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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                         -----------------------------

                                   FORM 10-K

(Mark One)


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the fiscal year ended December 31, 1996

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period
     from________________________________to________________________________



                                TUBOSCOPE VETCO

                           INTERNATIONAL CORPORATION
             (Exact name of registrant as specified in its charter)
<TABLE>
<S>                                    <C>                     <C>
          Delaware                           0-18312              76-0252850
(State or other jurisdiction           (Commission File No.)   (I.R.S. Employer
of incorporation or organization)                              Identification No.)

    2835 Holmes Road, Houston, Texas                                  77051
(Address of principal executive offices)                            (Zip Code)
</TABLE>

      Registrant's telephone number, including area code: (713) 799-5100
          Securities registered pursuant to Section 12(b) of the Act:

                                     None

          Securities registered pursuant to Section 12(g) of the Act:

                         Common stock, $.01 par value

                               (Title of Class)
                             --------------------
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                         Yes  [X]         No  [_]

     The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 19, 1997 was $423,655,903 based on the closing sales
price of such stock on such date.

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.    [_]

     The number of shares outstanding of the registrant's common stock, as of
March 19, 1997 was 43,564,734.

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

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's 1996 Annual Report to Stockholders and Proxy
Statement for its 1997 Annual Meeting are incorporated by this reference into
Part II and Part III, respectively, as set forth herein.

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                                     PART I
ITEM 1. BUSINESS

GENERAL

     Tuboscope Vetco International Corporation (together with its subsidiaries,
the "Company") is a supplier of technical services and highly-engineered
products to the oil and gas drilling, production, and transmission industries
worldwide.

     The Company operates through four main product lines in the oil and gas
industry segment.  The product lines are: (i) Tubular Services; (ii) Solids
Control Products & Services; (iii) Coiled Tubing & Pressure Control Products;
and (iv) Pipeline & Other Industrial Services.  Tubular Services  consists of
the provision of internal coating products and services, and inspection and
quality assurance services for tubular goods (such as drill pipe, tubing, line
pipe, and casing) used primarily in oil and gas operations.  Additionally,
Tubular Services includes the sale and leasing of proprietary equipment used to
inspect tubular products at steel mills.   Solids Control Products & Services
consists of the sale and rental of technical equipment used in, and the
provision of services related to, the separation of drill cuttings (solids) from
fluids used in oil and gas drilling processes.  Coiled Tubing & Pressure Control
Products  consists of the sale of highly-engineered coiled tubing, pressure
control, wireline, and related tools to companies engaged in providing oil and
gas well drilling and remediation services.  Pipeline & Other Industrial
Services  consists primarily of the provision of technical inspection services
and quality assurance for in-service pipelines used to transport oil and gas.
Additionally, this product line includes a wide variety of technical industrial
inspection, monitoring, and quality assurance services provided by the Company
for the construction, operation, and maintenance of major projects in energy-
related industries.

     The Company was incorporated under the laws of Delaware on March 28, 1988
as a successor to one of the first companies to provide tubular inspection
services to the oil and gas industry, which commenced operations in 1937.  The
Company has since grown through a series of mergers and acquisitions which have
added product lines.  The Company entered the Solids Control Products & Services
and the Coiled Tubing & Pressure Control Products businesses on April 24, 1996,
when it merged (the "Drexel Merger") with Drexel Oilfield Services ("Drexel"),
the largest provider of solids control services and coiled tubing equipment
worldwide.  The principal executive offices of the Company are located at 2835
Holmes Road, Houston, Texas, 77051, telephone 713-799-5100.

     This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934.  The forward looking statements are those that
do not state historical facts and are inherently subject to risk and
uncertainties.  The forward-looking statements contained herein are based on
current expectations and entail various risks and uncertainties that could cause
actual results to differ materially from those projected in the forward-looking
statements.  Such risks and uncertainties are set forth below under "Factors
Affecting Future Operating Results."

TUBULAR SERVICES

  Tubular Services is the Company's largest business line.  It generated
approximately 51%, 81%, and 77% of the Company's revenue for the years ended
December 31, 1996, 1995 and 1994, respectively.  On a pro forma basis giving
effect to the Drexel Merger and an acquisition made by Drexel in November 1995
of SWECO(R) Oilfield Services ("SOFS"), the Tubular Services business generated
approximately $174 million (46%) and  $154  million (49%) of the Company's
revenue for the years ended December 31, 1996 and 1995, respectively.  The
Company's Tubular Services operates in the  oilfield tubular markets of 54
countries, including North America, Latin America, Europe, Africa, the Middle
East, and the Far East.  The Company provides tubular inspection services at
drilling and workover rig locations, at pipe yards owned by its customers, at
steel mills manufacturing tubular goods, and at facilities which it owns.  The
Company provides for the internal coating of tubular goods at ten plants
worldwide, and through licensees in certain locations.

  Demand for tubular services products depends upon the activity level of
drilling, well remediation, and flowline installation operation activity in the
oil and gas industry.  Tuboscope's customers rely on tubular inspection services
to avoid failure of in service tubing, casing, flowlines, and drillpipe.  Such
tubular failures are expensive and in some cases catastrophic.  Tuboscope's
customers rely on internal coatings of tubular goods to prolong their useful
lives and to increase the volumetric throughput of in-service tubular goods.
Tubular inspection and coating services are used most

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frequently in drilling and production operations in high-temperature, deep,
corrosive oil and gas environments. In selecting a provider of tubular
inspection and tubular coating services, oil and gas operators consider such
factors as reputation, experience, technology of products offered, reliability
and price. The Company believes it is the largest provider of tubular inspection
and the largest provider of internal tubular coating services worldwide.

  Tubular Corrosion Control.  The Company develops, manufactures and applies its
proprietary tubular coatings, known as Tube-Kote(R) coatings, to new and used
tubulars.  Tubular coatings help prevent corrosion of tubulars by providing a
tough plastic shield to isolate steel from corrosive oilfield fluids such as
CO2, H2S and brine.  Delaying or preventing corrosion extends the life of
existing tubulars, reduces the frequency of well remediation and reduces
expensive interruptions in service and production for oil and gas producers.  In
addition, coatings are designed to increase the fluid flow through tubulars by
decreasing or eliminating paraffin and scale buildup, which can reduce or block
oil flow in producing wells.  The smooth inner surfaces of coated tubulars often
increase the fluid through-put on certain high-rate oil and gas wells.

  The Company has a long history of introducing new coating products custom-
engineered to address increasingly corrosive environments encountered in oil and
gas drilling and production operations.  The Company's reputation for supplying
quality internal coatings is an important factor in its business, since the
failure of coatings can lead to expensive production delays and premature
tubular failure.

  Subsequent to December 31, 1996, the Company acquired Fiber Glass Systems,
Inc. ("Fiber Glass Systems"), a leading provider of high pressure fiberglass
tubulars used in oilfield applications, for a combination of stock and cash.
Fiber Glass Systems has manufactured fiberglass pipe since 1968 under the name
"Star," and was the first manufacturer of high-pressure fiberglass pipe to be
licensed by the API in 1992.  Like coated tubulars, fiberglass pipe is used to
guard against corrosive fluids produced in the oilfield.  The acquisition added
a new product to the Company's corrosion control products.

  Tubular Inspection.  Newly manufactured pipe sometimes contains serious
defects that are not detected by the mill. In addition, pipe can be damaged in
transit and during handling prior to use at the well site.  As a result,
exploration and production companies often have new tubulars inspected before
they are placed in service to reduce the risk of tubular failures during
drilling and completion of oil and gas wells. Used tubulars are inspected by the
Company to detect service-induced flaws after the tubulars are removed from
operation.  Used drill pipe and used tubing inspection programs allow operators
to replace defective lengths, thereby prolonging the life of the remaining pipe
and saving the customer the cost of unnecessary tubular replacements and
expenses related to tubular failures.

  The Company's tubular inspection services employ all major non-destructive
inspection techniques, including electromagnetic, ultrasonic, magnetic flux
leakage and gamma ray.  These inspection services are provided both by mobile
units which work at the wellhead as used tubing is removed from a well, and at
fixed site tubular inspection locations. The Company provides an ultrasonic
inspection service for detecting potential fatigue cracks in the end area of
used drill pipe, the portion of the pipe that traditionally has been the most
difficult to inspect.  Tubular inspection facilities also offer a wide range of
related services, such as API thread inspection and ring and plug gauging, and a
complete line of reclamation services necessary to return tubulars to useful
service, including tubular cleaning and straightening, hydrostatic testing and
re-threading.

  In addition to its new and used tubular inspection and reclamation services,
the Company also offers a comprehensive proprietary tubular inventory management
system (TDS) which permits the real-time tracking of customer's tubular
inventories within the Company's facilities.  The system permits customers to
dial-in to monitor tubular inspection and coating progress.

  In 1996, the Company installed its first proprietary high-speed full body
ultrasonic tubular inspection unit (TruScope(R)).  The new service provides 100%
ultrasonic coverage of tubulars at a rate of up to 200 feet per minute.

  Mill Systems and Sales.  The Company engineers and fabricates inspection
equipment for steel mills, which it sells and leases.  The equipment is operated
by the steel mills and is used for quality control purposes to detect
transverse, longitudinal and three-dimensional defects in the pipe during the
high-speed manufacturing process.  Each piece of mill inspection equipment is
designed to customer specifications and is installed and serviced by the
Company.  Since 1962, the Company has installed more than 80 units worldwide, in
most major steel mills.  Equipment is manufactured at the

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Company's Houston, Texas facility. In 1996, the Company moved its NDT division
manufacturing facilities from Midland, Texas to Houston to improve overall
manufacturing efficiency and reduce the cost of manufacturing products. Revenue
for Mill Systems and Sales fluctuates significantly from year to year due to the
timing of negotiating large domestic and export sales contracts, arranging
financing and manufacturing equipment.

  The Company's tubular services customers include almost all major oil and gas
companies, large and small independent producers, national oil companies,
drilling contractors, oilfield supply stores, and steel mills.  No single
customer accounted for more than 10% of the Company's revenue in 1996.  The
Company's competitors in Tubular Services include ICO Inc., Shaw Industries, and
Shield Coat Inc.  In addition, the Company competes with a number of smaller
regional competitors in tubular inspection. Certain foreign jurisdictions and
government-owned petroleum companies located in some of the countries in which
the Company operates have adopted policies or regulations which may give local
nationals in these countries certain competitive advantages.  In tubular coating
certain substitutes such as non-metallic tubulars, inhibitors, corrosion
resistant alloys, cathodic protection systems, and non-metallic liners systems
also compete with the Company's products.

SOLIDS CONTROL PRODUCTS & SERVICES

  The Company generated approximately 23% of its revenue for the year ended
December 31, 1996 from Solids Control Products & Services.  On a pro forma basis
giving effect to the Drexel Merger and the SOFS acquisition, the Solids Control
Products & Services business generated approximately $98 million (26%) and $75
million (24%) of the Company's revenue for the years ended December 31, 1996 and
1995, respectively.  The Company's Solids Control Products & Services business
serves oilfield drilling markets in North America, Latin America, Europe,
Africa, the Middle East and the Far East.

