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                                                                   EXHIBIT 10.34


                         EXECUTIVE EMPLOYMENT AGREEMENT


       THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into
by and between Dailey Petroleum Services Corp., a Delaware corporation
("COMPANY"), and Martin Lyons ("EXECUTIVE") on this 18th day of July, 1997, but
to be effective on the 24th day of June, 1997 ("Effective Date").


                             W I T N E S S E T H :


       WHEREAS, Company desires to employ Executive and Executive desires to be
employed upon the terms and conditions set forth herein;

       WHEREAS, Company and Executive are parties to an Employment Agreement
dated June 25, 1996, as amended on February 17, 1997, which they desire to
amend and fully restate upon the terms and conditions set forth herein;

       NOW THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:

                                   ARTICLE 1
                         TERM AND NATURE OF EMPLOYMENT

       1.1 TERM OF EMPLOYMENT. Subject to the terms and conditions of this
Agreement, Company hereby employs Executive and Executive hereby accepts
employment with Company for a term beginning on the date on the Effective Date
as set forth above through and including June 23, 1999 (the "INITIAL TERM"),
unless this Agreement and Executive's employment hereunder are sooner
terminated pursuant to Article 5. On each anniversary of the Effective Date (a
"Renewal Date") the term of this Agreement shall automatically renew and extend
for a period of three years from the Renewal Date (a "Renewal Term") unless
written notice of nonrenewal is delivered from one party to the other at least
sixty days prior to the Renewal Date. The Agreement shall remain in force
during the Initial Term and any Renewal Term until terminated in accordance
with Article 5. The Initial Term together with each Renewal Term shall
hereinafter be referred to collectively as the "EMPLOYMENT PERIOD."

       1.2    PRINCIPAL DUTIES. Executive's employment hereunder shall be in
the capacity of Vice President North American Operations. In such capacity,
Executive shall perform the duties for which he currently is responsible as an
executive officer of Company. Executive shall perform his duties hereunder in
accordance with any lawful instructions, rules, regulations or policies made or
adopted





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by Company's Board of Directors, including those applicable to Company's
Executives generally, provided that Executive shall not have his duties,
authority, areas of responsibility, offices, immediate or support staff reduced
or eliminated during the Employment Period. During the Employment Period,
Executive shall devote his full time, and best efforts and skills to the
business and interests of Company, do his utmost to further enhance and develop
Company's best interests and welfare, and endeavor to improve his ability and
knowledge of Company's business, particularly as it relates to his duties
hereunder, in an effort to increase the value of his services for the mutual
benefit of the parties hereto. During the Employment Period, it shall not be a
violation of this Agreement for Executive to (a) serve on corporate, civic, or
charitable boards or committees (except for Boards or committees of a Competing
Business (as defined in Section 4.1)), (b) deliver lectures, fulfill teaching
or speaking engagements, (c) manage personal investments, so long as such
activities do not materially interfere with performance of Executive's
responsibilities under this Agreement.

       1.3    PLACE OF PERFORMANCE. Executive shall perform his duties
hereunder at the offices of Company in North Houston, Texas, or at such other
place where Company's offices subsequently may be located. Executive
acknowledges subject to Section 5.3(c) hereof, and agrees that Company may
require Executive to travel and render services in different locations from
time to time incident to the performance of his duties hereunder.

       1.4    AFFILIATES. The term "AFFILIATES" shall mean any person or entity
controlled by or under common control with Company.

                                   ARTICLE 2
                                  COMPENSATION

       For and in consideration of the performance by Executive of the
services, terms, conditions, covenants and agreements contained in this
Agreement, Company shall pay to Executive at the times, in the amounts and in
the manner herein provided, the following:

       2.1    BASE COMPENSATION. As the principal consideration for the
services to be performed by Executive hereunder during the Employment Period,
Executive shall be entitled to receive as base compensation from Company a
salary of not less than Twelve Thousand Nine Hundred Seventeen Thousand Dollars
($12,917) per month (the "BASE SALARY"), which shall be prorated for any
partial employment period and payable in the manner and on the timetable in
which Company's payroll is customarily handled, or at such more frequent
intervals as Company and Executive may hereafter agree to from time to time. No
overtime compensation shall be payable to Executive. Company's Board of
Directors shall review Executive's performance at least annually and shall make
any adjustments to Executive's compensation that it deems, in its sole
discretion, appropriate, provided that at no time during the Employment Period
shall Executive's compensation be adjusted to an amount below the Base Salary.
Company shall be entitled to withhold from all amounts of compensation payable
under this Article 2 such amounts on account of payroll taxes and similar
matters as are required by any applicable law, rule, or regulation of any
appropriate governmental





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authority. Such compensation shall continue to be paid during any period of
physical or mental incapacity unless and until Executive's employment is
terminated as herein provided.

