**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington D.C. 20549**

**FORM 10-K**

**(MarkOne)**

**o**                                   ANNUAL REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

**For the fiscal year ended June 30, 2007**

**Or**

**x**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**For the transition period from September 8,2006 to June 30, 2007**

**Commission File Number 001-33496**

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**VANTAGEENERGY SERVICES, INC.**

(Exactname of registrant as specified in its charter) 

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| **Delaware**              |   | **51-0599779**                           |
|---------------------------|--------|------------------------------------------|
| (State of  Incorporation) |   | (I.R.S. Employer  Identification Number) |

 

**777 Post Oak Blvd., Suite 610**

**Houston, Texas 77056**

(Address of principalexecutive offices and zip code)

**Registrant’stelephone number, including area code:**(281) 404-4700

Securitiesregistered pursuant to Section 12(b) of the Act:

| Title of each class                       | ** ** | **Name of each exchange on which registered** |
|-------------------------------------------|------------|-----------------------------------------------|
| Units                                     |       | American Stock  Exchange                      |
| Shares of Common  Stock, $0.001 par value |       | American Stock  Exchange                      |
| Warrants                                  |       | American Stock  Exchange                      |

 

Securitiesregistered pursuant to Section 12(g) of the Act: **None**

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act. Yes o  No x

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act. Yes o  No x

Indicateby check mark whether the registrant: (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. Yes o   No x

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. o

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Checkone):

| Large accelerated filer o | Accelerated filer o | Non-accelerated filer x |
|---------------------------|---------------------|-------------------------|

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act). Yes x  No o

Theaggregate market value of the voting common stock, par value $0.001 per share,held by non-affiliates of the registrant computed by reference to the closingsales price for the registrant’s common stock on September 20, 2007, asreported on the American Stock Exchange was approximately $262,260,000.

Indetermining the market value of the voting stock held by any non-affiliates,shares of common stock of the registrant beneficially owned by directors,officers and other holders of non-publicly traded shares of common stock of theregistrant have been excluded. This determination of affiliate status is notnecessarily a conclusive determination for other purposes.

Asof September 20, 2007, the registrant had outstanding 42,750,000 shares ofcommon stock, par value $0.001 per share, of which 35,066,475 such shares arepublicly traded.

**DOCUMENTS INCORPORATED BY REFERENCE**

LISTHEREUNDER THE DOCUMENTS FROM WHICH PARTS THEREOF HAVE BEEN INCORPORATED BYREFERENCE AND THE PART OF THE FORM 10-K INTO WHICH SUCH INFORMATIONIS INCORPORATED:

NONE.

 

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**TABLEOF CONTENTS**
| **SAFE HARBOR STATEMENT**                                                                 |   |                                                                                                                |
|-------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|
| **PART I**                                                                           |   |                                                                                                                |   |   |
| Item 1.                                                                                   |   | Business                                                                                                            |   | 3 |
| Item 1A.                                                                             |   | Risk Factors                                                                                                        |   | 17 |
| Item 1B.                                                                             |   | Unresolved Staff Comments                                                                                           |   | 40 |
| Item 2.                                                                                   |   | Properties                                                                                                          |   | 40 |
| Item 3.                                                                                   |   | Legal Proceedings                                                                                                   |   | 40 |
| Item 4.                                                                                   |   | Submission of Matters to a  Vote of Security Holders                                                                |   | 40 |
| **PART II**                                                                          |   |                                                                                                                |   |   |
| Item 5.                                                                                   |   | Market for Registrant’s  Common Equity, Related Stockholder Matters and Issuer Purchases of Equity  Securities |   | 41 |
| Item 6.                                                                                   |   | Selected Financial Data                                                                                             |   | 43 |
| Item 7.                                                                                   |   | Management’s Discussion and  Analysis of Financial Condition and Results of Operations                         |   | 44 |
| Item 7A.                                                                             |   | Quantitative and Qualitative  Disclosures About Market Risk                                                         |   | 46 |
| Item 8.                                                                                   |   | Financial Statements and  Supplementary Data.                                                                       |   | 46 |
| Item 9.                                                                                   |   | Changes in and Disagreements  with Accountants on Accounting and Financial Disclosure                               |   | 47 |
| Item 9A.                                                                             |   | Controls and Procedures                                                                                             |   | 47 |
| Item 9B.                                                                             |   | Other Information                                                                                                   |   | 47 |
| **PART III**                                                                         |   |                                                                                                                |   |   |
| Item 10.                                                                                  |   | Directors and Executive  Officers of the Registrant                                                                 |   | 48 |
| Item 11.                                                                                  |   | Executive Compensation                                                                                              |   | 53 |
| Item 12.                                                                                  |   | Security Ownership and  Certain Beneficial Owners and Management and Related Stockholder Matters                    |   | 54 |
| Item 13.                                                                                  |   | Certain Relationships,  Related Transactions and Director Independence                                              |   | 56 |
| Item 14.                                                                                  |   | Principal Accountant Fees  and Services                                                                             |   | 57 |
| **PART IV**                                                                          |   |                                                                                                                |   |   |
| Item 15.                                                                                  |   | Exhibits and Financial  Statement Schedules                                                                         |   | 58 |
| SIGNATURES                                                                                |   | 59                                                                                                                  |
| Certification of CEO  Pursuant to Section 302                                        |   |                                                                                                                |
| Certification of  Principal Financial and Accounting Officer Pursuant to Section 302 |   |                                                                                                                |
| Certification of CEO  Pursuant to Section 906                                        |   |                                                                                                                |
| Certification of Principal Financial and Accounting  Officer Pursuant to Section 906 |   |                                                                                                                |

 

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**SAFE HARBORSTATEMENT**

This TransitionReport on Form 10-K contains forward-looking statements within themeaning of Section 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended. This Transition Reportincludes statements regarding our plans, goals, strategies, intent, beliefs orcurrent expectations. These statements are expressed in good faith and basedupon a reasonable basis when made, but there can be no assurance that theseexpectations will be achieved or accomplished. These forward looking statementscan be identified by the use of terms and phrases such as “believe,” “plan,” “intend,”“anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tenseor conditional constructions (“will,” “may,” “could,” “should,” etc.). Itemscontemplating or making assumptions about, actual or potential future sales,market size, collaborations, and trends or operating results also constitutesuch forward-looking statements. Actual results may differ materially due tovarious factors, including, but not limited to, our:

·       beinga development stage company with no operating history;

·       dependenceon key personnel, some of whom may join us following an initial transaction;

·       personnelallocating their time to other businesses and potentially having conflicts ofinterest with our business;

·       potentiallybeing unable to obtain additional financing to complete an initial transaction;

·       limitedpool of prospective target businesses;

·       securities’ownership being concentrated;

·       potentialchange in control if we acquire one or more target businesses for stock;

·       riskassociated  with operating in the oilfield services industry;

·       delistingof our securities from the American Stock Exchange or our inability to have oursecurities listed on the American Stock Exchange following a businesscombination;

·       financialperformance following an initial transaction; or

·       thoseother risks and uncertainties detailed in the our filings with the Securitiesand Exchange Commission including those listed at Item 1A-Risk Factors herein.

Although forward-looking statements in this reportreflect the good faith judgment of management, forward-looking statements areinherently subject to known and unknown risks, business, economic and otherrisks and uncertainties that may cause actual results to be materiallydifferent from those discussed in these forward-looking statements. Readers areurged not to place undue reliance on these forward-looking statements, whichspeak only as of the date of this current report. We assume no obligation toupdate any forward-looking statements in order to reflect any event orcircumstance that may arise after the date of this report, other than as may berequired by applicable law or regulation. Readers are urged to carefully reviewand consider the various disclosures made by us in our reports filed with theSEC which attempt to advise interested parties of the risks and factors thatmay affect our business, financial condition, results of operation and cashflows. If one or more of these risks or uncertainties materialize, or if theunderlying assumptions prove incorrect, our actual results may vary materiallyfrom those expected or projected.

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**PART I**

**ITEM 1.**                BUSINESS

**Introduction**

Vantage Energy Services, Inc.(the “Company”, “we” or “us”) is a blank check company organized under the lawsof the State of Delaware on September 8, 2006. We were formed to acquire,through a merger, capital stock exchange, asset or stock acquisition,exchangeable share transaction, joint venture or other similar businesscombination, one or more businesses in the oilfield services industry. On May 30,2007, we completed an initial public offering for $276 million of 34.5 millionunits each consisting of one share of our common stock and one warrant (the “PublicOffering”). Pursuant to our amended and restated certificate of incorporation,we have until May 24, 2009 to complete a business combination or we willbe subject to liquidation. Since completion of our Public Offering, we havecommenced our search for a business acquisition or combination. To date, wehave examined more than 25 possible acquisitions or combinations.

On August 30,2007, the Company signed a definitive share purchase agreement to acquire allof the shares of common stock of Offshore Group Investment Limited (“OGIL”), aCayman Islands registered company and wholly owned subsidiary of F3 Capital (“F3Capital”). F3 Capital is affiliated with TMT Global, a Cayman Islandsregistered company. Four Baker Marine Pacific Class 375 ultra-premiumjackup drilling rigs are being constructed in Singapore for delivery and saleto OGIL. Under the terms of the share purchase agreement, the Company willchange its domicile from Delaware to the Cayman Islands.

F3 Capital will receiveaggregate consideration of approximately $331 million at closing, consisting ofapproximately $56 million in cash and $275 million in units. Each unit iscomprised of one share of common stock and 0.75 warrants to purchase commonstock. The warrants shall be on terms identical to the warrants included in theunits sold as part of our Public Offering. As part of the transaction, theCompany will: (i) assume approximately $517 million in payments owed undercertain contracts for the construction and delivery of the four ultra-premiumjackup drilling rigs and (ii) incur approximately $40 million in rigoutfitting costs. Also as part of the transaction, the Company will acquire anoption to purchase an ultra-deepwater drillship currently under development.

A major European bankhas provided the Company an indicative term sheet providing for debt financingfor completion of the jackup rigs of approximately $440 million, subject tocompletion of the lender’s internal processes. The closing of the acquisitionand the debt financing are subject to stockholder approval, regulatoryclearances and other customary closing conditions.

According to Spears &Associates, worldwide spending in the oilfield services and equipment sector isscheduled to increase from $198 billion in 2006 to $236 billion in2007. We believe there are substantial opportunities to provide technology andservices to oil and gas producers on a global basis. Management believes wewill have opportunities to acquire businesses operating in a number ofsub-sectors of the oilfield services industry. Our targeted businesses mayinclude one or more companies that are engaged in:

·       *Oil and gas contract drilling services.  *This includescompanies that provide conventional and horizontal contract drilling servicesto exploration and production companies to include land-based and offshoredrilling rigs in both U.S. and international markets, rig management servicesto include technical drilling assistance and personnel and rig repair andmaintenance services.

·       *Other well services.  *This includes workover and wellservicing, drilling and completion fluids, well logging and other wirelineservices, measurement-while-drilling and logging-while-drilling services, wellstimulation, casing services, coiled tubing services, well engineering andproject management and well testing services.

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·       *Seismic acquisition and reservoir imaging.  *Thisincludes companies that acquire, process, interpret and market geophysicalinformation that provides 2D and 3D images of the subsurface as well as 4D surveyson a contract basis to a single client or on a multi-client basis where thedata is licensed to multiple clients.

·       *Marine transportation and supply.  *This includescompanies that employ offshore support vessels to transport materials, suppliesand personnel and to position drilling structures.

·       *Manufacturing, selling and distributing oilfield services and products.  *Thisincludes companies that manufacture, sell and distribute products and performservices that are used in the drilling and completion of new oil and gas wellsand the maintenance of existing wells.

·       *Oil and gas exploration.  *This includes companiesengaged in the exploration for new oil and gas wells, as well as drilling andcompletion activities in mature fields.

We believe there are substantialopportunities to operate onshore as well as offshore, in both domestic andinternational markets. We may also make investments in oil and gas exploration,development and production activities. We believe these segments offersignificant organic growth and/or consolidation opportunities in highlyfragmented markets with abundant potential acquisition targets.

**Industry Trends**

The International Energy Outlook 2007 (EnergyInformation Administration, U.S. Department of Energy) projects strong growthfor worldwide energy demand over the next 25 years. Despite the recentincrease in world oil prices, overall economic growth is expected to increaseat an annual rate of 3.8 percent over this period. To fuel this growth,world oil consumption is expected to increase from 80 million barrels perday (bpd) in 2003 to 98 million bpd in 2015 and to 118 million bpd in2030. The annual consumption of natural gas is expected to increase from 95 tcfto 182 tcf over the same time period.

We believe demand for oilfield services is a functionof oil and gas companies’ willingness to make operating and capitalexpenditures to explore for, develop and produce hydrocarbons, which in turn isaffected by current and expected levels of oil and gas prices. As oil and gasprices have rebounded beginning in early 1999, worldwide spending on oilfieldservices and equipment, according to Spears & Associates, Inc.’s(“Spears”) Oilfield Market Report 2006, has increased from $75 billion in1999 to an expected $236 billion in 2007.

The number of active rigs,or rig count, serves as an indicator of demand for oilfield services. Accordingto Baker Hughes, U.S. and worldwide rig counts at January 2007 were 1,699and 3,314, respectively, an increase of 57% and 34% from three years ago. Accordingto ODS-Petrodata there are fewer than 300 premium jackup drilling rigsworldwide. Of this number, there are fewer than 70 drilling rigs within theultra-premium segment targeted in our proposed acquisition.

**Management andBoard Expertise**

Our executive officers and directors have extensiveexperience in the energy industry as managers, principals or directors ofworldwide energy companies. In addition, they collectively comprise aformidable pool of expertise covering the key areas of the energy industry,with experience in negotiating and structuring transactions in the areas inwhich we will attempt to compete. Prior to the consummation of a businesscombination, we intend to leverage the industry experience of our executiveofficers, including their extensive contacts, relationships and access toacquisition opportunities, by focusing our efforts on identifying a prospectivetarget business or businesses in the energy industry and negotiating the termsof such transaction.

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Subsequent to theconsummation of a business combination, we believe that the strengths of ourmanagement team, particularly their extensive operations experience in theenergy industry, will be valuable with respect to operating any business we mayacquire.

**Regulations**

*Government Regulation*

Government regulationsignificantly affects the energy industry, including international conventions,national, state and local laws and regulations in force in the countries inwhich we may operate. Because these laws and regulations are frequently changedand may impose increasingly stricter requirements, we cannot predict theultimate cost of complying with these requirements, or the impact of theserequirements on our business.

*EnvironmentalRegulation*

We will be subject tonumerous national and local environmental laws and regulations relating to ouroperations and activities. Current and proposed fuel and product specificationsunder a number of environmental laws could have a significant effect on ourprofitability. Environmental laws and regulations could also require us toremediate or otherwise redress the effects on the environment of prior disposalor release of chemicals or petroleum substances. The extent and cost of futureenvironmental restoration, remediation and abatement programs are ofteninherently difficult to estimate. They depend on the magnitude of any possiblecontamination, the timing and extent of the corrective actions required and ourshare of liability relative to that of other solvent responsible parties. Ouroperations will also be subject to environmental and common law claims forpersonal injury and property damage caused by the release of chemicals,hazardous materials or petroleum substances.

*United StatesRegulation*

The Clean Air Act and its regulations require, amongother things, new fuel specifications and sulphur reductions, enhancedmonitoring of major sources of specified pollutants; stringent air emissionlimits; and risk management plans for storage of hazardous substances. Inaddition, the Clean Water Act is designed to protect and enhance the quality ofU.S. surface waters by regulating the discharge of wastewater and otherdischarges from both onshore and offshore operations. Facilities are requiredto obtain permits for most surface water discharges, install control equipmentand implement operational controls and preventative measures, including spillprevention and control plans.

The Resource Conservation and Recovery Act, or RCRA,regulates the storage, handling, treatment, transportation and disposal ofhazardous and non-hazardous wastes. It also requires the investigation andremediation of certain locations at a facility where such wastes have beenhandled, released or disposed of. Assets we acquire may generate and handle anumber of wastes regulated by RCRA that are subject to investigation andcorrective action.

Under the Comprehensive Environmental Response,Compensation, and Liability Act, also known as CERCLA or Superfund, wastegenerators, site owners, facility operators and certain other parties arestrictly liable for part or all of the cost of addressing sites contaminated byspills or waste disposal regardless of fault or the amount of waste sent to asite. Additionally, each state has laws similar to CERCLA.

In addition, after a business combination we couldbecome regulated under the Oil Pollution Act, which amended the Clean WaterAct. Among other requirements, the Oil Pollution Act requires the owner oroperator of a tank vessel or facility to maintain an emergency oil responseplan to respond to releases of oil or hazardous substances. Also, in case ofsuch releases, the Oil Pollution Act requires 

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responsible parties to paythe resulting removal costs and damages, provides for substantial civilpenalties, and authorizes the imposition of criminal and civil sanctions forviolations. States where we may have operations may have similar laws to theOil Pollution Act. Spills of oil and other hazardous substances could occur atour facilities.

Other significantlegislation includes the Toxic Substances Control Act, which regulates thedevelopment, testing, import, export and introduction of new chemical productsinto commerce; the Occupational Safety and Health Act which imposes workplacesafety and health, training and process standards to reduce the risks ofchemical exposure and injury to employees; the Emergency Planning and CommunityRight-to-Know Act, which requires emergency planning and spill notification aswell as public disclosure of chemical usage and emissions. In addition, theU.S. Department of Transportation through agencies such as the Office ofPipeline Safety and the Office of Hazardous Materials Safety regulates in acomprehensive manner the transportation of products such as gasoline andchemicals to protect the health and safety of the public.

*Maritime Oil SpillRegulation*

The United States Oil Pollution Act of 1990, or OPA,established an extensive regulatory and liability regime for the protection andcleanup of the environment from oil spills. OPA affects all owners and operatorswhose vessels trade in the United States, its territories and possessions, andthose vessels that operate in United States waters, which includes the UnitedStates’ territorial sea and its two hundred nautical mile exclusive economiczone.

Under OPA, vesselowners, operators and bareboat charterers are “responsible parties” and arejointly, severally and strictly liable (unless the spill results solely fromthe act or omission of a third party, an act of God or an act of war) for allcontainment and clean-up costs and other damages arising from discharges orthreatened discharges of oil from their vessels. OPA defines these otherdamages broadly to include:

·       naturalresources damages and the costs of assessment thereof;

·       realand personal property damages;

·       netloss of taxes, royalties, rents, fees and other lost revenues;

·       lostprofits or impairment of earning capacity due to property or natural resourcesdamage; and

·       netcost of public services necessitated by a spill response, such as protection fromfire, safety or health hazards, and loss of subsistence use of naturalresources.

OPA specifically permitsindividual states to impose their own liability regimes with regard to oilpollution incidents occurring within their boundaries, and some states haveenacted legislation providing for unlimited liability for oil spills. Somestates which have enacted such legislation have not yet issued implementingregulations defining vessels owners’ responsibilities under these laws.

*European UnionRegulation*

Within the European Union, member states either applythe Directives of the European Commission or enact regulations. By jointagreement, European Union Directives may also be applied within countriesoutside of Europe.

A European Commission Directive for a system ofIntegrated Pollution Prevention and Control, or IPPC, was approved in 1996.This system requires the issuance of permits through the application of BestAvailable Techniques, also know as BAT. In the event that the use of BATresults in the breach of an 

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environmental qualitystandard, plant emissions must be reduced. The Directive encompasses mostactivities and processes undertaken by the oil and petrochemical industrywithin the European Union.

The European Union Large Combustion Plant Directivesets emission limit values for sulphur dioxide, nitrogen oxides andparticulates from large combustion plants. It also required phased reductionsin emissions from existing large combustion plants. The second important set ofair emission regulations that may affect our operations is the Air QualityFramework Directive and its three set of directives on ambient air qualityassessment and management, which prescribe, among other things, ambient limitvalues for sulphur dioxide, oxides of nitrogen, particulate matter, lead,carbon monoxide, ozone, cadmium, arsenic, nickel, mercury and polyaromatichydrocarbons.

The European Commission’s Clean Air for Europe Programis expected to lead to the publication of a Thematic Strategy on Air Pollution,or TSAP. TSAP will outline the environmental objectives for air quality andmeasures to be taken to achieve the Commission’s objectives.

Many countries in Europe have soil protectionpolicies. Each has its own contaminated land regulations.

The European Commission adopted a Directive onEnvironmental Liability on April 21, 2004. The proposal seeks to implementa strict liability approach for damage to biodiversity and services lost fromhigh-risk operations by April 30, 2007. Member states are considering howto implement the regime. Possibilities of damage insurance, increasedpreventive provisions and injunctive relief to third parties are also possible.

Other environment-relatedexisting regulations which may have an impact on our future operations includethe Major Hazards Directive which requires emergency planning, publicdisclosure of emergency plans and ensuring that hazards are assessed, andeffective emergency management systems are in place; the Water FrameworkDirective which includes protection of groundwater; and the Framework Directiveon Waste to ensure that waste is recovered or disposed without endangeringhuman health and without using processes or methods which could harm theenvironment.

*Other environmentalinitiatives*

The European Union is considering legislation thatwill affect the operation of vessels and the liability of owners for oilpollution. It is difficult to predict what legislation, if any, may bepromulgated by the European Union or any other country or authority.

Although the United Statesis not a party thereto, many countries have ratified and follow the liabilityscheme adopted by the IMO and set out in the International Convention on CivilLiability for Oil Pollution Damage, 1969, as amended, or the CLC, and theConvention for the Establishment of an International Fund for Oil Pollution of1971, as amended. Under these conventions, a vessel’s registered owner isstrictly liable for pollution damage caused on the territorial waters of acontracting state by discharge of persistent oil, subject to certain completedefenses. Many of the countries that have ratified the CLC have increased theliability limits through a 1992 Protocol to the CLC. The liability limits inthe countries that have ratified this Protocol are currently approximately$4 million plus approximately $566 per gross registered ton above 5,000gross tons with an approximate maximum of $80.5 million per vessel, withthe exact amount tied to a unit of account which varies according to a basketof currencies. The right to limit liability is forfeited under the CLC wherethe spill is caused by the owner’s actual fault or privity and, under the 1992Protocol, where the spill is caused by the owner’s intentional or recklessconduct. Vessels trading to contracting states must provide evidence ofinsurance covering the limited liability of the owner. In jurisdictions wherethe CLC has not been adopted, various legislative schemes or common law govern,and liability is imposed either on the basis of fault or in a manner similar tothe CLC.

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*Security regulation*

Since the terroristattacks of September 11, 2001, there have been a variety of initiativesintended to enhance vessel security. On November 25, 2002, the MaritimeTransportation Security Act of 2002, or MTSA, came into effect. To implementcertain portions of the MTSA, in July 2003, the United States Coast Guardissued regulations requiring the implementation of certain securityrequirements aboard vessels operating in waters subject to the jurisdiction ofthe United States. Similarly, in December 2002, amendments to theInternational Convention for the Safety of Life at Sea, or SOLAS, created a newchapter of the convention dealing specifically with maritime security. The newchapter went into effect on July 1, 2004 and imposes various detailedsecurity obligations on vessels and port authorities, most of which arecontained in the newly created International Ship and Port Facilities Security,or ISPS Code. Among the various requirements are:

·       on-boardinstallation of automatic information systems, or AIS, to enhancevessel-to-vessel and vessel-to-shore communications;

·       on-boardinstallation of ship security alert systems;

·       thedevelopment of vessel security plans; and

·       compliancewith flag state security certification requirements.

The United States CoastGuard regulations, intended to align with international maritime securitystandards, exempt non-U.S. vessels from MTSA vessel security measures providedsuch vessels have on board, by July 1, 2004, a valid International Ship SecurityCertificate, or ISSC, that attests to the vessel’s compliance with SOLASsecurity requirements and the ISPS Code.

**Effecting aBusiness Combination**

*General*

We were formed to acquire, through a merger, capitalstock exchange, asset or stock acquisition, exchangeable share transaction,joint venture or other similar business combination, one or more businesses inthe oilfield services industry. We intend to utilize cash derived from ourinitial public offering, our capital stock, debt or a combination of these ineffecting a business combination.

Subject to the requirementthat our business combination must be with a target acquisition having a fairmarket value that is at least 80% of our net assets held in trust (net of taxesand amounts disbursed for working capital purposes and excluding the amountheld in the trust account representing a portion of the underwriters’ discount)at the time of such acquisition, there are no limitations on the type ofoilfield service investments (including investments in securities of entitiesthat own or finance oilfield services activities) we can make or the percentageof our total assets that may be invested in any one investment. Accordingly,other than the requirement that our business combination must be with a targetacquisition having a fair market value that is at least 80% of our net assetsheld in trust (net of taxes and amounts disbursed for working capital purposesand excluding the amount held in the trust account representing a portion ofthe underwriters’ discount) at the time of such acquisition, our investmentpolicies may be changed from time to time at the discretion of our board ofdirectors, without a vote of our stockholders. Additionally, no limits havebeen set on the concentration of investments (including investments insecurities of entities that own or finance oilfield services activities) in anylocation or product type. Although our management will endeavor to evaluate therisks inherent in a particular target business, we cannot assure you that wewill properly ascertain or assess all significant risk factors.

