Document:

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                                                                    EXHIBIT 10.2

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

                            ASSET PURCHASE AGREEMENT

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

                THIS AGREEMENT MADE THE 24TH DAY OF MARCH, 2000,

                                     AMONG:

                       PHELPS DRILLING INTERNATIONAL LTD.

                                       AND

                               THE SHAREHOLDERS OF

                               592655 ALBERTA LTD.

                                       AND

                              PHELPS DRILLING LTD.

                                       AND

                                UTI ENERGY CORP.
<PAGE>   2
                                TABLE OF CONTENTS
                                                                            PAGE
                                                                            ----
ARTICLE 1      INTERPRETATION................................................1
      1.1      Defined Terms.................................................1
      1.2      Currency......................................................5
      1.3      Sections and Headings.........................................5
      1.4      Number, Gender and Persons....................................5
      1.5      Accounting Principles.........................................5
      1.6      Entire Agreement..............................................5
      1.7      Time of Essence...............................................5
      1.8      Applicable Law................................................6
      1.9      Successors and Assigns........................................6
      1.10     Severability..................................................6
      1.11     Amendments and Waivers........................................6
      1.12     Knowledge or Awareness........................................7
      1.13     Schedules.....................................................7

ARTICLE 2      PURCHASE AND SALE OF PURCHASED ASSETS.........................7
      2.1      Purchased Assets..............................................7
      2.2      Excluded Assets...............................................9
      2.3      Merchantability..............................................10

ARTICLE 3      PURCHASE PRICE...............................................11
      3.1      Purchase Price...............................................11
      3.2      Adjustments..................................................11
      3.3      Allocation of Purchase Price.................................12
      3.4      GST..........................................................13

ARTICLE 4      ASSUMPTION OF OBLIGATIONS....................................13
      4.1      Assumption of Obligations....................................13
      4.2      Exclusion of Liabilities.....................................14

ARTICLE 5      REPRESENTATIONS AND WARRANTIES OF SELLER.....................14
      5.1      Organization.................................................14
      5.2      Authorization................................................14
      5.3      No Conflict..................................................14
      5.4      No Other Agreements to Purchase..............................15
      5.5      Sufficiency of Purchased Assets..............................15
      5.6      Title to Purchased Assets....................................15
      5.7      Leased Real Property.........................................15
      5.8      Intellectual Property........................................16
      5.9      Insurance....................................................16
      5.10     Material Contracts...........................................17
      5.11     Compliance with Laws; Governmental Authorization.............18
      5.12     Consents and Approvals.......................................18
      5.13     Financial Statements.........................................19
      5.14     Books and Records............................................19
      5.15     Absence of Changes...........................................19
      5.16     Non-Arm's Length Transactions................................20
      5.17     Litigation...................................................21
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                               TABLE OF CONTENTS
                                  (continued)
                                                                            PAGE
                                                                            ----
      5.18     Residency....................................................21
      5.19     Environmental Matters........................................21
      5.20     Employee Matters.............................................21
      5.21     Customers and Suppliers......................................22
      5.22     Y2K Compliance...............................................22
      5.23     Full Disclosure..............................................23
      5.24     Brokers......................................................23
      5.25     31323 Alberta Ltd............................................23

ARTICLE 6      REPRESENTATIONS AND WARRANTIES OF PURCHASER..................23
      6.1      Organization.................................................23
      6.2      Authorization................................................24
      6.3      No Conflict..................................................24
      6.4      Consents and Approvals.......................................24
      6.5      Investment Canada............................................25
      6.6      Brokers......................................................25

ARTICLE 7      SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................25
      7.1      Survival of  Representations and Warranties..................25

ARTICLE 8      COVENANTS....................................................25
      8.1      Access to Purchased Business and Purchased Assets............25
      8.2      Delivery of Books and Records................................26
      8.3      Change of Name...............................................26
      8.4      Conduct of Purchased Business Prior to Closing...............27
      8.5      Third Party Consents and Novations...........................28
      8.6      Employees....................................................28
      8.7      Employee Plans...............................................29
      8.8      Financial Statement Cooperation..............................30
      8.9      Exclusivity..................................................30
      8.10     Non-Competition..............................................30
      8.11     Update of Schedules..........................................32