       2.2    BONUSES AND BENEFITS. In addition to the Base Salary and stock
grant and option described above, Company shall provide Executive with the
following during the Employment Period:

              (a)     Bonuses, when and based upon or subject to such terms and
       conditions as Company's Board of Directors, in its sole and absolute
       discretion, may determine;

              (b)     Participation in any present or future disability,
       medical, health, dental, insurance, pension, profit-sharing, thrift,
       retirement, investment, and stock appreciation plans, and any other
       benefit, bonus or compensation plans on the same terms generally
       available to all of Company's Executives generally or its executive
       officers in particular;

              (c)     Payment or reimbursement, as the case may be, of
       reasonable business expenses (within limits that may be established by
       Company's Board of Directors) incurred in connection with the
       performance of his duties hereunder, such expense payment or
       reimbursement being subject to, and made in accordance with Company's
       policies and procedures of Executive expense payment or reimbursement in
       effect from time to time;

              (d)    Access to and use of Company's health club facility in
       accordance with the policies and procedures governing such facility;

              (e)    an automobile allowance of One Thousand Five Hundred
       Dollars ($1,500) per month and the use of a PHH card for oil, gasoline,
       repairs and maintenance;

              (f)    Use of a Company paid full membership in a local shooting
       range of the Executive's choice,

              (g)    Reimbursement of the reasonable costs of tuition, books
       and travel incurred for Executive's continuing education in general
       business or continuing professional education. For each fiscal year
       during the Employment Period the reimbursement shall not exceed ten
       percent of Executive's annual base compensation as set forth in Section
       2.1;

              (h)    payment for preparation of tax returns by a Certified
       Public Accountant of Executive's choice.

       2.3    VACATION. During the Employment Period, Executive shall accrue
paid vacation time in such amounts and at such times as determined by Company's
Board of Directors, in its sole discretion; provided, however, that the minimum
amount of paid vacation to which Executive shall be entitled shall be no less
than that to which he is entitled as an Executive of Company immediately prior
to the effective date of this Agreement. If such vacation time is not taken by
Executive during





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the term of this Agreement, Executive may, at his option, receive a lump sum
payment of cash value of the vacation pay in lieu thereof, or carry the
vacation time forward.


                                   ARTICLE 3
                   CONFIDENTIAL INFORMATION; PROPERTY RIGHTS


       3.1    NON-DISCLOSURE OBLIGATION OF EXECUTIVE. For purposes of this
Article 3, all references to Company shall mean and include its Affiliates (as
defined in Section 1.4) Executive hereby acknowledges, understands and agrees
that whether developed by Executive or others employed by or in any way
associated with Executive or Company, all Confidential Information, as defined
in Section 3.2, is the exclusive and confidential property of Company and shall
be at all times regarded, treated and protected as such in accordance with this
Agreement. Executive acknowledges that all such Confidential Information is in
the nature of a trade secret. Failure to mark any writing confidential shall
not affect the confidential nature of such writing or the information contained
therein.

       3.2    DEFINITION OF CONFIDENTIAL INFORMATION. "CONFIDENTIAL
INFORMATION" shall mean information, whether or not originated by Executive,
which is used in Company's business and (a) is proprietary to, about or created
by Company; (b) gives Company some competitive business advantage or the
opportunity of obtaining such advantage, or the disclosure of which could be
detrimental to the interests of Company; (c) is designated as Confidential
Information by Company, known by the Executive to be considered confidential by
Company, or from all the relevant circumstances considered confidential by
Company, or from all the relevant circumstances should reasonably be assumed by
Executive to be confidential and proprietary to Company; or (d) is not
generally known by non-Company personnel. Such Confidential Information
includes, but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing or
designated as confidential):

              1.     Work product resulting from or related to work or projects
       performed or to be performed for Company or for clients of Company,
       including but not limited to data bases, draft and other non-public
       written documents, the interim and final lines of inquiry, hypotheses,
       research and conclusions related thereto and the methods, processes,
       procedures, analyses, techniques and audits used in connection
       therewith;

              2.     Computer software of any type or form in any stage of
       actual or anticipated research and development, including but not
       limited to programs and program modules, routines and subroutines,
       processes, algorithms, design concepts, design specifications (design
       notes, annotations, documentation, flowcharts, coding sheets, and the
       like), source codes, object codes and load modules, programming, program
       patches and system designs;





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              3.     Information relating to Company's proprietary rights prior
       to any public disclosure thereof, including but not limited to the
       nature of the proprietary rights, production data, technical and
       engineering data, test data and test results, the status and details of
       research and development of products and services, and information
       regarding acquiring, protecting, enforcing and licensing proprietary
       rights (including, without limitation, patents, copyrights and trade
       secrets);

              4.     Internal Company personnel and financial information,
       vendor names and other vendor information (including vendor
       characteristics, services and agreements), purchasing and internal cost
       information, internal service and operational manuals, and the manner
       and methods of conducting Company's business;

              5.     Marketing and development plans, price and cost data,
       price and fee amounts, pricing and billing policies, quoting procedures,
       marketing techniques and methods of obtaining business, forecasts and
       forecast assumptions and volumes, and future plans and potential
       strategies of Company which have been or are being discussed;

              6.     Names of customers and their representatives, contracts
       and their contents and parties, customer services, and the type,
       quantity, specifications and contents of products and services
       purchased, leased, licensed or received by customers of Company;

              7.     Information provided to Company by any actual or potential
       customer, government agency, or other third party (including businesses,
       consultants and other entities and individuals); and

              8.     Contracts with, or developed by Company for use with,
       agents of Company, including, without limitation, the terms and
       conditions thereof.

