<PAGE>
 
 
                           SCHEDULE 14A INFORMATION

          Proxy Statement Pursuant to Section 14(a) of the Securities
                    Exchange Act of 1934 (Amendment No.  )
        
Filed by the Registrant [X]

Filed by a Party other than the Registrant [_] 

Check the appropriate box:

[_]  Preliminary Proxy Statement        [_]  Confidential, for Use of the 
                                             Commission Only (as permitted by
                                             Rule 14a-6(e)(2))
[X]  Definitive Proxy Statement 

[_]  Definitive Additional Materials 

[_]  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

                        WEATHERFORD ENTERRA, INC.     
--------------------------------------------------------------------------------
               (Name of Registrant as Specified In Its Charter)

                          
--------------------------------------------------------------------------------
   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

   
Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

   
     (1) Title of each class of securities to which transaction applies:

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     (2) Aggregate number of securities to which transaction applies:

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     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
         the filing fee is calculated and state how it was determined):

     -------------------------------------------------------------------------
      

     (4) Proposed maximum aggregate value of transaction:

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     (5) Total fee paid:

     -------------------------------------------------------------------------

[_]  Fee paid previously with preliminary materials.
     
[_]  Check box if any part of the fee is offset as provided by Exchange
     Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
     was paid previously. Identify the previous filing by registration statement
     number, or the Form or Schedule and the date of its filing.
     
     (1) Amount Previously Paid:
 
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     (2) Form, Schedule or Registration Statement No.:

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     (3) Filing Party:
      
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     (4) Date Filed:

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Notes:



<PAGE>
 
Weatherford Enterra, Inc.
1360 Post Oak Boulevard
Suite 1000                                              [Weatherford Enterra
Houston, Texas 77056-3098                               Logo]
 
P.O. Box 27608
Houston, Texas 77227-7608
                                                                 
713/439-9400                                                    April 10, 1997
Telefax: 713/622-0913

Dear Stockholder:

  You are cordially invited to attend the Annual Meeting of Stockholders of
Weatherford Enterra, Inc. on Thursday, May 15, 1997, at 9:00 a.m. at The
Junior League of Houston, 1811 Briar Oaks Lane, Houston, Texas.
 
  The Board of Directors appreciates and encourages stockholder participation
in the Company's affairs. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED. PLEASE
MARK, DATE, SIGN AND RETURN YOUR PROXY AT YOUR EARLIEST CONVENIENCE IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
If you have multiple stockholder accounts and receive more than one set of
these materials, please be sure to vote each proxy and return it in the
respective postage-paid envelope provided.
 
  Thank you for your continued interest.
 
                                          Very truly yours,
 
                                          /s/ PHILIP BURGUIERES

                                          PHILIP BURGUIERES
                                          Chairman of the Board
<PAGE>
 
                           WEATHERFORD ENTERRA, INC.
 
                   NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
 
                          TO BE HELD ON MAY 15, 1997
 
  The Annual Meeting of Stockholders of Weatherford Enterra, Inc., a Delaware
corporation (the "Company"), will be held on Thursday, May 15, 1997, at 9:00
a.m. at The Junior League of Houston, 1811 Briar Oaks Lane, Houston, Texas,
for the following purposes:
 
    (1) To elect three directors, each for a term of three years;
 
    (2) To consider and vote upon a proposal to approve and adopt amendments
  to the Company's Non-Employee Director Stock Option Plan;
 
    (3) To consider and vote upon a proposal to approve and adopt the
  Weatherford Enterra Non-Employee Director Restricted Stock Plan; and
 
    (4) To consider and act upon any other matters as properly may come
  before the meeting or any adjournment thereof.
 
  Only stockholders of record at the close of business on March 31, 1997 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. A list of stockholders of record will be open to the examination of
any such stockholder for any purpose germane to the Annual Meeting after May
7, 1997 at the Company's offices at 1360 Post Oak Boulevard, Suite 1000,
Houston, Texas, during normal business hours.
 
                                          By Order of the Board of Directors,
 
                                          /s/ SUZANNE THOMAS

                                          H. SUZANNE THOMAS
                                               Secretary
 
Houston, Texas
April 10, 1997
 
                                   IMPORTANT
 
  YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. EVEN IF
YOU PLAN TO BE PRESENT, PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY
AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY
VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE>
 
                           WEATHERFORD ENTERRA, INC.
 
                                PROXY STATEMENT
 
         FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 1997
 
TIME, DATE, PLACE AND PURPOSE
 
  This Proxy Statement is being furnished to stockholders of Weatherford
Enterra, Inc., a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of proxies for use at the Annual
Meeting of Stockholders (the "Meeting") to be held on Thursday, May 15, 1997,
at 9:00 a.m. at The Junior League of Houston, 1811 Briar Oaks Lane, Houston,
Texas, and at any adjournment or postponement thereof, for the purposes set
forth in the Notice of Annual Meeting of Stockholders. This Proxy Statement
and the form of proxy are first being sent or delivered to stockholders on or
about April 10, 1997. The Company's principal executive offices are located at
1360 Post Oak Boulevard, Suite 1000, Houston, Texas 77056.
 
RECORD DATE AND VOTE REQUIRED
 
  The securities of the Company entitled to vote at the Meeting consist of
shares of Common Stock, $0.10 par value (the "Common Stock"). At the close of
business on March 31, 1997 (the "Record Date"), there were outstanding and
entitled to vote 52,290,407 shares of Common Stock. The holders of record of
Common Stock on the Record Date will be entitled to one vote per share at the
Meeting.
 
  The holders of a majority of the total shares of Common Stock issued and
outstanding at the close of business on the Record Date, whether present in
person or represented by proxy, will constitute a quorum for the transaction
of business at the Meeting. The affirmative vote of a plurality of the total
shares of Common Stock present in person or represented by proxy and entitled
to vote at the Meeting is required for the election of directors, and the
affirmative vote of a majority of the total shares of Common Stock present in
person or represented by proxy and entitled to vote at the Meeting is required
for the approval of any other matters as properly may come before the Meeting
or any adjournment thereof.
 
  The Annual Report to Stockholders for the year ended December 31, 1996 is
being furnished with this Proxy Statement to the holders of record of Common
Stock on the Record Date. The Annual Report to Stockholders does not
constitute a part of the proxy materials.
 
VOTING AND REVOCATION OF PROXIES
 
  All properly executed proxies that are not revoked will be voted at the
Meeting in accordance with the instructions contained therein. If a
stockholder executes and returns a proxy and does not specify otherwise, the
shares represented by such proxy will be voted "FOR" the election of the
nominees for director named below and for the recommended proposals. At the
date of this Proxy Statement, management of the Company knows of no other
matters that are likely to be brought before the Meeting. However, if any
other matters should properly come before the Meeting, the persons named in
the enclosed proxy will have discretionary authority to vote such proxy in
accordance with their best judgment on such matters. Checking the abstention
box on the proxy card or failing to return the proxy card has the same effect
as voting against the proposal. A stockholder who has executed and returned a
proxy may revoke it at any time before it is voted at the Meeting by executing
and returning a proxy bearing a later date, by filing written notice of such
revocation with the Secretary of the Company stating that the proxy is
revoked, or by attending the Meeting and voting in person.
 
  Under applicable stock exchange rules, brokers will not be permitted to
submit proxies authorizing a vote on a proposal in the absence of specific
instructions from beneficial owners. Broker non-votes will have the effect of
votes against a proposal. Under Delaware law, both abstentions and broker non-
votes contained on a returned proxy card will be considered present for
purposes of determining the existence of a quorum at the Meeting.
 
 
                                       1
<PAGE>
 
SOLICITATION OF PROXIES
 
  In addition to solicitation by mail, the directors, officers and employees
of the Company may solicit proxies from stockholders by personal interview,
telephone, telegram or otherwise. The Company will bear the costs of the
solicitation of proxies from its stockholders. Arrangements will also be made
with brokerage firms and other custodians, nominees and fiduciaries who hold
the voting securities of record for the forwarding of solicitation material to
the beneficial owners thereof. The Company will reimburse such brokers,
custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses
incurred by them in connection therewith. The Company has also engaged the
services of Corporate Investor Communications, Inc., a proxy solicitation
firm, to distribute proxy solicitation materials to brokers, banks and other
nominees and to assist in the solicitation of proxies from its stockholders
for an anticipated fee of $3,000, plus mailing expenses.
 
        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  PRINCIPAL STOCKHOLDERS. The following table sets forth certain information
with respect to the Common Stock beneficially owned by persons who are known
to the Company to be the beneficial owners of more than five percent of the
Common Stock as of the Record Date. For purposes of this Proxy Statement,
beneficial ownership is defined in accordance with the rules of the Securities
and Exchange Commission (the "Commission") to mean generally the power to vote
or dispose of shares, regardless of any economic interest therein. The persons
listed have sole voting power and sole dispositive power over all shares set
forth in the table, unless otherwise specified in the footnotes to the table.
 
<TABLE>
<CAPTION>
                                                             AMOUNT AND
                                                             NATURE OF   PERCENT
                                                             BENEFICIAL    OF
   NAME AND ADDRESS OF BENEFICIAL OWNER                     OWNERSHIP(1)  CLASS
   ------------------------------------                     ------------ -------
   <S>                                                      <C>          <C>
   First Reserve Corporation(2)............................  9,003,557    17.2
    475 Steamboat Road
    Greenwich, CT 06830
 
   FMR Corp. and Edward C. Johnson 3d(3)...................  3,846,902     7.4
    82 Devonshire Street
    Boston, MA 02109
</TABLE>
--------
(1) Information with respect to beneficial ownership is based upon information
    furnished by each stockholder or contained in filings made with the
    Commission. To the Company's knowledge, none of such shares are deemed to
    be beneficially owned because the holder has the right to acquire such
    shares within 60 days.
(2) Based upon information contained in Amendment No. 1 to Schedule 13D dated
    March 13, 1997, filed with the Commission by First Reserve Corporation
    ("First Reserve"). Represents shares owned by the following funds (the
    "First Reserve Funds"), for each of which First Reserve is the general
    partner: American Gas & Oil Investors, Limited Partnership--1,684,532
    shares; AmGO II, Limited Partnership--1,042,651 shares; First Reserve
    Secured Energy Assets Fund, Limited Partnership--1,963,409 shares; First
    Reserve Fund V, Limited Partnership--2,835,189 shares; First Reserve Fund
    V-2, Limited Partnership--708,470 shares; and First Reserve Fund VI,
    Limited Partnership--735,371 shares. First Reserve, in its role as
    managing general partner of the First Reserve Funds and acting on behalf
    of the First Reserve Funds, has the power to cause each First Reserve Fund
    to dispose of or vote shares of Common Stock held by such First Reserve
    Fund. Also includes 33,935 shares owned directly by First Reserve. The
    principal beneficial owners of the common stock of First Reserve are its
    executive officers, including Mr. Hill, Chairman of the Board of First
    Reserve, and Mr. Macaulay, President and Chief Executive Officer of First
    Reserve, each of whom is also a director of the Company. First Reserve,
    the First Reserve Funds and Messrs. Macaulay and Hill have entered into
    the First Reserve Agreement (as defined hereinafter) under which First
    Reserve and the First Reserve Funds are entitled to elect a certain number
    of directors depending on their percentage of ownership of the Common
    Stock. Does not include shares of Common Stock owned directly by each of
    Messrs. Hill and Macaulay.
 
                                        (footnotes continued on following page)
 
                                       2
<PAGE>
 
(3) Based upon information contained in a joint Schedule 13G dated February
    14, 1997, filed with the Commission by Edward C. Johnson 3d, Abigail P.
    Johnson and by FMR Corp., on behalf of itself and its subsidiaries,
    Fidelity Management & Research Company (beneficial owner of 3,440,847
    shares of Common Stock) and Fidelity Management Trust Company (beneficial
    owner of 406,055 shares of Common Stock). FMR Corp. and Mr. Johnson each
    has sole dispositive power over 3,440,847 shares of Common Stock and no
    voting power over these shares. FMR Corp. and Mr. Johnson each has sole
    dispositive power over 406,055 shares of Common Stock, of which each has
    sole voting power over 354,555 shares and no voting power over 51,500
    shares.
 
  MANAGEMENT. The following table sets forth certain information with respect
to the Common Stock beneficially owned by each of the Company's directors and
nominees for director, each of its executive officers named in the Summary
Compensation Table set forth in this Proxy Statement and by all of its
directors and executive officers as a group, as of the Record Date. Such
persons have sole voting power and sole dispositive power over all shares set
forth in the table unless otherwise specified in the footnotes to the table.
 