  Solids control is the application of highly-engineered products and services
to extract drill cuttings from fluids used in oil and gas drilling operations.
The removal of drill cuttings is required to permit the reuse of expensive
drilling fluids. By removing rock cuttings and other solid contaminants from the
fluids used in drilling operations, solids control equipment reduces the volume
of drilling fluids and solids for disposal subsequent to drilling operations
(which minimizes the environmental impact of the drilling operation and reduces
post-drilling reclamation costs) and reduces the volume of drilling fluids
consumed by the operation, further reducing drilling costs.  Effective solids
control also reduces the probability of sticking and losing expensive downhole
drilling equipment in the wellbore and the resulting need to redrill the well.
The use of solids control technology improves the efficiency of the drilling
process by preventing the recirculation and subsequent recutting of solids at
the drill bit and by reducing wear on mechanical components such as mud pumps
and mud motors.

  The Company believes the regulatory and industry trend towards minimizing the
environmental impact of drilling operations in a number of environmentally-
sensitive oil and gas productive regions will lead to higher demand for highly-
engineered solids control products and closed loop drilling systems.  The
Company further believes the trend towards more technically complex drilling,
including highly deviated directional wells and slim-hole completions, will
favorably impact the demand for solid controls technology because of its ability
to reduce costly downhole problems.

  Due to the Drexel Merger, the Company believes it is the world's leading
manufacturer and provider of solids control equipment and services to the oil
and natural gas drilling industry.  The Company manufactures conventional and
linear motion shale shakers, high speed and conventional centrifuges, desanders,
desilters, screens, degassers and closed loop drilling fluids systems at its
facilities in Conroe, Texas and Dundee, United Kingdom.  The Company markets
solids control equipment under the Brandt/EPI /TM/ brand name.  For the twelve
months ended December 31, 1996, on a pro forma basis giving effect to the Drexel
Merger, approximately 48% of the Company's solids control equipment revenue was
generated from the sale of solids control equipment and inventory, and
approximately 52% of such revenue was generated from rentals and services.

  Outside the petroleum market, solids control equipment is used in numerous
applications.  The Company recently expanded into the kaolin (clay) paper
processing and rock and aggregate markets by providing its shakers for use in
the separation process utilized in these industries.  Management believes that
there are additional opportunities for expansion into these and other markets,
such as the food processing and municipal waste water markets, although such
expansion cannot be assured.

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  The Company's customers for Solids Control Products & Services include almost
all major oil and gas companies, large and small independent producers, national
oil companies, and drilling contractors.  No single customer accounted for more
than 10% of the Company's revenue in 1996.  Competitors in oilfield solids
control equipment and services include Smith International ("SWACO"), Derrick
Manufacturing Corp. and a number of regional competitors.  The Company acquired
four regional competitors in solids control in 1996 in order to achieve
consolidation savings, gain entrance to solids control markets in Canada and
expand its market presence in Louisiana and Venezuela.  The Company's solids
control equipment is sold or rented in highly competitive markets.  Management
believes that on-site service is becoming an increasingly important competitive
element in the solids control equipment market.  Management believes that, in
addition to on-site services, the principal competitive factors affecting its
solids control equipment business are performance, quality, reputation, customer
service, product availability, breadth of product line and price.   Management
believes market conditions are generally improving in solids control due to
strong demand by oil and gas drillers to reduce overall drilling costs and
minimize environmental impact, and rising levels of technology required to serve
the market.

COILED TUBING & PRESSURE CONTROL PRODUCTS

  As a result of the Drexel Merger, the Company believes it is the world's
leading designer and manufacturer of coiled tubing equipment and coiled tubing
pressure control equipment used in oil and gas well remediation and drilling
operations.  This product line generated approximately 14% of the Company's
revenue for the year ended December 31, 1996.  On a pro forma basis giving
effect to the Drexel Merger and the SOFS acquisition, the Coiled Tubing &
Pressure Control Products segment generated approximately $62 million (16%) and
$50 million (16%) of the Company's revenue for the years ended December 31, 1996
and 1995, respectively.  The Company's Coiled Tubing & Pressure Control Products
line sells capital equipment and consumables to all the major oilfield coiled
tubing remediation and drilling service providers.

  Coiled tubing consists of flexible steel tubing manufactured in a continuous
string and wrapped on a spool.  It can extend several thousand feet in length
and is run in and out of the well bore at a high rate of speed by a
hydraulically operated coiled tubing unit.  A coiled tubing unit is typically
mounted on a truck or skid and consists of a hydraulically operated tubing reel
or drum, an injector head which pushes or pulls the tubing in or out of the well
bore, and various power and control systems.  Coiled tubing is typically used
with sophisticated pressure control equipment which permits the operator to
continue to safely produce the well.  The Company manufactures and sells both
coiled tubing units and the ancillary pressure control equipment used in these
operations.

  Coiled tubing provides a number of significant functional advantages over the
principal alternatives of conventional drillpipe and workover pipe.  Coiled
tubing allows faster "tripping" since the coiled tubing can be reeled very
quickly on and off a drum and in and out of a well bore.  In addition, the small
size of the coiled tubing unit compared to an average workover rig reduces
preparation time at the well site.  Coiled tubing permits a variety of workover
and other operations to be performed without having to pull the existing
production tubing from the well and allows ease of operation in
horizontal/highly deviated wells.  Thus, operations using coiled tubing can be
performed much more quickly and, in many instances, at a significantly lower
cost.  Finally, use of coiled tubing generally allows continuous production of
the well, eliminating the need to temporarily stop the flow of hydrocarbons.  As
a result, the economics of a workover are improved because the well can continue
to produce hydrocarbons and thus produce revenues while the well treatments are
occurring.  Continuous production also reduces the risk of formation damage
which can occur when the well is "shut in."

  Currently, most coiled tubing units are used in well remediation applications.
The Company believes that advances in the manufacturing process of coiled
tubing, tubing fatigue protection and the capability to manufacture larger
diameter coiled tubing strings have resulted in increased uses and applications
for coiled tubing products.  For example, well operators are increasingly
finding uses for coiled tubing in drilling applications such as slim hole
reentries of existing wells.  The Company engineered and manufactured the first
three coiled tubing units built specifically for coiled tubing drilling in 1996.

  There are certain limitations to the use of coiled tubing.  Coiled tubing
generally is made of high strength, alloy steel which wears down or fatigues
over time as a result of internal pressure, acidic operating environments and
normal bending cycles.  Thus, operators must carefully monitor the use of the
tubing.  In addition, coiled tubing will buckle if the weight the coiled tubing
is pushing becomes too great or if the tube becomes inhibited by some obstacle
or irregularity in the well bore.  Buckling has not proven to be a significant
obstacle in most well remediation applications, and the

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Company believes it will become less of an issue as the result of the
availability of stronger and larger diameter coiled tubing.

  Generally, the Company supplies customers with the equipment and components
necessary to use coiled tubing, which the customers typically purchase
separately.  The Company's coiled tubing product line consists of coiled tubing
units, coiled tubing injector heads, coiled tubing and wireline pressure control
equipment, snubbing units, nitrogen pumping equipment and cementing,
stimulation, and blending equipment.  The Company markets its coiled tubing
equipment under the Hydra Rig(R) brand name primarily to providers of coiled
tubing drilling and workover services.  The Company's primary coiled tubing unit
production facilities are located at its Hydra Rig facility in Fort Worth,
Texas. In addition, the Company markets coiled tubing pressure control equipment
under the Texas Oil Tools(R) brand name and manufactures such equipment at its
facility in Conroe, Texas and to a lesser extent at the Dundee facility in the
United Kingdom. Additionally, through its September 1996 acquisitions of SSR
(International) Ltd. and Pressure Control Engineering Ltd., the Company entered
the wireline unit manufacturing business, and greatly expanded its offering of
downhole coiled tubing tools. Many coiled tubing customers also purchase and
operate wireline units.

  The Company's coiled tubing product offering includes a wide variety of
sophisticated downhole tools engineered to enable oil and gas producers to re-
enter complex multilateral wells, to install coiled tubing velocity strings, to
bypass electrical submersible pumps, and to perform a variety of other
remediation and completion activities utilizing coiled tubing.  One such
product, the MLR system, was awarded a Meritorious Award for Engineering
Innovation at the 1996 Offshore Technology Conference in Houston, Texas.
Management believes that high-productivity multilateral drilling will continue
to grow.

  The Company's customers for Coiled Tubing & Pressure Control Products include
almost all major oil and gas coiled tubing service companies, as well as major
oil companies and large independents.  No single customer accounted for more
than 10% of the Company's revenue in 1996.  Competitors in Coiled Tubing &
Pressure Control Products include Stewart & Stevenson, Dreco Inc. and a few
smaller competitors.  Management believes market conditions are generally
improving in the coiled tubing equipment market due to growing widespread
acceptance of the technology, and growth in the number of oilfield applications
such as coiled tubing drilling.

PIPELINE & OTHER INDUSTRIAL SERVICES

  Pipeline & Other Industrial Services  generated approximately 12%, 19%, and
23% of the Company's revenue for the years ended December 31, 1996, 1995, and
1994, respectively.   On a pro forma basis giving effect to the Drexel Merger
and the SOFS acquisition, Pipeline & Other Industrial Services generated
approximately $43 million (12%) and $36 million (11%) of the Company's revenue
for the years ended December 31, 1996 and 1995,  respectively.  The Company's
Pipeline & Other Industrial Services provides a wide variety of industrial
inspection services, including in-place inspection services of oil and gas
transmission pipelines, and technical industrial inspection, monitoring, and
quality assurance services for the construction, operation, and maintenance of
major projects in energy-related industries.

  Pipeline Services.  In-place inspection services for oil and gas pipelines
identifies defects in the pipelines without removing or dismantling the
pipelines or disrupting the product flow, giving customers a convenient and
cost-effective method of identifying defects in pipelines.  The Company inspects
pipelines by launching a sophisticated survey instrument into the pipeline.
Propelled by the product flow, the instrument uses electromagnetics and digital
and analog recording devices to monitor the severity and location of internal
and external pitting-type corrosion as well as defects in the pipeline,
providing a basis for evaluation and repair by the customer.  Once the test is
complete, the survey instrument is returned to the Company, refurbished and used
for future pipeline inspections.

  The Company expanded its presence in the pipeline inspection market when it
acquired Vetco Pipeline Services, Inc., a major competing pipeline inspection
provider, in September, 1996.  The acquisition provided the Company with access
to certain new technologies including pipeline deformation inspection, increased
market presence in North America, and significant consolidation savings.