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*Sources of targetacquisition*

We believe that there arenumerous acquisition candidates in the global oilfield services industry thatwe intend to target. Target acquisitions are brought to our attention by ourofficers and directors, through their network of contacts and other industryrelationships located in the United States and elsewhere that regularly, in thecourse of their daily business activities, see numerous varied opportunities.Target acquisitions may also be brought to our attention by such unaffiliatedsources such as brokers or others as a result of being solicited by us throughcalls or mailings. Unaffiliated sources, such as brokers may also introduce usto target acquisitions they think we may be interested in on an unsolicitedbasis. In no event will any of our existing officers, directors or stockholdersor any entity with which they are affiliated, be paid any finder’s fee,consulting fee or other compensation prior to, or for any services they render,in order to effectuate the consummation of a business combination.

*Selection of atarget acquisition and structuring of a business combination*

Subject to therequirement that our business combination must be with a target acquisitionhaving a fair market value that is at least 80% of our net assets held in trust(net of taxes and amounts disbursed for working capital purposes and excludingthe amount held in the trust account representing a portion of the underwriters’discount) at the time of such acquisition, our management will have virtuallyunrestricted flexibility in identifying and selecting prospective targetacquisitions. We have not established any other specific attributes or criteria(financial or otherwise) for prospective target acquisitions. In evaluating aprospective target acquisition, our management consider, among other factors,the following factors likely to affect the performance of the investment:

·       earningsand growth potential;

·       experienceand skill of management and availability of additional personnel;

·       capitalrequirements;

·       competitiveposition;

·       financialcondition and results of operation;

·       barriersto entry into the energy and related industries;

·       stageof development of the products, processes or services;

·       breadthof services offered;

·       degreeof current or potential market acceptance of the services;

·       regulatoryenvironment of the industry;

·       costsassociated with effecting the business combination; and

·       proprietaryfeatures and degree of intellectual property or other protection of theproducts, processes or services.

These criteria are not intended to be exhaustive. Anyevaluation relating to the merits of a particular business combination will bebased, to the extent relevant, on the above factors as well as otherconsiderations deemed relevant by our management in effecting a businesscombination consistent with our business objective. In evaluating a prospectivetarget acquisition, we will conduct an extensive due diligence review whichencompasses, among other things, a review of all environmental issues, and areview of all relevant financial and other information which is made availableto us. This due diligence review may be conducted either by our management orby unaffiliated third parties we may engage. We also seek to have all owners ofany prospective target acquisition execute agreements with us waiving anyright, title, 

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interest or claim of anykind in or to any monies held in the trust account. If any prospective businessor owner refused to execute such agreement, it is unlikely we would continuenegotiations with such business or owner.

In the case of all possible acquisitions, we seek todetermine whether the transaction is advisable and in the best interests of us andour stockholders. We believe it is possible that our attractiveness as apotential buyer of businesses may increase after the consummation of an initialtransaction and there may be additional acquisition opportunities as we growand integrate our acquisitions. There may be future acquisition opportunities.Fundamentally, however, we believe that, following an initial transaction, wecould learn of, identify and analyze acquisition targets in the same way afteran initial transaction as we will before an initial transaction. To the extentwe are able to identify multiple acquisition targets and options as to whichbusiness or assets to acquire as part of an initial transaction, we intend toseek to consummate the acquisition which is most attractive and provides thegreatest opportunity for creating stockholder value. The determination of whichentity is the most attractive will be based on our analysis of a variety offactors, including whether such acquisition would be in the best interests ofour securityholders, the purchase price, the terms of the sale, the perceivedquality of the assets and the likelihood that the transaction will close.

The time and costsrequired to select and evaluate a target acquisition and to structure andcomplete the business combination cannot presently be ascertained with anydegree of certainty. Any costs incurred with respect to the identification andevaluation of a prospective target acquisition with which a businesscombination is not ultimately completed are expensed and reduce the amount ofcapital available to otherwise complete a business combination. While we maypay fees or compensation to third parties for their efforts in introducing usto a potential target business, in no event, however, will we pay any of ourexisting officers, directors or stockholders or any entity with which they areaffiliated any finder’s fee for services rendered to us or in connection withthe consummation of the initial business combination.

*Fair market valueof target acquisition*

The initial target acquisition that we acquire musthave a fair market value equal to at least 80% of our net assets held in trust(net of taxes and amounts disbursed for working capital purposes and excludingthe amount held in the trust account representing a portion of the underwriters’discount) at the time of such acquisition, subject to the conversion rightsdescribed below, although we may acquire a target acquisition whose fair marketvalue significantly exceeds 80% of our net assets held in trust (net of taxesand amounts disbursed for working capital purposes and excluding the amountheld in the trust account representing a portion of the underwriters’discount). To accomplish this, we may seek to raise additional funds throughcredit facilities or other secured financings or a private offering of debt orequity securities if such funds are required to consummate such a businesscombination.

Prior to entering into anagreement for a target acquisition, the fair market value of such target acquisitionwill be determined by our board of directors based upon standards generallyaccepted by the financial community, such as actual and potential sales,earnings and cash flow and book value. If our board is not able toindependently determine that the target acquisition has a sufficient fairmarket value, we will obtain an opinion from an unaffiliated, independent thirdparty appraiser, which may or may not be an investment banking firm that is amember of the National Association of Securities Dealers, Inc., statingwhether the fair market value meets the 80% of net assets held in trustthreshold. If such an opinion is obtained, we anticipate distributing copies,or making a copy of such opinion available, to our stockholders. We are notrequired to obtain an opinion from a third party as to the fair market value ifour board of directors independently determines that the target acquisitioncomplies with the 80% threshold unless there is a conflict of interest withrespect to the transaction.

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*Probable lack ofbusiness diversification*

Our businesscombination must be with a target acquisition which satisfies the minimumvaluation standard at the time of such acquisition, as discussed above.Consequently, we expect to have the ability to effect initially only a singlebusiness combination, although this process may entail the simultaneousacquisitions of several oilfield services businesses. Therefore, at leastinitially, the prospects for our success may be entirely dependent upon thefuture performance of a single business operation. Unlike other entities thatmay have the resources to complete several business combinations of entities orassets operating in multiple industries or multiple areas of a single industry,it is probable that we will not have the resources to diversify our operationsor benefit from the possible spreading of risks or offsetting of losses. Byconsummating a business combination with only a single entity or asset, ourlack of diversification may:

·       subjectus to numerous economic, competitive and regulatory developments, any or all ofwhich may have a substantial adverse impact upon the particular industry inwhich we may operate subsequent to a business combination, and

·       resultin our dependency upon the development or market acceptance of a single orlimited number of products, processes or services.

In the event we ultimatelydetermine to simultaneously acquire several businesses or assets and suchbusinesses or assets are owned by different sellers, we may need for each ofsuch sellers to agree that our purchase of its business or assets is contingenton the simultaneous closings of the other acquisitions, which may make it moredifficult for us, and delay our ability, to complete the business combination.With multiple acquisitions, we could also face additional risks, includingadditional burdens and costs with respect to possible multiple negotiations anddue diligence investigations (if there are multiple sellers) and the additionalrisks associated with the subsequent assimilation of the businesses or assetsinto a single operating business.

*Limited ability toevaluate the target business’s management*

Although we intend to closely scrutinize the incumbentmanagement, if any, of a prospective target business when evaluating thedesirability of effecting a business combination, we cannot assure you that ourassessment will prove to be correct. In addition, we cannot assure you that newmembers that join our management following a business combination will have thenecessary skills, qualifications or abilities to manage a public company.Furthermore, the future role of our officers and directors, if any, in thetarget business following a business combination cannot presently be statedwith any certainty. While our current officers and directors may remainassociated in senior management or advisory positions with us following abusiness combination, they may not devote their full time and efforts to ouraffairs subsequent to a business combination. Moreover, they would only be ableto remain with the company after the consummation of a business combination ifthey are able to negotiate employment or consulting agreements in connectionwith such business combination, which would be negotiated at the same time asthe business combination negotiations are being conducted and which may be aterm of the business combination. Such negotiations would take placesimultaneously with the negotiation of the business combination and couldprovide for such individuals to receive compensation in the form of cashpayments and/or our securities for services they would render to the companyafter the consummation of the business combination. While the personal andfinancial interests of such individuals may influence their motivation inidentifying and selecting a target business, the ability of such individuals toremain with the company after the consummation of a business combination willnot be the determining factor in our decision as to whether or not we willproceed with any potential business combination. Additionally, we cannot assureyou that our officers and directors will have significant experience orknowledge relating to the operations of the particular target business.

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In connection with abusiness combination, we may seek to recruit additional managers to supplementor replace the incumbent management of the target business. We cannot assureyou that we will have the ability to recruit such managers, or that any such managerswe do recruit will have the requisite skills, knowledge or experience necessaryto enhance the incumbent management, if any.

*Opportunity forstockholder approval of business combination*

Prior to the completion of our business combination,we will submit the transaction to our stockholders for approval, even if thenature of the acquisition is such as would not ordinarily require stockholderapproval under applicable state law. In connection with seeking stockholderapproval of a business combination, we will furnish our stockholders with proxysolicitation materials prepared in accordance with the Securities Exchange Actof 1934, as amended, which, among other matters, will include a description ofthe operations of the target business and, if applicable, historical financialstatements of a target business.

In connection with the stockholder vote required toapprove any business combination, all of our founding stockholders have agreedto vote all of their shares of common stock owned by them prior to our initialpublic offering in accordance with a majority of the public stockholders whovote at the special or annual meeting called for the purpose of approving abusiness combination. Our founding stockholders have also agreed that they willvote shares of common stock they acquired in our initial public offering, orsubsequently acquire, in favor of a business combination. We will proceed withthe business combination only if a majority of the shares of common stock votedby the public stockholders are voted in favor of the business combination andpublic stockholders owning less than 30% of the shares of common stock sold inthis offering exercise their conversion rights. Voting against the businesscombination alone will not result in conversion of a stockholder’s shares ofcommon stock into a pro rata share of the trust account. Such stockholder musthave also exercised its conversion rights described below.

Upon the completion of ourbusiness combination, unless required by Delaware law, the federal securitieslaws, and the rules and regulations promulgated thereunder, or the rules andregulations of an exchange upon which our securities are listed, we do notpresently intend to seek stockholder approval for any subsequent acquisitions.

*Conversion rights*

At the time we seek stockholder approval of anybusiness combination, we will offer to each public stockholder (but not to ourfounding stockholders, nor to any of our officers and directors) the right tohave such stockholder’s shares of common stock converted to cash if thestockholder votes against the business combination and the business combinationis approved and completed. Founding stockholders are not entitled to convertany of their shares of common stock into a pro rata share of the trust account.The actual per-share conversion price will be equal to the amount in the trustaccount, which includes $6,000,000 from the purchase of the founder securitiesby our founding stockholders, inclusive of any interest (net of any taxes dueon such interest, which taxes, if any, shall be paid from the trust account,and amounts disbursed for working capital purposes, and calculated as of twobusiness days prior to the consummation of the proposed business combination),divided by the number of shares of common stock sold in this offering. Withouttaking into account interest earned on the trust account or taxes payable onsuch interest, the initial per share conversion price would be $7.82 or $0.18less than the per unit offering price of $8.00. Because the initial per shareconversion price is $7.82 per share (plus any interest net of taxes payable)which may be lower than the market price of the common stock on the date of theconversion, there may be a disincentive on the part of public stockholders to exercisetheir conversion rights.

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If a business combination is approved, stockholdersthat vote against the business combination and elect to convert their shares ofcommon stock to cash will be entitled to receive their pro-rata portion of the$6.0 million ($0.24 per share) of deferred underwriting discount held inthe trust account.

An eligible stockholdermay request conversion at any time after the mailing to our stockholders of theproxy statement and prior to the vote taken with respect to a proposed businesscombination at a meeting held for that purpose. Any request for conversion,once made, may be withdrawn at any time up to the date of the meeting. If astockholder wishes to exercise his conversion rights, he must vote against theproposed business combination and, at the same time, demand that we convert hisshares into cash by marking the appropriate space on the proxy card. If,notwithstanding a stockholder’s vote, the proposed business combination isconsummated, then such stockholder will be entitled to receive a pro rata shareof the trust account, including any interest earned thereon as of date which istwo business days prior to the proposed consummation of the businesscombination. If a stockholder exercises his conversion rights, then he will beexchanging his shares of our common stock for cash and will no longer own theseshares of common stock. A stockholder will only be entitled to receive cash forthese shares if he continues to hold these shares through the closing date ofthe proposed business combination and then tenders his stock certificate to us.If a stockholder converts his shares of common stock, he will still have theright to exercise the warrants received as part of the units purchased in theoffering in accordance with the terms hereof. If the proposed businesscombination is not consummated then a stockholder’s shares will not beconverted into cash, even if such stockholder elected to convert.

*Liquidation if nobusiness combination*

Our amended and restated certificate of incorporationprovides that we will continue in existence only until May 24, 2009.This provision may not be amended except in connection with the consummation ofa business combination. If we have not completed a business combination by suchdate, our corporate existence will cease except for the purposes of winding upour affairs liquidating, pursuant to Section 278 of the Delaware GeneralCorporation Law. This has the same effect as if our board of directors andstockholders had formally voted to approve our dissolution pursuant to Section 275of the Delaware General Corporation Law. Accordingly, limiting our corporateexistence to a specified date as permitted by Section 102(b)(5) ofthe Delaware General Corporation Law removes the necessity to comply with theformal procedures set forth in Section 275 (which would have required ourboard of directors and stockholders to formally vote to approve our dissolutionand liquidation and to have filed a certificate of dissolution with theDelaware Secretary of State). We view this provision terminating our corporateexistence as an obligation to our stockholders and that investors will make aninvestment decision, relying, at least in part, on this provision. Thus,without the affirmative vote cast at a meeting of stockholders of at least 95%of the common stock issued in the offering, we will not take any action toamend or waive this provision to allow us to survive for a longer period oftime except in connection with the consummation of a business combination.

A liquidation after our existence terminates byoperation of law would occur in the event that a business combination is notconsummated by May 24, 2009. In the event we liquidate after terminationof our existence by operation of law, we anticipate notifying the trustee ofthe trust account to begin liquidating such assets promptly after such date andanticipate it will take no more than 10 business days to effectuate suchdistribution.

Our founding stockholders have waived their rights toparticipate in any distribution with respect to shares of common stock owned bythem immediately prior to this offering or purchased in the private placementupon our liquidation prior to a business combination, including the commonstock underlying the founder warrants. There will be no distribution withrespect to our warrants which will expire worthless. We expect that all costsassociated with the implementation and completion of our liquidation will befunded by any remaining net assets outside of the trust fund, although wecannot assure you that 

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there will be sufficientfunds for such purpose. If such funds are insufficient, our officers anddirectors have agreed to advance us the funds necessary to complete suchliquidation (currently anticipated to be no more than approximately $15,000 inthe case of a liquidation after our termination of existence by operation oflaw) and have agreed not to seek repayment for such expenses.

We will seek to reduce the possibility that ourexecutive officers and directors will have to indemnify the trust account dueto claims of creditors by endeavoring to have all vendors, service providersand prospective target businesses as well as other entities execute agreementswith us waiving any right, title, interest or claim of any kind in or to moniesheld in the trust account. We also will have access to up to $2,500,000(comprised of $250,000 available outside of the trust account from the Offeringproceeds and up to $2,250,000 interest income, net of taxes payable on allinterest income earned on the trust account, which we may seek to withdraw fromthe trust account for working capital purposes) with which to pay any suchpotential claims. The indemnification provisions are set forth in the insiderletter, dated as of May 14, 2007, executed by our executive officers anddirectors. The insider letter specifically sets forth that in the event weobtain a valid and enforceable waiver of any right, title, interest or claim ofany kind in or to any monies held in the trust account for the benefit of ourstockholders from a vendor, service provider, prospective target business orother entity, the indemnification from officers and directors will not beavailable. In the event that we liquidate and it is subsequently determinedthat the reserve for claims and liabilities is insufficient, stockholders whoreceived a return of funds from the liquidation of our trust account could beliable for claims made by creditors.

Under the Delaware General Corporation Law,stockholders may be held liable for claims by third parties against acorporation to the extent of distributions received by them in a dissolution.If the corporation complies with certain procedures set forth in Section 280of the Delaware General Corporation Law intended to ensure that it makesreasonable provision for all claims against it, including a 60-day noticeperiod during which any third-party claims can be brought against thecorporation, a 90-day period during which the corporation may reject anyclaims brought, and an additional 150-day waiting period before anyliquidating distributions are made to stockholders, any liability ofstockholders with respect to a liquidating distribution is limited to thelesser of such stockholder’s pro rata share of the claim or the amount distributedto the stockholder, and any liability of the stockholder would be barred afterthe third anniversary of the dissolution. However, as stated above, if we donot effect a business combination by May 24, 2009, it is our intention tomake liquidating distributions to our stockholders as soon as reasonablypossible after such time period and, therefore, we do not intend to comply withthose procedures. As such, our stockholders could potentially be liable for anyclaims to the extent of distributions received by them and any liability of ourstockholders may extend well beyond the third anniversary of such date. Becausewe will not be complying with Section 280, Section 281(b) of theDelaware General Corporation Law requires us to adopt a plan that will providefor our payment, based on facts known to us at such time, of (i) allexisting claims, (ii) all pending claims and (iii) all claims thatmay be potentially brought against us within the subsequent 10 years.Accordingly, we would be required to provide for any claims of creditors knownto us at that time or those that we believe could be potentially broughtagainst us within the subsequent 10 years prior to our distributing thefunds in the trust account to our public stockholders. We have not assumed thatwe will have to provide for payment on any claims that may potentially bebrought against us within the subsequent 10 years due to the speculativenature of such an assumption. If we were to expend all of the net proceeds ofthe initial public offering, other than the proceeds deposited in the trustaccount, and without taking into account interest, if any, earned on the trustaccount, the initial per-share liquidation price would be $7.82 or $0.18 lessthan the per unit offering price of $8.00. The proceeds deposited in the trustaccount could, however, become subject to the claims of our creditors whichcould be prior to the claims of our public stockholders. We cannot assure youthat the actual per-share liquidation price will not be less than $7.82, plusinterest (net of taxes payable, which taxes, if any, shall be paid from thetrust account), due to claims of creditors. However, because we are a blankcheck company, rather than an operating company, and our operations will belimited to searching 

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for prospective targetbusinesses to acquire, the only likely claims to arise would be from ourvendors (such as accountants, lawyers, investment bankers, etc.) or potentialtarget businesses. As described above, pursuant to the obligation contained inour underwriting agreement, we will seek to have all vendors, service providersand prospective target businesses execute agreements with us waiving any right,title, interest or claim of any kind in or to any monies held in the trustaccount. As a result of this obligation, the claims that could be made againstus are significantly limited and the likelihood that any claim that wouldresult in any liability extending to the trust is remote. Our executiveofficers and directors have, however, agreed to jointly and severally indemnifyus against claims from such vendors, service providers, prospective targetbusinesses or other entities that have not executed waivers or that haveexecuted waivers that are held to be invalid or unenforceable. We have anobligation to pursue indemnification from our officers and directors pursuantto the terms of their agreements with us. Further, our officers and directorsare liable only to the extent necessary to ensure that the amounts in the trustfund are not reduced.

If we are forced to file a bankruptcy case or aninvoluntary bankruptcy case is filed against us which is not dismissed, theproceeds held in the trust account could be subject to applicable bankruptcylaw, and may be included in our bankruptcy estate and subject to the claims ofthird parties with priority over the claims of our stockholders. Additionally,if we are forced to file a bankruptcy case or an involuntary bankruptcycase is filed against us which is not dismissed, any distributions received bystockholders could be viewed under applicable debtor/creditor and/or bankruptcylaws as either a “preferential transfer” or a “fraudulent conveyance.” As aresult, a bankruptcy court could seek to recover all amounts received by ourstockholders. Furthermore, because we intend to distribute the proceeds held inthe trust account to our public stockholders promptly after the termination ofour corporate existence, this may be viewed or interpreted as giving preferenceto our public stockholders over any potential creditors with respect to accessto or distributions from our assets. Furthermore, our board may be viewed ashaving breached its fiduciary duty to our creditors and/or may have acted inbad faith, and thereby exposing itself and our company to claims of punitivedamages, by paying public stockholders from the trust account prior toaddressing the claims of creditors. We cannot assure you that claims will notbe brought against us for these reasons.

Our public stockholderswill be entitled to receive funds from the trust account only in the event ofour liquidation or if they seek to convert their respective shares of commonstock into cash upon a business combination which the stockholder voted againstand which is completed by us. In no other circumstances will a stockholder haveany right or interest of any kind to or in the trust account. Voting againstthe business combination alone will not result in conversion of a stockholder’sshares of common stock into a pro rata share of the trust account. Suchstockholder must have also exercised its conversion rights described above.

**Competition**

We expect to encounter intense competition from otherentities having a business objective similar to ours, including, possibly,other blank check companies as well as other entities, domestic andinternational, competing for the type of businesses that we may intend toacquire. Many of these entities are well established and have extensiveexperience in identifying and effecting, directly or indirectly, acquisitionsof energy related and oilfield services businesses. Many of these competitorspossess greater technical, human and other resources, or more local industryknowledge, than we do and our financial resources will be relatively limitedwhen contrasted with those of many of these competitors. Our ability to competewith respect to large acquisitions will be limited by our available financialresources, giving a competitive advantage to other acquirers with greaterresources.

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Our competitors may adopt transaction structures similarto ours, which would decrease our competitive advantage in offering flexibletransaction terms. In addition, the number of entities and the amount of fundscompeting for suitable investment properties, assets and entities may increase,resulting in increased demand and increased prices paid for such investments.If we pay higher prices for a target business, our profitability may decreaseand we may experience a lower return on our investments. Increased competitionmay also preclude us from acquiring those properties, assets and entities thatwould generate the most attractive returns to us.

Further, thefollowing may not be viewed favorably by certain initial acquisition targets:

·       ourobligation to seek stockholder approval of a business combination or obtain thenecessary financial information to be included in the proxy statement to besent to stockholders in connection with such business combination may delay orprevent the completion of a transaction;

·       ourobligation to convert into cash shares of common stock held by our publicstockholders in certain instances may reduce the resources available to us fora business combination;

·       therequirement to acquire assets or an operating business that has a fair marketvalue equal to at least 80% of our net assets held in trust (net of taxes andexcluding the amount held in the trust account representing a portion of theunderwriters’ discount) at the time of the acquisition could require us toacquire several assets or closely related operating businesses at the sametime, all of which sales would be contingent on the closings of the othersales, which could make it more difficult to consummate the businesscombination; and

·       ouroutstanding warrants and unit purchase option, and the potential future dilutionthey represent, may not be viewed favorably by certain target businesses.

If we succeed in effectinga business combination, there will be, in all likelihood, intense competitionfrom competitors of the target acquisition. We cannot assure you that,subsequent to a business combination, we will have the resources or ability tocompete effectively.

**Employees**

We have two executiveofficers: Paul A. Bragg and Christopher G. DeClaire. We anticipate that we willhave access to the services of other personnel on an as needed basis, althoughthere can be no assurances that any such personnel will be able to devotesufficient time, effort or attention to us when we need it. None of ourofficers nor any of these other personnel, all of whom we will be dependantupon prior to effecting a business combination, have entered into employmentagreements with us and none are obligated to devote any specific number ofhours to our matters and intend to devote only as much time as they deemnecessary to our affairs. The amount of time they will devote in any timeperiod will vary based on whether we are in the process of (i) seeking apotential target acquisition, or (ii) performing due diligence on one ormore target acquisitions or (iii) completing the business combination fora selected target acquisition. Our officers may spend more time than others, orno time at all, on the various phases of the acquisition process depending ontheir competing time requirements apart from our business and their particularareas of expertise.

**Available Information**

Our Internet address ishttp://www.vantageenergyservices.com. The website is presently underdevelopment.

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We will make available through our Internet websiteunder the heading “Investor Relations,” our annual reports on Form 10-K,quarterly reports on Form 10-Q, current reports on Form 8-K,and amendments to those reports after we electronically file any such materialswith the Securities and Exchange Commission.

Copies of our key corporate governance documents,including our Code of Ethics for Directors, Officers and Employees, andcharters for our Audit Committee, our Nominating Committee and our CompensationCommittee will also be available on our website. Stockholders may request freecopies of these documents including our Annual Report to Shareholders bywriting to Vantage Energy Services, Inc., 777 Post Oak Blvd, Suite 610,Houston, Texas 77056 or by phoning (281) 404-4700.