       3.3    EXCLUSIONS FROM CONFIDENTIAL INFORMATION. "CONFIDENTIAL
INFORMATION" shall not include information publicly known other than as a
result of a disclosure by Executive in breach of Section 3.1, and the general
skills and experience gained during Executive's work with Company which
Executive could reasonably have been expected to acquire in similar work with
another company. The phrase "PUBLICLY KNOWN" shall mean readily accessible to
the public in a written publication and, shall not include information which is
only available by a substantial searching of the published literature or
information the substance of which must be pieced together from a number of
different publications and sources. The burden of proving that information or
skills and experience are not Confidential Information shall be on the party
asserting such exclusion.

       3.4    COVENANTS OF EXECUTIVE. As a consequence of Executive's
acquisition or anticipated acquisition of Confidential Information, Executive
will occupy a position of trust and confidence with respect to Company's
affairs and business. In view of the foregoing and of the consideration to be
provided to Executive, Executive agrees that it is reasonable and necessary
that Executive make the following covenants:





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              (a)    At any time during or after the termination of the
       Employment Period, Executive will not disclose Confidential Information
       to any person or entity, either inside or outside of Company, other than
       as necessary in carrying out duties on behalf of Company, without
       obtaining Company's prior written consent (unless such disclosure is
       compelled pursuant to court order or subpoena, and at which time
       Executive gives notice of such proceedings to Company), and Executive
       will take all reasonable precautions to prevent inadvertent disclosure
       of such Confidential Information. This prohibition against Executive's
       disclosure of Confidential Information includes, but is not limited to,
       disclosing the fact that any similarity exists between the Confidential
       Information and information independently developed by another person or
       entity, and Executive understands that such similarity does not excuse
       Executive from abiding by his covenants or other obligations under this
       Agreement.

              (b)    At any time during or after the termination of the
       Employment Period, Executive will not use, copy or transfer Confidential
       Information other than as necessary in carrying out his duties on behalf
       of Company, without first obtaining Company's prior written consent, and
       will take all reasonable precautions to prevent inadvertent use, copying
       or transfer of such Confidential Information. This prohibition against
       Executive's use, copying, or transfer of Confidential Information
       includes, but is not limited to, selling, licensing or otherwise
       exploiting, directly or indirectly, any products or services (including
       data bases, written documents and software in any form) which embody or
       are derived from Confidential Information, or exercising judgment in
       performing analyses based upon knowledge of Confidential Information.

       3.5    RETURN OF CONFIDENTIAL MATERIAL. Executive shall turn over to
Company all originals and copies of materials containing Confidential
Information in the Executive's possession, custody, or control upon request or
upon termination of the Executive's employment with Company. Executive agrees
to attend a termination interview with the General Counsel to confirm turnover
of such materials and to discuss any questions the undersigned may have about
his continuing obligations under this Agreement.

       3.6    INVENTIONS. Any and all inventions, products, discoveries,
improvements, copyrightable works, trademarks, service marks, ideas, processes,
formulae, methods, designs, techniques or trade secrets (collectively
hereinafter referred to as "INVENTIONS") made, developed, conceived or
resulting from work performed by Executive (alone or in conjunction with
others, during regular hours of work or otherwise) while he is employed by
Company and which may be directly or indirectly useful in, or related to, the
business of Company (including, without limitation, research and development
activities of Company), or which are made using any equipment, facilities,
Confidential Information, materials, labor, money, time or other resources of
Company, shall be promptly disclosed by Executive to his supervisor, shall be
deemed Confidential Information for purposes of this Agreement, and shall be
Company's exclusive property. Executive shall, upon Company's request, execute
any documents and perform all such acts and things which are necessary or
advisable in the opinion of Company to cause issuance of patents to, or
otherwise obtain recorded





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protection of right to intellectual property for, Company with respect to
Inventions that are to be Company's exclusive property under this Section 3.6,
or to transfer to and vest in Company full and exclusive right, title and
interest in and to such Inventions; provided, however, that the expense of
securing any such protection of right to Inventions shall be borne by Company.
In addition, Executive shall, at Company's expense, assist Company in any
proper manner in enforcing any Inventions which are to be or become Company's
exclusive property hereunder against infringement by others. Executive shall
keep confidential and will hold for Company's sole use and benefit any
Invention that is to be Company's exclusive property under this Section 3.6 for
which full recorded protection of right has not been or cannot be obtained.