  Management believes there are growth opportunities for the Company's Pipeline
Services due to the aging of the worldwide pipeline network and new pipeline
construction. U.S. regulatory inspection requirements and an extensive pipeline
infrastructure in Eastern Europe are additional industry factors expected to
contribute to the growth of the Company's Pipeline Services.  Additionally,
management believes that the Linalog(R) Plus technology and the Company's

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new digital TruRes(R) inspection technology will provide growth opportunities.
The Linalog(R) Plus service is a computer enhanced method for presenting the
inspection report produced by the Company's traditional Linalog(R) technology.
The TruRes(R) technology applies advanced digital computer technology and other
advancements within the body of the inspection tool to provide greater
measurement sampling density and pipe-body coverage.

  Industrial Inspection Services. The Company provides industrial inspection and
monitoring services for the construction, operation and maintenance of major
projects in energy-related industries.  Inspection techniques include the x-
raying of pipeline girth welds and ultrasonic or eddy current inspection of
refinery equipment.  Monitoring services include various quality assurance and
control and supervision services.  Most of these services are provided during
fabrication, installation and maintenance of energy-related facilities.  The
primary customers are power plants undergoing construction or maintenance,
chemical and petrochemical plants, pipeline construction companies and pipeline
owners.

  The Company's CTI tank inspection unit, which was included in its Pipeline &
Other Industrial Services group, was sold in the third quarter of 1996.  Less
than $1 million in revenue was generated from this operation in 1996.

  The Company's Pipeline & Other Industrial Services customers include most
major pipeline operators, national oil and gas companies, and various nuclear
power plant operators.  No customer accounted for more than 10 percent of
revenues for the Company in 1996.  The Company's primary competitors include
British Gas Plc; Ipel Kopp (Pipetronix), a subsidiary of A.G. Preussay
Anlagensau; and H. Rosen Engineering GmbH, and BJ Services.  Management believes
the major competitive factors for Pipeline Services are reputation for quality
service, reliability of obtaining a successful survey on the first run, product
technology, price, and technical support of survey results interpretation.

1996 ACQUISITIONS

  On April 24, 1996, pursuant to that certain Agreement and Plan of Merger dated
as of January 3, 1996 by and among the Company, Grow Acquisition Limited, a
Bermuda  corporation and wholly owned subsidiary of the Company ("Grow"), and
D.O.S. Ltd., a Bermuda corporation ("Drexel"), Grow was merged with and into
Drexel (the "Drexel Merger").  Upon consummation of the Drexel Merger, all of
the outstanding ordinary shares of Drexel were converted into the right to
receive approximately 16.7 million shares of the Company's  common stock, par
value $.01 per share ("Company Common Stock").

  In connection with the Drexel Merger, on April 24, 1996, the Company sold to
SCF-III, L.P., a Delaware limited partnership ("SCF"), 4,200,000 shares of
Company Common Stock and warrants to purchase 2,533,000 shares of Company Common
Stock at an exercise price of $10 per share expiring on December 31, 2000, for
an aggregate purchase price of $31 million pursuant to a certain Subscription
Agreement dated as of January 3, 1996 between the Company and SCF.

  Also in connection with the Drexel Merger, on April 24, 1996 Baker Hughes
Incorporated ("BHI") exchanged all of its 100,000 shares of Series A Convertible
Preferred Stock, par value $.01 per share, of the Company for 1,500,000 shares
of Company Common Stock and warrants to purchase 1,250,000 shares of Company
Common Stock at an exercise price of $10 per share expiring on December 31,
2000, pursuant to that certain Exchange Agreement dated as of January 3, 1996
between the Company and BHI.

  Prior to the Drexel Merger, Drexel was the world's leading provider of solids
control equipment and services to the oil and natural gas industry and coiled
tubing units and related pressure control equipment to oilfield service
companies. The Drexel Merger provided the Company increased market
capitalization, additional growth opportunities, improved capital structure and
consolidation savings opportunities.  Measures to achieve the expected
consolidation savings were fully implemented in 1996.

  During 1996, in addition to the Drexel Merger, the Company completed the
acquisition of seven businesses.  On May 31, 1996, pursuant to that certain
Share Purchase Agreement dated as of May 31, 1996, the Company acquired all of
the outstanding shares of capital stock of Wadeco Oilfield Services Ltd.
("Wadeco"), a Canadian-based company in the Solids Control Products & Services
business, for $16.4 million (provided  from the Company's cash reserves and its
existing revolving credit facility).  In addition, the Company assumed $5.2
million of Wadeco debt.  The acquisition provided the Company with a presence in
the Canadian solids control market and access to a fleet of high-quality solids
control equipment.

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  In June 1996, the Company acquired substantially all of the assets of Western
Service & Supply, S.A., a Venezuela-based company in the Solids Control Products
& Services business, for an aggregate purchase price of $2.6 million in cash.
This acquisition increased the Company's market share in Latin America, and
provided an opportunity to achieve consolidation cost savings.

  In September 1996, the Company acquired all of the outstanding shares of
S.S.R. (International) Ltd., and Pressure Control Engineering Ltd., two Scotland
based companies in the Coiled Tubing & Pressure Control Products business. The
consideration  included cash of $7.8 million, 129,967 shares of Company Common
Stock valued at $1.9 million, and $5 million of notes convertible into shares of
Company Common Stock.  These acquisitions expanded the Company's coiled tubing
and pressure control equipment product offerings.

  In September 1996, the Company acquired all of the outstanding shares of
capital stock of Vetco Pipeline Services, Inc. ("Vetco Pipeline"), a U.S.-based
company in the pipeline inspection business, for an aggregate purchase price of
$8.5 million in cash plus additional earnout consideration contingent upon the
realization of gross profit from certain contracts. The acquisition of Vetco
Pipeline provided additional pipeline inspection technology and significant
consolidation cost savings.

  In October 1996, the Company acquired substantially all of the solids control
assets of Polar Oilfield Services, a Canadian-based solids control business, for
an aggregate purchase price of approximately $1.8 million in cash.

  In December 1996, the Company acquired all of the outstanding shares of
capital stock of Gauthier Brothers Rentals, Inc., the leading provider of solids
control equipment and services in the Louisiana Gulf Coast area for total
consideration of approximately $11 million.  The purpose of the acquisition was
to improve the Company's market position through increased rental revenue and
closed loop systems.

SEASONAL NATURE OF THE COMPANY'S BUSINESS

  Historically, the level of the Company's business has followed seasonal
trends, which are described below. However, the historical trends in Tubular
Services and Solids Control Products & Services can also be subject to
significant changes resulting from fluctuations in oil prices and changes in rig
count.

  The Company's tubular inspection, tubular coating, and solids control
businesses in the United States tend to realize lower activity levels during the
first quarter of the calendar year due to the typical delay in the approval of
drilling budgets and weather restrictions.  The Company's tubular inspection,
tubular coating, and solids control businesses in Canada typically realize a
strong first quarter of the calendar year as operators take advantage of the
winter freeze to help gain access to drilling and production areas, and then
declines during the second quarter of the calendar year due to weather
conditions which result in road bans that curtail drilling activity.  Tubular
Services activity in both the United States and Canada typically increases
during the third quarter of the calendar year and then peaks in the fourth
quarter of the calendar year as operators authorize the spending of remaining
drilling and/or production capital budgets for the year. The seasonal trend in
North America is somewhat offset by the increased activity level in Latin
America during the first quarter of each year.

  Pipeline inspection typically experiences reduced activity during the first
quarter of the calendar year.  The high winter demand for gas and petroleum
products in the northern states and the consequent curtailment of
maintenance/inspection programs result in less opportunity to perform pipeline
inspection during this time.  During the second quarter of the calendar year,
activity begins to increase and normally continues at relatively stable levels
through the end of the year as operators finish scheduled maintenance programs.
Mill systems sales and industrial inspection services have no particular
seasonal trend.  The timing of mill equipment sales is not easily predictable
and, accordingly, revenue tends to fluctuate from quarter to quarter.

  In general, the Coiled Tubing and Pressure Control line has experienced lower
revenue in the fourth quarter due to major customers placing orders, based on
their budgeting process, in the fourth quarter for delivery during the next
three quarters.  This process may change in the future as a major customer has
changed to a continuing budget process and will place orders throughout the
year.  There can be no guarantees that this trend will continue or that any
other customer will change its ordering process.

                                       8
<PAGE>

  The Company anticipates that these seasonal trends will continue; however,
there can be no guarantee that spending by the Company's customers will continue
or that other circumstances will remain the same as in prior years.

MARKETING & DISTRIBUTION NETWORK

  The Company's products are marketed through a 142  employee sales organization
and a network of agents and distributors which spans 54 countries.  The
Company's customers include major and independent oil and gas companies,
national oil companies, oilfield equipment and product distributors and
manufacturers, drilling and workover contractors, oilfield service companies,
pipeline operators, steel mills, and other industrial companies.

  Certain tubular inspection and tubular coating products and service often are
incorporated as a part of a tubular package sold by tubular supply stores to end
users.  The Company's international oilfield inspection services were
historically marketed in large part through licensees, with agreements generally
ranging in duration from three to five years.  In 1990, the Company commenced
operating directly in selected foreign markets rather than marketing its
services through licensees.  With the 1991 acquisition of Vetco Services, which
markets its services directly or through joint ventures, and with the Company's
recent expansion in Latin America, the Company primarily has direct operations
in the international marketplace.

  The Company's Solids Control customers are predominantly oil and natural gas
producers and rig operators and its coiled tubing equipment customers are
primarily oil and natural gas service companies.  The Company operates sales and
distribution facilities at strategic locations worldwide to service areas with
intensive drilling activity.  The Company's worldwide employee Solids Control
sales organization  is complemented by service and engineering facilities which
provide specialty repair and maintenance services to existing customers.

  The Company's Coiled Tubing & Pressure Control Products primarily are sold
directly to end users through a worldwide employee Coiled Tubing & Pressure
Control Products sales organization.  The Company also has in place certain
exclusive alliances with major oilfield service companies to provide pressure
control equipment.

PATENTS, LICENSES AND TRADEMARKS

  Management believes that the Company's strong market position in its major
businesses is enhanced by its leading technologies and reputation for innovation
and expertise.  Through an internal development program and certain
acquisitions, the Company has assembled an extensive array of coiled tubing,
solids control, tubular coating, tubular inspection, mill systems, and pipeline
inspection technologies protected by a substantial number of trade and service
marks, patents, trade secrets, and other proprietary rights.

  In 1996, the Company engineered, manufactured, and delivered the first three
coiled tubing units designed specifically to drill wells.  The Company continues
to invest in technology to improve and expand coiled tubing drilling, and holds
a number of patents in both coiled tubing drilling and conventional coiled
tubing unit designs.   Additionally, the Company holds a number of patents
related to the manufacture and design of pressure control equipment.   The
Company has joint development agreements for the proprietary SAFECONN connector
system which permits the safe deployment of long perforating guns into live
wells.  The Company, through its Pressure Control Engineering subsidiary, also
offers a wide array of coiled tubing completion and fishing tools, including its
patented multi-lateral reentry (MLR) system, its StiffLine 2000 coiled tubing
velocity string wellhead hanger system, its HAPPI coiled tubing hydraulic anchor
push-pull intensifier. The Company has a wide complement of  patented blow out
preventors and ancillary equipment  for coiled tubing.