We are subject to theinformation requirements of the Securities Exchange Act. Therefore, we fileperiodic reports, proxy statements and other information with the SEC. Suchreports, proxy statements and other information may be obtained by visiting thePublic Reference Room of the SEC at 100 F Street, NW, Washington, DC20549. You may obtain information on the operation of the Public Reference Room bycalling the SEC at 1-800-SEC-0330. In addition, the SECmaintains an Internet site (http://www.sec.gov) that contains reports, proxyand information statements and other information regarding issuers that fileelectronically.

**ITEM 1A.**        RISKFACTORS

*An investment in our securities involves a high degreeof risk. You should consider carefully all of the material risks describedbelow, together with the other information contained elsewhere in thisTransition Report before making a decision to invest in our securities. Therisks and uncertainties described below are not the only ones facing us.Additional risks and uncertainties that we are unaware of, or that we currentlydeem immaterial, also may become important factors that affect us. If any ofthe following risks occur, our business, financial conditions or results ofoperating may be materially and adversely affected.*

**Risks Related toOur Business**

**We are a development stage company with no operatinghistory and, accordingly, you will not have any basis on which to evaluate ourability to achieve our business objective.**

We are a development stagecompany with no operating results to date. Since we do not have any operationsor an operating history, you will have no basis upon which to evaluate ourability to achieve our business objective, which is to acquire one or moreoperating businesses in the oilfield services industry. We will not generateany revenues or income, other than interest on the trust account funds, until,at the earliest, after the consummation of a business combination. Thefinancial statements do not include any adjustments that might result from ourability to operate as a going concern.

**If we are forced to dissolve before the completion ofa business combination, our public stockholders may receive less than $8.00 pershare upon distribution of the trust account and our warrants will expireworthless.**

If we are unable tocomplete a business combination, and are forced to liquidate the trust accountafter the cessation of our corporate existence, the per-share liquidation pricereceived by our public stockholders from the trust account may be less than$8.00 because of the expenses of the initial public offering, our general andadministrative expenses and the anticipated costs of seeking a businesscombination. Upon the liquidation of the trust account, public stockholderswill be entitled to receive (unless there are claims not otherwise satisfied bythe amounts not held in the trust account or the indemnification provided bycertain of our officers and directors) approximately $7.82 per share plusinterest earned on their pro rata portion of the trust account (net of taxespayable thereon), which includes $8,280,000 ($0.24 per unit) of deferredunderwriting discounts and commissions and the $6,000,000 

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($0.17 perunit) purchase price of the founder securities; provided, however that ourofficers and directors have agreed to indemnify us for all creditor claims,only to the extent we do not obtain valid and enforceable waivers from vendors,prospective target businesses or other entities, in order to protect theamounts held in the trust account. In the event of our dissolution where it issubsequently determined that the reserve for claims and liabilities isinsufficient, stockholders who received a return of funds from the liquidationof our trust account could be liable for claims made by our creditors.Furthermore, there will be no distribution with respect to our outstandingwarrants and, accordingly, the warrants will expire worthless if we dissolveand then liquidate the trust account in the event we do not complete a businesscombination within the required time periods.

**If the cash not held in trust is insufficient to allowus to operate for at least 24 months from the consummation of our initialpublic offering, we may be unable to complete a business combination.**

We believe that the fundsheld by us outside the trust account are sufficient to allow us to operateuntil at least May 24, 2009 (which is 24 months from our initial publicoffering), assuming that a business combination is not consummated during thattime. However, we cannot assure you that our estimates are accurate. We coulduse a portion of these funds to engage consultants to assist us with our searchfor a target business. We could also use a portion of these funds as a downpayment or to fund a “no-shop” provision (a provision in letters of intentdesigned to prevent a target businesses from “shopping” around for transactionswith other companies on terms more favorable to such target businesses) withrespect to a particular proposed business combination, although we do not haveany current intention to do so. If we entered into such a letter of intentwhere we paid for the right to receive exclusivity from a target business andwere subsequently required to forfeit such funds (whether as a result of ourbreach or otherwise), we may not have sufficient funds to continue searchingfor, or conduct due diligence with respect to, a target business.

**Because of our limited resources and the significantcompetition for business combination opportunities, including numerouscompanies with a business plan similar to ours, it may be more difficult for usto complete a business combination.**

Based on publicly available information, approximately116 similarly structured blank check companies have completed initial publicofferings since August 2003, and numerous others have filed registrationstatements. Of these companies, only 31 companies have consummated a businesscombination, while 26 other companies have announced that they have enteredinto definitive agreements or letters of intent with respect to potentialbusiness combinations, but have not yet consummated such business combinationsand another five will be liquidating. Accordingly, there are approximately 54blank check companies with approximately $5.5 billion in the trust account thathave filed registration statements and are or will be seeking to enter into abusiness combination. In addition, a number of blank check companies mayconsummate their business combinations in any industry they choose. This,compounded with the fact that we consider business combinations in othersectors, will subject us to competition from a considerable number of othercompanies seeking to consummate a business combination within any of our targetsectors, which, in turn, will result in an increased demand for privately-heldcompanies in these industries. Because of this competition, we cannot assureyou that we will be able to effectuate a business combination within therequired time period. Further, the fact that only 57 of such companies haveeither consummated a business combination or entered into a definitiveagreement for a business combination may indicate that there are fewerattractive target businesses available to such entities or that manyprivately-held target businesses are not inclined to enter into these types oftransactions with publicly-held blank check companies like ours.

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We expect to encounter intense competition from otherentities having a business objective similar to ours, including privateinvestors (which may be individuals or investment partnerships), other blankcheck companies, and other entities, domestic and international, competing forthe type of businesses that we may intend to acquire. Many of these individualsand entities are well established and have extensive experience in identifyingand effecting, directly or indirectly, acquisitions of companies operating inor providing services to the energy industry. Many of these competitors possessgreater technical, human and other resources, or more local industry knowledge,than we do and our financial resources will be relatively limited whencontrasted with those of many of these competitors. While we believe that thereare numerous target businesses that we could potentially acquire with the netproceeds of this offering, our ability to compete with respect to theacquisition of certain target businesses that are sizable will be limited byour available financial resources. This inherent competitive limitation givesothers an advantage in pursuing the acquisition of certain target businesses.Furthermore, the obligation we have to seek stockholder approval of a businesscombination may delay the consummation of a transaction. Additionally, ouroutstanding warrants and the future dilution they potentially represent may notbe viewed favorably by certain target businesses. Also, our obligation toconvert into cash the shares of common stock in certain instances may reducethe resources available for a business combination. Any of these obligationsmay place us at a competitive disadvantage in successfully negotiating abusiness combination.

We cannot assure you we willbe able to successfully compete for an attractive business combination.Additionally, because of this competition, we cannot assure you we will be ableto effectuate a business combination within the prescribed time period. If weare unable to consummate a business combination within the prescribed timeperiod, we will be forced to liquidate.

**If third parties bring claims against us, theproceeds held in trust could be reduced and the per-share liquidation pricereceived by stockholders from the trust account as part of our plan ofdissolution and distribution will be less than $7.82 per share.**

Our placing of funds in trust may not protect thosefunds from third party claims against us. Although we will seek to have allvendors, prospective target businesses or other entities with which we executeagreements waive any right, title, interest or claim of any kind in or to anymonies held in the trust account for the benefit of our public stockholders,there is no guarantee that they will execute such agreements, or even if theyexecute such agreements that they would be prevented from bringing claimsagainst the trust account including but not limited to fraudulent inducement,breach of fiduciary responsibility or other similar claims, as well as claims challengingthe enforceability of the waiver, in each case in order to gain an advantagewith a claim against our assets, including the funds held in the trust account.If any third party refused to execute an agreement waiving such claims to themonies held in the trust account, we would perform an analysis of thealternatives available to us if we chose not to engage such third party andevaluate if such engagement would be in the best interest of our stockholdersif such third party refused to waive such claims.

Examples of possible instances where we may engage athird party that refused to execute a waiver include the engagement of a thirdparty consultant whose particular expertise or skills are believed bymanagement to be significantly superior to those of other consultants thatwould agree to execute a waiver or in cases where management is unable to finda provider of required services willing to provide the waiver. In any event,our management would perform an analysis of the alternatives available to itand would only enter into an agreement with a third party that did not executea waiver if management believed that such third party’s engagement would besignificantly more beneficial to us than any alternative. In addition, there isno guarantee that such entities will agree to waive any claims they may have inthe future as a result of, or arising out of, any negotiations, contracts oragreements with us and not seek recourse against the trust account for anyreason. Accordingly, the proceeds held in trust could be 

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subject to claims thatcould take priority over the claims of our public stockholders and theper-share liquidation price could be less than the $7.82 per share held in thetrust account, plus interest (net of any taxes due on such interest, whichtaxes, if any, shall be paid from the trust account), due to claims of suchcreditors. If we are unable to complete a business combination and dissolve thecompany, our officers and directors will be personally liable, if we did notobtain a valid and enforceable waiver from any vendor, prospective targetbusiness or other entity of any rights or claims to the trust account, toensure that the proceeds in the trust account are not reduced by the claims ofvarious vendors, prospective target businesses or other entities that are owedmoney by us for services rendered or products sold to us, to the extentnecessary to ensure that such claims do not reduce the amount in the trustaccount. Based on information we have obtained from such individuals, we currentlybelieve that such persons are of substantial means and capable of funding ashortfall in our trust account, even though we have not asked them to reservefor such an eventuality. However, we cannot assure you that our officers anddirectors will be able to satisfy those obligations. We believe the likelihoodof our officers and directors having to indemnify the trust account is limitedbecause we will endeavor to have all vendors and prospective target businessesas well as other entities execute agreements with us waiving any right, title,interest or claim of any kind in or to monies held in the trust account. Wealso have access to $250,000 in funds initially available outside the trustaccount plus up to an additional $2.25 million in interest earned on the trustaccount funds with which to pay any such potential claims (including costs andexpenses incurred in connection with our liquidation currently estimated atapproximately $15,000). The indemnification provisions are set forth in theinsider letters executed by each of our officers and directors. The insiderletters specifically set forth that in the event we obtain a valid andenforceable waiver of any right, title, interest or claim of any kind in or toany monies held in the trust account for the benefit of our stockholders from avendor, prospective target business or other entity, the indemnification willnot be available. In the event that our corporate existence ceases and weliquidate where it is subsequently determined that the reserve for claims andliabilities is insufficient, stockholders who received a return of funds fromour trust account as part of its liquidation could be liable for claims made bycreditors.

Additionally, if we areforced to file a bankruptcy case or an involuntary bankruptcy case is filedagainst us which is not dismissed, the funds held in our trust account will besubject to applicable bankruptcy law, and may be included in our bankruptcyestate and subject to the claims of third parties with priority over the claimsof our stockholders. To the extent any bankruptcy claims deplete the trustaccount we cannot assure you we will be able to return to our publicstockholders the liquidation amounts due them.

**We will liquidateif we do not consummate a business combination.**

Pursuant to our amendedand restated certificate of incorporation, we have until May 24, 2009 tocomplete a business combination. If we fail to consummate a businesscombination within the required time frame, our corporate existence will, in accordancewith our amended and restated certificate of incorporation, cease except forthe purposes of winding up our affairs and liquidating. We may not be able tofind suitable target businesses within the required time frame. In addition,our negotiating position and our ability to conduct adequate due diligence onany potential target may be reduced as we approach the deadline for theconsummation of a business combination. We view this obligation to liquidate asan obligation to our stockholders and that investors will make an investmentdecision, relying, at least in part, on this provision. Thus, without theaffirmative vote cast at a meeting of stockholders of at least 95% of thecommon stock issued in the offering, neither we nor our board of directors willtake any action to amend or waive any provision of our amended and restatedcertificate of incorporation to allow us to survive for a longer period oftime. In addition, we will not support, directly or indirectly, or in any wayendorse or recommend, that stockholders approve an amendment or modification tosuch provision if it does not appear we will be able to consummate a businesscombination within the foregoing time periods. Our founding stockholders havewaived their rights to participate in any liquidation distribution with respectto 

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theshares of common stock owned by them prior to this offering or acquired in theprivate placement, including the shares of common stock underlying the founderwarrants. There will be no distribution from the trust account with respect toour warrants which will expire worthless. We will pay the costs of liquidation,which we currently estimate to be up to $15,000, from our remaining assetsoutside of the trust account. In addition, our executive officers and directorshave agreed to jointly and severally indemnify us for all claims of creditorsto the extent that we fail to obtain valid and enforceable waivers fromvendors, service providers, prospective target business or other entities inorder to protect the amounts held in trust.

**We may choose to redeem our outstanding warrants at atime that is disadvantageous to our warrant holders.**

Subject to there being acurrent prospectus under the Securities Act of 1933 with respect to the commonstock issuable upon exercise of the warrants, we may redeem the warrants issuedas a part of our units at any time after the warrants become exercisable inwhole and not in part, at a price of $0.01 per warrant, upon a minimum of30 days prior written notice of redemption, if and only if, the last salesprice of our common stock equals or exceeds $11.50 per share for any 20 tradingdays within a 30 trading day period ending three business days before we sendthe notice of redemption. In addition, we may not redeem the warrants unlessthe warrants comprising the units sold in our initial public offering and theshares of common stock underlying those warrants are covered by an effectiveregistration statement from the beginning of the measurement period through thedate fixed for the redemption. Redemption of the warrants could force thewarrant holders (i) to exercise the warrants and pay the exercise price ata time when it may be disadvantageous for the holders to do so, (ii) tosell the warrants at the then current market price when they might otherwisewish to hold the warrants, or (iii) to accept the nominal redemption pricewhich, at the time the warrants are called for redemption, is likely to besubstantially less than the market value of the warrants. We expect most purchasersof our warrants will hold their securities through one or more intermediariesand consequently you are unlikely to receive notice directly from us that thewarrants are being redeemed. If you fail to receive notice of redemption from athird party and your warrants are redeemed for nominal value, you will not haverecourse to the Company.

**Our stockholders may be held liable for claims bythird parties against us to the extent of distributions received by them.**

Our amended and restatedcertificate of incorporation provides that we will continue in existence onlyuntil May 24, 2009. If we have not completed a business combination bysuch date and amended this provision in connection therewith, pursuant to theDelaware General Corporation Law, our corporate existence will cease except forthe purposes of winding up our affairs and liquidating. Under Sections 280through 282 of the Delaware General Corporation Law, stockholders may be heldliable for claims by third parties against a corporation to the extent ofdistributions received by them in a dissolution. If the corporation complieswith certain procedures set forth in Section 280 of the Delaware GeneralCorporation Law intended to ensure that it makes reasonable provision for allclaims against it, including a 60-day notice period during which anythird-party claims can be brought against the corporation, a 90-dayperiod during which the corporation may reject any claims brought, and anadditional 150-day waiting period before any liquidating distributionsare made to stockholders, any liability of stockholders with respect to aliquidating distribution is limited to the lesser of such stockholder’s prorata share of the claim or the amount distributed to the stockholder, and anyliability of the stockholder would be barred after the third anniversary of thedissolution. However, it is our intention to make liquidating distributions toour stockholders as soon as reasonably possible after dissolution and,therefore, we do not intend to comply with those procedures. Because we willnot be complying with those procedures, we are required, pursuant to Section 281of the Delaware General Corporation Law, to adopt a plan that will provide forour payment, based on facts known to us at such time, of (i) all existingclaims, (ii) all pending claims and (iii) all claims that may bepotentially brought against us within the subsequent 10 years.Accordingly, we 

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would berequired to provide for any creditors known to us at that time or those that webelieve could be potentially brought against us within the subsequent10 years prior to distributing the funds held in the trust tostockholders. We cannot assure you that we will properly assess all claims thatmay be potentially brought against us. As such, our stockholders couldpotentially be liable for any claims to the extent of distributions received bythem and any liability of our stockholders may extend well beyond the thirdanniversary of such date. Accordingly, we cannot assure you that third partieswill not seek to recover from our stockholders amounts owed to them by us.

**We may issue shares of our capital stock to complete abusiness combination, which would reduce the equity interest of ourstockholders and likely cause a change in control of our ownership.**

Our amended andrestated certificate of incorporation authorizes the issuance of up to83,750,000 shares of common stock, par value $0.001 per share, and1,000,000 shares of preferred stock, par value $0.001 per share.Immediately after the initial public offering, there were no authorized butunissued shares of our common stock available for issuance (after appropriatereservation for the issuance of shares upon full exercise of our outstandingwarrants) and all of the 1,000,000 shares of preferred stock available forissuance. We may issue a substantial number of additional shares of our commonstock or preferred stock, or a combination of common and preferred stock, tocomplete a business combination. The issuance of additional shares of ourcommon stock or any number of shares of our preferred stock:

·       maysignificantly reduce the equity interest of investors in the initial publicoffering;

·       maysubordinate the rights of holders of common stock if preferred stock is issuedwith rights senior to those afforded to our common stock;

·       willlikely cause a change in control if a substantial number of our shares ofcommon stock are issued, which may affect, among other things, our ability touse our net operating loss carry forwards, if any, and could result in theresignation or removal of our present officers and directors; and

·       may adversely affectprevailing market prices for our common stock.

**The ability of our stockholders to exercise theirconversion rights may not allow us to effectuate the most desirable businesscombination or optimize our capital structure.**

When we seek stockholderapproval of any business combination, we will offer each public stockholder theright to have his, her or its shares of common stock converted to cash if thestockholder votes against the business combination and the business combinationis approved and completed. Accordingly, if our business combination requires usto use substantially all of our cash to pay the purchase price, because we willnot know how many stockholders may exercise such conversion rights, we mayeither need to reserve part of the trust account for possible payment upon suchconversion, or we may need to arrange third party financing to help fund ourbusiness combination in case a larger percentage of stockholders exercise theirconversion rights than we expect. Therefore, we may not be able to consummate abusiness combination that requires us to use all of the funds held in the trustaccount as part of the purchase price, or we may end up having a leverage ratiothat is not optimal for our business combination. This may limit our ability toeffectuate the most attractive business combination available to us.

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**We may issue notes or other debt securities, orotherwise incur substantial debt, to complete a business combination, which mayadversely affect our leverage and financial condition.**

We may choose toincur substantial debt to complete a business combination. The incurrence ofdebt could result in:

·       defaultand foreclosure on our assets if our operating cash flow after a businesscombination were insufficient to pay our debt obligations;

·       accelerationof our obligations to repay the indebtedness even if we have made all principaland interest payments when due if the debt security contained covenants thatrequired the maintenance of certain financial ratios or reserves and any suchcovenant were breached without a waiver or renegotiation of that covenant;

·       ourimmediate payment of all principal and accrued interest, if any, if the debtsecurity was payable on demand;

·       restrictionsor prohibitions on payment of dividends to our stockholders;

·       covenantsthat limit our ability to acquire capital assets or make additionalacquisitions; and

·       our inability to obtainadditional financing, if necessary, if the debt security contained covenantsrestricting our ability to obtain additional financing while such security wasoutstanding.

**Our ability to effect a business combination and toexecute any potential business plan afterwards will be totally dependent uponthe efforts of our key personnel, some of whom may be existing personnel of atarget business for whom we would have only a limited ability to evaluate.**

Our ability to effect abusiness combination will be totally dependent upon the efforts of our key personnel.The future role of our key personnel following a business combination, however,cannot presently be fully ascertained. Although some of our key personnel maybecome associated with the target business following a business combination,some or all of the management of the target business may remain in place. Whilewe intend to closely scrutinize any additional individuals we engage after abusiness combination, we cannot assure you that our assessment of theseindividuals will prove to be correct. These individuals may be unfamiliar withthe requirements of operating a public company as well as with United Statessecurities laws, which could cause us to have to expend time and resourceshelping them become familiar with such laws. This could be expensive andtime-consuming and could lead to various regulatory issues which may adverselyaffect our operations. Moreover, our current management will only be able toremain with the combined company after the consummation of a businesscombination if they are able to negotiate and agree to mutually acceptableemployment terms, which would be determined at such time between the respectiveparties and which may be a term of the business combination, as part of anysuch combination, which terms would be disclosed to stockholders in any proxystatement relating to a business combination. If we acquired a target businessin an all-cash transaction, it would be more likely that current members ofmanagement would remain with us if they chose to do so. If a business combinationwere structured as a merger whereby the stockholders of the target company wereto control the combined company following a business combination, it may beless likely that management would remain with the combined company unless itwas negotiated as part of the transaction via the acquisition agreement, anemployment agreement or other arrangement. In making the determination as towhether current management should remain with us following the businesscombination, management will analyze the experience and skill set of the targetbusiness’s management and negotiate as part of the business combination thatcertain members of current management remain if it is believed that it is inthe best interests of the combined company post-business combination.

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**Our officers and directors may allocate their timeto other businesses thereby causing conflicts of interest in theirdetermination as to how much time to devote to our affairs. This conflict ofinterest could have a negative impact on our ability to consummate a businesscombination.**

Our officers and directorsare not required to commit their full time to our affairs, which may result ina conflict of interest in allocating their time between our operations andother businesses. We do not intend to have any full time employees prior to theconsummation of a business combination. Each of our officers is engaged inseveral other business endeavors and is not obligated to contribute anyspecific number of hours per week to our affairs. If our officers’ otherbusiness affairs require them to devote more substantial amounts of time tosuch affairs, it could limit their ability to devote time to our affairs andcould have a negative impact on our ability to consummate a businesscombination.

**Our officers and directors are currentlyaffiliated with entities engaged in business activities similar to thoseintended to be conducted by us and accordingly, may have conflicting fiduciaryduties in determining to which entity a particular business opportunity should bepresented. We may seek a business combination with a target business with whichone or more of our founding stockholders may be affiliated.**

Certain of our officers and directors are currentlyinvolved in other businesses that are similar to the business activities thatwe intend to conduct following a business combination. Due to these existingaffiliations, they may have conflicting fiduciary obligations with regard topresenting certain potential business opportunities to those entities that maybe of interest to us. Our officers and directors may in the future becomeaffiliated with other entities, including other “blank check” companies,engaged in business activities similar to those we intend to conduct.

Each of our officers and directors has entered into anagreement with us whereby he has agreed to present to us, prior to presentationto any other person or entity, opportunities to acquire entities, until theearlier of our consummation of a business combination, our liquidation or untilsuch time as he ceases to be an officer or director, subject to anypre-existing fiduciary or contractual obligation he had. The terms of theseagreements may only be modified or waived by written instrument executed anddelivered by the party against whom such modification or waiver is to beenforced. There can be no assurance that any such terms will not be modified orwaived, which could result in the presentment of business opportunities toother entities before presentment to us; provided, however, the Company has nocurrent intention to permit such a modification or amendment.

Accordingly, because oftheir pre-existing fiduciary duties or a waiver by us of the terms of theseagreements, our officers and directors may have conflicts of interest indetermining to which entity a particular business opportunity should bepresented. Mr. Estrada, one of our directors, owes a fiduciary duty toPetrolera del Comahue, an Argentine oil and gas producer. Mr. Guiscardo,one of our directors, owes a fiduciary duty to a fabrication entityheadquartered in Argentina of which he is a principal. Mr. O’Leary is amember of the board of directors of Technip, Huisman-Itrec and KS Energy. Messrs. Estrada,Guiscardo and O’Leary are obligated to present business opportunities to suchentities, respectively. We cannot assure you that any conflicts that may arisewith these entities will be resolved in our favor. Furthermore, in order toretain Mr. O’Leary as a board member, and notwithstanding any conflictsthat may arise, we have agreed with Mr. O’Leary that Technip,Huisman-Itrec and KS Energy would receive priority with respect to presentmentof business opportunities by Mr. O’Leary.

**None of our officers or directors, or any of theiraffiliates, has ever been associated with a blank check company which couldadversely affect our ability to consummate a business combination.**

None of our officers ordirectors, or any of their affiliates, has ever been associated with a blankcheck company. Accordingly, you may not have sufficient information with whichto evaluate the ability of our management team to identify and complete abusiness combination using the proceeds of the initial public 

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offering.Our management’s lack of experience in operating a blank check company couldadversely affect our ability to consummate a business combination and couldresult in our having to liquidate our trust account. If we liquidate, ourpublic stockholders could receive less than the amount they paid for oursecurities, causing them to incur significant financial losses.

**All of our officers and directors own shares ofour securities that will not participate in the liquidation of the trustaccount and therefore they may have a conflict of interest in determiningwhether a particular target business is appropriate for a business combination.**

All of our officers anddirectors, directly or indirectly, own shares of common stock in our companythat were issued prior to the initial public offering but have waived theirright to receive distributions with respect to these shares upon theliquidation of the trust account if we are unable to complete a businesscombination. Additionally, certain of our officers and directors, or their designees,have purchased 375,000 units at a purchase price of $8.00 per unit, eachunit comprised of one share of common stock and one common stock purchasewarrant, and 3,000,000 common stock purchase warrants at a purchase price of$1.00 per warrant, directly from us in a private placement transactionconcurrently with the closing of the initial public offering. The purchase ofthe founders securities, together with any other acquisitions of our shares (orwarrants which are subsequently exercised), could allow the foundingstockholders to influence the outcome of matters requiring stockholderapproval, including the election of directors and approval of significantcorporate transactions after completion of our initial business combination.The shares and warrants owned by our officers and directors will be worthlessif we do not consummate a business combination. The personal and financialinterests of these individuals may influence their motivation in identifyingand selecting a target business and completing a business combination in atimely manner. Consequently, our officers and directors’ discretion inidentifying and selecting a suitable target business may result in a conflictof interest when determining whether the terms, conditions and timing of aparticular business combination are appropriate and in our stockholders’ bestinterest.