                                   ARTICLE 4
                   COVENANT NOT TO COMPETE; NON-INTERFERENCE


       4.1    PROHIBITED EXECUTIVE ACTIVITIES. Executive agrees that except in
the ordinary course of his employment hereunder during the Employment Period,
Executive shall not during the Employment Period and for a period of one (1)
year thereafter within any geographic area in which Company conducts business
during the Employment Period (all references to Company shall include its
Affiliates as defined in Section 1.4):

              (a)    Directly or indirectly, engage or invest in, own, manage,
       operate, control or participate in the ownership, management, operation
       or control of, be employed by, associated or in any manner connected
       with, or render services or advice to, any Competing Business (as
       defined below) provided, however, that the Executive may invest in the
       securities of any enterprise with the power to vote up to 5% of the
       capital stock of such enterprise (but without otherwise participating in
       the activities of such enterprise) if such securities are listed on any
       national or regional securities exchange or have been registered under
       Section 12(g) of the Securities Exchange Act of 1934;


              (b)    Directly or indirectly, either as principal, agent,
       independent contractor, consultant, director, officer, employee,
       employer, advisor (whether paid or unpaid), stockholder, partner or in
       any other individual or representative capacity whatsoever, either for
       his own benefit or for the benefit of any other person or entity,
       solicit, divert or take away, any customers or clients of Company; or

              (c).   Directly or indirectly, either as principal, agent,
       independent contractor, consultant, director, officer, Executive,
       Company, advisor (whether paid or unpaid), stockholder, partner or in
       any other individual or representative capacity whatsoever, either for
       his own benefit or for the benefit of any other person or entity, either
       (1) hire, attempt to hire, contact or solicit with respect to hiring any
       Executive of Company, (2) induce or otherwise counsel, advise or
       encourage any Executive of Company to leave the employment





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       of Company, or (3) induce any distributor, representative or agent of
       Company to terminate or modify its relationship with Company.

"COMPETING BUSINESS" shall mean any individual, business, firm, company,
partnership joint venture, organization, or other entity whose products or
services compete, in whole or in part, at any time during the Employment Period
with the products or services of Company or its Affiliates in any domestic or
international market area.

       4.2    ESSENTIAL NATURE OF ARTICLE 4. It is acknowledged, understood and
agreed by and between the parties hereto that the covenants made by Executive
in Section 4.1 are essential elements of this Agreement and that, but for the
agreement of the Executive to comply with such covenants, Company would not
have entered into this Agreement.

       4.3 NECESSITY AND REASONABLENESS OF ARTICLE 4. Executive hereby
specifically acknowledges and agrees that:

              (a)    Company has expended and will continue to expend
       substantial time, money and effort in developing (1) its business in
       which the designs, plans, manuals and specifications are valuable trade
       secrets, and (2) a valuable list of customers and agents, and
       information about their technical problems and needs, purchasing habits,
       idiosyncracies and internal purchasing procedures;

              (b)    Executive will, in the course of his Employment, be
       personally entrusted with and exposed to the trade secrets of Company;

              (c)    Company, during the term of this Agreement and after its
       termination, will be engaged in its highly competitive business in which
       many firms, including Company, compete;

              (d)    A substantial portion of Company's business is conducted
       outside the United States;

              (e)    Company, pursuant to acquiring certain patents, technology
       and associated trade secrets and know-how, will further develop its
       worldwide business;

              (f)    Executive could, after having access to Company's
       financial records, contracts, patents, technology and associated trade
       secrets and know-how and, after receiving further training by and
       experience with Company, and after reviewing Company's trade secrets,
       become a competitor;

              (g)    Company will suffer great loss and irreparable harm if
       Executive terminates his employment and enters directly or indirectly,
       into competition with Company;





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              (h)    The temporal and other restrictions contained in this
       Article 4 are in all respects reasonable and necessary to protect the
       business goodwill, trade secrets, prospects and other business interests
       of Company;

              (i)    The enforcement of this Agreement in general, and of this
       Article 4 in particular, will not work an undue or unfair hardship on
       Executive or otherwise be oppressive to him, it being specifically
       acknowledged and agreed by Executive that he has activities and other
       business interests and opportunities which will provide him adequate
       means of support if the provisions of this Article 4 are enforced after
       termination of his employment with Company; and

              (j)    the enforcement of this Agreement in general, and of this
       Article 4 in particular, will neither deprive the public of needed goods
       or services nor otherwise be injurious to the public.

       4.4    JUDICIAL MODIFICATION. Executive agrees that if a court of
competent jurisdiction determines that the length of time or any other
restriction, or portion thereof, set forth in this Article 4 is overly
restrictive and unenforceable, the court shall reduce or modify such
restrictions to those which it deems reasonable and enforceable under the
circumstances, and as so reduced or modified, the parties hereto agree that the
restrictions of this Article 4 shall remain in full force and effect. Executive
further agrees that if a court of competent jurisdiction determines that any
provision of this Article 4 is invalid or against public policy, the remaining
provisions of this Article 4 and the remainder of this Agreement shall not be
affected thereby, and shall remain in full force and effect.