<TABLE>
<CAPTION>
                                                            AMOUNT AND
                                                            NATURE OF   PERCENT
                                                            BENEFICIAL    OF
      NAME OF BENEFICIAL OWNER                             OWNERSHIP(1)  CLASS
      ------------------------                             ------------ -------
      <S>                                                  <C>          <C>
      Directors and Nominees for Director
        Thomas N. Amonett(2)(3)...........................      16,060     *
        Philip Burguieres(4)..............................     279,328     *
        Thomas J. Edelman.................................       2,000     *
        William E. Greehey(2).............................      14,088     *
        John A. Hill(5)...................................   9,010,524   17.2
        John W. Johnson(2)(6).............................      60,620     *
        William E. Macaulay(5)............................   9,010,524   17.2
        Robert K. Moses, Jr.(2)(7)........................     504,221     *
        Roger M. Widmann(8)...............................       3,000     *
      Named Executive Officers
        M.E. Eagles(9)....................................      52,072     *
        James R. Burke(10)................................      42,636     *
        Norman W. Nolen(11)...............................      50,868     *
        H. Suzanne Thomas(12).............................      69,538     *
      All Directors, Nominees and Executive Officers as a
       Group
       (14 persons)(13)...................................  10,123,855   19.4
</TABLE>
--------
 *Denotes ownership of less than one percent.
(1) Information with respect to beneficial ownership is based upon information
    furnished by each director, nominee for director or executive officer of
    the Company or contained in filings made with the Commission.
(2) Includes 3,500 shares subject to acquisition within 60 days pursuant to
    the Director Option Plan (as defined hereinafter).
(3) Also Acting President and Chief Executive Officer of the Company from July
    26, 1996 through January 31, 1997 on a non-employee consultant basis and
    since February 1, 1997 as an employee. Includes 5,000 shares granted to
    Mr. Amonett pursuant to the Restricted Plan (as hereinafter defined), with
    respect to which he has sole voting and no dispositive power.
(4) Also Chairman of the Company. Includes (a) 1,000 shares held by Mr.
    Burguieres' wife, with respect to which he has no voting or dispositive
    power, and (b) 500 shares held by Mr. Burguieres' adult son supported by
    him, with respect to which he has sole voting and dispositive power; Mr.
    Burguieres disclaims beneficial ownership of all such shares. Also
    includes (a) 8,750 shares granted to Mr. Burguieres pursuant to the
    Restricted Plan, with respect to which he has sole voting and no
    dispositive power, and (b) 145,834 shares subject to acquisition by Mr.
    Burguieres within 60 days pursuant to an Option Plan (as hereinafter
    defined).
 
                                    (footnotes continued on the following page)
 
                                       3
<PAGE>
 
   Also includes 431 shares held under the Company's Employee Stock Purchase
   Plan (the "ESPP") in the account of Mr. Burguieres, as to which he has sole
   voting and no dispositive power prior to withdrawal of such shares from the
   ESPP. Shares may be withdrawn from the ESPP by a participant on March 31 of
   each year upon written notice by such participant. Also includes 184 shares
   held under the Company's 401(k) Savings Plan (the "401(k) Plan") in Mr.
   Burguieres' account, as to which shares Mr. Burguieres has sole voting and
   no dispositive power.
 (5) Includes 9,003,557 shares owned beneficially by First Reserve and the
     First Reserve Funds; Messrs. Hill and Macaulay disclaim beneficial
     ownership of such shares.
 (6) Does not include 1,104,377 shares owned by Permian Mud Service, Inc.
     ("Permian"). Mr. Johnson is a director, officer and substantial
     beneficial shareholder of Permian and therefore may be deemed to be a
     beneficial owner of the shares of the Common Stock held by Permian; Mr.
     Johnson disclaims beneficial ownership of all such shares. Includes (a)
     6,000 shares held by Mr. Johnson as a trustee of various trusts for his
     children, with respect to which he has sole voting and dispositive power,
     and (b) 120 shares held as custodian for Mr. Johnson's children, with
     respect to which he has sole voting and dispositive power; Mr. Johnson
     disclaims beneficial ownership of all such shares.
 (7) Includes (a) 625 shares held by Mr. Moses' adult son supported by him,
     with respect to which Mr. Moses has no voting or dispositive power, and
     (b) an aggregate of 45,000 shares held in various trusts for Mr. Moses'
     children, his brother and his sister, of which Mr. Moses is the trustee,
     with respect to which Mr. Moses has sole voting and dispositive power;
     Mr. Moses disclaims beneficial ownership of all such shares. Does not
     include (a) an aggregate of 52,500 shares held in various trusts for Mr.
     Moses' children, with respect to which Mr. Moses has no voting or
     dispositive power, or (b) 1,851 shares held in a trust for Mr. Moses'
     son, with respect to which he has no voting or dispositive power; since
     Mr. Moses is not a trustee of such trusts and has no voting or
     dispositive power, he disclaims beneficial ownership of all such shares.
 (8) Includes 3,000 shares subject to acquisition within 60 days pursuant to
     the Director Option Plan.
 (9) Includes (a) 8,249 shares granted to Mr. Eagles pursuant to the
     Restricted Plan, with respect to which he has sole voting and no
     dispositive power, and (b) 28,167 shares subject to acquisition by Mr.
     Eagles within 60 days pursuant to an Option Plan.
(10) Includes (a) 7,125 shares granted to Mr. Burke pursuant to the Restricted
     Plan, with respect to which he has sole voting and no dispositive power,
     and (b) 25,999 shares subject to acquisition by Mr. Burke within 60 days
     pursuant to an Option Plan. Also includes 2,023 shares held under the
     401(k) Plan in Mr. Burke's account, with respect to which shares Mr.
     Burke has sole voting and no dispositive power.
(11) Includes (a) 5,875 shares granted to Mr. Nolen pursuant to the Restricted
     Plan, with respect to which he has sole voting and no dispositive power,
     and (b) 27,750 shares subject to acquisition by Mr. Nolen within 60 days
     pursuant to the Option Plans. Also includes 259 shares held under the
     401(k) Plan in Mr. Nolen's account, with respect to which shares Mr.
     Nolen has sole voting and no dispositive power.
(12) Includes (a) 5,875 shares granted to Ms. Thomas pursuant to the
     Restricted Plan, with respect to which she has sole voting and no
     dispositive power, and (b) 28,000 shares subject to acquisition by Ms.
     Thomas within 60 days pursuant to the Option Plans. Also includes 890
     shares held under the 401(k) Plan in Ms. Thomas' account, with respect to
     which shares Ms. Thomas has sole voting and no dispositive power.
(13) See footnotes (2) through (12). Also includes 7,833 shares subject to
     acquisition by an executive officer not named in the table within 60 days
     pursuant to the Option Plans, 3,000 shares pursuant to the Restricted
     Plan, with respect to which such executive officer has sole voting and no
     dispositive power, and 679 shares held under the 401(k) Plan in such
     executive officer's account, with respect to which shares he has sole
     voting and no dispositive power.
 
                                       4
<PAGE>
 
                             ELECTION OF DIRECTORS
 
                                 (PROPOSAL 1)
 
  The Company's Corrected Restated Certificate of Incorporation and Amended
and Restated By-Laws (the "Bylaws") provide that the Board of Directors will
consist of not less than six nor more than 15 persons, with the exact number
to be fixed from time to time by the Board of Directors. The Board of
Directors has fixed the authorized number of directors at ten. Directors are
divided into three classes, as nearly equal in number as possible. Each class
is elected for a term of three years, so that the term of office of one class
of directors expires at every Annual Meeting of Stockholders.
 
NOMINEES FOR DIRECTOR
 
  The Board of Directors has nominated three persons for election as directors
in the class whose term of office will expire at the Company's 2000 Annual
Meeting of Stockholders or until their respective successors are elected and
qualified. The nominees are John A. Hill, John W. Johnson and William E.
Macaulay. Messrs. Hill, Johnson and Macaulay are currently directors of the
Company whose terms will expire at the Meeting. It is the intention of the
persons named in the enclosed proxy to vote such proxy for the election of
such nominees.
 
  Management of the Company does not contemplate that any of such nominees
will become unavailable for any reason, but if that should occur before the
Meeting, proxies that do not withhold authority to vote for directors will be
voted for another nominee, or other nominees, in accordance with the best
judgment of the person or persons appointed to vote the proxy.
 
  The enclosed form of proxy provides a means for stockholders to vote for all
of the nominees listed therein, to withhold authority to vote for one or more
of such nominees, or to withhold authority to vote for all of such nominees.
Each properly executed proxy received in time for the Meeting will be voted as
specified therein, or if a stockholder does not specify in his or her executed
proxy how the shares represented by his or her proxy are to be voted, such
shares shall be voted for the nominees listed therein or for other nominees,
as provided above.
 
  The following table sets forth certain information for each nominee for
election as director. Unless otherwise indicated, each person has held the
position shown, or has been associated with the named employer in an executive
capacity, for more than five years.
 
<TABLE>
<CAPTION>
                                                  COMPANY
   NAME                                           POSITION AGE  DIRECTOR SINCE
   ----                                           -------- --- -----------------
   <S>                                            <C>      <C> <C>
   John A. Hill.................................. Director  55  October 5, 1995
   John W. Johnson............................... Director  52 November 19, 1991
   William E. Macaulay........................... Director  51  October 5, 1995
</TABLE>
 
  Mr. Hill is Chairman of the Board of First Reserve. He is a trustee of the
Putnam Funds; he is also a director of Snyder Oil Corporation, a Texas-based
corporation engaged in oil and gas exploration and production ("Snyder Oil");
Maverick Tube Corporation, a Missouri corporation engaged in the manufacture
of oilfield tubulars, line pipe and structural steel ("Maverick"); and
TransMontaigne Oil Company, a Colorado-based corporation engaged in natural
gas and oil products pipelines, distribution and marketing ("TransMontaigne").
He was a director of Enterra from August 1994, when Enterra acquired Total
Energy Services Company ("Total"), and previously served as a director of
Total and its predecessor.
 
  Mr. Johnson is President and a director of Permian, a Houston, Texas-based
company that manufactures and sells oilfield production chemicals. He was a
director of Petroleum Equipment Tools Co. ("Petco") from March 1971 to
November 1991, when Petco was acquired by merger with the Company. He serves
as a director of Southwest Bancorporation of Texas, Inc., a Houston, Texas-
based banking organization.
 
                                       5
<PAGE>
 
  Mr. Macaulay is President and Chief Executive Officer of First Reserve. He
is a director of Maverick; TransMontaigne; Hugoton Energy Corporation, a
Kansas corporation engaged in oil and gas exploration and production; and
National Oilwell, Inc., a Houston, Texas-based company engaged in the design,
manufacture and sale of machinery and equipment and the distribution of
products used in oil and gas drilling and production. He was appointed a
director and Vice Chairman of Enterra in August 1994, when Enterra acquired
Total, and previously served as a director of Total and its predecessor.
 
  Messrs. Hill and Macaulay were appointed to the Company's Board of Directors
on October 5, 1995, when Enterra Corporation ("Enterra") was merged with and
into the Company (the "Enterra Merger"), as required by the Agreement and Plan
of Merger (the "Merger Agreement"), between Weatherford International
Incorporated and Enterra. See "Information Concerning Other Directors".
Messrs. Hill and Macaulay were nominated for election as directors of the
Company pursuant to that certain Agreement (the "First Reserve Agreement"),
among Weatherford International Incorporated, the First Reserve Funds and
First Reserve, executed in connection with the Enterra Merger. Pursuant to the
First Reserve Agreement, as long as the First Reserve Funds beneficially own
(i) at least 15 percent of the combined voting power of all of the Company's
voting securities, certain of the First Reserve Funds shall be permitted to
designate two directors of the Company, and (ii) at least 10 percent but less
than 15 percent of the combined voting power of all of the Company's voting
securities, certain of the First Reserve Funds shall be permitted to designate
one director of the Company; if the First Reserve Funds own less than 10
percent of the combined voting power of all of the Company's voting
securities, the First Reserve Funds shall not be permitted to designate a
director of the Company. Pursuant to the First Reserve Agreement, the Company
has agreed to take all necessary or appropriate action to assist in the
nomination for election as a director of the Company the person or persons
designated by the First Reserve Funds and to have at least one of the
designees of the First Reserve Funds serve on each committee of the Company's
Board of Directors so long as the First Reserve Funds have at least two
designees on the Board of Directors.
 
INFORMATION CONCERNING OTHER DIRECTORS
 
  The following table sets forth certain information for those directors whose
present terms will continue after the Meeting. Unless otherwise indicated,
each person has held the position shown, or has been associated with the named
employer in an executive capacity, for more than five years.
 