**If our common stock becomes subject to the SEC’spenny stock rules, broker-dealers may experience difficulty in completingcustomer transactions and trading activity in our securities may be adverselyaffected.**

If at any time wehave net tangible assets of $5,000,000 or less and our common stock has amarket price per share of less than $5.00, transactions in our common stock maybe subject to the “penny stock” rules promulgated under the SecuritiesExchange Act of 1934. Under these rules, broker-dealers who recommend suchsecurities to persons other than institutional accredited investors must:

·       makea special written suitability determination for the purchaser;

·       receivethe purchaser’s written agreement to a transaction prior to sale;

·       providethe purchaser with risk disclosure documents that identify certain risksassociated with investing in “penny stocks” and that describe the market forthese “penny stocks” as well as a purchaser’s legal remedies; and

·       obtaina signed and dated acknowledgment from the purchaser demonstrating that thepurchaser has actually received the required risk disclosure document before atransaction in a “penny stock” can be completed.

If our common stockbecomes subject to these rules, broker-dealers may find it difficult toeffectuate customer transactions and trading activity in our securities may beadversely affected. As a result, the market price of our securities may bedepressed, and you may find it more difficult to sell our securities.

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**Persons who were stockholders prior to our initialpublic offering, including our officers and directors, control a substantialinterest in us and thus may influence certain actions requiring stockholdervote.**

Persons who were stockholders prior to our initialpublic offering (including all of our officers and directors) collectivelyowned 20.79% of our issued and outstanding shares of common stock. Our officersand directors, or their designees, also purchased $3 million of warrantsdirectly from us concurrently with the closing of the initial public offeringat a price per warrant of $1.00. The purchase of the founder warrants, togetherwith any other acquisitions of our shares (or warrants which are subsequentlyexercised), could allow the persons who were stockholders prior to our initialpublic offering to influence the outcome of matters requiring stockholderapproval, including the election of directors and approval of significantcorporate transactions after completion of our initial business combination.These warrants cannot be sold until after consummation of a businesscombination; however, they may be able to transfer such warrants in certainlimited circumstances such as by will in the event of their death, but thetransferees receiving such warrants will be subject to the same salerestrictions imposed on our officers and directors and their designees.

Our board of directors isdivided into two classes, each of which will generally serve for a term of twoyears with only one class of directors being elected in each year. It isunlikely that there will be an annual meeting of stockholders to elect newdirectors prior to the consummation of a business combination, in which caseall of the current directors will continue in office at least until theconsummation of the business combination. If there is an annual meeting, as aconsequence of our “staggered” board of directors, initially only a minority ofthe board of directors will be considered for election and the persons who werestockholders prior to our initial public offering, because of their ownershipposition, have considerable influence regarding the outcome. Accordingly, thepersons who were stockholders prior to our initial public offering willcontinue to exert control at least until the consummation of a businesscombination. In addition, the persons who were stockholders prior to ourinitial public offering and their affiliates and relatives are not prohibitedfrom purchasing units, shares of common stock or warrants in the open market.If they do, we cannot assure you that the persons who were stockholders priorto our initial public offering will not have considerable influence upon thevote in connection with a business combination.

**Our founding director warrants are non-redeemableprovided they are held by the initial purchasers or their permittedtransferees, which could provide such purchasers the ability to realize alarger gain than our public warrants holders.**

The warrants heldby our public warrant holders may be called for redemption at any time afterthe warrants become exercisable:

·       inwhole and not in part;

·       ata price of $0.01 per warrant;

·       uponnot less than 30 days’ prior written notice of redemption to each warrantholder; and

·       if,and only if, the last sale price of the common stock equals or exceeds $11.50per share, for any 20 trading days within a 30 trading day period endingon the third business day prior to the notice of redemption to warrant holders.

As a result of thefounding director warrants not being subject to the redemption features thatour publicly-held warrants are subject to, holders of the founding directorwarrants, or their permitted transferees, could realize a larger gain than ourpublic warrant holders.

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**Our outstandingwarrants and unit purchase option may have an adverse effect on the marketprice of common stock and make it more difficult to effect a businesscombination.**

In connection with theinitial public offering and the concurrent private placement, we issuedwarrants to purchase 37,875,000 shares of common stock. We also issued anoption to purchase 1,250,000 units to Deutsche Bank Securities Inc. which, ifexercised, will result in the issuance of an additional 1,250,000 shares ofcommon stock and 1,250,000 warrants. To the extent we issue shares of commonstock to effect a business combination, the potential for the issuance ofsubstantial numbers of additional shares upon exercise of these warrants andoption could make us a less attractive acquisition vehicle in the eyes of atarget business as such securities, when exercised, will increase the number ofissued and outstanding shares of our common stock and could reduce the value ofthe shares issued to complete the business combination. Accordingly, ourwarrants and Deutsche Bank Securities Inc.’s unit purchase option may make itmore difficult to effectuate a business combination or increase the cost of thetarget business. Additionally, the sale, or even the possibility of sale, ofthe shares underlying the warrants and unit purchase option could have anadverse effect on the market price for our securities or on our ability toobtain future public financing. If and to the extent these warrants and unitpurchase option are exercised, you may experience dilution to your holdings.

**If persons who werestockholders prior to our initial public offering and holders of the foundingdirector warrants exercise their registration rights, it may have an adverseeffect on the market price of our common stock and the existence of theserights may make it more difficult to effect a business combination.**

Persons who werestockholders prior to our initial public offering are entitled to require us toregister the resale of their shares of common stock at any time after the dateon which their shares are released from escrow, which, except in limitedcircumstances, will not be before one year after the consummation of a businesscombination. In addition, the holders of the founder securities can demand thatwe register those securities and the underlying shares of common stock. If thepersons who were stockholders prior to our initial public offering and theholders of the founder securities exercise their registration rights withrespect to all of their shares of common stock and warrants, then there will bean additional 7,875,000 shares of common stock and 3,375,000 warrants and/or upto 3,375,000 shares of common stock issued upon exercise of the founderwarrants that will be eligible for trading in the public market. The presenceof this additional number of securities eligible for trading in the publicmarket may have an adverse effect on the market price of our common stock. Inaddition, the existence of these rights may make it more difficult toeffectuate a business combination or increase the cost of the target business,as the stockholders of the target business may be discouraged from enteringinto a business combination with us or will request a higher price for theirsecurities as a result of these registration rights and the potential futureeffect their exercise may have on the trading market for our common stock.

**The American StockExchange may delist our securities from trading on its exchange in the future,which could limit our investors’ ability to effect transactions in oursecurities and subject us to additional trading restrictions.**

Our securities are listed on the American StockExchange, a national securities exchange. We cannot assure you that oursecurities will continue to be listed on the American Stock Exchange in thefuture. In addition, in connection with our initial business combination, ifany, it is likely that the American Stock Exchange may require us to file a newlisting application and meet its initial listing requirements, as opposed toits more lenient continued listing requirements. We cannot assure you that wewill be able to meet those initial listing requirements at that time.

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If the AmericanStock Exchange delists our securities from trading on its exchange in thefuture, we could face significant material adverse consequences, including:

·       alimited availability of market quotations for our securities;

·       adetermination that our common stock is a “penny stock,” which would requirebrokers trading in our common stock to adhere to more stringent rules andpossibly resulting in a reduced level of trading activity in the secondarytrading market for our common stock;

·       alimited amount of news and analyst coverage for our company;

·       decreasedability to issue additional securities or obtain additional financing in thefuture; and

·       a decreased ability of ourstockholders to sell their securities in certain states.

**If we are deemed tobe an investment company, we may be required to institute burdensome compliancerequirements and our activities may be restricted, which may make it moredifficult for us to complete a business combination.**

If we are deemed tobe an investment company under the Investment Company Act of 1940, we may besubject to certain restrictions that may make it more difficult for us tocomplete a business combination, including:

·       restrictionson the nature of our investments; and

·       restrictionson the issuance of securities.

In addition, we mayhave imposed upon us certain burdensome requirements, including:

·       registrationas an investment company;

·       adoptionof a specific form of corporate structure; and

·       reporting,record keeping, voting, proxy compliance policies and procedures and disclosurerequirements and other rules and regulations.

We do not believe that ourprincipal activities will subject us to the Investment Company Act of 1940, asamended. To this end, the proceeds held in trust may only be invested by thetrust agent in “government securities” within the meaning ofSection 2(a)(16) of the Investment Company Act of 1940 having a maturityof 180 days or less or in money market funds meeting certain conditions underRule 2a-7 promulgated under the Investment Company Act of 1940. Byrestricting the investment of the proceeds to these instruments, we intend toavoid being deemed an investment company within the meaning of the InvestmentCompany Act of 1940. The trust account and the purchase of governmentsecurities for the trust account is intended as a holding place for fundspending the earlier to occur of either: (i) the consummation of ourprimary business objective, which is a business combination, or(ii) absent a business combination, our dissolution and return of thefunds held in this trust account to our public stockholders. Notwithstandingour belief that we are not required to comply with the requirements of suchact, we may be considered to be an investment company and thus required tocomply with such act. If we were deemed to be subject to that act, compliancewith these additional regulatory burdens would require additional expense forwhich we have not budgeted.

**Our directors maynot be considered “independent” under the policies of the North AmericanSecurities Administrators Association, Inc. and we thus may not have thebenefit of independent directors examining our financial statements and thepriority of expenses incurred on our behalf subject to reimbursement.**

All of our officers anddirectors own shares of our common stock, and no salary or other compensationhas been or will be paid to our officers or directors for services rendered bythem on our 

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behalfprior to or in connection with a business combination. Although we believe thatfour of the members of our board of directors are “independent” as that term iscommonly used, under the policies of the North American SecuritiesAdministrators Association, Inc., because our directors may receivereimbursement for out-of-pocket expenses incurred by them in connection withactivities on our behalf such as identifying potential target businesses andperforming due diligence on suitable business combinations, it is likely thatstate securities administrators would take the position that we do not have thebenefit of independent directors examining the propriety of expenses incurredon our behalf and subject to reimbursement. Additionally, there is no limit onthe amount of out-of-pocket expenses that could be incurred and there is noreview of the reasonableness of the expenses by anyone other than our board ofdirectors, which would include persons who may seek reimbursement, or a courtof competent jurisdiction if such reimbursement is challenged. Although webelieve that all actions taken by our directors on our behalf have been andwill be in our best interests, whether or not any directors are deemed to be“independent,” we cannot assure you that this will actually be the case. Ifactions are taken or expenses are incurred that are actually not in our bestinterests, it could have a material adverse effect on our business andoperations and the price of our stock held by the public stockholders.

**Acquisitions thatwe may undertake would involve a number of inherent risks, any of which couldcause us not to realize the benefits anticipated to result.**

It is possiblethat, following our initial acquisition, our strategy will include expandingour operations and other capabilities through acquisitions of businesses andassets. Acquisition transactions involve various inherent risks, such as:

·       uncertaintiesin assessing the value, strengths and potential profitability of, andidentifying the extent of all weaknesses, risks, contingent and otherliabilities (including environmental liabilities) of, acquisition or othertransaction candidates;

·       thepotential loss of key customers, management and employees of an acquiredbusiness;

·       theability to achieve identified operating and financial synergies anticipated toresult from an acquisition or other transaction;

·       problemsthat could arise from the integration of the acquired business; and

·       unanticipatedchanges in business, industry or general economic conditions that affect theassumptions underlying the acquisition or other transaction rationale.

Any one or more of thesefactors could cause us not to realize the benefits anticipated to result from theacquisition of businesses or assets or could result in unexpected liabilitiesassociated with these acquisition candidates.

**In certaincircumstances, our board of directors may be viewed as having breached theirfiduciary duties to our creditors, thereby exposing itself and our company toclaims of punitive damages.**

If we are forced tofile a bankruptcy case or an involuntary bankruptcy case is filed againstus which is not dismissed, any distributions received by stockholders could beviewed under applicable debtor/creditor and/or bankruptcy laws as either a“preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcycourt could seek to recover all amounts received by our stockholders.Furthermore, because we intend to distribute the proceeds held in the trustaccount to our public stockholders promptly after the termination of ourexistence by operation of law, this may be viewed or interpreted as givingpreference to our public stockholders over any potential creditors with respectto access to or distributions from our assets. Furthermore, our board ofdirectors may be viewed as having breached its fiduciary duty to our creditorsand/or may have acted in bad faith, thereby exposing itself and our company toclaims of punitive 

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damages,by paying public stockholders from the trust account prior to addressing theclaims of creditors. We cannot assure you that claims will not be broughtagainst us for these reasons.

**Our currentofficers and directors may resign upon consummation of a business combination.**

Upon consummation of abusiness combination, the role of our founding officers and directors in thetarget business cannot presently be fully ascertained. While it is possiblethat one or more of our founding officers and directors will remain in seniormanagement or as directors following a business combination, we may employother personnel following the business combination. If we acquire a targetbusiness in an all cash transaction, it would be more likely that our foundingofficers and our directors would remain with us if they chose to do so. If abusiness combination were structured as a merger whereby the stockholders ofthe target company were to control the combined company, following a businesscombination, it may be less likely that our founding officers or directorswould remain with the combined company unless it was negotiated as part of thetransaction via the acquisition agreement, an employment agreement or otherarrangement.

**Negotiatedretention of officers and directors after a business combination may create aconflict of interest.**

If, as a condition to apotential business combination, our founding officers negotiate to be retainedafter the consummation of the business combination, such negotiations mayresult in a conflict of interest. The ability of such individuals to remainwith us after the consummation of a business combination will not be thedetermining factor in our decision as to whether or not we will proceed withany potential business combination. In making the determination as to whethercurrent management should remain with us following the business combination, wewill analyze the experience and skill set of the target business’ managementand negotiate as part of the business combination that our founding officersand directors remain if it is believed that it is in the best interests of thecombined company after the consummation of the business combination. Althoughwe intend to closely scrutinize any additional individuals we engage after abusiness combination, we cannot assure you that our assessment of theseindividuals will prove to be correct.

**Because any targetbusiness with which we attempt to complete a business combination will berequired to provide our stockholders with financial statements prepared inaccordance with and reconciled to United States generally accepted accountingprinciples, the pool of prospective target businesses may be limited.**

In accordance with therequirements of United States federal securities laws, in order to seek stockholderapproval of a business combination, a proposed target business will be requiredto have certain financial statements which are prepared in accordance with, orwhich can be reconciled to U.S. generally accepted accounting principles andaudited in accordance with U.S. generally accepted auditing standards. To theextent that a proposed target business does not have financial statements whichhave been prepared with, or which can be reconciled to, U.S. GAAP, and auditedin accordance with U.S. generally accepted auditing standards, a likelypossibility considering the international nature of the energy industry ingeneral and the oilfield services industry in particular, we will not be ableto acquire that proposed target business. These financial statementrequirements may limit the pool of potential target businesses.

**We may in thefuture enter into joint venture arrangements, which are risky since our jointventure investments could be adversely affected by our lack of soledecision-making authority, our reliance on a co-venturers’ financial conditionand disputes between us and our co-venturers.**

We may in the futureco-invest with third parties through partnerships, joint ventures or otherentities, acquiring non-controlling interests in or sharing responsibility formanaging the affairs of a target business, partnership, joint venture or otherentity. In such circumstances, we may not be in a position to exercise 

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soledecision-making authority regarding a target business, partnership, jointventure or other entity. Investments in partnerships, joint ventures or otherentities may, under certain circumstances, involve risks not present were athird party not involved, including the possibility that partners orco-venturers might become insolvent or fail to fund their share of requiredcapital contributions. Partners or co-venturers may have economic or otherbusiness interests or goals which are inconsistent with our business interestsor goals, and may be in a position to take actions contrary to our policies orobjectives. Such investments may also have the potential risk of impasses ondecisions, such as a sale, because neither we nor the partner or co-venturerwould have full control over the partnership or joint venture. Disputes betweenus and partners or co-venturers may result in litigation or arbitration thatwould increase our expenses and distract our officers and/or directors fromfocusing their time and effort on our business. Consequently, actions by, ordisputes with, partners or co-venturers might result in subjecting assets ownedby the partnership or joint venture to additional risk. We may also, in certaincircumstances, be liable for the actions of our third-party partners orco-venturers. For example, in the future we may agree to guarantee indebtednessincurred by a partnership, joint venture or other entity. Such a guarantee maybe on a joint and several basis with our partner or co-venturer in which casewe may be liable in the event such party defaults on its guaranty obligation.

**We will have onlylimited ability to evaluate the management of the target business.**

While we intend to closelyscrutinize any individuals we engage after a business combination, we cannotassure you that our assessment of these individuals will prove to be correct.These individuals may be unfamiliar with the requirements of operating a publiccompany which could cause us to have to expend time and resources helping thembecome familiar with such requirements. This could be expensive andtime-consuming and could lead to various operational issues which may adverselyaffect our operations.

**We may engage in abusiness combination with one or more target businesses that have relationshipsor are affiliated with our founding stockholders, directors or officers, whichmay raise potential conflicts.**

We may engage in abusiness combination with one or more target businesses that have relationshipsor are affiliated (as defined in Rule 405 of the Securities Act) with ourfounding stockholders, directors or officers, which may raise potentialconflicts. Also, the completion of a business combination between us and anentity owned by a business in which one of our directors or officers may havean interest could enhance their prospects for future business from such client.To minimize potential conflicts of interest, we have agreed not to consummate abusiness combination with an entity that is affiliated with any of our foundingstockholders unless we obtain an opinion from an unaffiliated, independentthird party appraiser, which may or may not be an investment banking firm thatis a member of the National Association of Securities Dealers, Inc., thatthe business combination is fair to our stockholders from a financial point ofview.

**Therequirement that we complete a business combination by May 24, 2009may give potential target businesses leverage over us in negotiating a businesscombination.**

We will liquidate andpromptly distribute only to our public stockholders the amount in our trustaccount (subject to our obligations under Delaware law for claims of creditors)plus any remaining net assets if we do not effect a business combinationby May 24, 2009. Any potential target business with which we enterinto negotiations concerning a business combination will be aware of thisrequirement. Consequently, such target businesses may obtain leverage over usin negotiating a business combination, knowing that if we do not complete abusiness combination with that particular target business, we may be unable tocomplete a business combination with any target business. This risk willincrease as we get closer to the time limits referenced above.

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**Initially, we mayonly be able to complete one business combination, which will cause us to besolely dependent on a single asset or property.**

We have limitedcash on-hand and in trust which may be used by us to complete the initialbusiness combination. We currently have no restrictions on our ability to seekadditional funds through the sale of securities or through loans. As a consequence,we could seek to acquire a target business that has a fair market valuesignificantly in excess of 80% of our net assets held in trust (net of taxesand excluding the amount held in the trust account representing a portion ofthe underwriters’ discount). We could seek to fund such a business combinationby raising additional funds through the sale of our securities or through loanarrangements. It is probable that we will have the ability to complete only asingle business combination, although this may entail the simultaneousacquisitions of several assets or closely related operating businesses at thesame time. However, should our management elect to pursue more than oneacquisition of target businesses simultaneously, our management could encounterdifficulties in consummating all or a portion of such acquisitions due to alack of adequate resources, including the inability of management to devotesufficient time to the due diligence, negotiation and documentation of eachacquisition. Furthermore, even if we complete the acquisition of more than onetarget business at substantially the same time, there can be no assurance thatwe will be able to integrate the operations of such target businesses.Accordingly, the prospects for our ability to effect our business strategy maybe:

·       solelydependent upon the performance of a single business; or

·       dependentupon the development or market acceptance of a single or limited number ofproducts, processes or services.

In this case, we will notbe able to diversify our operations or benefit from the possible spreading ofrisks or offsetting of losses, unlike other entities which may have theresources to complete several business combinations in different industries ordifferent areas of a single industry. Furthermore, since our initial businesscombination may entail the simultaneous acquisitions of several assets oroperating businesses at the same time and may be with different sellers, wewill need to convince such sellers to agree that the purchase of their assetsor businesses is contingent upon the simultaneous closings of the otheracquisitions.

**We may be unable toobtain additional financing, if required, to complete a business combination orto fund the operations and growth of the target business, which could compel usto restructure the transaction or abandon a particular business combination.**

If the cash we haveon-hand and in trust prove to be insufficient, either because of the size ofthe initial business combination, the depletion of the available net proceedsin the course of searching for suitable target acquisition that we can affordto acquire, or the obligation to convert into cash a significant number ofshares of common stock from dissenting stockholders, we will be required toseek additional financing. We cannot assure you that any additional financingwill be available to us on acceptable terms, if at all. To the extent thatadditional financing proves to be unavailable when needed to consummate aparticular business combination, we would be compelled to either restructurethe transaction or abandon that particular business combination and seek analternative target acquisition candidate. In addition, it is possible that wecould use a portion of the funds not in the trust account to make a deposit,down payment or fund a “no-shop” provision with respect to a proposed businesscombination, although we do not have any current intention to do so. In theevent that we were ultimately required to forfeit such funds (whether as aresult of our breach of the agreement relating to such payment or otherwise),we may not have a sufficient amount of working capital available outside of thetrust account to conduct due diligence and pay other expenses related tofinding a suitable business combination without securing additional financing.If we are unable to secure additional financing, we could fail to consummate abusiness combination in the allotted time and would liquidate the trustaccount. In addition, if we consummate a business combination, 

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we mayrequire additional financing to fund continuing operations and/or growth. Thefailure to secure additional financing if required could have a materialadverse effect on our ability to continue to develop and grow, even if weconsummate a business combination. None of our officers, directors orstockholders is required to provide any financing to us in connection with orafter a business combination.

**Uncertainties inmanagement’s assessment of a target business could cause us not to realize thebenefits anticipated to result from an acquisition.**

It is possible that,following our initial acquisition, uncertainties in assessing the value,strengths and potential profitability of, and identifying the extent of allweaknesses, risks, contingent and other liabilities (including environmentalliabilities) of, acquisition or other transaction candidates could cause us notto realize the benefits anticipated to result from an acquisition.

**The potential lossof key customers, management and employees of a target business could cause usnot to realize the benefits anticipated to result from an acquisition.**

It is possible that,following our initial acquisition, the potential loss of key customers,management and employees of an acquired business could cause us not to realizethe benefits anticipated to result from an acquisition.

**The lack of synergyfrom an acquisition could cause us not to realize the benefits anticipated toresult from an acquisition.**

It is possible that,following our initial acquisition, the inability to achieve identifiedoperating and financial synergies anticipated to result from an acquisition orother transaction could cause us not to realize the benefits anticipated toresult from an acquisition.

**Environmentalcompliance costs and liabilities could reduce our earnings and cash availablefor operations.**

A target business could be subject to increasinglystringent laws and regulations relating to environmental protection, includinglaws and regulations governing air emissions, water discharges and wastemanagement. We could incur, and would expect to continue to incur, capital andoperating costs to comply with environmental laws and regulations. Thetechnical requirements of environmental laws and regulations are becomingincreasingly expensive, complex and stringent. These laws may provide for“strict liability” for damages to natural resources or threats to public healthand safety. Strict liability can render a party liable for environmental damagewithout regard to negligence or fault on the part of the party. Someenvironmental laws provide for joint and several strict liability forremediation of spills and releases of hazardous substances.

A target business mightuse and generate hazardous substances and wastes in its operations. In addition,many of a target business’ current and former properties could be or could havebeen used for industrial purposes. Accordingly, we could become subject topotentially material liabilities relating to the investigation and cleanup ofcontaminated properties, and to claims alleging personal injury or propertydamage as the result of exposures to, or releases of, hazardous substances. Inaddition, stricter enforcement of existing laws and regulations, new laws andregulations, the discovery of previously unknown contamination or theimposition of new or increased requirements could require us to incur costs orbecome the basis of new or increased liabilities that could reduce our earningsand our cash available for operations.

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**Limitations on atarget business’ ability to protect its intellectual property rights, includingits trade secrets, could cause a loss in revenue and any competitive advantage.**

A target business’products or services, and the processes it uses to produce or provide them,might have been granted U.S. patent protection, might have patent applicationspending or might be trade secrets. After a business combination, our businessmay be adversely affected if our patents are unenforceable, the claims allowedunder our patents are not sufficient to protect our technology, our patentapplications are denied, or our trade secrets are not adequately protected. Ourcompetitors may be able to develop technology independently that is similar toours without infringing on our patents or gaining access to our trade secrets.