       4.5    SURVIVAL OF COVENANTS. The covenants and agreements of Executive
set forth in this Article 4 are of a continuing nature and shall survive the
expiration, termination or cancellation of the remainder of this Agreement
regardless of the reason for such therefor and shall survive the termination,
if any, of the Executive's employment.

       4.6    NONCOMPETITION PAYMENTS. Upon termination of Executive's
employment with Company for any reason pursuant to this Agreement, Company
shall pay to Executive , in addition to amounts otherwise payable herein, (a) a
single lump sum payment equal to six (6) months of Base Salary, and (b) twelve
(12) monthly installments equal to his monthly Base Salary, as defined in
Section 2.1, ("NonCompetition Payments"), provided that:

       (i)    any payments made to Executive pursuant to Section 5.3 shall be
       applied against and reduce the NonCompetition Payments payable to
       Executive under this Section 4.6; and

       (ii)   there shall be no NonCompetition Payments payable for any period
       in which Executive is in breach of the obligations set forth in Articles
       3 and 4 of this Agreement.





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                                   ARTICLE 5
                                  TERMINATION


       5.1    COMPANY TERMINATION

              (a)    Notwithstanding any other provision of this Agreement, at
       any time during the Employment Period, including, without limitation,
       the Initial Term, this Agreement and Executive's employment hereunder
       shall terminate upon his death, and Company shall have the right, in its
       sole and absolute discretion, to terminate this Agreement and
       Executive's employment hereunder at any time by giving him written
       notice of such termination (1) for "Cause" (as defined below), or (2) if
       Executive shall suffer a Disability (as defined below). In the event of
       Executive's death during the Employment Period, the Company shall (i)
       pay to Executive's estate an amount equal to one years Base Salary, (ii)
       pay to Executive's estate a pro rata portion of any bonus which would
       have been payable but for Executive's death; (iii) vest Executive fully
       in any Company stock grant and stock options held by Executive at his
       death.

              (b)    "CAUSE" shall mean any of the following events:

                     1.     An act or acts of personal dishonesty taken by the
              Executive and intended to result in substantial personal
              enrichment of the Executive at the expense of the Company;

                     2.     Repeated violations by the Executive of Executive's
              obligations under this Agreement or under written policies of the
              Company which are demonstrably willful on the Executive's part,
              and for which Executive has received more than one written
              warning that specifies each area of Executive's violations;

                     3.     Executive's conviction or pleas of nolo contendere
              or equivalent pleas of a felony in a court of competent
              jurisdiction;

                     4.     Executive's use of illegal drugs as evidenced by a
              drug test authorized by Company; or

                     5.     Executive's conviction or the entry of a plea of
              nolo contendere or equivalent plea in a court of competent
              jurisdiction of any crime or offense involving moral turpitude.

              (c)    "DISABILITY" shall mean any mental or physical illness,
       impairment or condition which renders the Executive incapable of
       performing any material portion of his duties for a continuous period of
       twelve (12) months.





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       5.2    TERMINATION BY EITHER PARTY. Subject to the provisions of Section
5.3, Company may at any time, for any reason, with or without Cause, terminate
this Agreement and Executive's employment hereunder. Executive may terminate
this Agreement at any time and for any reason. Each of Company's and
Executive's option to terminate this Agreement pursuant to this Section 5.2
shall be exercised by delivery of a written notice to Executive or Company, as
applicable, specifying the effective date of such termination which in no event
shall be sooner than expiration of thirty (30) calendar days following delivery
of such written notice, provided that the notice requirement can be waived if
Company pays Employee his Base Compensation for the 30 day notice period.

       5.3    EFFECT OF TERMINATION.

              (a)    "TERMINATION BY COMPANY WITHOUT CAUSE." If Company
       terminates this Agreement for any reason other than pursuant to the
       terms of Section 5.1 and such termination is not within one year of a
       Change in Control (as defined in 5.3(b) below), then Company shall: (1)
       pay to Executive an amount equal to the greater of (i) his total Base
       Salary for the remainder of the Employment Period, or (ii) one month of
       Base Salary for each full year of service completed with Company as of
       the date of termination, (2) cause Executive to be fully vested in any
       stock options and stock grants held by Executive, and (3) pay Executive
       an amount equal to Executive's most recent annual bonus. Company shall
       at its option, make such payments either in one lump sum on the
       effective date of termination or over the remainder of the Employment
       Period as if the Agreement had not been terminated.