<TABLE>
<CAPTION>
                                                                                    TERM
   NAME                              COMPANY POSITION          AGE DIRECTOR SINCE  EXPIRES
   ----                     ---------------------------------- --- --------------- -------
   <S>                      <C>                                <C> <C>             <C>
   Thomas N. Amonett....... Director and Acting President and  53   May 27, 1974    1998
                                 Chief Executive Officer
   Philip Burguieres....... Director and Chairman of the Board 53  April 23, 1991   1999
   Thomas J. Edelman.......              Director              46  March 11, 1997   1998
   William E. Greehey......              Director              60   May 25, 1984    1999
   Robert K. Moses, Jr.....              Director              56   May 12, 1978    1998
   Roger M. Widmann........              Director              57  October 5, 1995  1999
</TABLE>
 
  Mr. Amonett has served as Acting President and Chief Executive Officer of
the Company since July 26, 1996. He has been a director of the Company since
1974 and served as Chairman of the Board of the Company from May 1986 to May
1989. From July 1992 to July 1996, Mr. Amonett served as President of Reunion
Industries, Inc., a Houston, Texas-based company primarily engaged in the
manufacture of high volume, precision plastic products and the providing of
engineered plastic services, oil and gas exploration, development and
production and wine grape vineyard development ("Reunion"). Mr. Amonett also
was Of Counsel with Fulbright & Jaworski L.L.P., Attorneys at Law, Houston,
Texas, from September 1986 to July 1992. He serves as a director of Reunion;
PetroCorp, Incorporated, a Houston, Texas-based company engaged in oil and gas
exploration and production; Air-Cure Technologies, Inc. (n/k/a ITEQ, Inc.), a
Houston, Texas-based company that provides manufactured equipment and
engineered systems used in the processing, treatment and movement of gases and
liquids; and American Residential Services, Inc., a Houston, Texas-based
company that provides
 
                                       6
<PAGE>
 
maintenance, repair, replacement and new equipment installation services for
heating, ventilating and air conditioning, plumbing, electrical and indoor air
quality systems and major home appliances.
 
  Mr. Burguieres has been a director of the Company since April 1991 and has
served as Chairman of the Board of the Company since December 1992. From April
1991 to October 1996, he also served as President and Chief Executive Officer
of the Company. Mr. Burguieres serves as a director of McDermott
International, Inc., a New Orleans, Louisiana-based company engaged in the
fabrication of oilfield equipment; a director of Texas Commerce Bank, a
Houston, Texas-based banking organization; a director of TransAmerican Waste
Industries, Inc., a Houston, Texas-based company engaged in the processing and
disposal of non-hazardous industrial and municipal waste ("TransAmerican
Waste"); and Drilex International, Inc., a Houston, Texas-based company
engaged in providing products and services used in the precision drilling of
oil and gas wells.
 
  Mr. Edelman has served as Chairman of the Board, President and Chief
Executive Officer of Patina Oil & Gas Corporation, a Denver, Colorado-based
company engaged in oil and gas exploration and production since its formation
in May 1996. He co-founded Snyder Oil and was its President and a director
from 1981 through February 1997. Mr. Edelman serves as Chairman and a director
of Lomak Petroleum, Inc., a Fort Worth, Texas-based company engaged in oil and
gas exploration and production; and a director of Petroleum Heat & Power Co.,
a Connecticut-based fuel oil distributor. He was formerly a director of
Enterra from August 1994, when Enterra acquired Total, until October 1995,
when the Company merged with Enterra, and previously served as a director of
Total.
 
  Mr. Greehey is Chairman of the Board and Chief Executive Officer of Valero
Energy Corporation, a San Antonio, Texas-based company that refines, trades
and markets oil and gas and manages natural gas transmission operations; he
retired as Chief Executive Officer in June 1996 but returned to that position
in November 1996. Mr. Greehey serves as a director of Santa Fe Energy
Resources, Inc., a Houston, Texas-based company engaged in oil and gas
exploration and production.
 
  Mr. Moses is a private investor, principally in the oil and gas exploration
and oilfield services business, in Houston, Texas. He served as Chairman of
the Board of the Company from May 1989 to December 1992. Mr. Moses serves as a
director of TransAmerican Waste.
 
  Mr. Widmann has been a principal of Tanner & Co., Inc., a private investment
banking firm since March 1997. He was a Senior Managing Director of Castle,
Harlan & Widmann Energy Partners, L.L.C., a private investment banking firm,
from September 1995 until March 1997. He held various senior positions with
Chemical Bank from 1986 until August 1995. He serves as a director of Lydall,
Inc., a Connecticut-based corporation engaged in the manufacture of engineered
fiber materials; and a director of Mercantile International Petroleum
Corporation, a Canadian company engaged in oil and gas reserve acquisition and
production. Mr. Widmann previously was a member of the Board of Advisors of
various First Reserve Funds from 1981 through December 1995. He was a director
of Enterra from August 1994, when Enterra acquired Total, and previously
served as a director of Total.
 
  Messrs. Widmann, Hill and Macaulay were appointed to the Company's Board of
Directors on October 5, 1995, and Mr. Edelman was appointed on March 11, 1997,
in accordance with the Merger Agreement. Pursuant to the Merger Agreement, if
on or prior to October 5, 1997 any director designated by Enterra pursuant to
the Merger Agreement shall decline or be unable to serve as a director of the
Company, the other remaining Enterra-designated directors shall designate
another person to serve in such person's stead, subject to the approval of a
majority of the Weatherford-designated directors at that time, which approval
shall not be unreasonably withheld. Similarly, if on or prior to October 5,
1997 any director designated by Weatherford pursuant to the Merger Agreement
shall decline or be unable to serve as a director of the Company, the other
remaining Weatherford-designated directors shall designate another person to
serve in such person's stead, subject to the approval of a majority of the
Enterra-designated directors at that time, which approval shall not be
unreasonably withheld. The Company has agreed in the Merger Agreement until
October 5, 1997 to cause at least one Enterra designee (or his successor) to
be a member of each of the Executive and Nominating Committee, Audit Committee
and
 
                                       7
<PAGE>
 
Compensation and Stock Plans Committee of the Board of Directors of the
Company. In addition, the Company shall take all appropriate action through
October 5, 1997 to assist in the nomination for election as directors of the
Enterra designees designated in the Merger Agreement (or any successors).
 
  R. Rudolph Reinfrank, previously a director of the Company designated by
Enterra, resigned as a director on March 31, 1997. Mr. Reinfrank was a
director in the class with a term scheduled to expire in 1998.
 
FAMILY RELATIONSHIPS
 
  There are no family relationships between any two directors or executive
officers.
 
PROCEDURES FOR NOMINATING DIRECTORS
 
  The Company's Bylaws provide that only persons who are nominated in
accordance with the procedures set forth in the Bylaws shall be eligible for
election as directors of the Company. No nomination shall be made at a meeting
of stockholders unless such nomination is properly brought before the meeting
by any stockholder of the Company who (a) is a stockholder of record on the
date of the giving of the notice and on the record date for the determination
of stockholders entitled to vote at such annual meeting and (b) gives timely
notice of such nomination in writing to the Secretary of the Company.
 
  To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Company no less than 90
days nor more than 120 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within 30 days before
or after such anniversary date, notice by the stockholder to be timely must be
so received no later than the close of business on the tenth day following the
day on which such notice of the date of the meeting was mailed or public
disclosure of the annual meeting was made, whichever first occurs.
 
  A stockholder's notice to the Secretary of the Company must set forth (a) as
to each person whom the stockholder proposed to nominate, all information
relating to such person that is required to be disclosed in solicitations for
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any successor regulation thereto,
(b) the name and record address of the stockholder proposing such nomination,
(c) the class and number of shares of the Company that are beneficially owned
by the stockholder, (d) a description of all arrangements or understandings
between such stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination or
nominations are to be made by such stockholder and (e) a representation that
such stockholder intends to appear in person or by proxy at the annual meeting
to nominate the persons named in the notice.
 
  If the Chairman of an annual meeting of stockholders determines that a
nomination was not properly brought before the annual meeting in accordance
with the foregoing procedures, the Chairman shall declare to the meeting that
the nomination was not properly brought before the meeting and such nomination
shall be disregarded. A stockholder must also comply with all applicable
requirements of the Exchange Act and the rules and regulations promulgated
thereunder with respect to the above matters.
 
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
 
  The Board of Directors of the Company held eight meetings during 1996. The
Board of Directors has an Audit Committee, a Compensation and Stock Plans
Committee (the "Compensation Committee") and an Executive and Nominating
Committee (the "Executive Committee"). The Board of Directors also had a
Special Committee during part of 1996.
 
                                       8
<PAGE>
 
  The Audit Committee reviews with the Company's independent public
accountants the plan, scope and results of their annual audit and reviews the
internal audits performed, the procedures followed and the results of such
audits. The Audit Committee selects an accounting firm as the independent
auditors of the Company for each fiscal year, subject to ratification by the
full Board of Directors, and considers in general all audit and non-audit
services provided by such firm to the Company. The Audit Committee was
composed of Messrs. Amonett (Chairman), Hill and Reinfrank prior to May 17,
1996, and of Messrs. Johnson (Chairman), Hill, Greehey and Reinfrank on and
after May 17, 1996. The Audit Committee held two meetings during 1996.
 
  The Compensation Committee approves all executive compensation, except the
compensation of the Chief Executive Officer, which is recommended by the
Compensation Committee but approved by the full Board of Directors. The
Compensation Committee also approves employee benefit plans, establishes
directors' fees (subject to approval by the full Board of Directors) and
administers the Company's various stock option plans and other stock based
plans, various plans for which certain members of management are eligible and
certain plans for which non-employee directors are eligible. The Compensation
Committee was composed of Messrs. Greehey (Chairman), Moses and Widmann prior
to May 17, 1996; of Messrs. Amonett (Chairman), Greehey, Moses and Widmann
from May 17, 1996 through July 26, 1996; and of Messrs. Greehey (Chairman),
Moses and Widmann on and after July 26, 1996. The Compensation Committee held
three meetings during 1996.
 
  The Executive Committee is authorized to act on all corporate matters for
which applicable law does not require participation by the full Board of
Directors. In practice, the Executive Committee generally acts in place of the
full Board when scheduling makes it impracticable to assemble the full Board.
All actions taken by the Executive Committee must be reported at the next
meeting of the Board of Directors. The Executive Committee also evaluates the
size and composition of the Board of Directors, makes recommendations as to
candidates for election to the Board of Directors and recommends the
structuring of various committees of the Board. The Executive Committee was
composed of Messrs. Moses (Co-Chairman), Macaulay (Co-Chairman), Burguieres,
Johnson and Robert L. Parker, Sr. prior to Mr. Parker's resignation as a
director of the Company on April 16, 1996; of Messrs. Moses (Co-Chairman),
Macaulay (Co-Chairman), Burguieres and Johnson from April 16, 1996 through
August 16, 1996; and of Messrs. Moses (Co-Chairman), Macaulay (Co-Chairman),
Burguieres, Hill and Johnson on and after August 16, 1996. The Executive
Committee held one meeting during 1996.
 
  The Special Committee was formed by the Board of Directors on August 16,
1996. The original purpose of the Special Committee was to explore
alternatives for the Company in connection with the July 1996 leave of absence
and October 1996 resignation of Mr. Burguieres as President and Chief
Executive Officer of the Company. The purpose of the Special Committee was
amended as of February 26, 1997 such that its only purpose is the coordination
of the search for a new President and Chief Executive Officer of the Company.
The Special Committee is composed of Messrs. Moses (Co-Chairman), Macaulay
(Co-Chairman), Hill and Johnson. The Special Committee held six meetings
during 1996.
 
ATTENDANCE AT MEETINGS
 
  Each of the directors of the Company attended at least 75 percent of the
aggregate of the meetings of the Board of Directors and committees of which he
was a member, except for Mr. Burguieres who attended 50 percent of the
meetings of the Board of Directors and did not attend the only meeting of the
Executive Committee.
 
                                       9
<PAGE>
 
                            EXECUTIVE COMPENSATION
 
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
  The Compensation Committee of the Board of Directors of the Company, which
is composed of three independent outside directors, is responsible for setting
policies with respect to compensation of the Company's executive officers.
 
  COMPENSATION PHILOSOPHY AND OVERALL OBJECTIVES OF THE EXECUTIVE COMPENSATION
PROGRAM. The Company's executive compensation program is designed to attract,
motivate and retain the executives needed to improve the Company's performance
and maximize stockholder value. Toward that end, the Compensation Committee
attempts to provide the Company's executives with a total target compensation
package (which includes base salary, annual incentive bonus, long-term,
equity-based incentive compensation and other executive benefits) that, at
expected levels of corporate performance, is competitive with packages
provided to executives of companies similar to the Company who hold comparable
positions or have similar qualifications.
 