**We may be subject to litigation if another partyclaims that we have infringed upon its intellectual property rights.**

The tools, techniques,methodologies, programs and components that a target business uses in order toprovide its services may infringe upon the intellectual property rights ofothers. Infringement claims generally result in significant legal and othercosts and may distract management from running its core business. Royaltypayments under licenses from third parties, if available, would increase costs.If a license were not available we might not be able to continue providing aparticular product or service, which would reduce our post business combinationrevenue. Additionally, developing non-infringing technologies would increaseour costs.

**The high cost or unavailability of materials,equipment, supplies and personnel could adversely affect our ability to executeour operations on a timely basis.**

A target business’ manufacturing operations could bedependent on having sufficient raw materials, component parts and manufacturingcapacity available to meet our manufacturing plans at a reasonable cost whileminimizing inventories. A target business’ ability to effectively manage ourmanufacturing operations and meet these goals can have an impact on ourbusiness, including our ability to meet our manufacturing plans and revenuegoals, control costs and avoid shortages of raw materials and component parts.Raw materials and components of particular concern include steel alloys,copper, carbide, chemicals and electronic components. Our ability to repair orreplace equipment damaged or lost in the well can also impact our ability toservice our customers after a business combination.

People are a key resourceto developing, manufacturing and delivering products and services to ourcustomers around the world. A target business’ ability to recruit, train andretain the highly skilled workforce required by our plans will impact ourbusiness. A well-trained, motivated work force has a positive impact on ourability to attract and retain business. Rapid growth presents a challenge to usand our industry to recruit, train and retain our employees while managing theimpact of wage inflation and potential lack of available qualified labor in themarkets where we could operate. Labor-related actions, including strikes,slowdowns and facility occupations can also have a negative impact on ourbusiness after a business combination.

**Compliance with governmental regulations and changesin laws and regulations and risks from investigations and legal proceedingscould be costly and could adversely affect operating results.**

The oil and gas industry is subject to regulation andintervention by governments throughout the world in such matters as explorationand production interests, environmental protection controls, controls over thedevelopment and decommissioning of a field (including restrictions onproduction) and, possibly, nationalization, expropriation, cancellation ornon-renewal of contract rights. The oil and gas industry is also subject to thepayment of royalties and taxation, which tend to be high compared with thosepayable in respect of other commercial activities and operates in certain taxjurisdictions which have a degree of 

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uncertainty relating tothe interpretation of, and changes to, tax law. As a result of new laws andregulations or other factors, we could be required to curtail or cease certainoperations.

A target business’ operations in the U.S. andinternationally can be impacted by expected and unexpected changes in the legaland business environments in which we could operate, as well as the outcome ofongoing government and internal investigations and legal proceedings.

Changes that could impact the legal environmentinclude new legislation, new regulation, new policies, investigations and legalproceedings and new interpretations of the existing legal rules andregulations. In particular, changes in export control laws or exchange controllaws, additional restrictions on doing business in countries subject tosanctions, and changes in laws in countries identified by management forimmediate focus. Changes that impact the business environment include changesin accounting standards, changes in environmental laws, changes in tax laws ortax rates, the resolution of audits by various tax authorities, and the abilityto fully utilize our tax loss carryforwards and tax credits. Compliance relatedissues could limit our ability to do business in certain countries.

These changes could have asignificant financial impact on our future operations and the way we conduct,or if we conduct, business in the affected countries.

**Uninsured claimsand litigation could adversely impact our operating results.**

After a businesscombination, we expect to have insurance coverage against operating hazards,including product liability claims and personal injury claims related to ourproducts, to the extent deemed prudent by our management and to the extentinsurance is available, but no assurance can be given that the nature andamount of that insurance will be sufficient to fully indemnify us againstliabilities arising out of pending and future claims and litigation. Thisinsurance has deductibles or self-insured retentions and contains certaincoverage exclusions. The insurance does not cover damages from breach ofcontract by us or based on alleged fraud or deceptive trade practices.Insurance and customer agreements do not provide complete protection againstlosses and risks, and our results of operations could be adversely affected byunexpected claims not covered by insurance.

**We may re-incorporate in another jurisdiction inconnection with a business combination, and the laws of such jurisdiction willlikely govern all of our material agreements and we may not be able to enforceour legal rights.**

In connection with abusiness combination, we may relocate the home jurisdiction of our businessfrom Delaware to another jurisdiction. If we determine to do this, the laws ofsuch jurisdiction would likely govern all of our material agreements. We cannotassure you that the system of laws and the enforcement of existing laws in suchjurisdiction would be as certain in implementation and interpretation as in theUnited States. The inability to enforce or obtain a remedy under any of ourfuture agreements could result in a significant loss of business, businessopportunities or capital. Any such reincorporation and the international natureof the energy industry will likely subject us to foreign regulation.

**Changes in laws, effective tax rates or adverseoutcomes resulting from examination of our tax returns could adversely affectour financial results.**

Our future effective taxrates could be adversely affected by changes in tax laws, both domestically andinternationally. They could also be adversely affected by earnings being lowerthan anticipated in countries where we have lower statutory rates and higherthan anticipated in countries where we have higher statutory rates, by changesin the valuation of our deferred tax assets and liabilities, or by changes intax treaties, regulations, accounting principles or interpretations thereof inone or more countries in which we operate. In addition, in connection with aproposed business combination, we may become a Cayman Islands company and ourtax returns would be subject to review and examination by the Internal Revenue 

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Serviceand other tax authorities. If any country, including the U.S., successfullychallenges our income tax filings based on our operational structure there, orif we otherwise lose a material dispute, our effective tax rate on ourworldwide earnings could increase substantially and our financial results couldbe materially adversely affected.

**U.S. investors may recognize gain for U.S. federalincome tax purposes on the actual or deemed transfer of our assets to a foreigncorporation.**

In the event we form aforeign subsidiary and transfer all or substantially all of our assets to it,or we otherwise are deemed to have been converted to a foreign corporation forU.S. federal income tax purposes, U.S. Holders may recognize gain(but not loss) to the extent of their share of any appreciation in the value ofour assets at the time of such deemed or actual transfers and may also besubject to certain reporting obligations. U.S. Holders are urged toconsult their own tax advisors concerning the tax consequences of suchtransactions, including any reporting requirements with respect thereto.

**Risks Related tothe Worldwide Oil and Natural Gas Industry**

Our business is expectedto be focused on providing oilfield services to the worldwide oil and naturalgas industry; therefore, our risk factors include those factors that impact,either positively or negatively, the markets for oil and natural gas.Expenditures by our potential customers for exploration, development andproduction of oil and natural gas are expected to be based on theirexpectations of future hydrocarbon demand, the risks associated with developingthe reserves and the future value of the hydrocarbon reserves. Their evaluationof the future value of the hydrocarbon reserves is expected to be based, inpart, on their expectations for global demand, global supply and other factorsthat influence oil and natural gas prices. The key risk factors currentlyinfluencing the worldwide oil and natural gas markets are discussed below.

**Our business willdepend on the level of activity in the offshore oil and gas industry, which issignificantly affected by volatile oil and gas prices among other factors.**

Our business will depend on the level of activity in oil and gasexploration, development, and production in markets throughout the world. Oiland gas prices and market expectations of potential changes in these prices cansignificantly affect the level of drilling activity. The availability ofquality drilling prospects, exploration success, relative production costs, thestage of reservoir development and political and regulatory environments alsoaffect our customers’ drilling campaigns. Worldwide military, political andeconomic events have contributed to oil and gas price volatility and are likelyto do so in the future. Oil and gas prices are extremely volatile and areaffected by numerous factors, including, but not limited to the following:

·       worldwide demand for oil and gas;

·       the ability of OPEC to set and maintain production levels;

·       the level of production in non-OPEC countries;

·       the policies of various governments regarding exploration anddevelopment of their oil and gas reserves;

·       domestic and international tax policy;

·       laws and governmental regulations that restrict exploration anddevelopment of oil and natural gas in various jurisdictions;

·       advances in exploration and development technology;

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·       the worldwide military and political environment, including uncertaintyor instability resulting from an escalation or additional outbreak of armedhostilities or other crises in the Middle East or other geographic areas;

·       acts of terrorism; and

·       natural disasters such as: hurricane, tornado, flood, fire, tsunami,and earthquake.

**Our Company intends to operate in a highly competitiveindustry, which may adversely affect our results of operations.**

The oilfield services industry in which we willoperate is very competitive. Contract drilling companies compete primarily on aregional basis, and competition may vary significantly from region to region atany particular time. Many drilling, workover and well-servicing rigs can bemoved from one region to another in response to changes in levels of activityand provided market conditions warrant, which may result in an oversupply ofrigs in an area. In some markets in which we expect to operate, the number ofrigs available for use could exceed the demand for rigs, resulting in pricecompetition. Most drilling and workover contracts are awarded on the basis ofcompetitive bids, which also results in price competition. The land drillingmarket generally is more competitive than the offshore drilling market becausethere are larger numbers of rigs and competitors.

Certain competitors arepresent in more than one of the regions in which we may operate. In the U.S.Lower 48 states, there are several hundred competitors with smaller national,regional or local land rig operations. Internationally, we may compete directlywith various competitors at each location where the Company will operate. Webelieve that the market for land drilling and workover contracts will continueto be competitive for the foreseeable future. Certain of our competitorsinternationally and offshore may be better positioned in certain markets,allowing them to compete more effectively.

**Excess productive capacity and lower future demandcould adversely impact a target business’ results of operations.**

We believe oil and naturalgas storage inventory levels are an indicator of the relative balance betweensupply and demand. High or increasing storage or inventories generally indicatethat supply is exceeding demand and that energy prices are likely to soften.Low or decreasing storage or inventories are an indicator that demand isgrowing faster than supply and that energy prices are likely to rise. Measuresof maximum productive capacity compared to demand (excess productive capacity)are also an important factor influencing energy prices and spending by oil andnatural gas exploration companies. When excess productive capacity is lowcompared to demand, energy prices tend to be higher and more volatilereflecting the increased vulnerability of the entire system to disruption. Whenenergy prices are low, our customers tend to curtail spending which couldadversely affect a target business’ results of operations.

**Seasonal and adverse weather conditions,conservational measures and technical advances adversely affect demand for ourservices and operations after a business combination.**

Weather can also have a significant impact on demandas consumption of energy is seasonal and any variation from normal weatherpatterns, cooler or warmer summers and winters, can have a significant impacton demand. After a business combination, adverse weather conditions, such ashurricanes, may interrupt or curtail our operations, or our customers’operations, cause supply disruptions and result in a loss of revenue and damageto our equipment and facilities, which may or may not be insured.

Fuel conservationmeasures, alternative fuel requirements, increasing consumer demand foralternatives to oil and gas, technological advances in fuel economy and energygeneration devices could reduce demand for oil and gas. We cannot predict theimpact of the changing demand for oil and gas 

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servicesand products, and any major changes may have a material adverse effect on ourbusiness, financial condition, results of operations and cash flows.

**Changes in economicconditions may adversely affect our operating results.**

After a businesscombination, our ability to forecast the size of and changes in the worldwideoil and natural gas industry, and our ability to forecast our customers’activity levels and demand for our products and services, may impact managementof any service and distribution activities we then own, staffing levels andcash and financing requirements. Unanticipated changes in our customers’requirements could impact costs, creating temporary shortages or surpluses ofequipment and people and demands for cash or financing.

**The market price ofour common stock may fluctuate.**

Historically, the marketprice of common stock of companies engaged in the oil and natural gas industryhas been highly volatile. News announcements and changes in oil and natural gasprices, changes in the demand for oil and natural gas exploration and changesin the supply and demand for oil and natural gas are all factors that mightaffect the price of our common stock. In addition, following this offering, theprice of our securities may vary significantly due to our reports of operatinglosses, one or more potential business combinations, the filing of periodicreports with the SEC, and general market or economic conditions.

**Geopolitical andInternational Environment Risks**

**International andpolitical events could adversely affect our results of operations and financialcondition.**

A significant portion of our post business combinationrevenue may be derived from non-United States operations, which exposes us torisks inherent in doing business in each of the countries in which we transactbusiness. The occurrence of any of the risks described below could have amaterial adverse effect on our results of operations and financial condition.

Operations incountries other than the United States are subject to various risks peculiar toeach country. With respect to any particular country, these risks may include:

·       expropriationand nationalization of our assets in that country;

·       politicaland economic instability;

·       civilunrest, acts of terrorism, force majeure, war, or other armed conflict;

·       naturaldisasters, including those related to earthquakes and flooding;

·       inflation;

·       currencyfluctuations, devaluations, and conversion restrictions;

·       confiscatorytaxation or other adverse tax policies;

·       governmentalactivities that limit or disrupt markets, restrict payments, or limit themovement of funds;

·       governmentalactivities that may result in the deprivation of contract rights; and

·       governmentalactivities that may result in the inability to obtain or retain licensesrequired for operation.

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Due to the unsettled political conditions in manyoil-producing countries and countries in which we may operate, our revenue andprofits are subject to the adverse consequences of war, the effects ofterrorism, civil unrest, strikes, currency controls, and governmental actions.Countries where we may operate that have significant amounts of political riskinclude: Afghanistan, Algeria, Indonesia, Iran, Iraq, Nigeria, Russia, andVenezuela. In addition, military action or continued unrest in the Middle East couldimpact the supply and pricing for oil and gas, disrupt our operations in theregion and elsewhere, and increase our costs for security worldwide.

Our facilities and ouremployees could come under threat of attack in some countries where we mayoperate, including Iraq and Saudi Arabia. In addition, we may become subject tothe risk related to loss of life of our personnel and our subcontractors inthese areas. We are also subject to the risks that our employees, joint venturepartners, and agents outside of the United States may fail to comply withapplicable laws.

**Military action, other armed conflicts, or terroristattacks could limit or disrupt markets and our operations.**

Military action in Iraq, military tension involvingNorth Korea and Iran, as well as the terrorist attacks of September 11,2001 and subsequent terrorist attacks, threats of attacks, and unrest, havecaused instability or uncertainty in the world’s financial and commercialmarkets and have significantly increased political and economic instability insome of the geographic areas in which we may operate a target business. Acts ofterrorism and threats of armed conflicts in or around various areas in which wemay operate, such as the Middle East and Indonesia, could limit or disrupt marketsand our operations, including disruptions resulting from the evacuation ofpersonnel, cancellation of contracts, or the loss of personnel or assets.

Such events may causefurther disruption to financial and commercial markets and may generate greaterpolitical and economic instability in some of the geographic areas in which wemay operate. In addition, any possible reprisals as a consequence of the warand ongoing military action in Iraq, such as acts of terrorism in the UnitedStates or elsewhere, could materially and adversely affect us in ways we cannotpredict at this time.

**Income taxes couldadversely affect a target business’ operations.**

A target business may haveoperations in countries other than the United States. Consequently, we could besubject to the jurisdiction of a significant number of taxing authorities. Theincome earned in these various jurisdictions is taxed on differing bases,including net income actually earned, net income deemed earned, andrevenue-based tax withholding. The final determination of our tax liabilitiesinvolves the interpretation of local tax laws, tax treaties, and relatedauthorities in each jurisdiction, as well as the significant use of estimatesand assumptions regarding the scope of future operations and results achievedand the timing and nature of income earned and expenditures incurred. Changesin the operating environment, including changes in tax law andcurrency/repatriation controls, could impact the determination of our taxliabilities for a tax year.

**Foreign exchangeand currency risks could adversely affect our revenues and operating expenses.**

After a businesscombination, a portion of our revenue and operating expenses may be in foreigncurrencies. As a result, we would be subject to significant risks, including:

·       foreignexchange risks resulting from changes in foreign exchange rates and theimplementation of exchange controls; and

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·       limitationson our ability to reinvest earnings from operations in one country to fund thecapital needs of our operations in other countries.

We may conduct business in countries that havenontraded or “soft” currencies which, because of their restricted or limitedtrading markets, may be more difficult to exchange for “hard” currency. We mayaccumulate cash in soft currencies, and we may be limited in our ability toconvert our profits into United States dollars or to repatriate the profitsfrom those countries.

We may selectively use hedging transactions to limitour exposure to risks from doing business in foreign currencies. For thosecurrencies that are not readily convertible, our ability to hedge our exposurewould be limited because financial hedge instruments for those currencies arenonexistent or limited. Our ability to hedge would also be limited because pricingof hedging instruments, where they exist, is often volatile and not necessarilyefficient.

In addition, thevalue of the derivative instruments could be impacted by:

·       adversemovements in foreign exchange rates;

·       interestrates;

·       commodityprices; or

·       the value and time periodof the derivative being different than the exposures or cash flows beinghedged.

**ITEM 1B.**       UNRESOLVEDSTAFF COMMENTS

None

**ITEM 2.**                PROPERTIES

We maintain our principalexecutive offices at 777 Post Oak Blvd., Suite 610, Houston, Texas 77056.The cost for this space is approximately $8,000 per-month under a lease with a38 month term commencing April 9, 2007. The landlord for the lease isGateway Ridgecrest, Inc. As part of the negotiation, the landlord requireda 38 month lease term if we were to secure the lease for the space. In theevent that a business combination is not approved and we are liquidated, PaulBragg has agreed to assume personally the responsibility for the balance of thelease payments for the remaining twelve months. We consider our current officespace, combined with the other office space otherwise available to ourexecutive officers, adequate for our current operations.

**ITEM 3.**                LEGALPROCEEDINGS

There is no litigationcurrently pending or, to our knowledge, contemplated against us or any of ourofficers or directors in their capacity as such.

**ITEM 4.**                SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of securityholders during the fiscal fourth quarter ended June 30, 2007.

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**PART II**

**ITEM 5.**                MARKETFOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES

**Unit Market Pricesand Dividends**

Our units have been quoted on the American StockExchange (“AMEX”) under the symbol “VTG-U” since May 31,2007. Prior to that time, there was no public market for ourunits. Our warrants and shares of common stock began to trade separatelyon June 8, 2007 under symbols “VTG” and “VTG-WT”, respectively. Asof September 20, 2007, there were approximately eight holders ofrecord of our units, approximately eight holders of record of our common stockand approximately seven holders of record of our warrants. Such numbers do notinclude beneficial owners holding shares, warrants or units through nomineenames.

On February 6,2007 and May 23, 2007, the Company’s Board of Directors authorized andrecorded a one-for-one and a 0.2-for-one stock split, respectively. Thetotal number of authorized common stock shares and par value were unchanged bythis action. Accordingly, all references to the number of shares and per shareamounts in this Transition Report have been presented on a post-split basis.

We have not paid any dividends on our common stock to date and do notintend to pay dividends prior to the completion of a business combination. Thepayment of dividends in the future will be contingent upon our revenues andearnings, if any, capital requirements, general financial condition subsequentto completion of a business combination and our debt agreements, if any. Thepayment of any dividends subsequent to a business combination will be withinthe discretion of our then board of directors. It is the present intention ofour board of directors to retain all earnings, if any, for use in our businessoperations and, accordingly, our board does not anticipate declaring anydividends in the foreseeable future.

**SecuritiesAuthorized for Issuance under Equity Compensation Plans**

No compensation of any kind, including finder’s andconsulting fees, will be paid by us to any of our officers, directors, senioradvisors, or any of their respective affiliates, for services rendered prior toor in connection with a business combination. However, we will reimburse suchpersons for any out-of-pocket expenses incurred in connection with activitieson our behalf such as identifying potential target businesses and performingdue diligence on suitable business combinations, although they will not bereimbursed for any out-of-pocket expenses incurred by them to the extent thatsuch expenses exceed the amount not held in the trust account unless thebusiness combination is consummated.

Following an initial business combination and to theextent our current executive officers continue to be involved in management ofour business, they will be entitled to receive such compensation as our boardof directors may approve.

Although we currentlymaintain no equity compensation plans for the benefit of our officers,directors, senior advisors, or any of their respective affiliates, ourofficers, directors and senior advisors have beneficial ownership of equitysecurities of the Company, which securities were issued to them prior to theconsummation of our initial public offering. See Items 11 and 12 below forfurther disclosure of the beneficial ownership of equity securities by ourofficers, directors and senior advisors.

**Recent Sales ofUnregistered Securities**

On September 8, 2006, we issued 7,500,000 sharesof our common stock to our founding stockholders for an aggregate amount of$25,000 in cash, at a purchase price of approximately $0.003 per share (as 

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adjusted for the effect ofthe stock split in the ratio of one-for-one on February 6, 2007 and is further adjusted for theeffect of the stock split in the ratio of 0.2-for-one on May 23, 2007).

On May 30, 2007,our founding stockholders purchased in a private placement transaction acombined total of 375,000 units and 3,000,000 warrants from us at a price of$8.00 per unit and $1.00 per warrant. These units and warrants, which wecollectively refer to as the founder securities, cannot be sold or transferredby the founding stockholders who initially purchase these securities from usuntil one year after the consummation of a business combination, except incertain limited circumstances. The $6,000,000 purchase price of the foundersecurities is held in the trust account (together with net proceeds of ourinitial public offering) pending our completion of one or more businesscombinations. If we do not complete one or more business combinations that meetthe criteria described in this Transition Report, then the $6,000,000 purchaseprice of the founder securities will become part of the liquidation amountdistributed to our public stockholders from our trust account and the foundersecurities will become worthless.

Immediately after theinitial public offering and the private placement, our officers and directors,collectively, beneficially owned 20.8% of the issued and outstanding shares ofour common stock.

**Use of Proceeds**

On May 30, 2007, we consummated our initialpublic offering of 34,500,000 units (including over-allotment units). Each unitconsists of one share of common Stock, $0.001 par value per share and onewarrant to purchase one share of common stock at an exercise price of $6.00 pershare.

Our net proceeds from the initial public offering ofour units and sale of founder securities, after deducting the underwriters feeand certain offering expenses totaling approximately $11,790,000, were$270,210,000. Of this amount, $269,960,000 was placed in trust and theremaining $250,000 was held outside of the trust. The remaining proceeds areavailable to be used by us to provide for business, legal and accounting duediligence on prospective acquisitions and continuing general and administrativeexpenses. Excluding $8,280,000 of the deferred underwriters fee held in trustand payable upon the consummation of a business combination, we intend to usesubstantially all of the remaining net proceeds of the initial public offeringto acquire a target business, including identifying and evaluating prospectiveacquisition candidates, selecting the target business, and structuring,negotiating and consummating the business combination. To the extent that ourcapital stock is used in whole or in part as consideration to effect a businesscombination, the proceeds held in the trust fund as well as any other netproceeds not expended will be used to finance the operations of the targetbusiness.

No expenses of the initialpublic offering were paid to any of our officers and directors or any of theirrespective affiliates. We did, however, repay certain of our officers anddirectors for loans they made to us prior to the consummation of the initialpublic offering. The aggregate amount of principal on such loans that we repaidwas $275,000. These loans were non-interest bearing. All the funds held in thetrust account have been invested in either Treasury Bills or Money MarketAccounts.

**Repurchases ofEquity Securities**

None

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**ITEM6.**                SELECTED FINANCIALDATA

| ** **                                    | ** ** | **For the Period from**                         | ** **  |
|-----------------------------------------------|------------|----------------------------------------------------------------|-------------|
| ** **                                    | ** ** | **September 8, 2006  (date of inception)** | ** **  |
| ** **                                    | ** ** | **to June 30, 2007**                            | ** **  |
| **Statement  of Operations Data**             | ** ** |                                                           | ** **  | ** ** |   |
| Revenues                                      |       |                                                           | $           | — |   |   |
| General and  administrative expenses          |       |                                                           | 145,534     |   |   |
| Loss from  operations                         |       |                                                           | (145,534    | ) |   |
| Interest income                               |       |                                                           | 1,128,805   |   |   |
| Income before  provision for income taxes     |       |                                                           | 983,271     |   |   |
| Provision for  income taxes                   |       |                                                           | 335,366     |   |   |
| Net income                                    |       |                                                           | 647,905     |   |   |
| Net income per  share:                        |       |                                                           |        |   |   |
| Basic                                         |       |                                                           | 0.06        |   |   |
| Diluted                                       |       |                                                           | 0.05        |   |   |
| **Balance Sheet Data (at period end)**        | ** ** |                                                           | ** **  | ** ** |   |
| Cash                                          |       |                                                           | 1,512,642   |   |   |
| Restricted cash                               |       |                                                           | 269,960,000 |   |   |
| Other current  assets                         |       |                                                           | 183,184     |   |   |
| Property and  equipment                       |       |                                                           | 78,266      |   |   |
| Total assets                                  |       |                                                           | 271,734,092 |   |   |
| Accounts payable and accrued liabilities      |       |                                                           | 626,087     |   |   |
| Deferred  underwriters fee                    |       |                                                           | 8,280,000   |   |   |
| Notes  payable—stockholders              |       |                                                           | 225,000     |   |   |
| Total liabilities                             |       |                                                           | 9,131,087   |   |   |
| Common stock,  subject to possible redemption |       |                                                           | 76,753,407  |   |   |
| Total stockholders’  equity              |       |                                                           | 185,849,598 |   |   |
|                                               |            |                                                                |             |  |  |  |

 

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**ITEM 7.**                MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

**Overview**

The followingdiscussion of our financial condition and results of operations should be readin conjunction with the audited financial statements, the notes to the auditedfinancial statements and the “Selected Financial Data” appearing in Item 6above and Item 8 below. This discussion covers periods before and after ourinitial public offering. In addition, this discussion contains forward-lookingstatements that must be understood in the context of numerous risks anduncertainties, including, but not limited to, those described in Item 1A, “RiskFactors,” above.