  The Company's Solids Control Products & Services line engineers and assembles
linear motion shakers, combination linear motion/scalping shakers and various
centrifuge designs.  Additionally, various styles of screens for use with
shakers are designed by the Company for specialized use in the separation of
drill cuttings from fluids used in oil and gas drilling operations.  The Company
has various patents related to its screens and shale shakers in both the U.S.
and international locations.

  The Company and its recent acquisition Vetco Pipeline Services pioneered the
pipeline inspection process with what is now known as "conventional pipeline"
inspection technology.  The Company copyrighted Linalog(R) technology plus
computer enhancement technique adds the ability to integrate computer analysis
into the conventional technology.

                                       9
<PAGE>

  The Company's Tru Res(R) technology employs a patented state of the art high
resolution inspection tool and next generation magnetic flow leakage technology
to provide enhanced defect characterization.

  The Company's electromagnetic inspection system, known as Amalog(R) IV,
performs four separate inspections in one semi-automated process:  the
Sonoscope(R) section detects transverse defects, which are flaws aligned across
the pipe; the Amalog(R) section detects flaws with longitudinal dimensions; the
Isolog(R) section detects variations in the thickness of the wall of the pipe;
and the grade verifier section compares each length with a standard to determine
whether all the pipe is of the same metallurgical grade.  In addition, the
Company's PipeImage/TM/ System for electromagnetic inspection system uses small
sensors, digital signal processing, computer interpretation and three-
dimensional image presentation to help identify flaws in mid-range walled pipe
which may be undetectable with conventional electromagnetic inspection services.

  The equipment and technology used in the Company's ultrasonic inspection
systems (U-Tron(R), SOS Ultrasonic Inspection Unit, Vetcoscan(R) and NDT/TM/
Eagle) is designed to inspect heavywall or non-magnetic tubing, casing and line
pipe for manufacturing defects, where the effectiveness of electromagnetic
inspection is limited.  The Company's ultrasonic capabilities were further
enhanced  with the introduction of its Endsonic(R) technology for ultrasonic end
area inspection in 1994, and its patented full body ultrasonic inspection unit
(Truscope(R)) which provides 100% ultrasonic coverage at a rate of 200 feet per
minute.

  As part of the Vetco Services acquisition, the Company acquired BHI's
interests in substantially all of the foreign and domestic trademarks and
patents and other proprietary technology used in the Vetco Services business
(other than Vetcoscan(R)).  These technologies include Vetcolog(R),
PipeImage/TM/ and Vetcoscope(R) electromagnetic inspection systems and the end
area inspection system and all of the liquid and powder coating technology.  In
addition, the Company obtained certain rights to use the Vetcoscan(R) ultrasonic
inspection technology outside the United States.  In connection with such
acquisition, BHI's domestic coating and inspection business retained the right
to use such technology in the United States.  ICO, Inc. acquired the domestic
inspection and coating business of BHI in September 1992.  In 1993 the Company
introduced its WellChek(R) technology which inspects pipe on the rig floor as it
is "tripped" from the well.

  As part of the Company's tubular coating services, the Company develops,
manufactures and applies its proprietary tubular coatings, known as Tube-Kote(R)
coatings, to new and used tubulars.  Tube-Kote(R) coatings are manufactured by
and for the Company using a variety of resins, including phenolic, epoxy or
urethane, each selected for its suitability under certain corrosive conditions
and then formulated to enhance performance.  Presently the Company utilizes both
thermoplastic and thermosetting plastics technology to provide materials with
enhanced chemical resistance or mechanical properties to meet the end users
field requirements.  Every coating is tested and evaluated in field conditions
before being released for customer use.  Tube-Kote(R) coatings are developed and
manufactured either at the Company's Houston, Texas, facility or are
manufactured in North America or Europe through restricted sales agreements with
third party manufacturers.

  The Company also offers a complete line of connection services for internally
coated pipe.  These include Thru-Kote(R) and Thru-Kote(R)  U.B. systems for
welding coated line pipe, and a variety of other specialized fittings.
Additionally, the Company's TK(R) - tubing insert is a cost effective solution
for corrosive down hole environments.

  The Company has proprietary rights to a number of foreign and domestic
trademarks and service marks important to its business.  It also owns various
foreign and domestic patents related to the design and manufacture of certain
products.  Many of the patents have expired or will soon expire, and many of the
trademark registrations are up for renewal within the next two years.
Management intends to renew these trademarks.  Although management believes that
no single patent is material to the business of the Company, it continues to
seek  new patents to protect the Company's proprietary interests in certain
products as necessary.

ENGINEERING AND MANUFACTURING

  The Company manufactures or assembles the equipment and products which it
leases and sells to customers, and which it uses in providing solids control,
inspection, tubular coating, and pipeline inspection services.  In addition to
producing new equipment and products, the Company produces spare parts for its
equipment and for resale, and renovates and repairs equipment at its
manufacturing facilities in Houston, Texas; Conroe, Texas; Dundee, Scotland; and
Montrose, Scotland.  The Company manufactures screens used in its solids control
operations and for sale to others at its New Iberia,

                                       10
<PAGE>

Louisiana; Conroe, Texas; Leduc, Alberta; and Trinidad facilities. The Company
manufactures coiled tubing units, wireline units, and pressure control equipment
at its Fort Worth, Texas; Conroe, Texas; Montrose, Scotland; Aberdeen, Scotland;
and Poole, England facilities. The Company, through its 1997 acquisition of
Fiber Glass Systems, manufactures fiberglass tubulars and fittings at its San
Antonio, Texas and Big Springs, Texas facilities. The Company manufactures its
tubular coatings in its Houston, Texas facility, or through restricted sale
agreements with third party manufacturers.

  The equipment and products designed and manufactured by the Company range from
electromagnetic and ultrasonic inspection systems, coating products,
electromagnetic pipeline inspection tools, mechanical solids control equipment,
coiled tubing and wireline equipment, pressure control equipment, and downhole
coiled tubing tools.  Design and engineering are based on research and
development efforts as well as established customer and industry standards.

  Certain of the Company's manufacturing facilities and certain of the Company's
products have various certification, including, ISO 9001, API and ASME.

RAW MATERIALS

  The Company believes that materials and components used in its servicing and
manufacturing operations and purchased for sales are readily available at
competitive prices from numerous sources.

BACKLOG

  The Company's backlog is based upon anticipated revenues from customer orders
that the Company believes are firm and scheduled for shipment within twelve
months.  The level of backlog at any particular time is not necessarily
indicative of the future operating performance of the Company, and orders may be
changed at any time.  As of December 31, 1996, the Company's backlog of Coiled
Tubing & Pressure Control Products was $21.9 million, an increase of
approximately 20% above the $18.2 million in backlog as of December 31, 1995.
Such increase was primarily a result of an increase in demand, and due to the
acquisitions of SSR International Ltd and Pressure Control Engineering Ltd. in
1996.  Backlog amounts in the Company's other product lines are immaterial.

ENVIRONMENTAL MATTERS

  The Company's inspection and coating services routinely involve the handling
and disposal of chemical substances and waste materials, some of which may be
considered to be hazardous wastes.  These potential hazardous wastes result
primarily from the use of mineral spirits to clean pipe threads during the
tubular inspection process and from the coating process.

  The Company's operations are subject to numerous local, state and federal laws
and regulations, including the regulations promulgated by the Occupational
Safety and Health Administration, the United States Environmental Protection
Agency, the Nuclear Regulatory Commission and the United States Department of
Transportation. Management believes that the Company is in substantial
compliance with these laws and regulations, and that the compliance and remedial
action costs associated with these laws and regulations have not had a material
adverse effect on its results of operations, financial condition or competitive
position, to date.

  The Company cannot predict the effect on it of new laws and regulations with
respect to radioactive hazardous wastes caused by naturally occurring
radioactive materials or with respect to other environmental matters.
Circumstances or developments which are not currently known as well as the
future cost of compliance with environmental laws and regulations could be
substantial and could have a material adverse effect on the results of
operations and financial condition of the Company.

  Pursuant to an agreement executed as part of the acquisition of the Company in
1988 from Minstar Inc. ("Minstar"), Minstar has agreed, subject to certain
limitations concerning the time for submitting claims and the amount of losses
to be covered as described below, to indemnify the Company with respect to all
losses, liabilities, damages and expenses incurred in connection with, arising
out of or resulting from the production, use, generation, emission, storage,
treatment, transportation, disposal or other handling or disposition or
migration of any kind of any toxic or hazardous wastes at any time prior to the
closing of the 1988 acquisition date.  Claims for indemnification were required
to be made before May 13, 1992.  Minstar is obligated to indemnify the Company
for the first $1 million of losses incurred by the Company and

                                       11
<PAGE>

fifty percent of losses in excess of $2 million. The Company is solely
responsible for the second $1 million of losses incurred and fifty percent of
losses in excess of $2 million. See "Business--Legal Proceedings" for a
description of the indemnity to be provided by Minstar with respect to actions,
suits, litigation, proceedings or governmental investigations which may also
apply to certain environmental matters.

EMPLOYEES

  As of December 31, 1996, the Company employed 3,602 full-time employees
worldwide, of whom 1,876 were employed in North America.  The Company considers
its relations with its employees to be excellent.

FACTORS AFFECTING FUTURE OPERATING RESULTS

  The oil and gas industry in which the Company participates historically has
experienced significant volatility. Demand for the Company's services and
products depends primarily upon the number of oil and gas wells being drilled,
the depth and drilling conditions of such wells, the volume of production, the
number of well completions and the level of workover activity.  Drilling and
workover activity can fluctuate significantly in a short period of time,
particularly in the United States and Canada.

  The willingness of oil and gas operators to make capital expenditures for the
exploration and production of oil and natural gas will continue to be influenced
by numerous factors over which the Company has no control, including the
prevailing and expected market prices for oil and natural gas.  Such prices are
impacted by, among other factors, the ability of the members of the Organization
of Petroleum Exporting Countries ("OPEC") to maintain price stability through
voluntary production limits, the level of production by non-OPEC countries,
worldwide demand for oil and gas, general economic and political conditions,
costs of exploration and production, availability of new leases and concessions,
and governmental regulations regarding, among other things, environmental
protection, taxation, price controls and product allocations.  No assurance can
be given as to the level of future oil and gas industry activity or demand for
the Company's services and products.

  The Company's foreign operations, which include significant operations in
Canada, Europe, the Far East, the Middle East and Latin America, are subject to
the risks normally associated with conducting business in foreign countries,
including uncertain political and economic environments, which may limit or
disrupt markets, restrict the movement of funds or result in the deprivation of
contract rights or the taking of property without fair compensation.
Government-owned petroleum companies located in some of the countries in which
the Company operates have adopted policies (or are subject to governmental
policies) giving preference to the purchase of goods and services from companies
that are majority-owned by local nationals.  As a result of such policies, the
Company relies on joint ventures, license arrangements and other business
combinations with local nationals in these countries.  In addition, political
considerations may disrupt the commercial relationship between the Company and
such government-owned petroleum companies. Although the Company has not
experienced any significant problems in foreign countries arising from
nationalistic policies, political instability, economic instability or currency
restrictions, there can be no assurance that such a problem will not arise in
the future.