ARTICLE 9      CONDITIONS OF CLOSING........................................32
      9.1      Conditions of Closing in Favour of Purchaser.................32
      9.2      Conditions of Closing in Favour of Seller....................34

ARTICLE 10     CLOSING AND TRANSFER OF POSSESSION...........................35
      10.1     Place of Closing.............................................35
      10.2     Closing Deliveries by Seller.................................35
      10.3     Closing Deliveries by Purchaser..............................36
      10.4     Further Assurances...........................................36
      10.5     Transfer of Possession and Title.............................37
      10.6     Risk of Loss.................................................37

ARTICLE 11     INDEMNIFICATION..............................................37
      11.1     Indemnification by Seller and Shareholders...................37
      11.2     Indemnification by Purchaser and UTI.........................37
      11.3     Limitations on Indemnification...............................38
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                               TABLE OF CONTENTS
                                  (continued)
                                                                            PAGE
                                                                            ----
      11.4     Notice of Claim..............................................39
      11.5     Direct Claims................................................39
      11.6     Third Party Claims...........................................39
      11.7     Settlement of Third Party Claims.............................40
      11.8     Co-operation.................................................40
      11.9     Scope........................................................40

ARTICLE 12     TERMINATION; REMEDIES; LIMITATIONS...........................41
      12.1     Termination Agreement........................................41
      12.2     Effect of Termination........................................41

ARTICLE 13     MISCELLANEOUS................................................41
      13.1     Notices......................................................41
      13.2     Consultation.................................................43
      13.3     Disclosure...................................................43
      13.4     Best Efforts.................................................43
      13.5     Counterparts.................................................44

         Schedule  1 - Financial Statements
         Schedule  2 - Drilling Rigs and Equipment
         Schedule  3 - Drilling Contracts
         Schedule  4 - Leased Real Property
         Schedule  5 - Vehicles
         Schedule  6 - Other Agreements
         Schedule  7 - Licenses and Permits
         Schedule  8 - Intellectual Property
         Schedule  9 - Allocation of Purchase Price
         Schedule 10 - Insurance Policies
         Schedule 11 - Consents and Approvals
         Schedule 12 - Permitted Encumbrances
         Schedule 13 - Subsequent Changes
         Schedule 14 - Legal and Regulatory Proceedings
         Schedule 15 - Environmental Matters
         Schedule 16 - Employee Matters
         Schedule 17 - Major Customers
         Schedule 18 - Opinion of Seller's Counsel
         Schedule 19 - Opinion of Purchaser's and UTI's Counsel
         Schedule 20 - Related Transactions
         Schedule 21 - Bill of Sale
         Schedule 22 - Employment Terms and Employment Agreement
<PAGE>   5
                            ASSET PURCHASE AGREEMENT

      THIS AGREEMENT made the 24th day of March, 2000,

AMONG:

                  PHELPS DRILLING INTERNATIONAL LTD., a
                  corporation existing under the laws of
                  Alberta (hereinafter referred to as the
                  "SELLER")

                                 - and -

                  THE PERSONS LISTED ON THE SIGNATURE PAGES
                  HEREOF UNDER THE HEADING "SHAREHOLDERS",
                  each being a shareholder of 592655
                  Alberta Ltd. (hereinafter referred to
                  collectively as the "SHAREHOLDERS")

                                 - and -

                  PHELPS DRILLING LTD., a corporation
                  existing under the laws of Alberta
                  (hereinafter referred to as the
                  "Purchaser")

                                 - and -

                  UTI ENERGY CORP., a corporation existing
                  under the laws of Delaware (hereinafter
                  referred to as "UTI")

      THIS AGREEMENT WITNESSES THAT in consideration of the respective
covenants, agreements, representations, warranties and indemnities of the
Parties herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each Party), the Parties
agree as follows:

                                   ARTICLE 1
                                 INTERPRETATION

1.1   DEFINED TERMS

      For the purposes of this Agreement, unless the context otherwise requires,
the following terms shall have the respective meanings set out below and
grammatical variations of such terms shall have corresponding meanings:
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                                      -2-

      "ABCA" means the Business Corporations Act (Alberta) as in effect on the
      date hereof;