We are a blank check company organized under the lawsof the State of Delaware on September 8, 2006. We were formed to acquire,through a merger, capital stock exchange, asset or stock acquisition,exchangeable share transaction, joint venture or other similar businesscombination, one or more businesses in the oilfield services industry. Pursuantto our amended and restated certificate of incorporation, we have until May 24,2009 to complete a business combination or we will be subject to liquidation.

Significantfinancing activities since our inception include the following:

·       OnSeptember 8, 2006, we issued 7,500,000 shares of our common stock to ourfounding stockholders for an aggregate amount of $25,000 in cash, at a purchaseprice of approximately $0.003 per share (as adjusted for the effect of thestock dividends discussed above).

·       Our officers and directorsadvanced an aggregate of $275,000 to us, on a non-interest bearing basis, forpayment of offering expenses on our behalf. The remaining balance of $225,000of these advances at June 30, 2007 was repaid in July 2007.

·       On May 30, 2007, our founding stockholders purchased in a privateplacement transaction a combined total of 375,000 units and 3,000,000 warrantsfrom us at a price of $8.00 per unit and $1.00 per warrant. These units andwarrants, which we collectively refer to as the founder securities, cannot besold or transferred by the founding stockholders who initially purchase thesesecurities from us until one year after the consummation of a businesscombination, except in certain limited circumstances. The $6,000,000 purchaseprice of the founder securities is held in the trust account (together with netproceeds of our initial public offering) pending our completion of one or morebusiness combinations. If we do not complete one or more business combinationsthat meet the criteria described in this Transition Report, then the $6,000,000purchase price of the founder securities will become part of the liquidationamount distributed to our public stockholders from our trust account and thefounder securities will become worthless.

·       On May 30, 2007, weconsummated an initial public offering of 34,500,000 units subject to aRegistration Statement on Form S-1 filed with the Securities andExchange Commission. Each unit consisted of one share of common stock, $0.001par value per share and one warrant to purchase one share of common stock at anexercise price of $6.00 per share.

**Developments in Finding a Suitable Business Target**

On August 30,2007, the Company signed a definitive share purchase agreement to acquire allof the shares of common stock of Offshore Group Investment Limited (“OGIL”), aCayman Islands registered company and wholly owned subsidiary of F3 Capital (“F3Capital”). F3 Capital is affiliated with TMT Global, a Cayman Islandsregistered company. Four Baker Marine Pacific Class 375 ultra-premiumjackup drilling rigs are being constructed in Singapore for delivery and saleto OGIL. Under the terms of the share purchase agreement, the Company willchange its domicile from Delaware to the Cayman Islands.

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F3 Capital will receiveaggregate consideration of approximately $331 million at closing, consisting ofapproximately $56 million in cash and $275 million in units. Each unit iscomprised of one share of common stock and 0.75 warrants to purchase commonstock. The warrants shall be on terms identical to the warrants included in theunits sold as part of our initial public offering. As part of the transaction,the Company will: (i) assume approximately $517 million in payments owedunder certain contracts for the construction and delivery of the fourultra-premium jackup drilling rigs and (ii) incur approximately $40million in rig outfitting costs. Also as part of the transaction, the Companywill acquire an option to purchase an ultra-deepwater drillship currently underdevelopment.

A major European bank has provided the Company an indicative term sheetproviding for debt financing for completion of the jackup rigs of approximately$440 million, subject to completion of the lender’s internal processes. Theclosing of the acquisition and the debt financing are subject to stockholderapproval, regulatory clearances and other customary closing conditions.

**Results of Operations**

The Company has little operating history. Our entireactivity since inception has been to prepare for our fundraising through anoffering of our equity securities and, subsequently, to complete a businesscombination. We will not generate any operating income until the completion ofa merger, capital stock exchange, stock purchase, asset acquisition or othersimilar business combination. We have generated non-operating income in theform of interest income on the cash held in our trust account.

For the period from ourinception on September 8, 2006 to June 30, 2007, we had net income ofapproximately $648,000 comprised of $1,129,000 of interest income primarilyrelated to the cash held in our trust account less expenses of $145,000.

**Liquidity and Capital Resources**

Our net proceeds from the initial public offering ofour units and sale of founder securities, after deducting the underwriters feeand certain offering expenses totaling approximately $11,790,000, were$270,210,000. Of this amount, $269,960,000 was placed in trust and theremaining $250,000 was held outside of the trust and is available to fund ouroperating expenses. Weexpect to use $8,280,000 of the remaining proceeds held in the trust account topay the deferred underwriting discount and up to $2,250,000 of the interestearned on the trust account to satisfy our operating expenses, toprovide for business, legal and accounting due diligence on prospectiveacquisitions and to repay thenon-interest bearing advances from our officers and directors. We intend to usesubstantially all of the remaining net proceeds of the initial publicoffering to acquire a target business, including identifying and evaluatingprospective acquisition candidates, selecting the target business, andstructuring, negotiating and consummating the business combination. To theextent that our capital stock is used in whole or in part as consideration toeffect a business combination, the proceeds held in the trust fund as well asany other net proceeds not expended will be used to finance the operations ofthe target business.

We believe that thefunds available to us outside of the trust account, together with interestincome of up to $2,250,000 on the balance of the trust account releasable tous, will be sufficient to allow us to operate until May 24, 2009, assumingthat a business combination is not consummated during that time. Over this timeperiod, we anticipate paying approximately (1) $1,500,000 for legal,accounting, due diligence and other expenses related to a business combination,(2) $200,000 for legal and accounting fees relating to our SEC reporting obligations,(3) $250,000 for rent for office space and other administrative expenses, (4) $275,000for repayment of the non-interest bearing advances from our shareholders and (5) $275,000for miscellaneous expenses and reserves including the cost of dissolution andreserves, if any, which we currently estimate to be approximately $15,000.

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We do not believe we will need to raise additional funds in order tomeet the expenditures required for operating our business prior to our initialbusiness combination. However, we may need to raise additional funds through aprivate offering of debt or equity securities if such funds are required toconsummate a business combination that is presented to us.

**Off-Balance Sheet Arrangements, Commitments, Guarantees and ContractualObligations**

Contemporaneously withthe consummation of our initial public offering, we issued to the underwriters,in exchange for consideration of $100, an option to purchase up to an aggregateof 1,250,000 units at $9.60 per unit, with the warrants issued as part of suchunits exercisable at $7.20 per share. The units issuable upon exercise of thisoption are identical to the other units outstanding except that the warrantsincluded in the option have an exercise price of $7.20 per share (120% of theexercise price of the warrants included in the units sold in the offering).

In connection with ourinitial public offering, Deutsche Bank Securities Inc. has agreed to deferpayment of the remaining three percent (3%) of the gross proceeds ($8,280,000)until completion of a business combination. Until a business combination iscomplete, these funds will remain in the trust account. If the Company does notcomplete a business combination then the 3% deferred fee will become part ofthe funds returned to the Company’s public stockholders from the trust accountupon our liquidation.

We are obligated,commencing on April 9, 2007 and for 38 months thereafter to pay amonthly fee of approximately $8,000 for office space in the Houstonmetropolitan area. The landlord for the lease is Gateway Ridgecrest, Inc.As part of the negotiation, the landlord required a 38 month lease term ifwe were to secure the lease for the space. In the event that a businesscombination is not approved and we are liquidated, Paul Bragg has agreed toassume personally the responsibility for the balance of the lease payments forthe remaining twelve months. We will also seek to obtain administrativeservices including secretarial support from unaffiliated third parties atprevailing market rates.

**Critical Accounting Policies and Accounting Estimates**

The preparation offinancial statements and related disclosures in conformity with accountingprinciples generally accepted in the United States requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities, disclosure of contingent assets and liabilities at the date of thefinancial statements, and revenues and expenses during the periods reported.Actual results could materially differ from those estimates. We have determinedthat we currently are not subject to any critical accounting policies.

**Item 7A.**                Quantitativeand Qualitative Disclosures About Market Risk

Market risk is thesensitivity of income to changes in interest rates, foreign exchanges,commodity prices, equity prices, and other market driven rates or prices. Weare not presently engaged in, and if a suitable business combination is notconsummated by us prior to the prescribed liquidation of the trust fund we maynot engage in, any substantive commercial business. Accordingly, the risksassociated with foreign exchange rates, commodity prices, and equity prices arenot significant. We do not enter into derivatives or other financialinstruments for trading or speculative purposes.

**Item 8.**                        FinancialStatements and Supplementary Data.

Reference is made to ourfinancial statements beginning on page F-1 of this report.

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**Item 9.**                        Changesin and Disagreements with Accountants on Accounting and Financial Disclosure

None.

**Item 9A.**                Controlsand Procedures

**Disclosure Controlsand Procedures**

Disclosure controls and procedures are controls andother procedures that are designed to ensure that information required to bedisclosed by us in the reports we file or submit under the Securities ExchangeAct of 1934 (Exchange Act) is recorded, processed, summarized, and reported,within the time periods specified by the Securities and Exchange Commission’s(SEC) rules and forms.

Disclosure controls and procedures include, withoutlimitation, controls and procedures designed to provide reasonable assurancethat information required to be disclosed by us in the reports we file orsubmit under the Exchange Act is accumulated and communicated to management,including the Chief Executive Officer and Chief Financial Officer, asappropriate to allow timely decisions regarding required disclosure.

Under the supervision andwith the participation of our Chief Executive Officer and Chief FinancialOfficer, the Company has evaluated the effectiveness of its disclosure controlsand procedures (as such term is defined in Rule 13a-15(e) and15d-15(e) under the Exchange Act) as of June 30, 2007, and,based upon this evaluation, the Chief Executive Officer and Chief FinancialOfficer have concluded that these controls and procedures are effective inproviding reasonable assurance that information requiring disclosure isrecorded, processed, summarized, and reported within the timeframe specified bythe SEC’s rules and forms.

**Changes in InternalControl over Financial Reporting**

Under the supervision and with the participation ofour Chief Executive Officer and Chief Financial Officer, the Company hasevaluated changes in internal control over financial reporting (as such term isdefined in Rules 13a-15(f) and 15d-15(f) under theExchange Act) that occurred during the fiscal quarter ended June 30, 2007and found no change that has materially affected, or is reasonably likely tomaterially affect, internal control over financial reporting.

This Transition Reportdoes not include a report of management’s assessment regarding internal controlover financial reporting or an attestation report of the Company’s registeredpublic accounting firm due to a transition period established by rules ofthe Securities and Exchange Commission for newly public companies.

**Item 9B.**               OtherInformation

None.

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**PART III**

**ITEM 10.**         DIRECTORSAND EXECUTIVE OFFICERS OF THE REGISTRANT

Our current directors andexecutive officers are as follows: 

| **Name**                | ** ** | ** ** | ** ** | **Age** | ** ** | **Position**                                                                | ** ** |
|-------------------------|------------|------------|------------|---------|------------|-----------------------------------------------------------------------------|------------|
| Paul A. Bragg           |       |       | 51         |    |       | Chairman  of the Board and Chief Executive Officer                          |       |
| Christopher G. DeClaire |       |       | 48         |    |       | Chief Financial Officer, Vice President, Secretary,  Treasurer and Director |       |
| Jorge E. Estrada M.     |       |       | 60         |    |       | Director                                                                    |       |
| Marcelo D. Guiscardo    |       |       | 55         |    |       | Director                                                                    |       |
| John C.G. O’Leary  |       |       | 52         |    |       | Director                                                                    |       |
| John Russell            |       |       | 68         |    |       | Director                                                                    |       |

 

***Paul A. Bragg***has served as our Chairman of the Board of Directors and Chief ExecutiveOfficer since our inception. Mr. Bragghas over 31 years of direct industry experience. Prior to joining the Company,Mr. Bragg was affiliated with Pride International, Inc., oneof the world’s largest international drilling and oilfield services companies.  From 1999 through 2005, Mr. Bragg servedas the Chief Executive Officer of Pride International, Inc. From 1997through 1999, Mr. Bragg served as its Chief Operating Officer, and from1993 through 1997, Mr. Bragg served as its Vice President and ChiefFinancial Officer. Mr. Bragg graduated from the University of Texas atAustin in 1977 with a B.B.A. in Accounting.

***Christopher G.DeClaire*** has served as our Chief FinancialOfficer, Vice-President, Secretary, Treasurer and a Director since ourinception. Mr. DeClaire hasover 28 years of experience. Mr. DeClaire is the President of DeClaireInterests, Inc. and was active in that entity through the end of 2006.From 1999 through December 2002, Mr. DeClaire was a principal andmanaging director of Odyssey Capital, LLC. From 1994 through 1998,Mr. DeClaire served as the Chief Executive Officer ofSkillmaster, Inc. Mr. DeClaire graduated from Michigan StateUniversity in 1982 with a bachelor’s degree in pre-law with a minor inaccounting.

***Jorge E. Estrada M.***has served as a Director since inception. Mr. Estrada has over 37 years of direct industry experience. From July 1993 to January 2002,Mr. Estrada was employed as a consultant to Pride International, Inc.From January 2002 to May 2005 he was employed by Pride International, Inc.in a business development capacity. He also served as a director of PrideInternational, Inc. from July 1993 until May 2005. Mr. Estradais also the President and Chief Executive Officer of JEMPSA Media andEntertainment. Mr. Estrada received a B.S. in geophysics from Washingtonand Lee University, and was a PhD candidate at the Massachusetts Institute ofTechnology.

***Marcelo D.Guiscardo***has served as a Director since our inception.Mr. Guiscardo has 33 years ofdirect industry experience. He served as president of Pioneer Natural Resources, Inc.’sArgentine subsidiary from January 2005 until May 2006. From March 2000until January 2005, he was Vice President, E&P Services for PrideInternational, Inc. From September 1999 until joining PrideInternational, Inc., he was President of GDM Business Development, aprivate company providing consulting services to the energy industry. From November 1993until September 1999, Mr. Guiscardo held two executive officerpositions with and was a Director of YPF Sociedad Anonima (now part of RepsolYPF S.A.), an international integrated energy company. Mr. Guiscardo wasYPF’s Vice President of Business Development in 1998 and 1999. Prior to that,he was YPF’s Vice President of Exploration and Production. From 1979 to 1993 hefilled a variety of positions for Exxon Company USA and Exxon International(now ExxonMobil) that culminated in having E&P responsibilities over theMiddle East (Abu Dhabi, Egypt, 

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Saudi Arabia and Yemen), France, Thailand and Cote d’Ivoir. Mr. Guiscardograduated in May 1979 with a B.S. in Civil Engineering from RutgersCollege of Engineering.

***John C.G. O’Leary***hasserved as a Director since our inception. Mr. O’Learyhas over 31 years of direct industry experience. Mr. O’Leary is a member of the boards of directors of Technip,Huisman-Itrec and KS Energy.Mr. O’Leary is the CEO of Strand Energy, an independent consultancy firmwith head office in Dubai, UAE, providing advisory and brokerage services toclients in the upstream energy industry. Prior to forming Strand Energy, Mr. O’Learywas a partner of Pareto Offshore ASA, a consultancy firm based in Oslo, Norway,providing consultancy and brokerage services to customers in the upstreamenergy industry. Prior to commencing with Pareto Offshore in November 2004,Mr. O’Leary was President of Pride International, Inc. He joinedPride International, Inc. in 1997 as Vice President of WorldwideMarketing. Mr. O’Leary received an Honors B.E. in civil engineering fromUniversity College, Cork, Ireland in 1977. He holds two post-graduates degrees,one in finance from Trinity College, Dublin and one in petroleum engineeringfrom the French Petroleum Institute in Paris.

***John Russell***hasserved as a Director since our inception. Mr. Russell has over 46 years of direct industry experience.Mr. Russell served as President of Baker Hughes from August 1998until his retirement in October 1998. Previously, he served as Presidentand Chief Executive Officer of Western Atlas from 1997 until August 1998,when the company was acquired by Baker Hughes Incorporated. Mr. Russellpreviously served as Executive Vice President and Chief Operating Officer,Oilfield Services, of Western Atlas from 1994 until the spin-off of the companyfrom Litton Industries, when he was named President and Chief Executive Officerof the company.

Our board of directors hassix directors and is divided into two classes with one class of directors beingelected each year and each class serving a two-year term. The term of office ofthe first class of directors, consisting of Paul Bragg, Jorge Estrada and JohnRussell, will expire at our first annual meeting of stockholders. The term ofoffice of the second class of directors, consisting of Chris DeClaire, MarceloGuiscardo and John O’Leary will expire at the second annual meeting.

**Compliance with Section 16(a)**

Section 16(a) of the Securities Exchange Actof 1934 requires our directors and executive officers and persons who own morethan 10% of a registered class of our equity securities, to file with theSecurities and Exchange Commission initial reports of ownership and reports ofchanges in beneficial ownership of Common Stock and other equity securities ofus. Directors, officers and greater than 10% stockholders are required by SECregulations to furnish us with all Section 16(a) forms they file.

To our knowledge, basedsolely upon our review of the copies of such reports furnished to us, webelieve that all of our directors, officers and greater than 10% stockholdershave complied with the applicable Section 16(a) reportingrequirements in a timely fashion.

**Board of Directorsand Committees of the Board**

Our board of directors hadtwo meetings during the period from our inception on September 8, 2006 to June 30,2007 and acted by unanimous written consent nine times. Our audit committee hadone meeting during the period from our inception on September 8, 2006 to June 30,2007. Each member of the board participated in all Board and applicablecommittee meetings held during the period for which he was a director exceptfor Mr. Russell who missed one board meeting.

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**Audit Committee**

Our audit committeeof the board of directors consists of Messrs. Estrada, Guiscardo, O’Learyand Russell. Mr. O’Leary serves as the chairman of our audit committee.The audit committee’s duties, which are specified in our Audit CommitteeCharter, include, but are not limited to:

·       servingas an independent and objective party to monitor our financial reportingprocess, audits of our financial statements and internal control system;

·       reviewingand appraising the audit efforts of our independent registered publicaccounting firm and internal finance department; and

·       providing an open avenue ofcommunications among our independent registered public accounting firm,financial and senior management, our internal finance department, and the boardof directors.

**Financial Expertson Audit Committee**

The audit committee will at all times be composedexclusively of “independent directors” who are “financially literate,” meaningthey are able to read and understand fundamental financial statements,including a company’s balance sheet, income statement and cash flow statement.

In addition, the committeehas, and will continue to have, at least one member who has past employmentexperience in finance or accounting, requisite professional certification inaccounting, or other comparable experience or background that results in theindividual’s financial sophistication. The board of directors has determinedthat Mr. O’Leary satisfies the definition of financial sophistication andalso qualifies as an “audit committee financial expert,” as defined under theSEC’s rules and regulations.

**Audit CommitteeReport**

We have reviewed and discussed with management theCompany’s audited financial statements as of and for the period from ourinception on September 8, 2006 to June 30, 2007.

We have discussed with the independent auditors thematters required to be discussed by Statement on Auditing Standards No. 61,*Communication with Audit Committees*, asamended, by the Auditing Standards Board of the American Institute of CertifiedPublic Accountants.

We have received and reviewed the written disclosuresand the letter from the independent auditors required by Independence Standard No. 1,Independence Discussions with Audit Committees, as amended, by the IndependenceStandards Board, and have discussed with the auditors the auditors’independence.

Based on the reviews and discussions referred toabove, we have recommended to the Board of Directors that the financialstatements referred to above be included in the Company’s Transition Report on Form 10-Kfor the period from September 8, 2006 to June 30, 2007.

Mr. John C.G. O’Leary(Chairman)Mr. Jorge E. EstradaMr. Marcelo D. GuiscardoMr. John Russell

**NominatingCommittee**

Our nominating committee of the board of directorsconsists of Messrs. Estrada, Guiscardo, O’Leary and Russell, each of whomis an independent director as defined by the rules of the American StockExchange and the SEC. Mr. Estrada serves as the chairman of our nominatingcommittee. The nominating committee is responsible for overseeing the selectionof persons to be nominated to serve on our board of 

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directors. The nominatingcommittee considers persons identified by its members, management,stockholders, investment bankers and others.

The guidelines forselecting nominees, which are specified in the nominating committee charter,generally provide that persons to be nominated should be actively engaged inbusiness endeavors, have an understanding of financial statements, corporatebudgeting and capital structure, be familiar with the requirements of apublicly traded company, be familiar with industries relevant to our businessendeavors, be willing to devote significant time to the oversight duties of theboard of directors of a public company, and be able to promote a diversity ofviews based on the person’s education, experience and professional employment.The nominating committee evaluates each individual in the context of the boardas a whole, with the objective of recommending a group of persons that can bestimplement our business plan, perpetuate our business and represent stockholderinterests. The nominating committee may require certain skills or attributes,such as financial or accounting experience, to meet specific board needs thatarise from time to time. The nominating committee does not distinguish amongnominees recommended by stockholders and other persons.

**Code of Conduct andEthics**

We have adopted a code ofethics that applies to our officers, directors and employees in accordance withapplicable federal securities laws and the rules of the American StockExchange. We have filed copies of our code of ethics and committee charters asexhibits to the Registration Statement which we filed on May 7,2007. These documents may be reviewed by accessing our public filings atthe SEC’s web site at www.sec.gov. In addition, a copy of the code of ethicswill be provided without charge upon request to us. We intend to disclose anyamendments to or waivers of certain provisions of our code of ethics in aCurrent Report on Form 8-K.

**Conflicts ofInterest**

Investors should be aware of the following potentialconflicts of interest:

None of our officers or directors are required tocommit their full time to our affairs and, accordingly, they may have conflictsof interest in allocating management time among various business activities.

In the course of their other business activities, ourofficers and directors may become aware of investment and businessopportunities that may be appropriate for presentation to us as well as theother entities with which they are affiliated. They may have conflictingfiduciary duties in determining to which entity a particular businessopportunity should be presented. For a complete description of our management’sother affiliations refer to Item 1A-Risk Factors. Accordingly, such officersand directors may become subject to conflicts of interest regarding us andother business ventures in which they may be involved, which conflicts may havean adverse effect on our ability to consummate a business combination.

Our officers and directors may in the future becomeaffiliated with entities, including other blank check companies, engaged inbusiness activities similar to those intended to be conducted by us.

Since our officers and directors own shares of ourcommon stock that will be released from escrow only if a business combinationis completed and may own warrants that will expire worthless if a businesscombination is not consummated, these persons may have a conflict of interestin determining whether a particular target business is appropriate to effect abusiness combination. The personal and financial interests of our directors andofficers may influence their motivation in identifying and selecting a targetbusiness and timely completing a business combination and securing release oftheir stock.

If we were to make a deposit, down payment or fund a “noshop” provision in connection with a potential business combination, we mayhave insufficient funds available outside of the trust to pay for duediligence, legal, accounting and other expenses attendant to completing abusiness combination. In such 

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event, our initialstockholders may have to incur such expenses in order to proceed with theproposed business combination. As part of any such combination, such initialstockholders may negotiate the repayment of some or all of any such expenses,without interest or other compensation, which if not agreed to by the targetbusiness’s management, could cause our management to view such potentialbusiness combination unfavorably, thereby resulting in a conflict of interest.

If our management negotiates to be retained postbusiness combination as a condition to any potential business combination,their financial interests, including compensation arrangements, could influencetheir motivation in selecting, negotiating and structuring a transaction with atarget business, and such negotiations may result in a conflict of interest.

With respect topotential conflicts relating to potential business combinations, in general,prior to availing themselves personally of a business opportunity, officers anddirectors of a corporation incorporated under the laws of the State of Delawareare required to present business opportunities to the subject corporation if:

·       thecorporation could financially undertake the opportunity;

·       theopportunity is within the corporation’s line of business; and

·       itwould not be fair to the corporation and its stockholders for the opportunitynot to be brought to the attention of the corporation.

In addition, conflicts of interest may arise when ourboard evaluates a particular business opportunity with respect to theabove-listed criteria. While a director with such a conflict may decide torecuse himself, we cannot assure you that any of the above mentioned conflictswill be resolved in our favor.

Each of our directors has, or may come to have,conflicting fiduciary obligations relating to presenting business opportunitiesmeeting the above-listed criteria to multiple entities. Our officers anddirectors have fiduciary obligations to those companies on whose board ofdirectors they sit. To the extent that they identify businessopportunities that may be suitable for the entities or other companies on whoseboard of directors they may sit, our officers and directors will honor thosefiduciary obligations. Accordingly, they may not present opportunities to usthat come to their attention in the performance of their duties as directors ofsuch other entities unless any other entity to which they owe such a fiduciaryobligation and any successors to such entities have declined to accept such opportunities.Additionally, certain of our directors and officers are directors of companies,both public and private, that may perform business activities in the energyindustry similar to those that we may perform after consummating a businesscombination.