              (b)    "TERMINATION BY COMPANY WITHOUT CAUSE AFTER CHANGE IN
       CONTROL." If Company terminates this Agreement for any reason other than
       pursuant to the terms of Section 5.1 and such termination occurs within
       one year of the occurrence of a Change in Control, then Company shall:
       (1) pay to Executive an amount equal to the greater of (A) his total
       Base Salary for the remainder of the Employment period; (B) two times
       the greater of his annualized Base Salary in effect upon the occurrence
       of the Change in Control or his annualized Base Salary in effect on the
       date of notice termination is received; or (C) one month of Base Salary
       for each full year of service completed with the Company as of the date
       of termination, (2) pay to Executive an amount equal to two (2) times
       his most recent annual bonus, and (3) cause Executive to be fully vested
       in any stock options or stock grants held by Executive. Company shall
       make such payments in one lump sum on the effective date of termination.
       A "Change in Control" shall be deemed to have occurred at any time after
       the date of this Agreement that (i) any person (other than those persons
       who own more than 10% of the combined voting power of the Company's
       outstanding voting securities on the date hereof) becomes the beneficial
       owner, directly or indirectly, of 30% or more of the combined voting
       power of the Company's then outstanding voting securities, or (ii)
       individuals who at the beginning of any period of two consecutive fiscal
       years constitute the Company's Board of Directors cease for any reason
       to constitute a majority of such Board of Directors at any time during
       such two-year period.





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              (c)    "TERMINATION BY EXECUTIVE WITH GOOD CAUSE AFTER CHANGE IN
       CONTROL." If Executive terminates this Agreement for Good Cause (defined
       below) and such termination occurs within one year of the occurrence of
       a Change in Control, then Company shall: (1) pay to Executive an amount
       equal to the greater of (A) his total Base Salary for the remainder of
       the Employment Period; (B) two times the greater of his annualized Base
       Salary in effect upon the occurrence of the Change in Control or his
       annualized Base Salary in effect on the date of notice termination is
       received; or (C) one month of Base Salary for each full year of service
       completed with the Company as of the date of termination, (2) pay to
       Executive an amount equal to two (2) times his most recent annual bonus,
       and (3) cause Executive to be fully vested in any stock options or stock
       grants held by Executive. "GOOD CAUSE" shall mean the occurrence of any
       of the following events:

                     (i)    the assignment by Company to the Executive of
              duties that are materially inconsistent with the Executive's
              office with Company at the time of such assignment, or the
              removal by Company from the Executive of a material portion of
              those duties usually appertaining to the Executive's office with
              Company at the time of such removal;

                     (ii)   a material change by Company, without the
              Executive's prior written consent, in the Executive's
              responsibilities to Company, as such responsibilities are
              ordinarily and customarily required from time to time of a senior
              officer of a corporation engaged in Company's business;

                     (iii)  any removal of the Executive from, or any failure
              to reelect or to reappoint the Executive to, the office stated in
              Section 1.2;

                     (iv)   Company's direction that the Executive discontinue
              service (or not seek reelection or reappointment) as a director,
              officer or member of any corporation or association of which the
              Executive is a director, officer, or member at the date of this
              Agreement;

                     (v)    a reduction by Company in the amount of the
              Executive's salary in effect at the time of the occurrence of a
              Change in Control or the failure of Company to pay such salary to
              the Executive at the time and in the manner specified in this
              Agreement;

                     (vi)   other than with respect to the annual performance
              bonus specified in Article 2 or, as made with the Executive's
              prior written consent, the discontinuance (without comparable
              replacement) or material reduction by Company of the Executive's
              participation in any bonus or other employee benefit arrangement
              (including, without limitation, any profit-sharing, thrift, life
              insurance, medical, dental, hospitalization, stock option or
              retirement plan or arrangement) in which the





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<PAGE>   13
              Executive is a participant under the terms of this Agreement, as
              in effect on the date hereof or as may be improved from time to
              time hereafter;

                     (vii)  the moving by Company of the Executive's principal
              office space, related facilities, or support personnel, from
              Company's principal operating offices, or Company's requiring the
              Executive to perform a majority of his duties outside Company's
              principal operating offices for a period of more than 30
              consecutive days;

                     (viii) the relocation, without the Executive's prior
              written consent, of Company's principal executive offices to a
              location outside the county in which such offices are located at
              the time of the signing of this Agreement;

                     (ix)   in the event Company requires the Executive to
              reside at a location more than 25 miles from Company's principal
              executive offices, except for occasional travel in connection
              with Company business to an extent and in a manner which is
              substantially consistent with the Executive's current business
              travel obligations;

                     (x)    in the event the Executive consents to a relocation
              of Company's principal executive offices, the failure of Company
              to (A) pay or reimburse the Executive on an after-tax basis for
              all reasonable moving expenses incurred by the Executive in
              connection with such relocation or (B) indemnify the Executive on
              an after-tax basis against any loss realized by the Executive on
              the sale his principal residence in connection with such
              relocation;

                     (xi)   the failure of Company to continue to provide the
              Executive with office space, related facilities and support
              personnel (including, without limitation, administrative and
              secretarial assistance) that are commensurate with the
              Executive's responsibilities to and position with Company, and no
              less than those prior to this Agreement;

                     (xii)  the failure by Company to promptly reimburse the
              Executive for the reasonable business expenses incurred by the
              Executive in the performance of his duties for Company, in
              accordance with this Agreement.