  The Company's inspection and coating services routinely involve the handling
of waste materials, some of which may be considered to be hazardous wastes.  The
Company is subject to numerous local, state and federal laws and regulations
concerning the containment and disposal of hazardous materials, pursuant to
which Tuboscope has been required to incur compliance and clean-up costs.
Compliance with environmental laws and regulations due to currently unknown
circumstances or developments, however, could result in substantial costs and
have a material adverse effect on Tuboscope's results of operations and
financial condition.

  A significant portion of the Company's recent growth in revenues and
profitability has been the result of its aggressive acquisition program.  The
Company's future operating results will be impacted by the Company's ability to
identify additional attractive acquisition opportunities, consummate such
acquisitions on favorable terms and successfully integrate the operations of the
acquired businesses with those of the Company.

                                       12
<PAGE>

ITEM 2. PROPERTIES

  The following is a description of the Company's major facilities:
<TABLE>
<CAPTION>
                                                                                  SIZE
                                                                              (APPROXIMATE            OWNED/
             LOCATION                            DESCRIPTION                   SQUARE FEET)           LEASED
             --------                            -----------                  -------------           ------
<S>                                  <C>                                    <C>                    <C>
DOMESTIC:
--------
Amelia, Louisiana                    Coating Plant, Pipe Inspection and     85,000 on 35 Acres     Building Owned*
                                     Storage Facilities

Bakersfield, California              Reclamation Facility                   7,200 on 6 Acres       Owned

Casper, Wyoming                      Inspection Facility                    91,720 on 29 Acres     Owned

Corpus Christi, Texas                Service Facility                       20,800 on 4 Acres      Owned

Conroe, Texas                        Solids Control and Pressure            125,000 on 30.49       Owned
                                     Control Manufacturing Facility,        Acres
                                     Warehouse, Sales and
                                     Administrative Offices, &
                                     Engineering

Oklahoma City, Oklahoma              Inspection Facility                    6,000 on 5 Acres       Owned

Edmond, Oklahoma                     Coating Plant                          40,000 on 19 Acres     Owned

Fort Worth, Texas                    Coiled Tubing  Manufacturing           75,200 on 9.67 Acres   Owned
                                     Facility, Warehouse & Offices
                                     Fabrication Center                     26,700                 Leased

Harvey, Louisiana                    Coating Plant and Inspection          53,000 on 7 Acres       Owned & Leased
                                     Facility

Houston, Texas                       Holmes Road Complex:                                          Owned
                                     Manufacturing, Warehouse,
                                     Corporate Offices, Coating
                                     Manufacturing Plant & Pipeline
                                     Services

                                     Engineering/Technical Research        76,000 on 6 Acres       Owned
                                     Center

                                     Highway 90: Coating Plant             83,000 on 43 Acres      Leased

                                     Sheldon Road Complex: Region          137,000 on 94 Acres     Land Owned **
                                     Administration Offices, Pipe                                  Building Leased
                                     Inspection and Storage Facilities

                                     SOS Inspection Facility               32,000 on 31 Acres      Owned

Lake Arthur, Louisiana               Solids Control Service & Rework       7,800                   Leased
                                     Facility

Midland, Texas                       Coating Plant, Reclamation            87,000 on 25 Acres      Owned
                                     Facility and Technical Service
                                     Building

Odessa, Texas                        Inspection Pipe Storage Yard and      12,000 on 23.2 Acres    Leased
                                     Ancillary Service Facility
</TABLE>

                                       13
<PAGE>

<TABLE>
<CAPTION>
                                                                                  SIZE
                                                                              (APPROXIMATE            OWNED/
             LOCATION                            DESCRIPTION                   SQUARE FEET)           LEASED
             --------                            -----------                  -------------           ------
<S>                                  <C>                                   <C>                     <C>
Morgan City, Louisiana               Inspection Facility                   42,400 on 3 Acres       Building Owned*

New Iberia, Louisiana                Manufacturing and Warehouse           25,500 on 3.4 Acres     Owned
                                     Facility

North Slope (Deadhorse), Alaska      Inspection, Repair and Service        18,400                  Building Owned*
                                     Center

Kenai, Alaska                        Inspection Facility                   9,100 on 21 Acres       Leased

INTERNATIONAL:

CANADA:
------
Calgary, Alberta                     Pipeline Services Facility            33,825 on .8 Acres      Leased
                                     Sales and Inspection Facility         20,000 on .63 Acres     Owned

Edmonton, Alberta                    Nisku Complex:  Coating Plant,        114,000 on 40 Acres     Owned
                                     Inspection Facility, Pipeline
                                     Services and Maintenance Center

Leduc, Alberta                       Solids Control Equipment Rental       38,626 on 9.36 Acres    Owned
                                     and Services Facility

ARGENTINA:
---------
Plaza Huincul, Neuquen State         Reclamation and Inspection            2,000 on 2.3 Acres      Leased
                                     Facility

Comodoro Rivadavi, Chubut State      Reclamation and Inspection            7,300 on 1.1 Acres      Leased
                                     Facility

COLOMBIA:
--------
Yopal, Colombia                      Warehouse, Storage Yard and           4,600 on 3.75 Acres     Leased
                                     Offices

TRINIDAD:
--------
Couva, Trinidad                      Manufacturing                         8,073                   Leased

VENEZUELA:
---------
Anaco, Venezuela                     Inspection Facility                   600 on 2.5 Acres        Leased

Maracaibo, Venezuela                 Solids Control Facility               25,000 on 1 Acre        Owned

FRANCE:
------
Berlaimont, France                   Coating Plant                         44,000 on 16 Acres      Owned

SINGAPORE:
---------
Jurong, Singapore                    Coating Plant                         50,644 on 8 Acres       Building Owned*

Jurong, Singapore                    Inspection Facility                   19,429 on 3 Acres       Building Owned*
</TABLE>

                                       14
<PAGE>
<TABLE>
<CAPTION>

                                                                                 SIZE
                                                                              (APPROXIMATE            OWNED/
             LOCATION                            DESCRIPTION                   SQUARE FEET)           LEASED
             --------                            -----------                  -------------           ------
<S>                                  <C>                                   <C>                     <C>
UNITED KINGDOM:
--------------
Bordon, England                      Pipeline Services Center              12,000                  Building Owned*

Aberdeen, Scotland                   Inspection Facility & Coating         64,982 on 10 Acres      Owned
                                     Plant

Dundee, Scotland                     Manufacturing                         16,000 on 3.7 Acres     Owned

Montrose, Scotland                   Manufacturing and Assembly            22,400 on 1.5 Acres     Owned

Aberdeen, Scotland                   Manufacturing & Administrative        45,209                  Owned
                                     & Sales

Dorset, England                      Manufacturing & Administrative        12,700 on .33 Acres     Leased
                                     & Sales

GERMANY:
-------
Celle, Germany                       Inspection Facility,                  43,560 on 12 Acres      Building Owned*
                                     Administrative
                                     & Engineering Offices

Gladbeck, Germany                    Coating Plant                         25,635 on 4 Acres       Owned

NETHERLANDS:
-----------
Veenoord, Netherlands                Reclamation and Repair Facility       53,361 on 2 Acres       Leased

SAUDI ARABIA:
------------
A1 Khobar, Saudi Arabia              Reclamation, Inspection Facility      28,341 on 8 Acres       Leased
                                     and Offices
</TABLE>
-------------------------
*  Building owned subject to a ground lease.
** Land leased to building owner under a 99 year lease.

  The Company owns undeveloped acreage next to several of its facilities,
including over 100 acres of undeveloped property located in Houston, Texas.
Machinery, equipment, buildings, and other facilities owned and leased are
considered by management to be adequately maintained and adequate for the
Company's operations.

ITEM 3. LEGAL PROCEEDINGS

  The following discussion contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934.  These statements relate to the Company's legal
proceedings described below.  Litigation is inherently uncertain and may result
in adverse rulings or decisions. Additionally, the Company may enter into
settlements or be subject to judgments which may, individually or in the
aggregate, have a material adverse effect on the Company's results of
operations.  Accordingly, actual results could differ materially from those
projected in the forward-looking statements.

  The Company is involved in numerous legal proceedings which arise in the
ordinary course of its business.  A description of certain of these proceedings
follows.  The Company is unable to predict the outcome of these proceedings;
however, for the reasons set forth below, management believes that none of these
legal proceedings will have a material adverse effect on the results of
operations or financial condition of the Company.  Notwithstanding the
foregoing, there

                                       15
<PAGE>

can be no absolute assurance that the indemnity from Minstar discussed below or
the Company's insurance coverage will be sufficient to protect the Company from
incurring substantial liability as a result of these proceedings.

  The Company has been party to two lawsuits that allege wrongful death or
injury of former employees resulting from exposure to silica and silica dust
during employment with the Company, both of which have been settled.   These
settlements have been made on the Company's behalf by the Company's and
Minstar's insurance carriers without financial loss to the Company.  The Company
is aware of the possibility that suits may be brought against it by other former
employees alleging exposure to silica and silica dust during their employment
with the Company.  These suits may involve claims for wrongful death under a
theory of gross negligence and claims for punitive damages, the amounts of which
could be substantial but cannot be predicted.  Additionally, the Company has
been sued for two other claims arising out of allegations of exposure to
asbestos, benzene and certain other substances alleged to have been used
primarily during its processes in the 1960s and 1970s.  The Company believes
that, based upon insurance and indemnification from Minstar, any such potential
claims, if asserted, would not have a material adverse effect on the Company's
results of operations or financial condition.

  Pursuant to an agreement executed in connection with the acquisition of the
Company in 1988, Minstar agreed, subject to certain limitations, to hold the
Company harmless from and against any and all losses, liabilities, damages,
deficiencies and expenses (in excess of $1.5 million in the aggregate) arising
out of product and/or general liability claims arising out of occurrences on or
prior to the closing of the acquisition.  In addition, Minstar agreed, subject
to certain limitations, to hold the Company harmless from any and all losses,
liabilities and damages, deficiencies and expenses related to any action, suit,
litigation, proceeding or governmental investigation existing or pending on or
prior to the closing of the acquisition.  There is, however, a dispute with
Minstar concerning whether the indemnification referenced in the first sentence
of this paragraph is applicable only if the claim is the type that would be
covered by a product or general liability insurance policy.  The Company firmly
maintains that all suits or claims are the responsibility of Minstar when the
event giving rise to liability occurred prior to the closing of the acquisition.
No assurance can be given, however, that Minstar will not contest responsibility
for future suits, including those filed under theories of gross negligence.
Management believes that Minstar is responsible for indemnifying it with respect
to all of the aforementioned lawsuits subject in certain instances to the $1.5
million basket.  In addition, while management believes certain liability
arising from certain of the above described suits will be covered by insurance,
such suits may be subject to a reservation of rights and the coverage could be
contested by the carriers providing such insurance.