In connection with the stockholder vote required toapprove any business combination, all of our initial stockholders have agreedto vote the shares of common stock owned by them prior to the initial publicoffering in the same manner as a majority of the public stockholders who voteat the special or annual meeting called for the purpose of approving a businesscombination. Our initial stockholders have also agreed that if they acquireshares of common stock in or following the initial public offering, they willvote such acquired shares in favor of a business combination. Accordingly, anyshares of common stock acquired by initial stockholders in the open market willnot have the same right to vote as public stockholders with respect to apotential business combination (since they are required to vote in favor of abusiness combination). Additionally, our initial stockholders will not haveconversion rights with respect to shares acquired during or subsequent to theinitial public offering (since they may not vote against a businesscombination), except upon our liquidation as part of any plan of dissolutionand distribution. In addition, with respect to shares of common stock owned bythem prior to the initial public offering, they have agreed to waive theirrespective rights to participate in any liquidation including the liquidationof our trust account as part of our dissolution, occurring upon our failure toconsummate a business combination, 

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but only with respect tothose shares of common stock acquired by them prior to the initial publicoffering and not with respect to any shares acquired in our initial publicoffering or the open market.

To further minimizepotential conflicts of interest, we have agreed not to consummate a businesscombination with an entity that is affiliated with any of our initialstockholders unless we obtain an opinion from an independent investment bankingfirm that the business combination is fair to our stockholders from a financialpoint of view. Such opinion will be included in our proxy solicitationmaterials, furnished to stockholders in connection with their vote on such abusiness combination and we expect that such independent banking firm will be aconsenting expert.

**ITEM 11.**         EXECUTIVECOMPENSATION

No compensation of any kind, including finder’s andconsulting fees, will be paid by us to any of our officers, directors, senioradvisors, or any of their respective affiliates, for services rendered prior toor in connection with a business combination. However, we will reimburse suchpersons for any out-of-pocket expenses incurred in connection with activitieson our behalf such as identifying potential target businesses and performingdue diligence on suitable business combinations, although they will not bereimbursed for any out-of-pocket expenses incurred by them to the extent thatsuch expenses exceed the amount not held in the trust account unless thebusiness combination is consummated.

Following an initial business combination and to theextent our current executive officers continue to be involved in management ofour business, they will be entitled to receive such compensation as ourCompensation Committee may approve.

We currently maintain noequity compensation plans for the benefit of our officers or directors, or anyof their respective affiliates.

**CompensationCommittee**

The compensation committee consists of MarceloGuiscardo as chairman, Jorge Estrada, John O’Leary and John Russell, each ofwhom is an independent director under the American Stock Exchange listingstandards.

No executive officer ofthe Company has served on the compensation committee of any other entity, norhas any executive officer of the Company served as a director of anotherentity, whose executive officer has also served on the Company’s compensationcommittee.

**Compensation Discussion and Analysis**

As described above, noneof our executive officers or senior advisors will be entitled to receivecompensation prior to such time, if any, that a business combination iseffectuated. Accordingly, we have not made any specific disclosures in thisItem 11 in respect of executive compensation.

At such time as we areable to consummate a business combination, our Compensation Committee willconsider and adopt appropriate executive compensation policies in light of suchfactors as it deems appropriate.

**Compensation Committee Report**

We have reviewed anddiscussed with management the Company’s Compensation Discussion and Analysis asof and for the period from our inception on September 8, 2006 to June 30,2007.

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Basedon the reviews and discussions referred to above, we have recommended to theBoard of Directors that Compensation Discussion and Analysis referred to abovebe included in the Company’s Transition Report on Form 10-K for theperiod from September 8, 2006 to June 30, 2007.

Mr. Marcelo D.Guiscardo (Chairman)Mr. Jorge E. EstradaMr. John C.G. O’LearyMr. John Russell

**ITEM12.**         SECURITY OWNERSHIP ANDCERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Thefollowing table sets forth information regarding the beneficial ownership ofour common stock as of September 20, 2007, by:

·       eachperson known by us to be the beneficial owner of more than 5% of ouroutstanding shares of common stock;

·       eachof our officers and directors; and

·       allour officers and directors as a group.

Unlessotherwise indicated, we believe that all persons named in the table have solevoting and investment power with respect to all shares of common stockbeneficially owned by them.

| **Name and Address of Beneficial Owners** (1) | ** ** | ** ** | ** ** | **Number of  Shares(2)** | ** ** | **Percentage of  Common  Stock ** | ** ** |
|-----------------------------------------------------------------------------|------------|------------|------------|-------------------------------|------------|---------------------------------------------|------------|
| Paul A. Bragg(4)                                                            |       | 2,205,000  |       |                          | 5.2        | %                                           |       |
| Christopher G.  DeClaire(5)                                                 |       | 1,134,000  |       |                          | 2.7        | %                                           |       |
| Jorge E. Estrada M.(6)                                                      |       | 1,134,000  |       |                          | 2.7        | %                                           |       |
| Marcelo D. Guiscardo(7)                                                     |       | 1,134,000  |       |                          | 2.7        | %                                           |       |
| John C.G. O’Leary(8)                                                   |       | 1,134,000  |       |                          | 2.7        | %                                           |       |
| John Russell(9)                                                             |       | 1,134,000  |       |                          | 2.7        | %                                           |       |
| Sapling, LLC(10)                                                            |       | 1,941,574  |       |                          | 4.6        | %                                           |       |
| Fir Tree Recovery Master  Fund, LP(10)                                      |       | 433,426    |       |                          | 1.0        | %                                           |       |
| HBK Investments L.P.(11)                                                    |       | 2,555,800  |       |                          | 6.0        | %                                           |       |
| All Directors and Additional Officers as a Group (6 persons)           |       | 7,875,000  |       |                          | 18.4       | %                                           |       |

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       (1) Unless otherwise indicated, the business address of each of thestockholders is 777 Post Oak Blvd., Suite 610, Houston, Texas 77056.

       (2) Unless otherwise indicated, all ownership is direct beneficialownership.

       (3) Assumes only the sale of 34,500,000 units in our Public Offering andthe sale of 375,000 units in the private placement, but not the exercise of the34,875,000 warrants comprising such units and the 3,000,000 founder warrants.

       (4) Paul A. Bragg is our Chairman and Chief Executive Officer. Forestate planning purposes, Mr. Bragg has transferred 750,000 of his sharesof common stock to the Paul A. Bragg 2007 Annuity Trust, a grantorretained annuity trust for the benefit of family and friends.

       (5) Christopher G. DeClaire is our Chief Financial Officer, VicePresident, Secretary, Treasurer and a Director.

       (6) Jorge E. Estrada M. is a Director of the Company.

       (7) Marcelo D. Guiscardo is a Director of the Company.

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       (8) John C.G. O’Leary is a Director of the Company.

       (9) John Russell is a Director of the Company.

(10) Based on information contained in a Statement on Schedule 13G filedby Sapling LLC, a Delaware limited liability company (“Sapling”) and by FirTree Recovery Master Fund, L.P., a Cayman Islands exempted limited partnership(“Fir Tree Recovery”) on July 30, 2007. Sapling may direct the vote anddisposition of the 1,941,574 shares of common stock, and Fir Tree Recovery maydirect the vote and disposition of 433,426 shares of common stock. The addressof Sapling LLC is 505 Fifth Avenue, 23rd Floor, New York, New York 10017 andthe address of Fir Tree Recovery is c/o Admiral Administration Ltd., AdmiralFinancial Center, 5th Floor, 90 Fort Street, Box 32021 SMB, Grand Cayman, CaymanIslands. Fir Tree, Inc., a New York corporation, is the investment managerof Sapling and Fir Tree Recovery and as such possesses investment discretionover the portfolios of Sapling and Fir Tree Recovery.

(11) Based on information contained in a Statement on Schedule 13G filedby HBK Investments L.P., a Delaware limited partnership (“HBK Investments”), byHBK Services LLC, a Delaware limited liability company (“HBK Services”), by HBKPartners II L.P., a Delaware limited partnership (“HBK Partners”), by HBKManagement LLC, a Delaware limited liability company (“HBK Management”), and byHBK Master Fund L.P., a Cayman Islands limited partnership (“HBK Master Fund”)on September 14, 2007. The above entities have the shared power to vote orto direct the disposition of 2,555,800 shares. The address of HBK Investments,HBK Services, HBK Partners and HBK Management is 300 Crescent Court, Suite 700,Dallas, Texas 75201 and the address of HBK Master Fund is c/o HBK Services, 300Crescent Court, Suite 700, Dallas, Texas 75201. HBK Investments hasdelegated discretion to vote and dispose of the securities to HBK Services. HBKServices may, from time to time, delegate discretion to vote and dispose ofcertain of the securities to HBK New York LLC, a Delaware limited liabilitycompany, HBK Virginia LLC, a Delaware limited liability company, HBK EuropeManagement LLP, a limited liability partnership organized under the laws of theUnited Kingdom, and/or HBK Hong Kong Ltd., a corporation organized under thelaws of Hong Kong (collectively, the “Subadvisors”). Each of HBK Services andthe Subadvisors is under common control with HBK Investments.

On May 30, 2007, our founding stockholderspurchased in a private placement transaction a combined total of 375,000 unitsand 3,000,000 warrants from us at a price of $8.00 per unit and $1.00 perwarrant. These units and warrants, which we collectively refer to as thefounder securities, cannot be sold or transferred by the founding stockholderswho initially purchase these securities from us until one year after theconsummation of a business combination, except in certain limitedcircumstances. The $6,000,000 purchase price of the founder securities wasadded to the proceeds of this offering to be held in the trust account pendingour completion of one or more business combinations. If we do not complete oneor more business combinations that meet the criteria described in thisTransition Report, then the $6,000,000 purchase price of the founder securitieswill become part of the liquidation amount distributed to our publicstockholders from our trust account and the founder securities will becomeworthless.

All of the sharesof common stock outstanding prior to the effective date of the registrationstatement, including shares of common stock included in the founder units, havebeen placed in escrow with Continental Stock Transfer & Trust Company,as escrow agent, until the earliest of:

·       oneyear following the consummation of a business combination; and

·       theconsummation of a liquidation, merger, stock exchange or other similartransaction which results in all of our stockholders having the right toexchange their shares of common stock for cash, securities or other propertysubsequent to our consummating a business combination with a targetacquisition.

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During the escrow period, the holders of these sharesof common stock will not be able to sell or transfer their securities except incertain limited circumstances (such as transfers to relatives and trusts forestate planning purposes, while remaining in escrow), but will retain all otherrights as our stockholders, including, without limitation, the right to votetheir shares of common stock and the right to receive cash dividends, ifdeclared. If dividends are declared and payable in shares of common stock, suchdividends will also be placed in escrow. If we are unable to effect a businesscombination and liquidate, none of our founding stockholders will receive anyportion of the liquidation proceeds with respect to common stock owned by themprior to May 30, 2007 or purchased in the private placement, including thecommon stock underlying the founder warrants.

Each of Messrs: Bragg andDeClaire is deemed to be our “parent” and “promoter,” as these terms aredefined under the Federal securities laws.

**ITEM 13.**         CERTAINRELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

On September 8, 2006, we issued 7,500,000 sharesof our common stock to certain affiliates listed below for an aggregate amountof $25,000 in cash, at a purchase price of approximately $0.003 per share (asadjusted for the effect of the stock dividends).

On May 30, 2007, our founding stockholderspurchased in a private placement transaction pursuant to Regulation Dunder the Securities Act, a combined total of 375,000 units from us at a priceof $8.00 per unit and 3,000,000 warrants from us at a price of $1.00 perwarrant. These units and warrants, which we collectively refer to as thefounder securities, may not be sold or transferred by the purchaser until thecompletion of our initial business combination. The $6,000,000 purchase priceof the founder securities was added to the net proceeds of our initial publicoffering held in the trust account pending our completion of one or morebusiness combinations. If we do not complete one or more business combinationsthat meet the criteria described in Transition Report, then the $6,000,000purchase price of the founder securities will become part of the liquidationamount distributed to our public stockholders from our trust account and thefounder securities will become worthless.

The holders of a majority of all of (i) theshares of common stock owned or held by the founding stockholders; and(ii) the shares of common stock issuable upon exercise of the founder warrantsand the warrants underlying the founder units will be entitled to make up totwo demands that we register these securities pursuant to an agreement signedon May 24, 2007. Such holders may elect to exercise these registrationrights at any time commencing on or after the date on which these securitiesare released from escrow. In addition, these stockholders have certain“piggy-back” registration rights with respect to registration statements filedsubsequent to the date on which these securities are released from escrow. Wewill bear the expenses incurred in connection with the filing of any suchregistration statements.

Because the founder units and founder warrants sold inthe Regulation D private placement were originally issued pursuant to anexemption from registration requirements under the federal securities laws, theholders of the warrants purchased in the Regulation D private placementwill be able to exercise their warrants even if, at the time of exercise, aprospectus relating to the common stock issuable upon exercise of such warrantsis not current.

Our officers anddirectors advanced an aggregate of $275,000 to us, on a non-interest bearingbasis, for payment of offering expenses on our behalf. The remaining balance of$225,000 of these advances at June 30, 2007 was repaid in July 2007.

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We will reimburse our officers and directors for anyreasonable out-of-pocket business expenses incurred by them in connection withcertain activities on our behalf such as identifying and investigating possibletarget acquisitions and business combinations. There is no limit on the amountof out-of-pocket expenses reimbursable by us, which will be reviewed only byour board or a court of competent jurisdiction if such reimbursement ischallenged. Accountable out-of-pocket expenses incurred by our officers anddirectors will not be repaid out of proceeds held in trust until these proceedsare released to us upon the completion of a business combination, providedthere are sufficient funds available for reimbursement after such consummation.

Other than the reimbursable out-of-pocket expensespayable to our officers and directors, no compensation or fees of any kind,including finders, consulting fees or other similar compensation, will be paidto any of our founding stockholders, officers or directors who owned our commonstock prior to our initial public offering, or to any of their respectiveaffiliates prior to or with respect to a business combination.

Our founding stockholders will not receivereimbursement for any out-of-pocket expenses incurred by them to the extentthat such expenses exceed the amount held outside of the trust account unlessthe business combination is consummated and there are sufficient fundsavailable for reimbursement after such consummation. The financial interest ofsuch persons could influence their motivation in selecting a target businessand thus, there may be a conflict of interest when determining whether aparticular business combination is in the stockholders’ best interest.

After the consummation of a business combination, ifany, to the extent our management remains as officers of the resultingbusiness, some of our officers and directors may enter into employmentagreements, the terms of which shall be negotiated and which we expect to becomparable to employment agreements with other similarly-situated companies inthe oilfield services industries. Further, after the consummation of a businesscombination, if any, to the extent our directors remain as directors of theresulting business, we anticipate that they will receive compensationcomparable to directors at other similarly-situated companies in the oilfieldservices industry.

All ongoing and futuretransactions between us and any of our officers and directors or theirrespective affiliates, including loans by our officers and directors, will beon terms believed by us to be no less favorable than are available fromunaffiliated third parties. Such transactions or loans, including anyforgiveness of loans, will require prior approval by a majority of ourdisinterested “independent” directors or the members of our board who do nothave an interest in the transaction, in either case who had access, at ourexpense, to our attorneys or independent legal counsel. We will not enter intoany such transaction unless our disinterested “independent” directors determinethat the terms of such transaction are no less favorable to us than those thatwould be available to us with respect to such a transaction from unaffiliatedthird parties.

**DirectorIndependence**

Our board of directors hasdetermined that Messrs. Estrada, Guiscardo, O’Leary and Russell are “independentdirectors” within the meaning of Rule 121(A) of the American StockExchange Company Guide and Rule 10A-3 promulgated under theSecurities and Exchange Act of 1934, as amended.

**ITEM 14.**         PRINCIPALACCOUNTANT FEES AND SERVICES

*Audit Fees*

During the period from ourinception on September 8, 2006 to June 30, 2007, we paid, or expectto pay, our principal accountant $95,000 for the services they performedthroughout the period, including the financial statements issued in connectionwith our initial public offering, the financial statements included 

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in theCurrent Reports on Form 8-K filed with the Securities and ExchangeCommission on June 4, 2007, and the June 30, 2007 audit andTransition Report on Form 10-K.

*Audit-Related Fees*

During the period from ourinception on September 8, 2006 to June 30, 2007, our principalaccountant did not render assurance and related services reasonably related tothe performance of the audit or review of financial statements.

*Tax Fees*

During the period from ourinception on September 8, 2006 to June 30, 2007, we paid or expect topay, our principal accountant $12,000 for tax compliance services.

*All Other Fees*

During the period from our inception on September 8,2006 to June 30, 2007, there were no fees billed for products and servicesprovided by the principal accountant other than those set forth above.

To safeguard the continuedindependence of the independent auditor, our Audit Committee adopted a policythat provides that independent auditors are only permitted to provide servicesthat have been pre-approved by the Audit Committee. Pursuant to applicableprovisions of the Securities Exchange Act of 1934, as amended, the AuditCommittee may delegate approval authority to the Chairman of the AuditCommittee.

**PART IV**

**ITEM 15.**         EXHIBITSAND FINANCIAL STATEMENT SCHEDULES

(a)   List ofdocuments filed as part of this report

1.                *Financial Statements.*   The followingFinancial Statements and Report of Independent Registered Public AccountingFirm are included in this Transition Report on Form 10-K. 
|                                                          | ** ** | **Page** | ** ** |
|----------------------------------------------------------|------------|----------|------------|
| Report of Independent  Registered Public Accounting Firm |       | F-2      |       |
| Balance Sheet                                            |       | F-3      |       |
| Statement of Operations                                  |       | F-4      |       |
| Statement of Stockholders’  Equity                  |       | F-5      |       |
| Statement of Cash Flows                                  |       | F-6      |       |
| Notes  to Financial Statements                           |       | F-7      |       |

 

2.                *Financial Statement Schedules.*   Theseschedules are omitted as the required information is inapplicable or theinformation is presented in the financial statements or related notes. 

3.                *Exhibits.*   We hereby file as part of this TransitionReport on Form 10-K the Exhibits listed in the attachedExhibit Index.

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**SIGNATURES**

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.
|        | VANTAGE ENERGY SERVICES, INC. |
|--------|-------------------------------|
|   | By:                           | /s/ PAUL A BRAGG |
|   | * *                      | Name: Paul A.  Bragg |
|   | * *                      | Title:*Chairman and Chief  Executive Officer* |

 

Pursuantto the requirements of the Securities Act, this Registration Statement has beensigned by the following persons in the capacities and on the dates indicated. 
|                                   | **Name** | ** **                                                                         | ** ** | ** **              | **Position** | ** ** | ** ** | ** ** | **Date** | ** ** |
|-----------------------------------|----------|------------------------------------------------------------------------------------|------------|-------------------------|--------------|------------|------------|------------|----------|------------|
| /s/ PAUL  A BRAGG            |     | Chairman and  Chief Executive Officer                                              |       | September 26, 2007 |
| Paul  A. Bragg                    |     | (Principal Executive Officer)                                                      |       |                    |
| /s/ CHRISTOPHER  G. DECLAIRE |     | Chief Financial  Officer Vice President,                                           |       | September 26, 2007 |
| Christopher  G. DeClaire          |     | Secretary, Treasurer,  and Director   (Principal Financial and Accounting Officer) |       |                    |
| /s/ JORGE  E ESTRADA M       |     | Director                                                                           |       | September 26, 2007 |
| Jorge  E. Estrada M.              |     |                                                                               |       |                    |
| /s/ MARCELO  D. GUISCARDO    |     | Director                                                                           |       | September 26, 2007 |
| Marcelo  D. Guiscardo             |     |                                                                               |       |                    |
| /s/ JOHN  C.G. O’LEARY  |     | Director                                                                           |       | September 26, 2007 |
| John  C.G. O’Leary           |     |                                                                               |       |                    |
| /s/ JOHN  RUSSELL            |     | Director                                                                           |       | September 26, 2007 |
| John Russell                      |     |                                                                               |       |                    |

 

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| Exhibit No. | ** ** | **Description**                                                                                                                                              |
|------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.1              |       | Form of Underwriting Agreement.(6)                                                                                                                      |
| 3.1              |       | Certificate of Incorporation.(1)                                                                                                                             |
| 3.2              |       | Form of Amended and Restated Certificate of  Incorporation.(6)                                                                                          |
| 3.3              |       | By-laws.(1)                                                                                                                                                  |
| 4.1              |       | Specimen Unit Certificate.(5)                                                                                                                                |
| 4.2              |       | Specimen Common Stock Certificate.(5)                                                                                                                        |
| 4.3              |       | Specimen Warrant Certificate.(5)                                                                                                                             |
| 4.4              |       | Form of Unit Purchase Agreement to be granted  to Deutsche Bank Securities Inc.(2)                                                                      |
| 4.5              |       | Form of Warrant Agreement between Continental  Stock Transfer & Trust Company and the Registrant.(5)                                           |
| 5.1              |       | Opinion of Ellenoff Grossman & Schole  LLP.(7)                                                                                                      |
| 10.1             |       | Form of Investment Management Trust Agreement  between Continental Stock Transfer & Trust Company and the  Registrant.(5)                 |
| 10.2             |       | Form of Securities Escrow Agreement among the  Registrant, Continental Stock Transfer & Trust Company, and the  Founding Stockholders.(5) |
| 10.3             |       | Form of Registration Rights Agreement among the  Registrant and the Founding Stockholders.(5)                                                           |
| 10.4             |       | Letter Agreement by Paul A. Bragg.(6)                                                                                                                        |
| 10.5             |       | Letter Agreement by Christopher G. DeClaire.(6)                                                                                                              |
| 10.6             |       | Letter Agreement by Jorge E. Estrada M.(6)                                                                                                                   |
| 10.7             |       | Letter Agreement by Marcelo D. Guiscardo.(6)                                                                                                                 |
| 10.8             |       | Letter Agreement by John C.G. O’Leary.(6)                                                                                                               |
| 10.9             |       | Letter Agreement by John Russell.(6)                                                                                                                         |
| 10.10            |       | Lease Agreement between the Registrant and Gateway  Ridgecrest, Inc.(5)                                                                                 |
| 10.11            |       | Amended and Restated Subscription Agreement between  the Registrant and the Founding Stockholders.(3)                                                        |
| 10.12            |       | Promissory Note, dated October 31, 2006, issued  to Paul A. Bragg in the amount of $50,000.(3)                                                          |
| 10.13            |       | Promissory Note, dated October 31, 2006, issued  to Paul A. Bragg in the amount of $21,000.(3)                                                          |
| 10.14            |       | Promissory Note, dated October 31, 2006, issued  to Christopher G. DeClaire in the amount of $10,800.(3)                                                |
| 10.15            |       | Promissory Note, dated October 31, 2006, issued  to Jorge E. Estrada M. in the amount of  $10,800.(3)                                                   |
| 10.16            |       | Promissory Note, dated October 31, 2006, issued  to Marcelo D. Guiscardo in the amount of  $10,800.(3)                                                  |
| 10.17            |       | Promissory Note, dated October 31, 2006, issued  to John C.G. O’Leary in the amount of  $10,800.(3)                                                |
| 10.18            |       | Promissory Note, dated October 31, 2006, issued  to John Russell in the amount of  $10,800.(3)                                                          |
| 10.19            |       | Promissory Note, dated January 31, 2007, issued  to Paul A. Bragg in the amount of $21,000.(3)                                                          |
| 10.20            |       | Promissory Note, dated January 31, 2007, issued  to Christopher G. DeClaire in the amount of $10,800.(3)                                                |
| 10.21            |       | Promissory Note, dated January 31, 2007, issued  to Jorge E. Estrada M. in the amount of  $10,800.(3)                                                   |
| 10.22            |       | Promissory Note, dated January 31, 2007, issued  to Marcelo D. Guiscardo in the amount of  $10,800.(3)                                                  |

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| 10.23 |   | Promissory Note, dated January 31, 2007, issued  to John C.G. O’Leary in the amount of  $10,800.(3)               |
|-------|--------|-----------------------------------------------------------------------------------------------------------------------------|
| 10.24 |   | Promissory Note, dated January 31, 2007, issued  to John Russell in the amount of $10,800.(3)                          |
| 10.25 |   | Employment, non-competition and confidentiality  agreement between Paul A. Bragg and Pride International, Inc.(5) |
| 10.26 |   | Charter of the Audit Committee of the Board of  Directors(5)                                                                |
| 10.27 |   | Charter of the Nominating Committee of the Board of  Directors(5)                                                           |
| 10.28 |   | Promissory Note, dated March 26, 2007, issued  to Paul A. Bragg in the amount of $21,000.(6)                           |
| 10.29 |   | Promissory Note, dated March 26, 2007, issued  to Christopher G. DeClaire in the amount of $10,800.(6)                 |
| 10.30 |   | Promissory Note, dated March 26, 2007, issued  to Jorge E. Estrada M. in the amount of $10,800.(6)                     |
| 10.31 |   | Promissory Note, dated March 26, 2007, issued  to Marcelo D. Guiscardo in the amount of  $10,800.(6)                   |
| 10.32 |   | Promissory Note, dated March 26, 2007, issued  to John C.G. O’Leary in the amount of $10,800.(6)                  |
| 10.33 |   | Promissory Note, dated March 26, 2007, issued  to John Russell in the amount of $10,800.(6)                            |
| 14    |   | Code of Business Conduct and Ethics(5)                                                                                      |
| 31.1  |   | Certification of CEO Pursuant to Section 302*                                                                          |
| 31.2  |   | Certification of Principal Financial and Accounting  Officer Pursuant to Section 302*                                  |
| 32.1  |   | Certification of CEO Pursuant to Section 906*                                                                          |
| 32.2  |   | Certification of Principal Financial and Accounting  Officer Pursuant to Section 906*                                  |

----

*                    Filedherewith.