              (d)    Subject to the provisions of Section 4.6, 5.1 or 5.3, upon
       termination of this Agreement and Executive's employment hereunder by
       either Company or Executive, Executive shall have no right to receive
       any compensation or benefits or continue to have any further rights or
       privileges under this Agreement (including without limitation any
       automobile allowance, use of Company facilities or property, etc.) for
       any period subsequent to the effective date of such termination, or for
       any period prior to such date which have not been earned or vested as of
       such date except as may be provided for in any employee benefit plan
       relating to such benefits.





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              (e)    Company's right of termination shall be in addition to and
       shall not affect Company's rights and remedies under Articles 3 and 4,
       and Section 6.1 of this Agreement, and Company's rights and remedies
       shall survive termination of Executive's employment hereunder.

              (f)    For purposes of this Agreement, Executive's years of
       service shall include service with the Company, service with any
       predecessor entity in which all or part of Company's business was
       conducted, and service with any Affiliate, as defined in Section 1.4.

       5.4    RESIGNATION FROM OFFICES. Any provision of this Agreement to the
contrary notwithstanding, Executive shall immediately resign from any offices
held with Company or its Affiliates upon written request by the Company. Any
resignation made pursuant to a written request by Company under this Section
5.4 shall not affect Executive's rights under this Agreement for any
compensation or payment.

       5.5    RELEASE OF FOREIGN RIGHTS. If, during the course of Executives
employment with Company or its Affiliates, Executive may acquire any
compensation, retirement, severance or other similar rights or benefits under
the laws of a country other than the United States of America,
("Extraterritorial Rights") then the compensation and benefits of this
Agreement shall supersede and replace such Extra Territorial Rights to the
extent permitted by law. Furthermore, to the extent the Extra Territorial
Rights may not be superseded under the applicable law, any payments or benefits
under applicable law, any payments or benefits under this Agreement shall be
reduced on a dollar for dollar basis for any amounts paid Executive for any
Extra Territorial Rights. By entering into this Agreement Executive expressly
acknowledges:

              (a)    Executive's domicile is the United States of America;

              (b)    Executive acknowledges that the employment relationship
       with Company and its Affiliates is to be governed solely by reference to
       the laws of the State of Texas, regardless of any services rendered in a
       jurisdiction outside the State of Texas;

              (c)    Executive expressly waives and releases any rights under
       the laws of any country other than the United States of America for any
       Extra Territorial Rights as heretofore defined; and

              (d)    Executive expressly acknowledges and agrees that the
       payments and benefits under this Agreement have been bargained for in
       lieu of any Extra Territorial Rights.

                                   ARTICLE 6
                                 MISCELLANEOUS

       6.1    INJUNCTIVE RELIEF. Because of the unique nature of the
Confidential Information, Executive acknowledges, understands and agrees that
Company will suffer immediate and irreparable





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harm if Executive fails to comply with any of his obligations under Articles 3
or 4 of this Agreement, and that monetary damages will be inadequate to
compensate Company for such breach. Accordingly, Executive agrees that Company
shall, in addition to any other remedies available to it at law or in equity,
be entitled to temporary, preliminary, and permanent injunctive relief to
enforce the terms of Articles 3 and 4 without the necessity of proving
inadequacy of legal remedies or irreparable harm.

       6.2    ACTION BY AND CONSENT OF COMPANY. All rights and remedies of
Company hereunder shall be exercised by the Company solely by the Compensation
Committee of the Company's Board of Directors.

       6.3    NOTICES. Any notice, instruction, authorization, request or
demand required hereunder shall be in writing, and shall be delivered either by
personal delivery, by telegram, telex, telecopy or similar facsimile means, by
certified or registered mail, return receipt requested, or by courier or
delivery service, addressed to the parties hereto at the principal offices of
Company at the address indicated beneath its signature on the execution page of
this Agreement, and also to Executive at his home address indicated beneath his
signature on the execution page of this Agreement, or at such other address and
number as a party shall have previously designated by written notice given to
the other party in the manner hereinabove set forth. Notices shall be deemed
given when received, if sent by facsimile means (confirmation of such receipt
by confirmed facsimile transmission being deemed receipt of communications sent
by facsimile means); and when delivered and receipted for (or upon the date of
attempted delivery where delivery is refused), if hand-delivered, sent by
express courier or delivery service, or sent by certified or registered mail,
return receipt requested.

       6.4    AMENDMENT AND WAIVER. This Agreement may be amended, modified or
superseded only by written instrument executed by all parties hereto. Any
waiver of the terms, provisions, covenants, representations, warranties, or
conditions hereof shall be made only by a written instrument executed and
delivered by the party waiving compliance. Any waiver granted by Company shall
be effective only if executed and delivered by a duly authorized executive
officer of Company other than Executive. The failure of any party at any time
or times to require performance of any provisions hereof, shall in no manner
effect the right to enforce the same. No waiver by any party of any condition
or provision, or the breach of any term, provision, representation, or warranty
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or
a waiver of any other condition or the breach of any other term, provision,
covenant, representation, or warranty.

