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                                                                   EXHIBIT 10.21





                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into
by and between Dailey Petroleum Services Corp., a Delaware corporation
("COMPANY"), and James F. Farr ("EXECUTIVE") on this 27th day of November,
1996, but to be effective on the 27th day of November, 1996 ("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 Executive Employment
Agreement dated June 25, 1996 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 December 31, 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 President and Chief Executive Officer.  In such capacity,
Executive shall perform the duties for which he currently is responsible as an
executive officer of Company.    Executive shall perform his
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duties hereunder in accordance with any lawful instructions, rules, regulations
or policies made or adopted 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 principal executive offices of Company at One Lawrence Centre,
2507 North Frazier, Conroe, Texas  77305,  or at such other place where
Company's principal executive 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 Twenty-Three Thousand Three Hundred and Thirty-Three
Dollars ($23,333) 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





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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 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     STOCK GRANT AND OPTION.  As additional consideration for
Executive's performance of his obligations under Article 3 and Article 4 of
this Agreement, Company has previously, granted to Executive 120,000 restricted
shares of Company's Common Stock, and an option to purchase 71,712 shares of
Company's Common Stock, subject to the terms and conditions of Company's 1996
Key Employee Stock Plan, and the terms of the specific agreements relating to
the grants of restricted stock and stock options.   Executive hereby
acknowledges and agrees that Company's grant to Executive of such Common Stock
and options, together with other compensation payable to Executive hereunder,
is reasonable and adequate independent consideration for Executive's
performance of his obligations under Articles 3 and 4 of this Agreement.

         2.3     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 provided, however, that an annual
         bonus plan shall be prepared which will make a bonus of thirty three
         and one third percent (33 1/3%) of Base Salary payable if all bonus
         plan criteria are met;

                 (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)      At the option of Executive each year either (1) use
         of a current model Company vehicle comparable to a fully equipped
         Cadillac, plus reimbursement of the full cost of repairs, maintenance,
         gasoline, oil and cleaning, or (2) an automobile allowance of
         $1,700.00 per month;





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                 (f)      Use of a Company paid full membership in a local area
         country club of the Executive's choice, and

                 (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.

         2.4     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 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):





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                 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;

                 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





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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:

                 (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.





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         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 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;





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                 (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
         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;





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                 (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;

                 (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





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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.


                                   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;





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                          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 six (6) months.

         5.2     TERMINATION BY EITHER PARTY.  Subject to the provisions of
Section 5.3(a), 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.

         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





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         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.

                 (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





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<PAGE>   13
                 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 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.





                                       13
<PAGE>   14
                 (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 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, including the Company's 1996 Key Employee
         Stock Plan.

                 (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





                                       14
<PAGE>   15
                 (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 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





                                       15
<PAGE>   16
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.

         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, except any agreement entered into
pursuant to Company's 1996 Key Employee Stock  Plan as contemplated by Section
2.2 of this Agreement.





                                       16
<PAGE>   17
         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.

         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/ J.D. LAWRENCE
                                           --------------------------------
                                        Name:       J.D. Lawrence
                                        Title:      Chairman
                                                    
                                        Address:    One Lawrence Center
                                                    P. O. Box 1863
                                                    2507 North Frazier
                                                    Conroe, Texas  77305
                                                    
                                        EXECUTIVE:  
                                                    
                                         /s/ JAMES F. FARR
                                        -----------------------------------
                                        Name:       James F. Farr
                                        Address:    62 Lakeridge Court
                                                    The Woodlands, Texas 77381






                           [INTENTIONALLY LEFT BLANK]





                                       17
<PAGE>   18
                             COMPANY ACKNOWLEDGMENT


STATE OF TEXAS            )
                          )
COUNTY OF MONTGOMERY      )

         Before me, the undersigned authority, on this date personally appeared
J. D. Lawrence, Chairman 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 27th day of November, 1996.



                                        /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
James F. Farr, 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 27th day of November, 1996.


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

                                           My Commission Expires: 5-21-2000






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