  The Company is a defendant in litigation that arose out of the rupture of
Texas Eastern's natural gas pipeline in Edison, New Jersey, in March of 1994.
The plaintiffs consist almost exclusively of the residents and family members of
an apartment complex that was located within several hundred feet of the point
of origin of the pipeline rupture.  The plaintiff's claims include, but are not
limited to, claims for property damage, personal injury, medical bills, lost
income, loss of consortium, lost wages, living shelter, emotional injury,
interruption of schooling, permanent disability, mental anguish, and attorney's
fees and costs.  The Defendants include Texas Eastern, Quality Materials, Inc.,
Tuboscope Pipeline Services, Inc.  ("TPSI"), and current and prior landowners of
land adjacent to the pipeline right-of-way.  It is estimated that the number of
plaintiffs could reach as high as 1,200 individuals.  These cases are globally
addressed in Master Litigation No.  L-614614-93; NANCY KEMPS, ET AL.  V.  TEXAS
EASTERN TRANSMISSION CORP., ET AL.;  In the Superior Court of New Jersey, Law
Division, Middlesex County.  An additional action has been brought by a
co-defendant, Civil Action No.  94-1644;  QUALITY MATERIALS, INC.  V.  TEXAS
EASTERN CORP.  AND TEXAS EASTERN TRANSMISSION CORP., In the United States
District Court of New Jersey.   Also, an adjacent land owner has filed a
separate action styled L-0000Z-96 EDISON TYLER VILLAGES LLC.  V.  TEXAS EASTERN
TRANSMISSION CORP. in the Superior Court of New Jersey, Middlesex County, Law
Division .  A defense is being provided by the Company's insurance carrier
subject to a reservation of rights letter.  Management believes, based upon
insurance and its rights against co-defendants, that these cases will not have a
material adverse effect on the  Company's results of operations or financial
condition.

  The Company is a Defendant in litigation styled Artisan Corporation v. Optima
                                                  -----------------------------
Petroleum Corporation - Optima Petroleum Corporation and Dunhaven Energy Inc.
-----------------------------------------------------------------------------
vs. Artisan Corporation and Tuboscope Vetco Canada Inc. causes No.9601-06975 and
-------------------------------------------------------
9601-9867, Court of Queen's Bench of Alberta, Judicial District of Calgary.  The
plaintiffs allege breach of contract and negligence in connection with
inspection of drill pipe in Canada in 1995 and seek damages in excess of 8
million Canadian Dollars.  Management believes that, based upon insurance and
its rights and defenses against co-parties that this case will not have a
material adverse effect on the Company's results of operations or financial
condition.  This action is being vigorously contested.

                                       16
<PAGE>

  The products acquired by the Company due to the Drexel Merger are used in
complex industrial applications. Litigation arising from a catastrophic
occurrence at such applications may result in the Company being named as a
defendant in lawsuits asserting large claims.  Although the Company believes its
insurance coverage is adequate for its current operations and its uninsured
losses from product liability claims have not been significant, a successful
liability claim for which the Company is underinsured or uninsured could have a
material adverse effect on the Company.

  The Company is a defendant in litigation in the United States District Court
for the Southern District of Texas, Houston Division, styled Derrick
                                                             -------
Manufacturing Corporation vs. Advanced Wirecloth, Inc., Environmental
---------------------------------------------------------------------
Procedures, Inc. dba SWECO Oilfield Services, Vincent D. Leone, and William S.
------------------------------------------------------------------------------
Cagle; Civil Action No.942417 which is a consolidated action, having
------
consolidated Civil Action No.95-3653 into that Civil Action.  Plaintiff asserts
a number of claims related to the Company's screen manufacturing and its solids
control business including: (1) infringement of United States Patent
No.4,575,421; (2) trademark infringement under 15 U.S.C.(S) 1114, Section 32 of
the Lanham Act; (3) unfair competition under 15 U.S.C. (S)1125(a), Section 43(a)
of the Lanham Act; (4) state common law unfair competition; and (5) violation of
Texas' Anti-Dilution Act.  Plaintiff has asked for an unspecified amount of
damages arising from these claims as well as a permanent injunction, as
asserted in the original action as well as claims including: (1) infringement of
United States Patent No.5,417,859; (2) trademark infringement under 15 U.S.C.
(S) 1114, Section 32 of the Lanham Act; (3) unfair competition under 15 U.S.C.
(S) 1125(a), Section 43(a) of the Lanham Act; (4) state common law unfair
competition; (5) false marking of Advanced's and SWECO's screens with U.S.
Patent No.5,385,669 in violation of 35 U.S.C. (S) 292(a); and (6) violation of
Texas' Anti-Dilution Act. Plaintiff has asked for an unspecified amount of
damages arising from these claims as well as for preliminary and permanent
injunctions.

  All claims against defendant William S. Cagle have been dismissed.  A separate
case involving one of the same two patents asserted by Derrick against Advanced
Wirecloth, but involving a different screen manufacturer as defendants, was
tried to a jury before the same Judge in Derrick Manufacturing Corporation vs.
                                         -------------------------------------
Southwestern Wire Cloth, Inc., Southwestern Wire Cloth Oilfield Screens, Inc.
-----------------------------------------------------------------------------
and Robert E. Norman, Civil Action No.H-94-0135 in the United States District
---------------------
Court for the Southern District of Texas.  The Judge entered a judgment as a
matter of law that the patent in suit was procured by inequitable conduct and is
unenforceable, notwithstanding a jury verdict against the defendant awarding the
Plaintiff $4,000,000 in damages.  The Southwestern case is now on appeal to the
Court of Appeals for the Federal Circuit.  If the district court's judgment is
affirmed on appeal, the Company believes that it will have no exposure on the
patent in the suit that was adjudicated and common to the Southwestern and
Advanced Wirecloth cases, i.e., United States Patent No.4,575,421.  The other
patent on which Derrick has sued Advanced Wirecloth, i.e., United States Patent
No.5,417,859, is the subject of a second suit between Derrick and Southwestern,
Civil Action No.95-C-1184K, pending in the United States District Court for the
Northern District of Oklahoma.  The outcome of the case, if favorable to
Southwestern, could have a favorable impact  on Advanced Wirecloth with respect
to the second Derrick patent.  In view of the appeal in the Derrick vs.
Southwestern Wire Cloth case, the Judge has stayed all proceedings in the
Advanced Wirecloth case pending the outcome of the Southwestern appeal.
Notwithstanding the outcome of the Southwestern Wirecloth cases the Company
believes it has strong defenses to all of Derrick's allegations and that based
on these and certain indemnities from the Seller's in the SOFS-Drexel
transaction, and insurance the result from this litigation will not have a
material adverse effect on the Company's results of operations or financial
condition.  This action is being vigorously contested.

  The Company is aware of an investigation by the Department of Justice
concerning certain alleged violations of the International Emergency Economic
Powers Act which may involve the Company.  The Company has not been officially
notified or served with any process with respect to such investigation.  The
Company believes that the outcome of this investigation will not have a material
adverse effect upon the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  No matters were submitted to a vote of stockholders during the fourth quarter
of 1996.

                                       17
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY STOCK AND RELATED STOCKHOLDER
        MATTERS

  The Company's common stock is quoted on the Nasdaq Stock Market under the
symbol "TUBO". The following table sets forth, for the calendar periods
indicated, the range of high and low closing prices for the common stock, as
reported by Nasdaq:
<TABLE>
<CAPTION>
                         1996                1995
                 -------------------   -----------------
                   HIGH       LOW       HIGH       LOW
                 --------   --------   -------   -------
<S>              <C>        <C>        <C>       <C>
1st Quarter      $10 1/4    $ 5 7/8    $8 1/2    $6 1/8
2nd Quarter       13 7/16     9 7/8     7 1/2     6
3rd Quarter       15 7/8     10 5/16    7         5 3/4
4th Quarter       16 1/2     13 1/2     6 5/8     5 5/8
</TABLE>

     The closing price of the Company's common stock on March 19, 1997 was
$13 1/8.  The approximate number of stockholders of record on March 19, 1997
was 251.

     Holders of Tuboscope Common Stock are entitled to such dividends as may be
declared from time to time by the Tuboscope Board of Directors out of funds
legally available therefore. The Company has not declared or paid any dividends
on its common stock since its inception and does not currently plan to declare
or pay any dividends.   The Company's Senior Credit Agreement restricts the
Company from paying dividends on its capital until all mandatory prepayments
have been made from excess cash flow and the total funded debt to capital ratio
is not greater than 40%. The Company's total funded debt to capital ratio (as
defined under the agreement) was 46.8% at December 31, 1996. The Company was
therefore prohibited from paying dividends under the terms of its Senior Credit
Agreement at December 31, 1996.

ITEM 6.  SELECTED FINANCIAL DATA

     There is hereby incorporated herein by reference the information appearing
under the caption "Selected Financial Data" of the registrant's Annual Report to
Stockholders for the year ended December 31, 1996, which is included as part of
Exhibit 13 to this Form 10-K.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITION

     There is hereby incorporated herein by reference the information appearing
under the caption "Management's Discussion and Analysis of Results of Operations
and Financial Condition of the Company" of the registrants's Annual Report to
Stockholders for the year ended December 31, 1996, which is included as part of
Exhibit 13 to this Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     There is hereby incorporated herein by reference the Consolidated Financial
Statements of the Company, the Notes to Consolidated Financial Statements
and the Report of Independent Auditors with respect thereto appearing on
Pages 23 through 43 of the registrant's Annual Report to Stockholders
for the year ended December 31, 1996, which is included as part of Exhibit 13 to
this Form 10-K. Reference is made to the Index to Financial Statements in Item
14 below.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

                                       18
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     There is hereby incorporated herein by reference the information appearing
under the captions "Proposal 1 -"Election of Directors" and "Executive Officers
of the Company"  of the registrant's definitive Proxy Statement for its 1997
Annual Meeting to be filed with the Securities and Exchange Commission (the
"Commission") on or before April 30, 1997.