       6.5    SUCCESSORS AND ASSIGNS. All of the terms, provisions, covenants,
representations, warranties, and conditions of this Agreement shall bind, be
enforceable by, and inure to the benefit of, the parties hereto, but this
Agreement and the rights and obligations hereunder shall not be assignable or
delegable by any party; provided, however, that this Agreement and all of
Company's rights and obligations hereunder may be assigned or delegated by it,
in whole, but not in part, to, and shall be binding upon and inure to the
benefit of, any of its successors or assigns, but such assignment or delegation
by Company shall not relieve it of any of its obligations hereunder.





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       6.6    DEFINITIONS, GENDER AND CERTAIN REFERENCES. As used in this
Agreement, each parenthetically or quoted capitalized term in the introduction,
recitals and other Sections of this Agreement shall have the meaning so
ascribed to it. Whenever the context requires, the gender of all words used
herein shall include the masculine, feminine and neuter, and the number of all
words shall include the singular and plural. References to Articles or Sections
shall be to Articles or Sections of this Agreement unless otherwise specified.
The headings and captions used in this Agreement are solely for convenient
reference and shall not affect the meaning or interpretation of any article,
section or paragraph herein, or this Agreement. The terms "hereof," "herein" or
"hereunder" shall refer to this Agreement as a whole and not to any particular
Section.

       6.7    GOVERNING LAW AND SEVERABILITY. This Agreement has been executed
and is performable in Montgomery County, Texas. The validity, interpretation,
construction, and performance of this Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Texas. Each party
hereto hereby acknowledges and agrees that it has had the opportunity to
consult with its own legal counsel in connection with the negotiation of this
Agreement, and that it has bargaining power equal to that of the other party
hereto in connection with the negotiation, execution and delivery of this
Agreement. Accordingly, the parties hereto agree that the rule of contract
construction that an agreement shall be construed against the drafter shall
have no application in the construction or interpretation of this Agreement.
The invalidity of any provision of this Agreement shall not affect any other
provision of this Agreement, which shall remain in full force and effect, nor
shall the invalidity of a portion of any provision of this Agreement affect the
balance of such provision.

       6.8    EXPENSES. Each party hereto shall pay all of its respective fees
and expenses of attorneys, accountants and other persons employed by it in
connection with the resolution of any dispute between the parties hereto
arising out of or relating to this Agreement.

       6.9    ENTIRE AGREEMENT. No agreements or representations, oral or
otherwise, express or implied, have been made by any party hereto with respect
to the subject matter hereof that are not set forth expressly in this
Agreement. This Agreement supersedes and cancels any prior agreement,
arrangement or understanding entered into between Company and Executive
relating to the subject matter hereof.

       6.10   COUNTERPARTS. The parties may execute this Agreement in any
number of counterparts, each of which is an original, but all of which together
constitute one and the same instrument.





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<PAGE>   17
       IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written.


                                   COMPANY:

                                   DAILEY PETROLEUM SERVICES CORP.


                                   By:      /s/ JAMES F. FARR                   
                                            ------------------------------------
                                   Name:    James F. Farr
                                   Title:   President and CEO

                                   Address:     One Lawrence Center
                                                P. O. Box 1863
                                                2507 North Frazier
                                                Conroe, Texas 77305

                                   EXECUTIVE:


                                   /s/ MARTIN LYONS                             
                                   ---------------------------------------------
                                   Martin Lyons

                                   Address:  10510 Dude Rd.                     
                                             -----------------------------------
                                             Houston, TX 77084                  
                                             -----------------------------------
                                                                                
                                             -----------------------------------
                                                                                
                                             -----------------------------------





                           [INTENTIONALLY LEFT BLANK]





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<PAGE>   18
                             COMPANY ACKNOWLEDGMENT

STATE OF TEXAS       )
                     )
COUNTY OF MONTGOMERY )

       Before me, the undersigned authority, on this date personally appeared
James F. Farr, President and Chief Executive Officer of Dailey Petroleum
Services Corp., a Delaware corporation, known to me to be the person whose name
is subscribed to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein expressed, in the
capacity stated, and as the act and deed of said corporation.

Given under my hand and seal this 18th day of July, 1997.



[SEAL]                                     /s/ VIRGINIA J. CROSS                
                                           -------------------------------------
                                           Notary Public in and for
                                           The State of Texas

                                           My Commission Expires: 5-21-2000



                            EXECUTIVE ACKNOWLEDGMENT


STATE OF TEXAS       )
                     )
COUNTY OF MONTGOMERY )

       Before me, the undersigned authority, on this date personally appeared
Martin Lyons, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

Given under my hand and seal this 18th day of July, 1997.




[SEAL]                                     /s/ VIRGINIA J. CROSS                
                                           -------------------------------------
                                           Notary Public in and for
                                           The State of Texas

                                           My Commission Expires: 5-21-2000





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