Filed by Bowne Pure Compliance





Exhibit 10.2


AMENDMENT

TO

EXECUTIVE
EMPLOYMENT AGREEMENT


This Amendment to
Executive Employment Agreement (this “Amendment”) is entered into
by and between Allis-Chalmers Energy Inc., a Delaware corporation (the
“Company”), and Munawar H. Hidayatallah (the
“Executive”).


WHEREAS, the
Company and Executive entered into that certain Executive Employment Agreement
dated as of April 1, 2007 (the “Agreement”);


WHEREAS, the
parties desire to amend the Agreement as set forth below, including to extend
the term of employment of Executive for an additional year; and


WHEREAS, the
parties desire to amend the Agreement to comply with Internal Revenue Code
Section 409A and regulations issued thereunder;


NOW,
THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:


1. Section 4 of the Agreement is hereby deleted in its
entirety and the following substituted in its place:


“Term. The term of employment of Executive
hereunder shall commence on the Effective Date and terminate four years
thereafter, provided that if Executive at the end of such four year period
remains liable for any guarantees of obligations of the Company, then the term
hereof shall extend for such period as Executive remains liable for such
guarantees.”


2. Section 5(g) of the Agreement is hereby deleted in its
entirety and the following substituted in its place:


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“(g) Certain Additional Payments. Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by Company or its successor to or for the
benefit of Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a “Payment”),
would be subject to excise tax imposed by Section 4999 of the Code (such
excise tax, together with any additions to tax or additional amounts with
respect to such excise tax, being collectively referred herein to as the
“Excise Tax”), then Company shall pay to Executive one or more
additional payments (each a “Gross-Up Payment”) in an amount such
that after payment by Executive of all taxes, additions to tax, or additional
amounts with respect to such Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. The
applicable Gross-Up Payment shall be made to Executive within thirty
(30) days after remittance by the Executive of the Excise Tax to the
Internal Revenue Service and the submission to the Company of appropriate
documentation of such remittance as may be required by the Company. To the
extent Executive incurs any interest or penalties with respect to such Excise
Tax (other than interest and penalties due to Executive’s failure to
timely make any applicable election, file a tax return or pay taxes shown on
his return) (the “Expenses”), then the Company shall reimburse
Executive for such Expenses within thirty (30) days after Executive incurs
such Expenses. All determinations made under this Section 5(g), including
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by Company’s registered independent public accounting firm (the
“Accounting Firm”). The Accounting Firm shall provide detailed
supporting calculations both to Company and Executive. All fees and expenses of
the Accounting Firm shall be borne solely by the Company. The Company shall
indemnify and hold harmless Executive, on an after-tax basis, for and against
any Excise Tax or income tax or other tax (including interest, penalties,
additions to tax or additional amounts with respect thereto) imposed on
Executive as a result of such payment of fees and expenses by reimbursing the
Executive within thirty (30) days after payment by the Executive of any
such amounts. In addition, the Company shall indemnify and hold harmless
Executive, on an after-tax basis, for any fees or costs incurred in connection
with the contest of liability for Excise Taxes as well as any Excise Tax or
income or other tax (including interest, penalties, additions to tax, or
additional amounts with respect thereto) imposed on Executive as a result of
such payments of fees and expenses by reimbursing the Executive within thirty
(30) days after payment by the Executive of any such amounts. The
Company’s reimbursement obligations under this Section 5(g) shall remain
in effect during the applicable statute of limitations, and the amount eligible
for reimbursement during any taxable year of Executive will not affect the
amount eligible for reimbursement in any other taxable year of Executive. The
Executive’s right to reimbursement is not subject to liquidation or
exchange for another benefit.”

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3. Section 7(b)(ii) of the Agreement is hereby amended to
add the following sentence to the end thereof to provide as follows:


“Subject to Section 12(b), payment of all amounts
owed under this Section 7(b)(ii) shall be made within 90 days after
the date of termination.”


4. A new Section 7(c) is hereby added to the Agreement to
provide as follows:


“Reimbursement upon Voluntary Termination.
Executive hereby acknowledges the payment by the Company of a cash bonus award
in the amount of $1,430,000. In the event Executive voluntarily terminates his
employment with the Company prior to the end of the term as set forth in
Section 4 hereto, other than as a result of death, Disability (as defined
in the Agreement) or a Change In Control (as
defined in the Agreement), Executive shall reimburse the Company for $1,180,000
of such award.


5. The Agreement, as amended by this Amendment, constitutes the
entire agreement and understanding between the parties hereto relating to the
subject matter hereof and all prior agreements, proposals, negotiations,
understandings and correspondence between the parties in this regard, whether
written or oral, are hereby superseded and merged herewith.


6. This Amendment may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


Signature page follows

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IN WITNESS
WHEREOF, the Company and the Executive have executed this Amendment to the
Agreement, effective as of this 31st day of December, 2008.


ALLIS-CHALMERS
ENERGY INC.:


By: /s/
Theodore F. Pound
III         

Printed Name:
Theodore F. Pound III

Title: General Counsel and Secretary




EXECUTIVE:


By: /s/ Munawar
H. Hidayatallah        
Munawar H.
Hidayatallah




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