(1)          Incorporated byreference to the corresponding exhibit filed with the Registration Statement onForm S-1 (File No. 333-138565) with the SEC on November 9,2006.

(2)          Incorporated byreference to the corresponding exhibit filed with Amendment No. 1 to theRegistration Statement on Form S-1 (File No. 333-138565)with the SEC on February 8, 2007.

(3)          Incorporated byreference to the corresponding exhibit filed with Amendment No. 2 to theRegistration Statement on Form S-1 (File No. 333-138565)with the SEC on March 23, 2007.

(4)          Incorporated byreference to the corresponding exhibit filed with Amendment No. 3 to theRegistration Statement on Form S-1 (File No. 333-138565)with the SEC on April 20, 2007.

(5)          Incorporated byreference to the corresponding exhibit filed with Amendment No. 4 to theRegistration Statement on Form S-1 (File No. 333-138565)with the SEC on May 7, 2007.

(6)          Incorporated byreference to the corresponding exhibit filed with Amendment No. 5 to theRegistration Statement on Form S-1 (File No. 333-138565)with the SEC on May 14, 2007.

(7)          Incorporated byreference to the corresponding exhibit filed with Amendment No. 7 to theRegistration Statement on Form S-1 (File No. 333-138565)with the SEC on May 22, 2007.

61

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**VANTAGE ENERGYSERVICES, INC.(A Corporation in the Development Stage)**

**FINANCIALSTATEMENTS**

**CONTENTS**
|                                                          | ** ** | **Page** | ** ** |
|----------------------------------------------------------|------------|----------|------------|
| Report of Independent  Registered Public Accounting Firm |       | F-2      |       |
| Balance Sheet                                            |       | F-3      |       |
| Statement of Operations                                  |       | F-4      |       |
| Statement of Stockholders’  Equity                  |       | F-5      |       |
| Statement of Cash Flows                                  |       | F-6      |       |
| Notes  to Financial Statements                           |       | F-7      |       |

 

F-1

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**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

Board of Directors and StockholdersVantage Energy Services, Inc.Houston, Texas

We have audited the accompanying balance sheet ofVantage Energy Services, Inc. (a corporation in the development stage) asof June 30, 2007, and the related statements of operations, stockholders’equity and cash flows for the period from inception (September 8, 2006) toJune 30, 2007. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatements. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.

In our opinion, thefinancial statements referred to above present fairly, in all materialrespects, the financial position of Vantage Energy Services, Inc. as of June 30,2007, and the results of its operations and its cash flows for the period frominception (September 8, 2006) to June 30, 2007, in conformity withaccounting principles generally accepted in the United States of America.

UHY LLP

Houston, TexasSeptember 26, 2007

F-2

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**VANTAGEENERGY SERVICES, INC.**

**(A Corporation in the Development Stage)**

**BALANCE SHEET**

**JUNE 30, 2007**

| **ASSETS**                                                                                                                                                                 | ** ** | ** **  | ** **  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|-------------|
| CURRENT ASSETS                                                                                                                                                             |       |        |        |
| Cash and cash  equivalents                                                                                                                                                 |       | $           | 1,512,642   |   |
| Restricted cash held  in trust account                                                                                                                                     |       | 269,960,000 |        |
| Prepaid expenses and  other assets                                                                                                                                         |       | 183,184     |        |
| Total Current Assets                                                                                                                                                       |       | 271,655,826 |        |
| Property and equipment, net of accumulated depreciation of $1,423                                                                                                          |       | 78,266      |        |
| **TOTAL ASSETS**                                                                                                                                                           |       | $           | 271,734,092 |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                              | ** ** | ** **  | ** **  |
| CURRENT LIABILITIES                                                                                                                                                        |       |        |        |
| Accounts payable                                                                                                                                                           |       | $           | 212,606     |   |
| Accrued liabilities                                                                                                                                                        |       | 413,481     |        |
| Deferred underwriters  fee                                                                                                                                                 |       | 8,280,000   |        |
| Notes  payable—stockholders                                                                                                                                           |       | 225,000     |        |
| Total Current  Liabilities                                                                                                                                                 |       | 9,131,087   |        |
| Common stock, subject  to possible redemption, 10,346,550 shares at redemption value (Note 1)                                                                         |       | 76,753,407  |        |
| Commitments and contingencies                                                                                                                                              |       |        |        |
| STOCKHOLDERS’ EQUITY                                                                                                                                                  |       |        |        |
| Preferred stock, $0.001 par value, 1,000,000 shares authorized, none  issued or  outstanding                                                                               |       | —      |        |
| Common stock, $0.001 par value, 82,750,000 shares authorized,  42,375,000 shares issued and outstanding (which includes 10,346,550 shares  subject to possible redemption) |       | 42,375      |        |
| Additional paid-in capital                                                                                                                                                 |       | 185,159,318 |        |
| Retained earnings accumulated during the development stage                                                                                                                 |       | 647,905     |        |
| Total Stockholders’ Equity                                                                                                                                            |       | 185,849,598 |        |
| **TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                        |       | $           | 271,734,092 |   |

 

See notes to financial statements.

F-3

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**VANTAGEENERGY SERVICES, INC.(A Corporation in the Development Stage)**

**STATEMENT OF OPERATIONS FOR THE PERIOD FROM INCEPTION (SEPTEMBER 8, 2006) TO JUNE 30, 2007**

| REVENUE                                             |   | $          | —  |   |
|-----------------------------------------------------|--------|------------|---------|--------|
| GENERAL &  ADMINISTRATIVE EXPENSES         |   | 145,534    |    |
| LOSS FROM OPERATIONS                                |   | (145,534   | )       |
| INTEREST INCOME                                     |   | 1,128,805  |    |
| INCOME BEFORE INCOME  TAXES                         |   | 983,271    |    |
| PROVISION FOR INCOME  TAXES                         |   | 335,366    |    |
| NET INCOME                                          |   | $          | 647,905 |   |
| Weighted-Average Number of Shares Outstanding— |   |       |    |
| Basic                                               |   | 11,164,831 |    |
| Diluted                                             |   | 11,937,256 |    |
| Net Income Per Share—                          |   |       |    |
| Basic                                               |   | $          | 0.06    |   |
| Diluted                                             |   | $          | 0.05    |   |

 

See notes to financial statements.

F-4

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**VANTAGE ENERGYSERVICES, INC. (A Corporation in the DevelopmentStage)**

**STATEMENT OFSTOCKHOLDERS’ EQUITY**

**FOR THE PERIOD FROM INCEPTION (SEPTEMBER 8, 2006)TO JUNE 30, 2007**

| ** **                                                                     | ** ** | **Common Stock** | ** ** | **Additional  Paid-in**                           | ** ** | **Retained  Earnings  Accumulated  During the  Development **                                       | ** ** | **Total  Stockholders’** | ** **                                                    |
|--------------------------------------------------------------------------------|------------|-----------------------|------------|---------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------|------------|-------------------------------|---------------------------------------------------------------|
| ** **                                                                     | ** ** | **Shares**            | ** ** | **Amount**                                        | ** ** | **Capital**                                                                                                   | ** ** | **Stage**                     | ** **                                                    | **Equity** | ** ** |
| Balance, September 8, 2006                                                |       | —                |       | $       — |       | $                 — |       |                          | $         — |   |   | $                 — |   |
| Issuance of common  stock to initial stockholders                              |       | 7,500,000             |       | 7,500                                             |       | 17,500                                                                                                        |       |                          | —                                                        |   |   | 25,000 |   |
| Issuance of common  stock and warrants in private placement               |       | 375,000               |       | 375                                               |       | 5,999,625                                                                                                     |       |                          | —                                                        |   |   | 6,000,000 |   |
| Issuance of common  stock and warrants to public stockholders             |       | 34,500,000            |       | 34,500                                            |       | 179,142,093                                                                                                   |       |                          | —                                                        |   |   | 179,176,593 |   |
| Issuance of option to  purchase common stock and warrants to underwriters |       | —                |       | —                                            |       | 100                                                                                                           |       |                          | —                                                        |   |   | 100 |   |
| Net income                                                                     |       | —                |       | —                                            |       | —                                                                                                        |       |                          | 647,905                                                       |   |   | 647,905 |   |
| Balance, June 30, 2007                                                    |       | 42,375,000            |       | $ 42,375                                     |       | $ 185,159,318                                                                                            |       |                          | $ 647,905                                                |   |   | $ 185,849,598 |   |

 

See notes to financial statements.

F-5

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**VANTAGE ENERGYSERVICES, INC. (A Corporation in the DevelopmentStage)**

**STATEMENT OF CASHFLOWS**

**FOR THE PERIOD FROM INCEPTION (SEPTEMBER 8, 2006)TO JUNE 30, 2007**

| CASH FLOWS FROM OPERATING ACTIVITIES                                                    |   |         |      |
|-----------------------------------------------------------------------------------------|--------|--------------|-----------|
| Net income                                                                              |   | $            | 647,905   |   |
| Adjustments to reconcile net income to net cash provided by operating  activities:      |   |         |      |
| Depreciation expense                                                                    |   | 1,423        |      |
| Changes in operating assets and liabilities:                                            |   |         |      |
| Prepaid expenses and  other assets                                                      |   | (183,184     | )         |
| Accounts payable and  accrued liabilities                                               |   | 626, 087     |      |
| NET CASH PROVIDED BY OPERATING ACTIVITIES                                               |   | 1,092,231    |      |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                    |   |         |      |
| Purchases of property and equipment                                                     |   | (79,689      | )         |
| Restricted cash                                                                         |   | (269,960,000 | )         |
| NET CASH USED IN  INVESTING ACTIVITIES                                                  |   | (270,039,689 | )         |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                    |   |         |      |
| Proceeds from issuance of common stock to initial stockholders                          |   | 25,000       |      |
| Proceeds from issuance of common stock and warrants in private  placement               |   | 6,000,000    |      |
| Proceeds from issuance of common stock and warrants to public  stockholders             |   | 255,930,000  |      |
| Proceeds from issuance of option to purchase common stock and  warrants to underwriters |   | 100          |      |
| Proceeds from notes payable-stockholders                                                |   | 275,000      |      |
| Repayment of notes payable-stockholders                                                 |   | (50,000      | )         |
| Proceeds from deferred underwriters fee                                                 |   | 8,280,000    |      |
| NET CASH PROVIDED BY  FINANCING ACTIVITIES                                              |   | 270,460,100  |      |
| NET INCREASE IN CASH  AND CASH EQUIVALENTS                                              |   | 1,512,642    |      |
| CASH AND CASH  EQUIVALENTS—beginning of period                                     |   | —       |      |
| CASH AND CASH EQUIVALENTS—end of period                                            |   | $            | 1,512,642 |   |

 

See notes to financial statements.

F-6

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**VANTAGE ENERGYSERVICES, INC.**

**(ACorporation in the Development Stage)**

**NOTES TO FINANCIAL STATEMENTS**

**1.**                 Organization

Vantage Energy Services, Inc.(the “Company”) is a blank check company organized under the laws of theState of Delaware on September 8, 2006. We were formed to acquire, througha merger, capital stock exchange, asset or stock acquisition, exchangeableshare transaction, joint venture or other similar business combination, one ormore businesses in the oilfield services industry.

The Company isconsidered to be a development stage company and as such the financialstatements presented herein are presented in accordance with Statement ofFinancial Accounting Standards (“SFAS”) No. 7. On June 30, 2007, theBoard of Directors of the Registrant passed a resolution to provide that theCompany’s fiscal year end be changed from June 30 to December 31.

On February 6,2007 and May 23, 2007, the Company’s Board of Directors authorized andrecorded a one-for-one and a 0.2-for-one stock split, respectively. Thetotal number of authorized common stock shares and par value were unchanged bythis action. Accordingly, all references to the number of shares and per shareamounts in the financial statements have been presented on a post-split basis.

On May 30, 2007,the Company consummated an initial public offering (“Public Offering”)of 34,500,000 units, (including over-allotment units) pursuant to a Registration Statement onForm S-1 filed with the Securities and Exchange Commission. Eachunit consists of one share of common Stock, $0.001 par value per share and onewarrant to purchase one share of common stock at an exercise price of $6.00 pershare. Each warrant will become exercisable on the later of our completion of abusiness combination or May 24, 2008, and will expire on May 24,2011.

Preceding consummationof the Public Offering certain officers, directors and initial shareholderspurchased a combined total of 375,000 units and 3,000,000 warrants at theprices of $8.00 per unit and $1.00 per warrant for a total of $6,000,000 fromthe Company. We refer to these 375,000 units and 3,000,000 warrants as theFounding Securities. The purchase price of the Founding Securities is includedin the proceeds held in trust pending our completion of one or more businesscombinations. If we do not complete one or more business combinations that meetthe criteria described in our amended and restated certificate ofincorporation, then the$6,000,000 purchase price will become part of the amount payable to our publicshareholders upon the liquidation of our trust and the Founding Securities willexpire worthless.

Upon the closing of thePublic Offering on May 30, 2007, net proceeds of $269,960,000, afterpayment of certain amounts to the underwriter and offering related costs, wasplaced in a trust account (“Trust Account”) and is invested in money marketfunds meeting certain conditions under Rule 2a-7 promulgated underthe Investment Company Act of 1940 until the earlier of (i) theconsummation of a first Business Combination or (ii) the liquidation ofthe Trust Account upon the cessation of our corporate existence on May 24,2009. The money market funds have been accounted for as trading securities,which are held at their market value. The Trust Agreement provides that up to$2,250,000 of the interest earned on the trust account may be used to satisfyour operating expenses. The remaining net proceeds (not held in the TrustAccount) may be used to pay for business, legal and accounting due diligence onprospective acquisitions and continuing general and administrative expenses.

Management has broaddiscretion with respect to the specific application of the net proceeds of thePublic Offering, although substantially all of the net proceeds of the PublicOffering are intended to be generally applied toward consummating a businesscombination with an operating business in the oilfield 

F-7

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services industry (“Business Combination”). Furthermore, there is noassurance that the Company will be able to successfully effect a Business Combination.The Company, after signing a definitive agreement for the acquisition of atarget business, will submit such transaction for stockholder approval. In theevent that stockholders owning 30% or more of the shares sold in the PublicOffering vote against the Business Combination and exercise their conversionrights described below, the Business Combination will not be consummated. Allof the Company’s stockholders prior to the Public Offering, including all ofthe officers and directors of the Company (“Initial Stockholders”), have agreedto vote their founding shares of common stock in accordance with the vote ofthe majority in interest of all other stockholders of the Company (“PublicStockholders”) with respect to any Business Combination. After consummation ofa Business Combination, these voting safeguards will no longer be applicable.

With respect to aBusiness Combination which is approved and consummated, any Public Stockholderwho votes against the Business Combination may demand that the Company converthis or her shares. The per share conversion price will equal the amount in theTrust Account, net of taxes payable, calculated as of two business days priorto the consummation of the proposed Business Combination, divided by the numberof shares of common stock held by Public Stockholders at the consummation ofthe Public Offering. Accordingly, Public Stockholders holding 29.99% of theaggregate number of shares owned by all Public Stockholders may seek conversionof their shares in the event of a Business Combination. Such PublicStockholders are entitled to receive their per share interest in the TrustAccount computed without regard to the shares held by Initial Stockholders.Accordingly, a portion of the net proceeds from the Public Offering (29.99% ofthe amount held in the Trust Fund), is subject to possible conversion. In thisrespect, $76,753,407 has been classified as common stock subject to possibleredemption. In addition, such stockholders would also be entitled to a portionof the deferred portion of the underwriters’ discount.

The Company’s Amended and Restated Certificate of Incorporationprovides for the liquidation of the Trust Account in the event that the Companydoes not consummate a Business Combination by May 24, 2009.

**2.**                 Summary of Significant AccountingPolicies

*Cash and Cash Equivalents:*   Includes deposits with financialinstitutions as well as short-term money market instruments with maturities ofthree months or less when purchased.

*Restricted Cash:**  *Consists of net proceeds from the PublicOffering placed in a trust account, invested in money market funds as describedin Note 1.

*Property and Equipment:**  *Consists of furniture and fixtures andcomputer equipment, depreciated, upon placement in service, over estimateduseful lives ranging from three to seven years on a straight-line basis.

*Concentration of Credit Risk:*   Financial instruments thatpotentially subject the Company to a significant concentration of credit riskconsist primarily of cash and cash equivalents and restricted cash. The Companymaintains deposits in federally insured financial institutions in excess offederally insured limits. The Company’s restricted cash is invested in moneymarket funds.

*Use of Estimates:*   The preparation of financialstatements in accordance with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and the disclosureof contingent assets and liabilities at the date of the financial statementsand the reported amounts of revenue and expenses during the reporting period.Actual results could differ from those estimates.

*Income Taxes:*   Deferred income tax assets andliabilities are computed for differences between the financial statement andtax basis of assets and liabilities that will result in future taxable ordeductible amounts and are based on enacted tax laws and rates applicable tothe periods in which the differences are 

F-8

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expected to affect taxable income. Valuation allowances are establishedwhen necessary to reduce deferred income tax assets to the amount expected tobe realized.

*Net income per common share:*   The Company complies with SFAS No. 128,*Earnings Per Share*. SFAS 128requires dual presentation of basic and diluted income per share for allperiods presented. Basic income per share excludes dilution and is computed bydividing income available to common stockholders by the weighted average numberof common shares outstanding for the period. Diluted income per share reflectsthe potential dilution that could occur if securities or other contracts toissue common stock were exercised or converted into common stock or resulted inthe issuance of common stock that then share in the income of the Company. Thedilutive effect of the 37,875,000 warrants was computed by application of thetreasury stock method under SFAS 128. At June 30, 2007, and for the periodfrom inception (September 8, 2006) to June 30, 2007, the effect ofthe underwriters purchase option for 1,250,000 Units, described in Note 6,along with the warrants underlying such Units, has not been considered in thediluted earnings per share calculation since the market price of the Units wasless than the exercise price their effect would be anti-dilutive.

*Fair value of financial instruments:*   The fair value of the Company’sfinancial assets and liabilities approximates the carrying amounts representedin the balance sheet.

*Recently Issued Accounting Pronouncements:*   In February 2007, theFinancial Accounting Standards Board (“FASB”) issued SFAS No. 159, *The Fair Value Option for Financial Assets andFinancial Liabilities*. SFAS 159 gives entities the option tovoluntarily choose, at certain election dates, to measure many financial assetsand liabilities at fair value. Elections are made on an instrument byinstrument basis and are irrevocable once made. Subsequent changes to the fairvalue of any instrument for which an election is made are reflected throughearnings. The Company does not expect SFAS 159 to have a significant impact onits financial position, results of operations or cash flows.

On September 15, 2006, the FASB issued SFAS No. 157, *Fair Value Measurement*. SFAS 157 setsforth comprehensive guidance for measuring fair value of assets andliabilities. Under the provisions of SFAS 157, fair value should be based onthe assumptions market participants would use to complete the sale of an assetor transfer of a liability. SFAS 157 provides a hierarchy of information to beused to determine the applicable market assumptions, and fair valuemeasurements would be separately disclosed under each applicable layer of thehierarchy. SFAS 157 does not expand or restrict the use of fair value formeasuring assets and liabilities but provides a single methodology to be usedwhen fair value accounting is applied. The Company does not expect the adoptionof SFAS 157 to significantly impact its financial position, results ofoperations or cash flows.

**3.**                 Preferred Stock

The Company is authorized to issue up to 1,000,000 shares of preferredstock with such designations, voting, and other rights and preferences as maybe determined from time to time by the Company’s board of directors.

**4.**                 Notes Payable—Stockholders

As of June 30, 2007, non-interest bearing advances fromstockholders totaling $225,000 were outstanding. The notes were repaid in fullin July 2007.

F-9

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**5.**                 Income Taxes

The provision for income taxes for the periodfrom inception (September 8, 2006) to June 30, 2007 differs from theamount computed by applying the federal statutory income tax rate (34%) onoperations as follows: 

| Income tax benefit computed at statutory rates |   | $     | 334,312 |   |
|------------------------------------------------|--------|-------|---------|--------|
| Non-deductible  expenses                       |   | 1,054 |    |
| Total                                          |   | $     | 335,366 |   |

 

**The Company’s deferred tax assets and liabilities atJune 30, 2007 were not significant.**

**6.**                 Underwriter Purchase Option

The Company sold toDeutsche Bank Securities Inc. for $100, as additional compensation, an optionto purchase up to a total of 1,250,000 units at $9.60 per unit, with thewarrants issued as part of such units exercisable at $7.20 per share. The unitsissuable upon exercise of this option are identical to the other unitsoutstanding except that the warrants included in the option have an exerciseprice of $7.20 per share (120% of the exercise price of the warrants includedin the units sold in the offering).

This option isexercisable at $9.60 per unit, commencing on the later of the consummation of abusiness combination and May 24, 2008 and expiring May 24, 2011. Theexercise price and the number of units issuable upon exercise of the option maybe adjusted in certain circumstances.

The purpose of this option is to compensate the underwriters for theportion of their underwriting deferred discount that is held in the trustaccount and therefore is at risk of loss. The fair value of the purchase optionsold to the underwriters is based on a Black-Scholes model on the date of saleand was approximately $3.9 million using an expected life of four years,volatility of 51.5% and a risk-free interest rate of 4.66%.

**7.**                 Commitments and Contingencies

The Company enteredinto a 38 month office lease with a third party at monthly lease payments ofapproximately $8,000. To the extent the Company liquidates at or after May 24,2009, the Company’s Chief Executive Officer has personally agreed to be liablefor all subsequent lease payments in the event such occurs.

In connection with the Public Offering, the Company entered into anunderwriting agreement (the “Underwriting Agreement”) with the underwriters inthe Public Offering. Pursuant to the Underwriting Agreement, the Company wasobligated to the underwriter for certain fees and expenses related to thePublic Offering, including underwriters’ discounts of $19,320,000. The Companypaid $11,040,000 of the underwriting discount upon closing of the PublicOffering. The Company and the underwriters have agreed that payment of thebalance of the underwriting discount of $8,280,000 will be deferred untilconsummation of the Business Combination. Accordingly, a deferred underwritingfee comprised of the deferred portion of the underwriting discount is includedin the accompanying balance sheet at June 30, 2007.

**8.**                 Subsequent Events

On August 30,2007, the Company signed a definitive share purchase agreement to acquire allof the shares of common stock of Offshore Group Investment Limited (“OGIL”), aCayman Islands registered company and wholly owned subsidiary of F3 Capital (“F3Capital”). F3 Capital is affiliated with TMT 

F-10

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Global, a Cayman Islands registered company. Four Baker Marine Pacific Class 375ultra-premium jackup drilling rigs are being constructed in Singapore fordelivery and sale to OGIL. Under the terms of the share purchase agreement, theCompany will change (subject to stockholder approval) its domicile fromDelaware to the Cayman Islands.

F3 Capital will receiveaggregate consideration of approximately $331 million at closing, consisting ofapproximately $56 million in cash and $275 million in units. Each unit iscomprised of one share of common stock and 0.75 warrants to purchase commonstock. The warrants shall be on terms identical to the warrants included in theunits sold as part of our Public Offering. As part of the transaction, theCompany will: (i) assume approximately $517 million in payments owed undercertain contracts for the construction and delivery of the four ultra-premiumjackup drilling rigs and (ii) incur approximately $40 million in rigoutfitting costs. Also as part of the transaction, the Company will acquire anoption to purchase an ultra-deepwater drillship currently under development.

A major European bankhas provided the Company an indicative term sheet providing for debt financingfor completion of the jackup rigs of approximately $440 million, subject tocompletion of the lender’s internal processes. The closing of the acquisitionand the debt financing are subject to stockholder approval, regulatoryclearances and other customary closing conditions.

F-11

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