ITEM 11.  EXECUTIVE COMPENSATION

     There is hereby incorporated herein by reference the information appearing
under the captions "Executive Compensation" of the registrant's definitive Proxy
Statement for its 1997 Annual Meeting to be filed with the Commission on or
before April 30, 1997.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     There is hereby incorporated herein by reference the information appearing
under the caption "Voting Securities and Certain Holders Thereof"  of the
registrant's definitive Proxy Statement for its 1997 Annual Meeting to be filed
with the Commission on or before April 30, 1997.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     There is hereby incorporated herein by reference the information appearing
under the caption "Certain Transactions" of the registrant's definitive Proxy
Statement for its 1997 Annual Meeting to be filed with the Commission on or
before April 30, 1997.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) Financial Statements, Financial Statement Schedules and Exhibits

     1. Financial Statements:

     The information under the following captions, which is included in the
     1996 Annual Report to Stockholders, is incorporated herein by reference and
     is included as part of Exhibit 13 to this Form 10-K:

     Tuboscope Vetco International Corporation:
            Report of Independent Auditors
            Consolidated Balance Sheets as of December 31, 1996 and 1995
            Consolidated Statements of Operations for the years ended December
              31, 1996, 1995 and 1994
            Consolidated Statements of Cash Flows for the years ended December
              31, 1996, 1995, and 1994
            Consolidated Statements of Common Stockholders' Equity and
              Redeemable Preferred Stock for the years ended December 31, 1996,
              1995, and 1994
            Notes to Consolidated Financial Statements

                                       19
<PAGE>

     2. Financial Statement Schedules:

        The information under the following captions is filed as part of
        this Report:

        Schedule I Parent Company Only Condensed Balance Sheets
        Schedule I Parent Company Only Condensed Statements of Operations
        Schedule I Parent Company Only Condensed Statements of Cash Flows
        Schedule I Parent Company Only Notes to Condensed Financial Statements
        Schedule II Valuation and Qualifying Accounts

  All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted or the
information is presented in the consolidated financial statements or related
notes.

     3. The list of exhibits contained in the Index to Exhibits are filed as
        part of this Report.

     (b) Reports on Form 8-K

     A Form 8-K/A regarding the acquisition of Vetco Pipeline Services, Inc.
     was filed on November 12, 1996.


                                       20
<PAGE>

                                   SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                       TUBOSCOPE VETCO INTERNATIONAL CORPORATION

                                       By:           /s/ L.  E.  SIMMONS
                                          --------------------------------------
                                           L. E. Simmons
                                           Chairman of the Board

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
          SIGNATURE                          TITLE                      DATE
          ---------                          -----                      ----
<S>                             <C>                                <C>

     /s/ L. E.  SIMMONS         Chairman of the Board              March 25, 1997
-----------------------------
       L. E. Simmons

  /s/  JOHN F. LAULETTA         Director                           March 25, 1997
-----------------------------     President and Chief Executive
     John F. Lauletta             Officer
                                  (Principal Executive Officer)

  /s/   JOSEPH C. WINKLER       Executive Vice President, Chief    March 25, 1997
-----------------------------     Financial Officer and Treasurer
      Joseph C. Winkler           (Principal Financial and
                                  Accounting Officer)

  /s/  MARTIN I. GREENBERG      Vice President, Controller,        March 25, 1997
-----------------------------     Assistant Treasurer and
     Martin I. Greenberg          Assistant Secretary

   /s/  JEROME R.  BAIER        Director                           March 25, 1997
-----------------------------
       Jerome R. Baier

  /s/  J.  S.  DICKSON LEACH    Director                           March 25, 1997
-----------------------------
     J. S. Dickson Leach

   /s/  ERIC L. MATTSON         Director                           March 25, 1997
-----------------------------
       Eric L. Mattson

    /s/  MARTIN R. REID         Director                           March 25, 1997
-----------------------------
       Martin R. Reid

</TABLE>

                                       21
<PAGE>

                                                                      SCHEDULE I

                   TUBOSCOPE VETCO INTERNATIONAL CORPORATION

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                            CONDENSED BALANCE SHEETS
                             (PARENT COMPANY ONLY)

                           DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                                             DECEMBER 31,
                                                                                        ---------------------
                                                                                           1996       1995
                                                                                        ---------   ---------
                              A S S E T S                                                  (IN THOUSANDS)
                              -----------
<S>                                                                                     <C>         <C>
Cash..................................................................................   $      9    $      9
Accounts receivable...................................................................         17          --
Investment in subsidiaries............................................................    228,502     132,496
                                                                                         --------    --------
      Total assets....................................................................   $228,528    $132,505
                                                                                         ========    ========

                 L I A B I L I T I E S   A N D   E Q U I T Y
                 -------------------------------------------
Amounts due to affiliates.............................................................   $  7,068    $    889
Interest payable......................................................................         45          --
Notes payable.........................................................................      2,513          --
Redeemable Series A Convertible Preferred Stock.......................................         --      10,175
Common stockholders' equity:
    Common stock, $.01 par value 60,000,000 shares authorized, 41,612,495 shares
       issued and outstanding (18,546,075  at December 31, 1995)......................        416         185
    Paid-in capital...................................................................    261,932     116,379
    Retained earnings (deficit).......................................................    (42,949)      6,650
    Cumulative translation adjustment.................................................       (497)     (1,773)
                                                                                         --------    --------
             Total common stockholders' equity........................................    218,902     121,441
                                                                                         --------    --------
             Total liabilities and equity.............................................   $228,528    $132,505
                                                                                         ========    ========

</TABLE>

                  See notes to condensed financial statements.
                  ============================================

                                       22
<PAGE>

                                                                      SCHEDULE I


                   TUBOSCOPE VETCO INTERNATIONAL CORPORATION

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                       CONDENSED STATEMENTS OF OPERATIONS
                             (PARENT COMPANY ONLY)

                 YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                             -----------------------------
                                                               1996      1995       1994
                                                            --------   --------   --------
                                                                    (IN THOUSANDS)
<S>                                                         <C>        <C>        <C>
Equity in net earnings (loss) of subsidiaries............   ($49,326)    $8,874     $7,563
Interest expense.........................................        (45)        --         --
Foreign exchange loss....................................       (171)        --         --
State franchise tax and other............................        (57)       (55)       (39)
                                                            --------     ------     ------
Net income (loss)........................................    (49,599)     8,819      7,524
Dividends applicable to redeemable preferred stock.......         --        700        700
                                                            --------     ------     ------
Net income (loss) applicable to common stock.............   ($49,599)    $8,119     $6,824
                                                            ========     ======     ======

</TABLE>

                  See notes to condensed financial statements.
                  ============================================

                                       23
<PAGE>

                                                                      SCHEDULE I


                   TUBOSCOPE VETCO INTERNATIONAL CORPORATION

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                       CONDENSED STATEMENTS OF CASH FLOWS
                             (PARENT COMPANY ONLY)

                 YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,
                                                                                   ------------------------------
                                                                                     1996        1995      1994
                                                                                   --------    --------  --------
                                                                                           (IN THOUSANDS)
<S>                                                                                <C>         <C>       <C>
Cash flows from operating activities:
      Net income (loss).........................................................   ($49,599)   $ 8,819    $ 7,524
      Adjustments to reconcile net income (loss) to net cash provided by
      operating activities:
          Equity in net (earnings) loss of subsidiaries.........................     49,326     (8,874)    (7,563)
          Changes in current assets and liabilities:
             Accounts receivable................................................        (17)        --         --
             Interest payable...................................................         45         --         --
             Amounts due to affiliates..........................................      6,179        357        425
                                                                                  ---------    -------    -------
      Net cash provided by  operating activities................................      5,934        302        386
                                                                                  ---------    -------    -------
Cash flows used for  investing activities:
      Investment in subsidiaries................................................    (37,466)        --         --
                                                                                  ---------    -------    -------
Cash flows provided by (used for)  financing activities:
      Proceeds from sale of common stock........................................     31,707        398        314
      Dividends paid on Redeemable Series A Convertible Preferred Stock.........       (175)      (700)      (700)
                                                                                  ---------    -------    -------
      Net cash provided by (used for)  financing activities.....................     31,532       (302)      (386)
                                                                                  ---------    -------    -------
Net change in cash and cash equivalents.........................................         --         --         --
Cash and cash equivalents:
      Beginning of the year.....................................................          9          9          9
                                                                                  ---------    -------    -------
      End of the year...........................................................  $       9    $     9    $     9
                                                                                  =========    =======    =======
</TABLE>

                 See notes to condensed financial statements.

                                       24
<PAGE>

                                                                      SCHEDULE I

                   TUBOSCOPE VETCO INTERNATIONAL CORPORATION

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                    NOTES TO CONDENSED FINANCIAL STATEMENTS

                       DECEMBER 31, 1996, 1995,  AND 1994

     No cash dividends were paid to Tuboscope Vetco International Corporation.

     For information concerning restrictions pertaining to the common stock and
commitments and contingencies, see Notes 7 and 10 of notes to consolidated
financial statements of Tuboscope Vetco International Corporation.





















                                       25
<PAGE>

                                                                     SCHEDULE II


                   TUBOSCOPE VETCO INTERNATIONAL CORPORATION

                       VALUATION AND QUALIFYING ACCOUNTS

                 YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
                                                                 ADDITIONS
                                                                (DEDUCTIONS)
                                                     BALANCE     CHARGED TO                   BALANCE
                                                    BEGINNING    COSTS AND     CHARGE OFFS    END OF
                                                     OF YEAR      EXPENSES      AND OTHER      YEAR
                                                    ---------   ------------   ------------   -------
                                                                     (IN THOUSANDS)
<S>                                                 <C>         <C>            <C>            <C>
Allowance for doubtful accounts:
    1996...........................................    $  955        $  628        $   799     $2,382
    1995...........................................    $1,599        $ (272)       $  (372)    $  955
    1994...........................................    $1,858        $  --         $  (259)    $1,599

Allowance for inventory reserves:
    1996...........................................    $5,988        $  329        $ 2,677     $8,994
    1995...........................................    $6,272        $ (275)       $    (9)    $5,988
    1994...........................................    $6,147        $   91        $    34     $6,272

Valuation allowance for deferred income taxes:
    1996...........................................    $3,404        $  --         $(2,233)    $1,171
    1995...........................................    $1,310        $2,119        $   (25)    $3,404
    1994...........................................    $  862        $  665        $  (217)    $1,310

</TABLE>
The increase in the allowance for doubtful accounts and allowance for inventory
reserves during 1996 was  due primarily to the merger with Drexel.

The change in the valuation allowance for deferred income taxes in 1996 relates
to foreign tax credits and net operating losses. These items were relieved in
connection with the write-off of long-lived assets discussed in Notes 2 and 6.

                                       26
<PAGE>

                                 EXHIBIT INDEX
<TABLE>
<CAPTION>
 EXHIBIT NO.                                  DESCRIPTION                                   NOTE NO.
--------------                                -----------                                 -----------
<S>              <C>                                                                      <C>
2(a)             Agreement and Plan of Merger, dated as of January 3, 1996, among         (Note 12)
                 Tuboscope Vetco International Corporation, Grow Acquisition Limited
                 and D.O.S. Ltd.

2(b)             Share Purchase Agreement dated as of May 31, 1996 between TVI            (Note 15)
                 Wadeco Inc., J & S Hokanson Investments Ltd., John Hokanson,
                 Douglass Bell, Robert Russell, Richard Rutherford and Wadeco
                 Oilfield Services Ltd.

