |  |                    |           |  | Beneficial | 
|                                                                |  | Number of Shares   |           |  | Ownership  | 
|Name and Address                                                |  | Beneficially Owned |           |  | Percentage | 
|                                                               
|Named Executive
    Officers:                                   |  |                    |           |  |            |  |      | 
|Munawar H. Hidayatallah(1)                                      |  |                    | 1,686,666 |  |            |  | 9.3  | 
|David Wilde(2)                                                  |  |                    | 341,666   |  |            |  | 1.9  | 
|Victor M. Perez(3)                                              |  |                    | 51,667    |  |            |  | *    | 
|Terence P. Keane(4)                                             |  |                    | 25,000    |  |            |  | *    | 
|David Bryan(5)                                                  |  |                    | 68,666    |  |            |  | *    | 
|Directors:                                                      |  |                    |           |  |            |  |      | 
|Jens H. Mortensen, Jr.(6)                                       |  |                    | 1,600,591 |  |            |  | 9.2  | 
|John E. McConnaughy, Jr.(7)                                     |  |                    | 100,000   |  |            |  | *    | 
|Victor F. Germack(8)                                            |  |                    |          |  |            |  |     | 
|Thomas E. Kelly(9)                                              |  |                    | 14,201    |  |            |  | *    | 
|Thomas O. Whitener, Jr.(10)                                     |  |                    |          |  |            |  |     | 
|Robert E. Nederlander(11)                                       |  |                    | 717,594   |  |            |  | 4.1  | 
|Jeffrey R. Freedman(12)                                         |  |                    | 119,000   |  |            |  | *    | 
|Leonard Toboroff(13)                                            |  |                    | 695,594   |  |            |  | 4.0  | 
|All directors and executive
    officers as a group(19 persons) |  |                    | 5,543,976 |  |            |  | 28.8 | 
|Other 5% Holders:                                               |  |                    |           |  |            |  |      | 
|Palo Alto Investors(14)                                         |  |                    | 2,208,767 |  |            |  | 12.7 | 
|Steve Emerson(15)                                               |  |                    | 1,065,900 |  |            |  | 6.3  | 









|    |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   |  | Less than one percent.                                                                                                                                                                                                                                                                                                                                                                              
|   
|(1) |  | Mr. Hidayatallah is the trustee of the Hidayatallah Family
    Trust, which is the record owner of 845,000 shares of our
    common stock, and Mr. Hidayatallah holds options to
    purchase 1,125,000 shares of common stock, of which options
    to purchase 841,666 shares are exercisable within
    60 days. Mr. Hidayatallahs address is
    5075 Westheimer, Suite 890, Houston, TX 77056.

14



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##### 



(2)
    
    Includes (a) 5,000 shares of common stock owned of
    record by Mr. Wilde and (b) options to purchase
    500,000 shares of common stock, of which 336,666 are
    exercisable within 60 days. Mr. Wildes address
    is 5075 Westheimer, Suite 890, Houston, TX 77056.(3)
    
    Includes options to purchase 100,000 shares of common
    stock, of which 51,667 are exercisable within 60 days.
    Mr. Perezs address is 5075 Westheimer,
    Suite 890, Houston, TX 77056.(4)
    
    Includes options to purchase 50,000 shares of common stock,
    of which 25,000 are exercisable within 60 days.
    Mr. Keanes address is 5075 Westheimer,
    Suite 890, Houston, TX 77056.(5)
    
    Includes (a) 12,000 shares of common stock owned of
    record by Mr. Bryan and (b) options to purchase
    70,000 shares of common stock, of which 56,666 are
    exercisable within 60 days. Mr. Bryans address
    is 5075 Westheimer, Suite 890, Houston, TX 77056.(6)
    
    Includes (a) 1,500,591 shares of common stock owned of
    record by Mr. Mortensen and (b) options to purchase
    100,000 shares of common stock, all of which are
    exercisable within 60 days. Mr. Mortensens
    address is 5075 Westheimer, Suite 890, Houston, TX 77056.(7)
    
    Mr. McConnaughys address is 2 Parklands Drive,
    Darien, CT 06820.(8)
    
    Mr. Germacks address is 845 3rd Avenue,
    Suite 1410, New York, NY 10022.(9)
    
    Mr. Kellys address is 450 North Marienfield,
    Suite 200, Midland, TX 79701.(10)
    