  The Compensation Committee determines competitive levels of compensation for
executive positions based on information obtained from published/private
compensation surveys for companies with annual revenues of approximately $1
billion (general industry), proxy statements for a group of competitor
companies approved by the Compensation Committee (the "compensation peer
group") and recommendations of an independent compensation consultant retained
by the Company. Although some of the same companies are included in both
groups, the compensation peer group is not the same as the group of companies
comprising the Peer Group used in the Performance Graph included later in this
Proxy Statement. In selecting the companies to survey for compensation
purposes, the Compensation Committee focuses primarily on companies with U.S.
and international business operations; similar revenues, market
capitalization, employment levels and lines of business (including
manufacturing); and a management style and corporate culture similar to that
of the Company.
 
  The Company's pay-for-performance philosophy has resulted in compensation
packages that consist in large part of variable, performance-based components,
such as bonuses and stock-based awards, which can increase or decrease to
reflect changes in corporate or individual performance. Target total direct
compensation is competitive on an overall basis with the market 63rd
percentile based on general industry data; this information is not available
for the compensation peer group. Actual total direct compensation is
competitive on an overall basis with the market 63rd percentile based on
general industry data and on average is below the market median (50th
percentile) for the compensation peer group.
 
  EXECUTIVE COMPENSATION PROGRAM COMPONENTS. The Company uses cash and equity-
based compensation to achieve its pay-for-performance philosophy and to reward
short-term and long-term performance. The mix of base salary, annual
incentives and long-term incentives is reviewed periodically to ensure the
approximate mix.
 
  Base Salary. The Compensation Committee's philosophy is to control fixed
compensation costs and to place greater emphasis on incentive compensation
based on results. The Company's 1996 base salaries are on average competitive
with the market median based on general industry data and on average are less
than competitive with the market median for the compensation peer group.
Salaries for executives are reviewed periodically (not more often than
annually, unless the executive has had a change in duties and
responsibilities) and revised, if appropriate, based on a variety of factors,
including individual performance and responsibility, general levels of market
salary increases and the Company's overall financial results, with emphasis on
competitive salaries in the marketplace.
 
  Incentive Compensation. The Compensation Committee's philosophy is to use a
combination of annual and long-term compensation methods, including grants of
Common Stock under various plans. The Compensation Committee believes that key
employees should have a significant portion of their total compensation paid
in shares of Common Stock, as significant equity ownership in the Company
focuses executives on managing the Company from the long-term perspective of
an owner, with emphasis on enhanced stockholder value. Key employees are
strongly encouraged to retain shares of Common Stock granted as part of their
compensation.
 
                                      10
<PAGE>
 
  Annual incentive bonuses--Annual incentive bonuses are based on the
achievement of specified corporate goals. Targeted corporate goals are
established at the outset of each fiscal year by the Company's management and
are approved by the Compensation Committee. There is no specific weighting
assigned to these goals. A range of potential annual incentive awards (as a
percentage of base salary), based on general industry averages, has been
established for each executive officer. The Company's target annual incentive
award levels are generally consistent with the market median target awards
based on general industry data; this information is not available for the
compensation peer group. Annual incentive bonuses may be paid in cash, shares
of Common Stock or a combination of cash and shares of Common Stock.
 
  The Company achieved its 1996 targeted operating cash flow goal, and the
Company's 1996 target for selling, general and administrative expenses as a
percentage of revenues was exceeded. The Company's 1996 earnings per share,
earnings before interest and taxes, and net income were slightly below the
1996 targeted goals (actual results were 96 percent, 99 percent and 98
percent, respectively, of targeted goals), and the Company's 1996 capital
spending exceeded the target by six percent.
 
  The Compensation Committee also considered the Company's relative
performance against other companies in the oilfield services industry, noting
that the Company ranked in the top 25 percent of the compensation peer group
on earnings before depreciation, interest and taxes ("EBITD") as a percentage
of each of revenues and return on revenues, and in the top 50 percent on EBITD
as a percentage of assets. Accordingly, annual incentive awards were made to
the executive officers named in the Summary Compensation Table amounting to
approximately 48.8 percent of the aggregate 1996 annual base salaries of such
individuals. Such bonuses were paid in cash, except for Mr. Amonett's bonus,
which was paid in a combination of cash and shares of Common Stock.
 
  The Company's target total annual compensation (base salary plus annual
incentive bonus) is on average competitive with the market median based on
general industry data; this information is not available for the compensation
peer group. The Company's actual total annual compensation is competitive on
an overall basis with the market median based on general industry data and
generally slightly less than competitive on an overall basis with the market
median for the compensation peer group.
 
  Long-term, equity-based incentive compensation--The Company currently
provides long-term incentive compensation to executives in two forms: stock
options and restricted stock grants. Prior to March 1992, stock appreciation
rights ("SARs") were granted in tandem with stock options under the Company's
Stock Appreciation Rights Plan (the "SAR Plan"). Each type of incentive is
intended to track the Company's performance and reward achievement of long-
term objectives through stock price appreciation. The Company's overall stock
option and restricted stock grant levels are established by considering market
data on grant levels and an appropriate overall level of shares reserved for
such plans in the market. The Compensation Committee considers stock options
or restricted stock awards previously granted, industry practices, the
executive's accountability level and an assumed potential stock value when
determining the amount of individual long-term incentive compensation.
 
  Options to purchase shares of Common Stock reward participants for
generating appreciation in the Company's stock price. Stock options are
granted under one of the Option Plans to key employees of the Company,
including the executive officers named in the Summary Compensation Table, at
the fair market value of the Common Stock on the date of grant. These options
vest in three equal installments beginning one year after the date of grant
and are exercisable for a term of 10 years. The optionees receive value from
the options only if the market price of the Common Stock appreciates from the
price on the grant date. As with options, holders of SARs (granted prior to
1992, but still in effect) receive value only if the market price of the
Common Stock appreciates.
 
  The Company's Restricted Stock Incentive Plan (the "Restricted Plan") is
designed to meet several objectives, which include increasing the actual share
ownership position of key executives, providing a strong emphasis on
maintaining and enhancing stockholder value and retaining executives during
different stages of the business cycle. Under the Restricted Plan, eligible
employees are granted shares of Common Stock that are subject to certain
ownership restrictions. The shares are non-transferable during the restricted
period and are
 
                                      11
<PAGE>
 
subject to substantial risk of forfeiture if certain conditions are not met.
The Restricted Plan provides that restrictions will cease, at the Compensation
Committee's discretion, after continued employment for a specified period of
time or upon the occurrence of certain established goals. The Compensation
Committee has determined that restrictions on certain shares granted under the
Restricted Plan will lapse after continued employment for a specified period
of time and restrictions will lapse on the remaining shares upon the earlier
of certain corporate performance goals being achieved or after eight years,
whichever occurs first. The restricted stock is performance sensitive, as the
value of the shares granted varies based on the market price of the Common
Stock.
 
  The long-term incentives granted to executive officers is on average between
the market 63rd and market 75th percentiles based on general industry data and
are on average less than competitive with the market median for the
compensation peer group.
 
  Other Benefits. The Company maintains the 401(k) Plan, pursuant to which the
Company makes a matching contribution, in cash or shares of Common Stock, in
an amount equal to a percentage of the amount of each eligible employee's base
salary deferred by that employee pursuant to the 401(k) Plan, up to six
percent of his or her base salary. Pursuant to the 401(k) Plan, the Company
made matching contributions of 33 percent through June 30, 1996 (and 50
percent thereafter) of each eligible employee's base salary deferred under
this plan, up to six percent, including the executive officers named in the
Summary Compensation Table. The Company also has the ability to make
discretionary contributions to all eligible employees, including the executive
officers named in the Summary Compensation Table, under the 401(k) Plan. The
Company also maintains the Pension Plan (as defined hereinafter) for eligible
employees, including the executive officers named in the Summary Compensation
Table; the Pension Plan was frozen on June 30, 1996 for benefit accrual
purposes. The Company also maintains certain plans that provide benefits to
certain executives and other managers that are supplemental to the benefits
under the 401(k) Plan and the Pension Plan.
 
  DISCUSSION OF 1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. As
described above, the Company determines total compensation for all executives,
including the Chief Executive Officer, considering both a pay-for-performance
philosophy and market rates of compensation. In determining Mr. Burguieres'
compensation for 1996, the Compensation Committee considered the Company's
financial performance and corporate accomplishments, individual performance
and compensation data of general industry companies and the compensation peer
group. The Compensation Committee also reviewed more subjective factors, such
as development and implementation of a corporate strategy to enhance
shareholder value. With respect to establishing Mr. Burguieres' 1996 salary,
emphasis was placed on competitive salaries in the marketplace. Mr.
Burguieres' compensation as Chairman, after his resignation in October 1996 as
President and Chief Executive Officer, was established based on competitive
salaries in the marketplace and existing contractual arrangements between Mr.
Burguieres and the Company. Mr. Burguieres was not paid a 1996 bonus. With
respect to the stock option and restricted share grants made to Mr. Burguieres
in 1996, the Compensation Committee placed emphasis on grant levels of the
general industry and the compensation peer group.
 
  Mr. Burguieres received a 42.3 percent salary increase for 1996. Mr.
Burguieres received in March 1996 an option under an Option Plan to purchase
55,000 shares of Common Stock and an award of 28,000 shares of Common Stock
under the Restricted Plan.
 
  In determining Mr. Amonett's compensation for services performed as Acting
President and Chief Executive Officer, the Compensation Committee considered
general industry compensation data and the compensation peer group for a
President and Chief Executive Officer who is also the Chairman of the Board.
Mr. Amonett received a 1996 bonus of $110,000.
 
  POLICY REGARDING SECTION 162(M) OF THE INTERNAL REVENUE CODE. Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), generally
limits corporate deductions to $1 million for compensation paid to a person
who on the last day of any fiscal year beginning on or after January 1, 1994
is either the Chief Executive Officer or among the four most highly
compensated executive officers other than the Chief Executive Officer,
provided there is an exception for qualified performance-based compensation.
Section 162(m) of the Code became applicable to the Company effective January
1, 1994.
 
                                      12
<PAGE>
 
  The Option Plans currently qualify as performance-based compensation under
Internal Revenue Service rules. The Company's annual incentive bonuses and
awards granted under the Restricted Plan are based on performance measures,
but do not qualify as performance-based under the Code. The Compensation
Committee requested and received a review by the independent compensation
consultant retained by the Company of the Company's compensation plans and
similar plans maintained by companies in the compensation peer group with
regard to Section 162(m). The Compensation Committee has determined that it is
unlikely that any of the Company's executive officers will receive
compensation in excess of $1 million in the near future. Accordingly, the
Compensation Committee will not necessarily limit executive compensation to
compensation that is deductible under Section 162(m). The Compensation
Committee will continue to evaluate this matter and consider alternatives to
preserve the deductibility of compensation payments and benefits to the extent
reasonably practicable and consistent with the Company's compensation
objectives.
 