2(c)             Stock Purchase and Sale Agreement dated as of September 6, 1996 by       (Note 16)
                 and among Tuboscope Pipeline Services, Inc., Vetco Pipeline Services,
                 Inc., Rauma USA, Inc. and Rauma Corporation

2(d)             Addendum No. 1 to Stock Purchase and Sale Agreement dated as of          (Note 16)
                 September 20, 1996 by and among Tuboscope Pipeline Services, Inc.,
                 Vetco Pipeline Services, Inc., Rauma USA, Inc. and Rauma
                 Corporation

2(e)             Addendum No. 2 to Stock Purchase and Sale Agreement dated as of          (Note 16)
                 September 20, 1996 by and among Tuboscope Pipeline Services, Inc.,
                 Vetco Pipeline Services, Inc., Rauma USA, Inc. and Rauma
                 Corporation

3(a)             Restated Certificate of Incorporation, dated March 12, 1990.              (Note 7)

3(b)             Amended and Restated Bylaws.                                              (Note 2)

3(c)             Certificate of Designation of Series A Convertible Preferred Stock,       (Note 3)
                 dated October 22, 1991.

3(d)             Certificate of Amendment to Restated Certificate of Incorporation        (Note 10)
                 dated May 12, 1992.

3(e)             Certificate of Amendment to Restated Certificate of Incorporation        (Note 11)
                 dated May 10, 1994.

4(a)             Stockholders' Agreement, dated May 13, 1988, between the Company,         (Note 1)
                 Brentwood, Hub, the Management Investors, the Other Investors, and
                 the Institutional Investors, including the Common Stock Registration
                 Rights Agreement attached thereto as Exhibit A.

4(b)             Indenture (including the form of Note), dated as of April 1, 1993,        (Note 4)
                 among Tuboscope Vetco International Inc., the Company and Norwest
                 Bank Minnesota, National Association, as Trustee, regarding the
                 10 3/4% Senior Subordinated Notes due 2003 of Tuboscope Vetco
                 International Inc.

4(c)             Supplemental Indenture dated as of December 18, 1996, among               Exhibit 4(c)
                 Tuboscope Vetco International Inc., the Company and Norwest Bank
                 Minnesota, National Association, as Trustee, regarding the 10 3/4%
                 Senior Subordinated Notes due 2003 of Tuboscope Vetco International
                 Inc.

4(d)             Various documentation relating to $1,000,000 Alaska Industrial
                 Revenue Bond financing.  (Not filed herewith pursuant to Item
                 601(b)(4)(iii) of Regulation S-K.  The Company hereby agrees to
                 furnish copies of relevant documentation to the Securities and
                 Exchange Commission upon request).

</TABLE>

                                       27
<PAGE>

<TABLE>
<CAPTION>
 EXHIBIT NO.                                  DESCRIPTION                                   NOTE NO.
--------------                                -----------                                 -----------
<S>              <C>                                                                      <C>
4(e)             Various documentation relating to $1,000,000 Wyoming Industrial
                 Revenue Bond financing.  (Not filed herewith pursuant to Item
                 601(b)(4)(iii) of Regulation S-K.  The Company hereby agrees to
                 furnish copies of relevant documentation to the Securities and
                 Exchange Commission upon request).

4(f)             Various promissory notes in the aggregate principal amount of
                 $4,000,000 relating to the acquisition of Sound Optics Systems, Inc.,
                 dba South Optical Systems, Inc. (Not filed herewith pursuant to Item
                 601(b)(4)(iii) of Regulation S-K.  The Company hereby agrees to
                 furnish copies of the relevant documentation to the Securities and
                 Exchange Commission upon request).

4(g)             Secured Credit Agreement, dated August 2, 1996, between Tuboscope        (Note 14)
                 Vetco International Inc., and Drexel Holdings, Inc., and The Chase
                 Manhattan Bank, N.A., ABN Amro Bank N.V., Houston Agency, and
                 the other Lenders Party Hereto, and ABN Amro Bank N.V., Houston
                 Agency as Administrative Agent.

10(a)            Savings Investment Plan, dated May 13, 1988, as amended by                (Note 1)
                 First Amendment to Savings Investment Plan.

10(b)            Second, Third and Fourth Amendments to Savings Investment Plan.           (Note 4)

10(c)            Fifth, Sixth and Seventh Amendments to Savings Investment Plan.           (Note 8)

10(d)            Supplementary Agreement Fixed Rental Scheme, dated May 19, 1989,          (Note 1)
                 between Jurong Town Corporation and AMF Far East Pte. Ltd.

10(e)            Description of Life Insurance Plan.                                       (Note 1)

10(f)            Amended and Restated Stock Option Plan for Key Employees of               (Note 5)
                 Tuboscope Vetco International Corporation.

10(g)            Form of Revised Incentive Stock Option Agreement.                         (Note 5)

10(h)            Form of Revised Non-Qualified Stock Option Agreement.                     (Note 5)

10(i)            Stock Option Plan for Non-Employee Directors of Tuboscope Vetco           (Note 6)
                 International Corporation.

10(j)            Amendment to Stock Option Plan for Non-Employee Directors of              (Note 6)
                 Tuboscope Vetco International Corporation.

10(k)            Form of Non-Qualified Stock Option Agreement.                             (Note 6)

10(l)            Employee Qualified Stock Purchase Plan.                                   (Note 8)

10(m)            Purchase Agreement, dated as of September 30, 1991, between the           (Note 3)
                 Company and BHI relating to the Vetco Services Acquisition.

10(o)            Technology Transfer Agreement, dated as of October 29, 1991,              (Note 3)
                 between Tuboscope Inc. and BHI.

10(p)            Lease Agreement with respect to Celle, Germany facility.                  (Note 3)

10(q)            Building Agreement for Land at Jurong, dated May 5, 1983, between         (Note 3)
                 Jurong Town Corporation and Vetco International, Inc.

10(r)            Lease between J.G.B. Properties Limited and Vetco Inspection GmbH.        (Note 3)

10(s)            Eighth and Ninth Amendment to Savings Investment Plan.                    (Note 9)
</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>
 EXHIBIT NO.                                  DESCRIPTION                                   NOTE NO.
--------------                                -----------                                 -----------
<S>              <C>                                                                      <C>
10(t)            Subscription Agreement, dated as of January 3, 1996, by and between      (Note 12)
                 Tuboscope Vetco International Corporation and SCF-III, L.P.

10(u)            Exchange Agreement, dated as of January 3, 1996, among Tuboscope         (Note 13)
                 Vetco International Corporation and Baker Hughes Incorporated.

10(v)            Voting Agreement, dated as of January 3, 1996, among Tuboscope           (Note 12)
                 Vetco International Corporation, D.O.S. Ltd., D.O.S. Partners, L.P.,
                 Panmell (Holdings), Ltd. And Zink Industries Limited.

10(w)            Voting Agreement, dated as of January 3, 1996, among D.O.S. Ltd.,        (Note 12)
                 Brentwood Associates IV, L.P. and Baker Hughes Incorporated.

10(x)            Form of Amended and Restated Executive Agreement.                        (Note 13)

10(y)            Master Lease Agreement, dated December 18, 1995, between the             (Note 13)
                 Company and Heller Financial Leasing, Inc.

10(z)            1996 Equity Participation Plan.                                          (Note 17)

10(aa)           D.O.S. Ltd. 1993 Stock Option Plan.                                      (Note 18)

13               Annual Report to Stockholders for the year ended December 31, 1996.      Exhibit 13

21               Subsidiaries.                                                            Exhibit 21

23               Consent of Ernst & Young LLP                                             Exhibit 23

27               Financial Data.                                                          Exhibit 27
</TABLE>
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Note 1  Previously filed by the Registrant in Registration No. 33-31102 and
        incorporated by reference herein pursuant to Rule 12b-32 of the
        Exchange Act.

Note 2  Previously filed by the Registrant in Registration No. 33-33248 and
        incorporated by reference herein pursuant to Rule 12b-32 of the
        Exchange Act.

Note 3  Previously filed by the Registrant in File No. 33-43525 and
        incorporated by reference herein pursuant to Rule 12b-32 of the
        Exchange Act.

Note 4  Previously filed by the Registrant in Registration No. 33-56182 and
        incorporated by reference herein pursuant to Rule 12b-32 of the
        Exchange Act.

Note 5  Previously filed by the Registrant in Registration No. 33-72150 and
        incorporated by reference herein pursuant to Rule 12b-32 of the
        Exchange Act.

Note 6  Previously filed by the Registrant in Registration No. 33-72072 and
        incorporated by reference herein pursuant to Rule 12b-32 of the
        Exchange Act.

Note 7  Previously filed in the Company's Annual Report on Form 10-K for the
        fiscal year ended December 31, 1990 and incorporated by reference herein
        pursuant to Rule 12b-32 of the Exchange Act.

Note 8  Previously filed in the Company's Annual Report on Form 10-K for the
        fiscal year ended December 31, 1993 and incorporated by reference herein
        pursuant to Rule 12b-32 of the Exchange Act.

Note 9  Previously filed in the Quarterly Report on Form 10-Q for the quarter
        ended June 30, 1994 and incorporated by reference herein pursuant to
        Rule 12b-32 of the Exchange Act.

Note 10 Previously filed in the Company's Annual Report on Form 10-K for the
        fiscal year ended December 31, 1992 and incorporated by reference herein
        pursuant to Rule 12b-32 of the Exchange Act.

                                       29
<PAGE>

Note 11 Previously filed in the Company's Proxy Statement for the 1994
        Annual Meeting of Stockholders and incorporated by reference herein
        pursuant to Rule 12b-32 of the Exchange Act.

Note 12 Previously filed in the Company's Current Report on Form 8-K filed
        on January 16, 1996 and incorporated by reference herein pursuant to
        Rule 12b-32 of the Exchange Act.

Note 13 Previously filed in the Company's Annual Report on Form 10-K for the
        fiscal year ended December 31, 1995 and incorporated by reference herein
        pursant to Rule 12b-32 of the Exchange Act.

Note 14 Previously filed in the Company's Quarterly Report on Form 10-Q for
        the quarter ended June 30, 1996 and incorporated by reference herein
        pursuant to Rule 12b-32 of the Exchange Act.

Note 15 Previously filed in the Company's Current Report on Form 8-K filed
        on June 14, 1996, as amended by Amendment No. 1 on Form 8-K/A filed on
        August 2, 1996, and incorporated by reference herein pursuant to
        Rule 12b-32 of the Exchange Act.

Note 16 Previously filed in the Company's Current Report on Form 8-K filed
        on October 7, 1996, as amended by Amendment No. 1 filed on November 12,
        1996, and incorporated by reference herein pursuant to Rule 12b-32 of
        the Exchange Act.

Note 17 Previously filed by the Company in Registration No. 333-05233 and
        incorporated by reference herein pursuant to Rule 12b-32 of the
        Exchange Act.

Note 18 Previously filed by the Company in Registration No. 333-05237 and
        incorporated by reference herein pursuant to Rule 12b-32 of the
        Exchange Act.

                                       30