    Mr. Whiteners address is 5956 Sherry Lane,
    Suite 900, Dallas, TX 75225.(11)
    
    Includes (a) 715,594 shares of common stock owned
    directly by Mr. Nederlander or by RER Corp. or QEN Corp.,
    corporations controlled by Mr. Nederlander, and
    (b) currently exercisable options to purchase
    2,000 shares of common stock owned directly by
    Mr. Nederlander or RER Corp. Mr. Nederlanders
    address is 1450 Broadway, Suite 2001, New York, NY
    10018.(12)
    
    Mr. Freedmans address is 123 Via Verde Way, Palm
    Beach, FL 33418.(13)
    
    Includes (a) 595,194 shares of common stock owned
    directly by Mr. Toboroff or Lenny Corp., a corporation
    wholly-owned by Mr. Toboroff, and (b) currently
    exercisable options to purchase 100,400 shares of common
    stock owned directly by Mr. Toboroff.
    Mr. Toboroffs address is 1450 Broadway,
    Suite 2001, New York, NY 10018.(14)
    
    Owned collectively by Micro Cap Partners, L.P., UBTI Free, L.P.
    and Palo Alto Global Energy Fund, L.P. Palo Alto Investors,
    LLC acts as the general partner of Micro Cap Partners, L.P.,
    UBTI Free, L.P. and Palo Alto Global Energy Fund, L.P. Palo Alto
    Investors, Inc. is the manager of Palo Alto Investors, LLC, and
    William L. Edwards is the President of Palo Alto Investors, Inc.
    Palo Alto Investors, LLC, Palo Alto Investors, Inc. and William
    L. Edwards each have investment and voting authority with
    respect to the shares owned by this stockholder. The business
    address for each of these persons is 470 University Avenue, Palo
    Alto, CA 94301.(15)
    
    Consists of certain shares owned by J. Steven Emerson IRA
    RO II, Bear Stearns Securities Corporation, Custodian, J.
    Steven Emerson Roth IRA, Bear Stearns Securities Corporation,
    Custodian, and Emerson Partners, respectively. J. Steven Emerson
    has investment and voting authority with respect to the shares
    owned by J. Steven Emerson IRA RO II, Bear Stearns
    Securities Corporation, Custodian, J. Steven Emerson Roth IRA,
    Bear Stearns Securities Corporation, Custodian and Emerson
    Partners, Bear Stearns Securities Corporation, Custodian.
    Mr. Emersons business address is 1522 Ensley Avenue,
    Los Angeles, CA 90024. 15




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##### 



Equity
    Compensation Plan Information
    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


2,756,067


$
5.18



210,100Equity compensation plans not
    approved by security holders


489,243


$
2.97



Total


3,245,310


$
4.85



210,100   Equity
    Compensation Plans Not Approved by Security Holders
            ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS       16




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##### 



ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES      UHY Mann Frankfort
    Stein & Lipp CPAs LLP

2005


2004Audit fees(1)

$
325,542


$
210,453Audit related fees(2)

$
307,070


$
Tax fees(3)

$
88,273


$
15,028All other fees(4)

$
121,755


$
14,000   Gordon Hughes & Banks,
    LLPAudit fees(1)

$



$
Audit related fees(2)

$



$
Tax fees(3)

$



$
All other fees(4)

$
59,216


$
58,754     (1)
    
    Includes fees paid for audit of our annual financial statements
    and reviews of the related quarterly financial statements. 100%
    of these fees were pre-approved by our Audit Committee.(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 issuance of consents and
    other accounting and reporting consultations. 100% of these fees
    were pre-approved by our Audit Committee.(3)
    
    Includes tax planning and tax return preparation fees. These
    services and fees were not pre-approved by our Audit Committee.(4)
    
    Includes fees related to the review and issuance of consents
    related to our registration statements on
    Form S-1
    and other SEC filings. These services and fees were not
    pre-approved by our Audit Committee.  Pre-approval
    Policies and Procedures
   17




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##### 



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Form 10-K/A-1 Form 10-K/A-1.
 18




---



##### 



SIGNATURES    /s/  MUNAWAR H. HIDAYATALLAH
  Munawar H. Hidayatallah
    Chief Executive Officer and Chairman
 19




---



##### 



EXHIBIT INDEX  Exhibit

Description31
.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.  20