  This Compensation Committee Report on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, except to the
extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
 
       COMPENSATION AND STOCK PLANS COMMITTEE OF THE BOARD OF DIRECTORS
                         William E. Greehey, Chairman
                             Robert K. Moses, Jr.
                               Roger M. Widmann
 
SUMMARY COMPENSATION TABLE
 
  The following table sets forth information concerning the compensation of
the Company's former Chief Executive Officer, who resigned as President and
Chief Executive Officer in October 1996, its Acting Chief Executive Officer
and the four most highly compensated executive officers of the Company as to
whom the total annual salary and bonuses for the year ended December 31, 1996
exceeded $100,000:
 
<TABLE>
<CAPTION>
                                                                       LONG-TERM
                                   ANNUAL COMPENSATION            COMPENSATION AWARDS
                         ---- ---------------------------------  ------------------------
          (A)            (B)    (C)      (D)           (E)          (F)           (G)         (I)
------------------------ ---- ------- ---------    ------------  ----------    ---------- ------------
                                                                 RESTRICTED    SECURITIES
                                                   OTHER ANNUAL    STOCK       UNDERLYING  ALL OTHER
   NAME AND PRINCIPAL         SALARY    BONUS      COMPENSATION    AWARDS       OPTIONS   COMPENSATION
        POSITION         YEAR   ($)    ($)(1)         ($)(2)       ($)(3)        (#)(4)       ($)
   ------------------    ---- ------- ---------    ------------  ----------    ---------- ------------
<S>                      <C>  <C>     <C>          <C>           <C>           <C>        <C>
PHILIP BURGUIERES(5).... 1996 541,154       -0-(6)       -0-      441,882(7)     30,000      16,092(8)
 Chairman of the Board
  and Former             1995 420,000 1,620,000          -0-      259,000        27,500     653,592
 President and Chief
  Executive              1994 390,000   312,000          -0-      246,875        27,500       9,913
 Officer
THOMAS N. AMONETT (9)... 1996 118,153   110,000          -0-          -0-           -0-         -0-
 Acting President and
  Chief
 Executive Officer
M.E. EAGLES............. 1996 282,504   180,000          -0-(10)  157,815(11)    12,000      12,897(12)
 Senior Vice President   1995 245,000   180,000          -0-      101,750        10,000     257,236
 and President--Services 1994 230,000   150,000       50,638       95,788        10,000       6,750
JAMES R. BURKE.......... 1996 223,236   150,000          -0-       94,689(13)     8,000      10,459(14)
 Senior Vice President
  and President          1995 182,000   125,000          -0-       74,000         7,500     190,749
 --Products/Compression  1994 168,000   100,000          -0-       53,325         6,000       5,388
NORMAN W. NOLEN......... 1996 180,000   115,000          -0-       94,689(15)     6,000       7,769(16)
 Senior Vice President,
  Chief                  1995 155,000   108,000          -0-       55,500         6,000     162,587
 Financial Officer and
  Treasurer              1994 147,000    90,000          -0-       53,325         6,000       4,245
H. SUZANNE THOMAS....... 1996 180,000   115,000          -0-       94,689(17)     6,000       8,274(18)
 Senior Vice President,
  Secretary              1995 155,000   108,000          -0-       55,500         6,000     162,687
 and General Counsel     1994 147,000    90,000          -0-       53,325         6,000       4,245
</TABLE>
 
                                    (footnotes continued on the following page)
 
                                      13
<PAGE>
 
--------
 (1) Bonuses paid for 1996 were paid in cash, except for Mr. Amonett, who
     received approximately 69% of his bonus in shares of Common Stock issued
     under the Company's Executive Incentive Stock Bonus Plan (the "Bonus
     Plan"). For 1995, Mr. Burguieres received 100% of his bonus in shares of
     Common Stock issued under the Bonus Plan, while other executives received
     75% in cash and 25% in shares of Common Stock issued under the Bonus
     Plan. Bonuses paid for 1994 were paid in cash.
 (2) Unless otherwise indicated, does not include the value of perquisites and
     other benefits as the aggregate amount of such compensation for each
     named officer does not exceed the lesser of $50,000 or 10% of that
     officer's total reported annual salary and bonus.
 (3) Dollar amount shown equals number of shares issued under the Restricted
     Plan multiplied by the closing stock price on grant date. Dividends would
     be paid on these shares in the event dividends are paid on the Common
     Stock, which is not anticipated in the foreseeable future.
 (4) Adjusted to reflect the one-for-two reverse stock split of the Common
     Stock effected on October 5, 1995 (the "Split").
 (5) Mr. Burguieres resigned as President and Chief Executive Officer of the
     Company on October 17, 1996, but continues to serve as Chairman of the
     Board.
 (6) For 1995, includes a $1.2 million fee paid pursuant to the terms of the
     Merger Agreement.
 (7) Held an aggregate of 14,125 shares under the Restricted Plan still
     subject to restrictions as of December 31, 1996 with an aggregate total
     value of $347,576; restrictions have lapsed, or will lapse, on 1,875
     shares on March 18, 1997; on 1,750 shares on each of February 15, 1997,
     1998, 1999 and 2000; and on 1,750 shares on each of March 16, 1997, 1998
     and 1999.
 (8) For 1996, includes $6,717 of Company match and discretionary
     contributions under the 401(k) Plan and $9,375 of Company match under the
     Supplemental Savings Plan. For 1995, includes $630,000 paid in exchange
     for the waiver of certain rights under Mr. Burguieres' Severance
     Agreement (as hereinafter defined) required pursuant to the terms of the
     Merger Agreement (see "Employment Contracts and Termination of Employment
     and Change of Control Arrangements"), $11,952 of Company match and
     discretionary contributions under the 401(k) Plan, and $11,640 of Company
     match under the Supplemental Savings Plan. For 1994, includes $5,113 of
     Company match and discretionary contributions under the 401(k) Plan and
     $4,800 of Company match under the Supplemental Savings Plan.
 (9) Mr. Amonett, also a director of the Company, entered into a Consulting
     Agreement dated as of July 26, 1996, pursuant to which he agreed to serve
     as Acting President and Chief Executive Officer in exchange for a monthly
     consulting fee and various other benefits, in addition to the fees he
     receives as a director. The amounts reflected in the table do not include
     his director compensation. See "Compensation of Directors".
(10) For 1994, includes $30,058 paid in connection with Mr. Eagles' relocation
     and $20,580 reimbursement for the payment of taxes thereon.
(11) Held an aggregate of 5,811 shares under the Restricted Plan still subject
     to restrictions as of December 31, 1996 with an aggregate total value of
     $136,716; restrictions have lapsed, or will lapse, on 1,250 shares on
     March 18, 1997; on 625 shares on each of February 15, 1997, 1998, 1999
     and 2000; and on 687 shares on each of March 16, 1997, 1998 and 1999.
(12) For 1996, includes $6,884 of Company match and discretionary
     contributions under the 401(k) Plan and $6,013 of Company match under the
     Supplemental Savings Plan. For 1995, includes $245,000 paid in exchange
     for the waiver of certain rights under Mr. Eagles' Severance Agreement
     required pursuant to the terms of the Merger Agreement (see "Employment
     Contracts and Termination of Employment and Change of Control
     Arrangements"), $7,336 of Company match and discretionary contributions
     under the 401(k) Plan and $4,900 of Company match under the Supplemental
     Savings Plan. For 1994, includes $5,150 of Company match and
     discretionary contributions under the 401(k) Plan and $1,600 of Company
     match under the Supplemental Savings Plan.
 
                                    (footnotes continued on the following page)
 
                                      14
<PAGE>
 
(13) Held an aggregate of 3,406 shares under the Restricted Plan still subject
     to restrictions as of December 31, 1996 with an aggregate total value of
     $81,485; restrictions have lapsed, or will lapse, on 406 shares on March
     18, 1997; on 625 shares on each of February 15, 1997, 1998, 1999 and
     2000; and on 687 shares on each of March 16, 1997, 1998 and 1999.
(14) For 1996, includes $6,684 of Company match and discretionary
     contributions under the 401(k) Plan and $3,775 of Company match under the
     Supplemental Savings Plan. For 1995, includes $182,000 paid in exchange
     for the waiver of certain rights under Mr. Burke's Severance Agreement
     required pursuant to the terms of the Merger Agreement (see "Employment
     Contracts and Termination of Employment and Change of Control
     Arrangements"), $6,109 of Company match and discretionary contributions
     under the 401(k) Plan and $2,640 of Company match under the Supplemental
     Savings Plan. For 1994, includes $4,888 of Company match and
     discretionary contributions under the 401(k) Plan and $500 of Company
     match under the Supplemental Savings Plan.
(15) Held an aggregate of 3,031 shares under the Restricted Plan still subject
     to restrictions as of December 31, 1996 with an aggregate total value of
     $74,547; restrictions have lapsed, or will lapse, on 406 shares on March
     18, 1997; on 375 shares on each of February 15, 1997, 1998, 1999 and
     2000; and on 375 shares on each of March 16, 1997, 1998 and 1999.
(16) For 1996, includes $6,149 of Company match and discretionary
     contributions under the 401(k) Plan and $2,637 of Company match under the
     Supplemental Savings Plan. For 1995, includes $155,000 paid in exchange
     for the waiver of certain rights under Mr. Nolen's Severance Agreement
     required pursuant to the terms of the Merger Agreement (see "Employment
     Contracts and Termination of Employment and Change of Control
     Arrangements"), $5,787 of Company match and discretionary contributions
     under the 401(k) Plan and $1,800 of Company match under the Supplemental
     Savings Plan. For 1994, includes $4,245 of Company match and
     discretionary contributions under the 401(k) Plan.
(17) Held an aggregate of 3,031 shares under the Restricted Plan still subject
     to restrictions as of December 31, 1996 with an aggregate total value of
     $74,547; restrictions have lapsed, or will lapse, on 406 shares on March
     18, 1997; on 375 shares on each of February 15, 1997, 1998, 1999 and
     2000; and on 375 shares on each of March 16, 1997, 1998 and 1999.
(18) For 1996, includes $5,904 of Company match and discretionary
     contributions under the 401(k) Plan and $2,370 of Company match under the
     Supplemental Savings Plan. For 1995, includes $155,000 paid in exchange
     for the waiver of certain rights under Ms. Thomas' Severance Agreement
     required pursuant to the terms of the Merger Agreement (see "Employment
     Contracts and Termination of Employment and Change of Control
     Arrangements"), $5,787 of Company match and discretionary contributions
     under the 401(k) Plan and $1,900 of Company match under the Supplemental
     Savings Plan. For 1994, includes $4,245 of Company match and
     discretionary contributions under the 401(k) Plan.
 
STOCK OPTION PLANS AND SAR PLAN
 
  The Company currently maintains the 1987 Stock Option Plan and the 1991
Stock Option Plan (each an "Option Plan" or, collectively, the "Option
Plans"). The Option Plans, which have substantially the same terms and
conditions, allow for grants of options to purchase shares of the Common
Stock. The 1987 Option Plan has expired for purposes of future grants, but all
outstanding options remain exercisable in accordance with their terms. Future
grants may be made under the 1991 Option Plan. All options to purchase Common
Stock are granted by the Compensation Committee, except for options granted to
the Chief Executive Officer, which are recommended by the Compensation
Committee and approved by the Board of Directors.
 
  All stock options granted under an Option Plan have a term of ten years
(except for certain options assumed in various mergers, which have a term of
five years) and are exercisable at a rate of one-third each year beginning one
year after the grant date. The exercise price, which is the fair market value
of the Common Stock on the date of grant, is payable in cash, shares of Common
Stock (subject to certain limitations), broker-financed cashless exercises or
some combination of these approaches. No employee has any rights as a
stockholder of any shares subject to an option until the exercise price has
been paid and the shares issued to the employee.
 
                                      15
<PAGE>
 
  The Company maintains the SAR Plan pursuant to which the Company could,
prior to March 20, 1992, grant SARs to eligible employees of the Company. The
SAR Plan was originally implemented to allow executives and certain other
stock option plan participants to tender their options to the Company in
exchange for cash equal to the "spread" in the option (equal to the difference
between the market value of the Common Stock on the date of grant and the
market value of the Common Stock on the date the option is exercised).
Effective March 19, 1992, the SAR Plan was amended to provide that no new
awards may be made pursuant to the SAR Plan after that date. SARs awarded
under the SAR Plan prior to that date remain in effect and are not affected by
the amendment.
 
  The following table sets forth certain information regarding stock options
granted during fiscal year 1996 to the persons named in the Summary
Compensation Table above. The hypothetical present values on the date of grant
of stock options granted in 1996 shown below are presented pursuant to the
Commission's rules and are calculated under a modified Black-Scholes Model
(the "Model") for pricing options. This hypothetical value of options trading
in the stock market bears little relationship to the compensation cost to the
Company or potential gain realized by an executive officer. The actual amount,
if any, realized upon exercise of stock options will depend upon the market
price of the Common Stock relative to the exercise price per share of Common
Stock at the time the stock option is exercised. There is no assurance that
the hypothetical present value of stock options reflected in this table
actually will be realized.
 
                     OPTION/SAR GRANTS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                                          GRANT
                                                                          DATE
                            INDIVIDUAL GRANT                              VALUE
------------------------------------------------------------------------ -------
            (A)                 (B)       (C)         (D)         (E)      (F)
--------------------------- ---------- --------- ------------ ---------- -------
                                         % OF
                                         TOTAL
                            NUMBER OF   OPTIONS
                            SECURITIES  GRANTED                           GRANT
                            UNDERLYING    TO                              DATE
                             OPTIONS   EMPLOYEES EXERCISE OR             PRESENT
                             GRANTED   IN FISCAL  BASE PRICE  EXPIRATION  VALUE
NAME                            (#)(1)   YEAR    ($/SHARE)(2)    DATE    ($)(3)
----                        ---------- --------- ------------ ---------- -------
<S>                         <C>        <C>       <C>          <C>        <C>
Philip Burguieres..........   30,000      9.2       31.563    2/15/2006  279,741
Thomas N. Amonett..........      -0-      N/A        N/A         N/A       N/A
M. E. Eagles...............   12,000      3.7       31.563    2/15/2006  111,896
James R. Burke.............    8,000      2.5       31.563    2/15/2006   74,600
Norman W. Nolen............    6,000      1.8       31.563    2/15/2006   55,948
H. Suzanne Thomas..........    6,000      1.8       31.563    2/15/2006   55,948
</TABLE>
--------
(1) Options granted in 1996 are exercisable starting 12 months after the grant
    date, with one-third of the shares covered thereby becoming exercisable at
    that time and an additional one-third becoming exercisable on each
    successive anniversary date, with full vesting occurring on the third
    anniversary date. Under the terms of the Option Plans, the Compensation
    Committee retains the discretion, subject to plan limitations, to modify
    the terms of outstanding options, including the exercise price and
    expiration date in certain events.
(2) The exercise price and tax withholding obligations related to the exercise
    may be paid by delivery of already-owned shares of Common Stock or by
    offsetting a portion of the underlying shares, subject to certain
    conditions.
(3) The present values on grant date are calculated under the Model modified
    to give effect to the expected dividend rate of the Common Stock and non-
    transferability factors such as timing, vesting, liquidity and freely-
    traded status. The Model is a mathematical formula used to value options
    traded on stock exchanges. This formula considers a number of factors to
    estimate the option's present value, including the Common Stock's
    volatility (based on 36 months of historical stock price trading data),
    dividend rate (0%), exercise period of the option (10 years), interest
    rate (risk free rate of 5.7%) and vesting schedule (adjusted for risk of
    forfeiture during three-year vesting period).
 
                                      16
<PAGE>
 
  The following table shows aggregate option and SAR exercises during fiscal
year 1996 and December 31, 1996 values for the persons named in the Summary
Compensation Table above.
 
   AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
                                    VALUES
 
<TABLE>
<CAPTION>
          (A)                (B)          (C)                     (D)                                (E)
------------------------ ----------- -------------- ------------------------------------------------------------------
                                                    NUMBER OF SECURITIES UNDERLYING     VALUE OF UNEXERCISED IN-THE-
                           SHARES                     UNEXERCISED OPTIONS/SARS AT                   MONEY
                         ACQUIRED ON                          FY-END(#)(2)              OPTIONS/SARS AT FY-END($)(1)
                          EXERCISE       VALUE      ------------------------------------------------------------------
          NAME               (#)     REALIZED($)(1)   EXERCISABLE       UNEXERCISABLE     EXERCISABLE    UNEXERCISABLE
          ----           ----------- -------------- ------------------ --------------------------------- -------------
<S>                      <C>         <C>            <C>                <C>             <C>               <C>
Philip Burguieres.......       0            0           145,834/31,250       29,166/0  2,173,437/623,594   108,663/0
Thomas N. Amonett.......       0            0              N/A                N/A             N/A             N/A
M.E. Eagles.............       0            0                 28,167/0       11,333/0          294,625/0    39,513/0
James R. Burke..........       0            0             25,999/5,125        7,834/0     350,859/72,952    29,638/0
Norman W. Nolen.........       0            0             27,750/5,125        6,000/0     392,204/99,131    23,710/0
H. Suzanne Thomas.......       0            0             28,000/7,750        6,000/0    403,230/149,433    23,710/0
</TABLE>
--------
(1) Market value of underlying securities at exercise date or year-end, as
    appropriate, minus the exercise or base price of "in-the-money"
    options/SARs.
(2) Adjusted to reflect the Split.
 
DEFINED BENEFIT PLAN
 
  The Company maintains a defined benefit plan called the Weatherford Enterra
Pension Plan (the "Pension Plan") for U.S. employees of the Company and
certain of its subsidiaries, including executive officers, which was frozen as
of June 30, 1996.
 
  The remuneration covered by the Pension Plan consists only of the salaries
paid to Pension Plan participants, as set forth in column (c) of the Summary
Compensation Table. Bonuses, including the bonuses set forth in column (d) of
that table, are excluded. The Pension Plan provides for (i) normal retirement
at age 65 with an early retirement option at age 55 for eligible employees,
(ii) a vested benefit after five years of vesting service, (iii) retirement
income of approximately 32 percent of final average earnings after 35 years of
credited service and (iv) spouse and disability benefits.
 
  The Company also maintains the Supplemental Executive Retirement Plan (the
"SERP") to supplement the retirement benefit to be paid pursuant to the
Pension Plan to certain employees designated by the Compensation Committee,
including the executive officers named in the Summary Compensation Table. The
Code limited the benefit under the Pension Plan during 1996 to $120,000 and
limited the compensation used to calculate the benefit to $150,000; these
amounts are indexed annually to the changes in Social Security benefits. If
the pension benefit to certain employees would be limited by Section 415 of
the Code or if the participant's compensation used to calculate the benefit
would be limited by the Code, such amounts otherwise payable to the Pension
Plan participant pursuant to the Pension Plan would be paid directly to such
participant by the Company in full, pursuant to the provisions of the SERP.
The purpose of the SERP is to pay each employee the full retirement benefit
otherwise payable to him or her but for the benefit limitations imposed by the
Code. In addition, bonuses, including the bonuses set forth in column (d) of
the Summary Compensation Table, are included in compensation for purposes of
the SERP. The SERP also replaces benefits that would have accrued under the
Pension Plan had that plan not been frozen. The Company intends to freeze the
SERP as of October 5, 1997.
 
                                      17
<PAGE>
 
  The following table sets forth the estimated combined annual benefit payable
from the Pension Plan and the SERP upon normal retirement at age 65 as a
straight-life annuity to persons in specified remuneration and years of
service classifications.
 
                             PENSION PLAN TABLE(1)
 
<TABLE>
<CAPTION>
                                             YEARS OF CREDITED SERVICE
   ASSUMED 10-YEAR                  --------------------------------------------
   FINAL AVERAGE PAY                   15       20       25       30       35
   -----------------                -------- -------- -------- -------- --------
   <S>                              <C>      <C>      <C>      <C>      <C>
   $100,000........................ $ 13,500 $ 18,000 $ 22,500 $ 27,000 $ 31,500
    200,000........................   27,000   36,000   45,000   54,000   63,000
    300,000........................   40,500   54,000   67,500   81,000   94,500
    400,000........................   54,000   72,000   90,000  108,000  126,000
    500,000........................   67,500   90,000  112,500  135,000  157,500
    600,000........................   81,000  108,000  135,000  162,000  189,000
    700,000........................   94,500  126,000  157,500  189,000  220,500
    800,000........................  108,000  144,000  180,000  216,000  252,000
</TABLE>
--------
(1) Estimated annual benefits shown above are overstated as they reflect the
    higher accrual rate (.9%) based on final average pay both over and under a
    participant's Covered Compensation (as defined below). Generally the
    accrual rate is .45% plus an additional .45% for pay in excess of the
    lesser of 125% of the participant's Covered Compensation and the current
    taxable wage base. "Covered Compensation" is the average of the Social
    Security Wage Bases during the 35-year period ending with the year the
    employee reached Social Security retirement age. Benefits are not subject
    to deductions for Social Security benefits or any other offset amounts.
 
  Credited service for purposes of the Pension Plan and the SERP is all
service with the Company after January 1, 1992. Each of Messrs. Burguieres,
Burke and Nolen and Ms. Thomas has five years of credited service, and Mr.
Eagles has four years of credited service.
 
COMPENSATION OF DIRECTORS
 
  During 1996, all members of the Board of Directors who were not employees of
the Company were paid a quarterly retainer fee of $5,000 and a fee of $1,000
for attendance at each meeting of the Board of Directors. Additionally,
committee members were paid a fee of $1,000 for attendance at each meeting of
a committee of the Board of Directors on which they served.
 
  The Company maintains the Non-Employee Director Retirement Plan, effective
January 1, 1994, pursuant to which each non-employee director who has
completed five years or more of service at the time he or she ceases to be a
director will receive an annual deferred compensation benefit equal to between
50 percent and 100 percent, depending on his or her years of service, of his
or her annual cash retainer fee paid for the year in which he or she ceases to
be a director. The benefit will be paid for the lesser of the number of months
of his or her service as a director or 120 months.
 
  The Company also maintains the Deferred Compensation Plan for Non-Employee
Directors, effective December 1, 1994, pursuant to which each non-employee
director can defer all or a portion of his or her retainer fee or meeting fees
and receive interest on such deferred amounts at a market rate of return
established by the Compensation Committee.
 
  The Company also maintains the Non-Employee Director Stock Option Plan (the
"Director Option Plan"), effective March 16, 1995, pursuant to which each non-
employee director is granted a stock option to purchase 2,500 shares of Common
Stock at the time of his or her initial election to the Company's Board of
Directors and an option to purchase 500 shares of Common Stock at each Annual
Meeting of Stockholders thereafter for so
 
                                      18
<PAGE>
 
long as he or she serves as a non-employee director. The exercise price of
such options is the fair market value of the Common Stock on the date of
grant. Such options vest 100 percent six months after the grant date and are
exercisable for a term of 10 years. All non-employee directors except Messrs.
Hill and Macaulay were granted on May 20, 1996 an option to purchase 500
shares of Common Stock at an exercise price of $32.75, the fair market value
of the Common Stock on May 20, 1996. Messrs. Hill and Macaulay have refused
grants under the Director Option Plan prior to 1997 but will accept such
grants beginning in 1997. On March 11, 1997, the Board of Directors approved
the amendment of the Director Option Plan, subject to stockholder approval, as
described in Proposal 2 below.
 
  The Company entered into a Consulting Agreement dated July 26, 1996, as
amended effective January 1, 1997, with Mr. Amonett pursuant to which he
agreed to serve as Acting President and Chief Executive Officer for $22,750
per month (increased to $30,000 per month as of January 1, 1997), in addition
to his other compensation earned as a non-employee director. Mr. Amonett
became an employee of the Company as of February 1, 1997, and, therefore, is
not entitled to receive compensation as a director or to participate in the
non-employee director plans described above for so long as he remains an
employee of the Company.
 
  On March 11, 1997, the Board of Directors approved the Non-Employee Director
Restricted Stock Plan, subject to stockholder approval, as described in
Proposal 3 below.
 
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
 
  The Company has entered into a Change of Control Agreement (a "Severance
Agreement") with each of Messrs. Eagles, Burke and Nolen and Ms. Thomas. Until
his resignation as President and Chief Executive Officer on October 17, 1996,
Mr. Burguieres had a Severance Agreement. The purpose of the Severance
Agreements is to encourage the executive officers to continue to carry out
their duties with the Company in the event of a "change of control" of the
Company. Under each Severance Agreement, a change of control of the Company is
deemed to have occurred if (i) any person or group of persons acting in
concert becomes the beneficial owner of 20 percent or more of the outstanding
shares of Common Stock or the combined voting power of the Company's voting
securities, with certain exceptions; (ii) individuals who as of the date of
such agreement constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof; (iii) there occurs a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the Company's assets, unless after the transaction, all
or substantially all of those persons who were the beneficial owners of Common
Stock prior to the transaction beneficially own more than 60 percent of the
then outstanding common stock of the resulting corporation, no person who did
not own Common Stock prior to the transaction beneficially owns 20 percent or
more of the then outstanding common stock of the resulting corporation, and at
least a majority of the Board of Directors of the corporation resulting from
such transaction were members of the Board of Directors of the Company at the
time such Severance Agreement was approved by the Board of Directors or
executed; or (iv) the stockholders of the Company approve a complete
liquidation or dissolution of the Company.
 
  Each of the Severance Agreements provides for severance payments in the
event of termination of the executive officer's employment within three years
after a change of control of the Company, unless the executive's employment is
terminated by the Company or its successor for "cause" or "disability",
because of the executive's death or "retirement" or by the executive's
voluntary termination for other than "good reason", in each case as such terms
are defined in the Severance Agreement. The benefits may consist of the
following: (a) an amount equal to three times the highest salary plus bonus
paid to such executive in any of the five years preceding the year of
termination of employment; (b) salary and bonus (prorated based on the highest
bonus earned in the preceding three years) to the date of termination; (c) an
amount equal to the amount that would be payable if all unvested retirement
plan benefits were vested; (d) an amount equal to the amount that would have
been contributed as the Company match under the 401(k) Plan and the
Supplemental Savings Plan for three years and (e) an amount equal to the
amount the executive would have received as a car allowance for three years.
In addition, if an executive is terminated within three years after a change
of control, all outstanding stock options granted under either of the Option
Plans and all outstanding SARs issued under the SAR Plan would
 
                                      19
<PAGE>
 
automatically vest and the executive would have the right to either exercise
such options and SARs for seven months after his or her date of termination
(or until the stated termination of such options and SARs, if earlier) or to
surrender for cash all such options and SARs, unless to do so would cause a
transaction otherwise eligible for pooling of interests accounting treatment
under Accounting Principles Board Opinion No. 16 to be ineligible for such
treatment, in which case the executive would receive shares of Common Stock
equal in value to the cash he or she would have received. Ownership
restrictions on shares granted under the Restricted Plan would also be
terminated in the event of an executive's termination during this period. All
health and medical benefits would also be maintained after termination for
three years, if the executive makes his or her required contribution. Under
the Deficit Reduction Act of 1984, severance payments that exceed a certain
amount subject both the Company and the executive to adverse U.S. Federal
income tax consequences. Each of the Severance Agreements provides that the
Company shall pay the executive a "gross-up payment" to ensure that the
executive receives the total benefit intended by the Severance Agreement. Each
of the Severance Agreements was amended in August 1996 to increase the
protection period after a change of control from two years to three years and
to increase the multiple of salary to be paid to the executive from two to
three.
 
  The Company has entered into an Employment Agreement dated October 17, 1996
with Mr. Burguieres pursuant to which he will continue to serve as a director
and as Chairman of the Board of Directors of the Company and provide other
services to the Board. The term of the agreement will expire October 16, 2001
unless sooner terminated as provided therein, but the Board may choose not to
re-elect Mr. Burguieres as Chairman and not to nominate him as a director at
the end of his current term. The Company will pay Mr. Burguieres $25,000 per
month pursuant to this agreement. Such Employment Agreement provides that the
amounts owed thereunder shall be due and payable, at Mr. Burguieres' option,
in the event of a "change of control" of the Company (as defined in the
Severance Agreements).
 
  The Company has entered into an Indemnification Agreement (an
"Indemnification Agreement") with each executive officer and director of the
Company, pursuant to which the Company is obligated to provide indemnification
and expense advancement to such executive officer or director in connection
with a claim made against such executive officer or director by reason of an
"Indemnifiable Event", as defined in each Indemnification Agreement. Each
Indemnification Agreement provides that, in the event of a change in control
of the Company, as defined in each Indemnification Agreement, the Company will
seek an opinion from a special independent counsel selected by an executive
officer or director seeking indemnification and approved by the Company as to
whether and to what extent such executive officer or director would be
permitted to be indemnified under the Indemnification Agreement or the Bylaws.
 
  Certain of the Company's benefit plans, including the Option Plans, the SAR
Plan, the Restricted Plan, the 401(k) Plan, the Supplemental Savings Plan, the
Pension Plan and the SERP, contain provisions that permit early vesting of the
benefits, receipt of cash in exchange for cancellation of the benefits or the
termination of ownership restrictions on the benefits, as applicable, upon the
occurrence of a change of control, as defined in each such plan. To the extent
that the change of control provisions of the Severance Agreements are
triggered, the Severance Agreements may provide for a different treatment for
such benefits, as described above.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  Messrs. Greehey, Moses and Widmann served as members of the Compensation
Committee during the entire year, and Mr. Amonett served as a member from May
17 through July 26, 1996, until his appointment as Acting President and Chief
Executive Officer of the Company. Except for Mr. Amonett, during 1996 no
member of the Compensation Committee was an officer or employee of the Company
or any of its subsidiaries. Except for Messrs. Amonett and Moses, each of whom
previously has served as Chairman of the Board of the Company in a non-
executive officer capacity, no member of the Compensation Committee was
formerly an officer or employee of the Company or any of its subsidiaries.
 
  During 1996, no executive officer of the Company served as (i) a member of
the compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers
 
                                      20
<PAGE>
 
served on the Compensation Committee, (ii) a director of another entity, one
of whose executive officers served on the Compensation Committee, or (iii) a
member of the compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers
served as a director of the Company.
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
  The Company has an Employment Agreement with Mr. Burguieres. See "Employment
Contracts and Termination of Employment and Change of Control Arrangements".
 
                             PROPOSAL TO AMEND THE
                    NON-EMPLOYEE DIRECTOR STOCK PLAN OPTION
 
                                 (Proposal 2)
 
  On March 11, 1997, the Board of Directors approved and adopted the amendment
of the Non-Employee Director Stock Option Plan (the "Director Option Plan") to
increase the number of shares of Common Stock covered by the option granted to
each non-employee director of the Company (an "Outside Director") after each
annual meeting of stockholders from 500 shares to 2,000 shares. The Company's
stockholders are being asked to approve and adopt such amendment.
 
  The purpose of the Director Option Plan is to promote the achievement of the
Company's long-term objectives by linking the personal interests of the
Outside Directors to those of the Company's stockholders and to attract and
retain persons of outstanding competence to serve as directors of the Company.
 
  The Director Option Plan has been approved previously by the Company's
stockholders. The following summary of the Director Option Plan, including the
amendments thereto approved by the Board of Directors, is qualified in its
entirety by reference to the Director Option Plan.
 
  Administration. The Director Option Plan is administered by the Compensation
Committee. However, since the Director Option Plan provides for automatic
grants of options to Outside Directors, the Compensation Committee shall have
no power to determine the eligibility for options, the timing of options, the
number of shares of Common Stock covered by options granted, the option
exercise price or the vesting schedule for options.
 
  Shares Subject to Option. As of the Record Date, a total of 22,500 shares
were subject to options granted under the Director Option Plan and 48,500
shares were available for future option grants under the Director Option Plan.
Only Stock options not intended to qualify as incentive options as described
in Section 422A of the Code may be issued pursuant to the Director Option
Plan. Common Stock issued upon the exercise of options granted under the
Director Option Plan may consist of authorized but unissued shares or shares
reacquired by the Company and held as treasury Stock. If an option under the
Director Option Plan expires or terminates before it has been exercised in
full, the shares of Common Stock allocable to the unexercised portion of such
option may again be subject to the granting of options under the Director
Option Plan. The number of shares available for the granting of options and
subject to issuance upon the exercise of any outstanding options, and option
prices, as herein described, are to be adjusted upward or downward, as the
case may be, in the event of any subdivision or consolidation of shares or
other capital readjustment, payment of a Stock dividend, merger, consolidation
or similar transaction affecting the shares.
 
  Eligibility. The only persons eligible to participate in the Director Option
Plan shall be Outside Directors. There are currently eight Outside Directors.
 
  Option Grants. Each Outside Director will receive upon his or her initial
election to the Board of Directors of the Company an option to purchase 2,500
shares of Common Stock. In addition, each Outside Director will receive on the
day after each annual meeting of stockholders an option to purchase 2,000
shares of Common Stock for so long as he or she serves as an Outside Director.
 
                                      21
<PAGE>
 
  Option Price. The exercise price of an option will be the fair market value
of a share of Common Stock on the day such option is granted. A holder of an
option granted under the Director Option Plan may exercise his or her option
by paying the option exercise price (i) in cash, (ii) subject to certain
conditions, in whole or in part in shares of Common Stock previously acquired
by such holder or (iii) subject to the provisions of Rule 16b-3 promulgated
under the Exchange Act, by delivery of irrevocable instructions to a broker to
promptly deliver to the Company the option exercise price, either from loan
proceeds or sale of share proceeds.
 
  Duration. Options are exercisable for ten years after the date such option
is granted.
 
  Transferability. Options granted under the Director Option Plan will be
transferable only by will or under the laws of descent and distribution.
 
  Exercise of Options. Options shall become exercisable in whole beginning six
months after the date of grant. If a holder ceases to be a director of the
Company for any reason other than death, disability or retirement, all options
not then exercisable shall terminate and all then outstanding vested options
shall be exercisable for a period ending on the earlier of the expiration date
of the options and six months following his or her termination. In the event
of the death, disability or retirement of an optionee before the date of
expiration of such options, all then outstanding options (including those not
vested) shall be vested and such options shall be exercisable for a period
ending on the earlier of the expiration date of the options and one year after
the date of death, disability or retirement.
 
  Change of Control. The Director Option Plan provides that if there is a
change of control (as defined below), the option holder has the right to (i)
surrender all outstanding options, whether or not then exercisable, for a cash
payment equal to the amount by which the option price for shares covered by
the option is exceeded by the then fair market value of such shares, or, if
applicable, the price for such shares offered to stockholders of the Company
in connection with any fundamental corporate change, unless to do so would
cause a transaction otherwise eligible for "pooling of interests" accounting
treatment under Accounting Principles Board Opinion No. 16 to be ineligible
for such treatment, in which case the director would receive shares of Common
Stock equal in value to the cash payment he or she would have received, or
(ii) exercise all outstanding options, which would automatically vest, for a
period ending on the earlier of the expiration date of the options and seven
months after the date of his or her termination as a director. The Director
Option Plan defines a "change of control" as (i) a third person becoming the
beneficial owner of 20 percent or more of the voting securities of the
Company; (ii) a situation where, as a result of a contested election for
directors, the persons who were directors of the Company before the election
cease to constitute a majority of the Board of Directors; or (iii) any merger
or consolidation of the Company, regardless of whether the Company is the
surviving corporation, the dissolution of the Company, or the sale of all or
substantially all of the Company's assets to any other person or entity. The
acceleration of vesting or the use of Company funds for payment of cash to
option holders upon the occurrence of a change of control of the Company may
be seen as an anti-takeover provision and may have the effect of discouraging
such fundamental corporate changes.
 
  Amendments. The Board of Directors of the Company has the power to modify,
revise or terminate the Director Option Plan. However, unless it shall have
obtained the approval of the stockholders of the Company, the Board of
Directors may not (i) materially increase the benefits accruing to persons
holding options granted under the Director Option Plan; (ii) change the
aggregate number of shares of Common Stock issuable upon the exercise of
options granted under the Director Option Plan; or (iii) change the class of
directors eligible to receive options. In no event may the Director Option
Plan be amended more frequently than once every six months.
 
  Effective Date and Duration. The Director Option Plan became effective as of
March 16, 1995. No options will be granted under the Director Option Plan
after March 15, 2005.
 
                                      22
<PAGE>
 
  New Plan Benefits. The following options will be granted under the Director
Option Plan during 1997, subject to stockholder approval of the amendment to
the Director Option Plan.
 
<TABLE>
<CAPTION>
                                                                  SHARES
                                                                  SUBJECT OPTION
                                                                    TO    PRICE
   NAME AND POSITION                                              OPTION   ($)
   -----------------                                              ------- ------
   <S>                                                            <C>     <C>
   Directors:
     Thomas J. Edelman ..........................................  2,000     *
     William E. Greehey..........................................  2,000     *
     John A. Hill................................................  2,000     *
     John W. Johnson.............................................  2,000     *
     William E. Macaulay.........................................  2,000     *
     Robert K. Moses, Jr.........................................  2,000     *
     Roger M. Widmann............................................  2,000     *
   Non-Executive Director Group.................................. 14,000     *
</TABLE>
--------
*Fair market value on May 16, 1997.
 
  Valuation. The fair market value of the Common Stock was $28.00 per share on
April 4, 1997.
 
  Tax Consequences. The grant of options under the Director Option Plan will
not result in income tax consequences to either the Company or the optionee.
The optionee will generally realize ordinary income in the year in which the
option is exercised in an amount equal to the excess of the fair market value
of the purchased shares on the exercise date over the exercise price paid for
the shares. The Company ordinarily will be entitled to a tax deduction in an
amount equal to the amount of ordinary income realized by the optionee with
respect to exercised options in the taxable year in which the optionee
realizes the income.
 
  VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL. The Board of Directors has
approved and adopted the proposed amendment to the Director Option Plan.
However, the proposed amendment will not be implemented unless the holders of
a majority of the shares of Common Stock present in person or represented by
proxy and entitled to vote at the Annual Meeting vote "for" the approval and
adoption of the amendment to the Director Option Plan.
 
  THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE PROPOSED AMENDMENT TO THE NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN.
 
                            PROPOSAL TO APPROVE THE
                  NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN
 
                                 (Proposal 3)
 
  On March 11, 1997, the Board of Directors approved and adopted the Non-
Employee Director Restricted Stock Plan (the "Director Restricted Plan"),
which provides for the granting of up to 250,000 shares of Common Stock of the
Company to Outside Directors. The Company's stockholders are being asked to
approve the Director Restricted Plan.
 
  The purpose of the Director Restricted Plan is to advance the best interest
of the Company by supplementing the compensation paid to the Outside Directors
to increase their proprietary interest in the Company, to attract and retain
persons with outstanding qualifications to serve as directors of the Company
and to enhance their identification with the interest of the Company's
stockholders. The following summary of the major provisions of the Director
Restricted Plan is qualified in its entirety by reference to the detailed
provisions of the Director Restricted Plan.
 
                                      23
<PAGE>
 
  Administration. The Director Restricted Plan will be administered by the
Compensation Committee. However, since the Director Restricted Plan provides
for automatic grants of shares to Outside Directors, the Committee shall have
no power to determine the eligibility for awards, the number of shares of
Common Stock covered by the awards granted, the timing of awards granted or
the restrictions, and timing for removal thereof, on the shares granted.
 
  Shares Subject to Grant. Under the Director Restricted Plan, a total of
250,000 shares of the Company's Common Stock will be made available for grant.
Common Stock granted under the Director Restricted Plan may consist of
authorized but unissued shares or shares reacquired by the Company and held as
treasury shares. If shares granted under the Director Restricted Plan are
forfeited, such shares may again be subject to grant under the Director
Restricted Plan. The number of shares available for grant under the Director
Restricted Plan is to be adjusted in the event of any subdivision or
consolidation of shares or other capital readjustment, merger, consolidation
or similar transaction affecting the shares.
 
  Eligibility. The only persons eligible to participate in the Director
Restricted Plan shall be Outside Directors. There are currently eight Outside
Directors.
 
  Operation of the Director Restricted Plan. Each person who is an Outside
Director on the effective date of the Director Restricted Plan will be
automatically granted that number of shares of Common Stock, determined by
dividing $45,000 by the fair market value of a share of Common Stock on that
date. A person who is first elected or appointed an Outside Director after the
effective date of the Director Restricted Plan will be automatically granted
on the date so elected or appointed that number of shares of Common Stock
determined by dividing $45,000 (subject to adjustment on an annual basis for
years after 1997 for projected inflation based on changes in the consumer
price index) by the fair market value of a share of Common Stock on that date.
Each Outside Director who previously received a grant under the Director
Restricted Plan on which all restrictions on ownership have terminated and who
is reelected for an additional term as an Outside Director at, or whose term
of office otherwise continues following the date of, an annual meeting of
stockholders will be automatically granted an additional award of shares of
Common Stock under the Director Restricted Plan, the number of shares to be
determined by dividing $45,000, subject to adjustment, by the fair market
value of a share of Common Stock on that date.
 
  An Outside Director will own the shares of Common Stock from the date of the
share grant, subject to restrictions on ownership. The Outside Director will
not be able to sell, exchange, transfer, assign, pledge or otherwise dispose
of such shares until such restrictions on ownership terminate in accordance
with the provisions of the Director Restricted Plan. Ownership restrictions
will terminate on each grant of shares of Common Stock under the Director
Restricted Plan in three equal installments over a three-year period,
commencing one year after the date of the grant. The Outside Director
generally must be serving as a director of the Company at the specified times
in order for the restrictions to terminate, although the Director Restricted
Plan provides that the restrictions will otherwise terminate in certain
limited circumstances. In the event an Outside Director ceases to be a
director prior to the ownership restrictions on the shares terminating, the
Outside Director will, unless provided otherwise in the Director Restricted
Plan, for no consideration, forfeit all shares granted under such plan that
remain subject to such restrictions and surrender to the Company all Stock
certificates representing such shares, if any have been issued and delivered.
 
  Change of Control. If there is a change of control (as defined below) of the
Company, all restrictions remaining on any shares granted to an Outside
Director will automatically terminate and unrestricted ownership of such
shares will then vest in the Outside Director. A "change of control" is
defined as a (i) third person's becoming the beneficial owner of 20 percent or
more of the voting securities of the Company; (ii) a situation where, as a
result of a contested election for directors, the persons who were directors
of the Company before the election cease to constitute a majority of the Board
of Directors, or (iii) any merger or consolidation of the Company, regardless
of whether the Company is the surviving corporation, the dissolution of the
Company, or the sale of all or substantially all of the Company's assets to
any person or entity. The acceleration of vesting upon the occurrence of a
change of control may be seen as an anti-takeover provision and may have the
effect of discouraging such fundamental corporate changes.
 
                                      24
<PAGE>
 
  Amendments. The Board of Directors of the Company has the power to modify,
revise or terminate the Director Restricted Plan. However, unless it shall
have obtained stockholder approval, the Board of Directors may not exercise
discretion with respect to eligibility for participation, the number of shares
of Common Stock to be granted to an Outside Director, the timing of grants or
the timing for the termination of restrictions on the shares granted under the
plan. In no event may the Director Restricted Plan be amended more frequently
than once every six months.
 
  New Plan Benefits.
 
<TABLE>
<CAPTION>
                                                                  NUMBER DOLLAR
                                                                    OF    VALUE
   NAME AND POSITION                                              SHARES   ($)
   -----------------                                              ------ -------
   <S>                                                            <C>    <C>
   Directors:
     Thomas J. Edelman ..........................................   *     45,000
     William E. Greehey..........................................   *     45,000
     John A. Hill................................................   *     45,000
     John W. Johnson.............................................   *     45,000
     William E. Macaulay.........................................   *     45,000
     Robert K. Moses, Jr.........................................   *     45,000
     Roger M. Widmann............................................   *     45,000
   Non-Executive Director Group..................................   *    315,000
</TABLE>
--------
* $45,000 divided by the fair market value on May 15, 1997
 
  Valuation. The fair market value of the Common Stock was $28.00 per share on
April 4, 1997.
 
  Effective Date and Duration. The Director Restricted Plan shall become
effective as of May 15, 1997, if the Director Restricted Plan is approved by
the stockholders of the Company. The duration of the Director Restricted Plan
is perpetual.
 
  Tax Consequences. The Director Restricted Plan is not qualified under
Section 401(a) of the Code. An Outside Director will probably realize ordinary
income for Federal tax purposes on the shares of Common Stock granted to him
or her when the ownership restrictions on the shares terminate. The amount of
income recognized will be the fair market value of such shares on the day the
restrictions terminate. Alternatively, the Outside Director may elect, within
30 days after the date shares are awarded to him or her pursuant to the
Director Restricted Plan, to recognize the then fair market value of such
shares as ordinary income for Federal income tax purposes. In either event,
the Company ordinarily will be entitled to a deduction equal to the amount of
income realized by the Outside Director in the year in which the Outside
Director recognizes income.
 
  VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL. The directors of the Company
approved and adopted the Director Restricted Plan. However, the Director
Restricted Plan will not be implemented unless the holders of a majority of
the shares of Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting vote "for" the approval and adoption of
the Director Restricted Plan.
 
  THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN.
 
                                      25
<PAGE>
 
PERFORMANCE GRAPH
 
  The following graph compares the Company's cumulative total stockholder
return on the Common Stock for a five-year period (December 31, 1991 to
December 31, 1996) with the cumulative total return of the Standard & Poor's
500 Composite Stock Index (the "S&P 500 Index") and the Company's peer group,
which is the Standard & Poor's Oil & Gas (Drilling & Equipment) Index,
previously called the S&P Oil Well Equipment & Services Stock Index (the "Peer
Group"). The graph assumes $100 was invested on December 31, 1991 in the
Common Stock, the S&P 500 Index and the Peer Group. Dividend reinvestment has
been assumed, and investment has been weighted to reflect relative stock
market capitalization.
 
             Comparison of Five Year Year Cumulative Total Return*
                Among the Company, S&P 500 Index and Peer Group
 
 
                             [GRAPH APPEARS HERE] 
 
 
 
<TABLE>
<CAPTION>
YEAR                                               1991 1992 1993 1994 1995 1996
----                                               ---- ---- ---- ---- ---- ----
<S>                                                <C>  <C>  <C>  <C>  <C>  <C>
Common Stock...................................... $100 $131 $236 $217 $322 $333
S&P 500 Index.....................................  100  108  118  120  165  203
Peer Group........................................  100   98  107   98  136  192
</TABLE>
--------
* Prepared by Research
 
  The foregoing performance graph is based on historical data and is not
necessarily indicative of future performance of the Common Stock. This graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filings under the
Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
 
                                      26
<PAGE>
 
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
  Section 16(a) of the Exchange Act requires that the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities file with the Commission and the New
York Stock Exchange initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. In
addition, trusts in which a director, executive officer or greater than ten
percent stockholder is a trustee, and that person or a member of his or her
immediate family is a beneficiary, have a separate filing obligation even
where the individual reports in his or her own filings the trust's
transactions and holdings in equity securities of the Company. Directors,
executive officers and greater than ten percent stockholders are required by
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file.
 
  To the Company's knowledge, based solely on a review of the copies of the
Section 16(a) reports furnished to the Company and written representations
that no other reports were required during the fiscal year ended December 31,
1996, all Section 16(a) filing requirements applicable to its directors,
executive officers and greater than ten percent beneficial owners were
complied with.
 
               RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
 
  The Board of Directors has selected Arthur Andersen LLP as the Company's
principal independent public accountants for the current year. Representatives
of Arthur Andersen are expected to be present at the Meeting, with the
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.
 
                       PROPOSALS FOR NEXT ANNUAL MEETING
 
  Any proposals of holders of Common Stock intended to be presented at the
Annual Meeting of Stockholders of the Company to be held in 1998 must be
received by the Company, addressed to the Secretary of the Company at P.O. Box
27608, Houston, Texas 77227-7608, no later than December 11, 1997, to be
considered for inclusion in the Proxy Statement and form of proxy relating to
that meeting.
 
  In addition, the Company's Bylaws provide that no business shall be
conducted at an annual meeting of stockholders unless such business is
properly brought before the meeting by any stockholder of the Company who (a)
is a stockholder of record on the date of the giving of the notice and on the
record date for the determination of stockholders entitled to vote at such
annual meeting, and (b) gives timely notice of such business in writing to the
Secretary of the Company.
 
  To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Company no less than 90
days nor more than 120 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within 30 days before
or after such anniversary date, notice by the stockholder to be timely must be
so received no later than the close of business on the tenth day following the
day on which such notice of the date of the meeting was mailed or public
disclosure of the annual meeting was made, whichever first occurs.
 
  A stockholder's notice to the Secretary of the Company must set forth (a) a
brief description of each matter desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting,
(b) the name and record address of the stockholder proposing such business,
(c) the class and number of shares of the Company that are beneficially owned
by the stockholder, (d) any material interest of the stockholder in such
business, and (e) a representation that such stockholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.
 
  No business shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with the procedures
set forth above. If the Chairman of an annual meeting of stockholders
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
 
                                      27
<PAGE>
 
                    [WEATHERFORD ENTERRA LOGO APPEARS HERE]
 
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
 
                              AND PROXY STATEMENT
 
                             THURSDAY, MAY 15, 1997
 
                                   9:00 A.M.
 
                          THE JUNIOR LEAGUE OF HOUSTON
 
                              1811 BRIAR OAKS LANE
 
                                 HOUSTON, TEXAS
 
<PAGE>
 
PROXY                      WEATHERFORD ENTERRA, INC.
                 ANNUAL MEETING OF STOCKHOLDERS -- MAY 15, 1997
          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
 
  The undersigned holder of Common Stock of Weatherford Enterra, Inc. (the
"Company") hereby appoints Thomas N. Amonett and H. Suzanne Thomas, or either
of them, proxies of the undersigned with full power of substitution, to vote at
the Annual Meeting of Stockholders of the Company to be held on May 15, 1997,
at 9:00 a.m., Houston time, at The Junior League of Houston, 1811 Briar Oaks
Lane, Houston, Texas, and at any adjournment thereof, the number of votes which
the undersigned would be entitled to cast if personally present:

1.  To elect three directors for a term expiring in 2000:
       [_] FOR                            [_] WITHHOLD AUTHORITY
       all nominees listed below          to vote for all nominees
       (except as marked below)           listed below

             JOHN A. HILL    JOHN W. JOHNSON    WILLIAM E. MACAULAY
 
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, DRAW A
              LINE THROUGH OR STRIKE OUT THAT NOMINEE'S NAME AS SET FORTH
              ABOVE.

2.  To consider and vote on the amendments to the Company's Non-Employee
    Director Stock Option Plan:

     [_] FOR              [_] AGAINST              [_] ABSTAIN

3.  To consider and vote on the adoption of the Company's Non-Employee Director
    Restricted Stock Plan:

     [_] FOR              [_] AGAINST              [_] ABSTAIN

4.  To consider and take action upon any other matter which may properly come
    before the meeting or any adjournment thereof.

All as more particularly described in the proxy statement dated April 10, 1997
relating to such meeting, the receipt of which is hereby acknowledged.
 
                   (continued and to be signed on other side)



  THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL OF THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
 
                                            -----------------------------------

                                            -----------------------------------
                                                Signature of Stockholder(s)
 
                                            PLEASE SIGN YOUR NAME EXACTLY AS
                                            IT APPEARS HEREON. JOINT OWNERS
                                            MUST EACH SIGN. WHEN SIGNING AS
                                            ATTORNEY, EXECUTOR, ADMINISTRATOR,
                                            TRUSTEE OR GUARDIAN, PLEASE GIVE
                                            YOUR FULL TITLE AS IT APPEARS
                                            HEREON.

                                            Date ________________________, 1997
 
 Please mark, date, sign and return in the enclosed envelope, which requires
 no postage if mailed in the United States.