      "AFFILIATE" has the meaning given to that term in the ABCA;

      "ANNUAL FINANCIAL STATEMENTS" means the financial statements of the Seller
      prepared by Seller's accountants on a review engagement basis as at and
      for the financial years ended May 31, 1996, May 31, 1997, May 31, 1998 and
      May 31, 1999, including the notes thereto, copies of which are annexed
      hereto as Part 1 of Schedule 1;

      "ASSOCIATE" has the meaning given to that term in the ABCA;

      "ASSUMED OBLIGATIONS" has the meaning set out in Section 4.1;

      "BILL OF SALE" means the assignment, bill of sale and assumption agreement
      in substantially in the form attached as Schedule 21;

      "BUSINESS DAY" means any day of the week, except Saturday, Sunday, or any
      statutory holiday in Calgary, Alberta or Los Angeles, California;

      "CDN. $" or "$" means lawful currency of Canada;

      "CLOSING" means the closing of the purchase and sale contemplated
      hereby on the Closing Date;

      "CLOSING DATE" means April 18, 2000 or such other date as the Seller and
      the Purchaser may mutually determine;

      "CONTRACT" means any agreement, indenture, contract, lease, deed of trust,
      licence, option, instrument or other commitment, whether written or oral;

      "EFFECTIVE TIME" means 12:01 a.m. (Calgary time) on the Closing Date;

      "EMPLOYEE PLANS" has the meaning set out in Subsection 5.20(b);

      "EMPLOYEES" means all employees of the Seller immediately prior to the
      Time of Closing;

      "ENCUMBRANCE" means any encumbrance, lien, charge, hypothecation, pledge,
      mortgage, title retention agreement, security interest of any nature,
      adverse claim, exception, reservation, easement, right of occupation, any
      matter capable of registration against title, preferential arrangement or
      restriction of any kind including, without limitation, any restriction on
      the use, voting, transfer, receipt of income or other exercise of any
      attributes of ownership;

      "ENVIRONMENTAL LAWS" has the meaning set out in Subsection 5.19(a);

      "EXCLUDED ASSETS" has the meaning set out in Section 2.2;

      "EXCLUDED LIABILITIES" has the meaning set out in Section 4.2;
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                                      -3-

      "FINAL ACCOUNTING STATEMENT" has the meaning set out in Subsection
      3.2(c);

      "FINANCIAL STATEMENTS" means the Annual Financial Statements and the
      Interim Financial Statements;

      "GST" has the meaning set out in Subsection 3.4(a);

      "INTELLECTUAL PROPERTY" has the meaning set out in Subsection 2.1(l);

      "INTERIM ACCOUNTING STATEMENT" has the meaning set out in Subsection
      3.2(b);

      "INTERIM FINANCIAL STATEMENTS" means the unaudited financial statements of
      the Seller as prepared by the Seller as at and for the nine month period
      commencing June 1, 1999 and ending February 29, 2000, copies of which are
      annexed hereto as Part 2 of Schedule 1;

      "LEASED REAL PROPERTY" means the real property that is used in the
      Purchased Business and leased by the Seller and which is described in
      Schedule 4;

      "LIABILITIES" means any and all indebtedness, liabilities and obligations,
      whether accrued or fixed, absolute or contingent, matured or unmatured or
      determined or determinable, including, without limitation, those arising
      under any Contract or law;

      "LOSSES" means, in respect of any matter, all claims, demands,
      proceedings, losses, damages, Liabilities, deficiencies, costs and
      expenses (including, without limitation, all legal and other professional
      fees and disbursements, interest, penalties and amounts paid in
      settlement) arising directly or indirectly as a consequence of such
      matter;

      "MANAGEMENT AGREEMENTS" means (i) the Management Agreement dated September
      1, 1996 between the Seller and 700392, as amended, and (ii) the Amended
      and Restated Management Agreement dated September 1, 1996 between the
      Seller and 584022, as amended;

      "PARTY" means a party to this Agreement, and "PARTIES" means all of
      such parties;

      "PERMITTED ENCUMBRANCES" means any of the following Encumbrances:

            (i)   servitudes, easements, restrictions, rights-of-way and other
                  similar rights in real property or any interest therein,
                  provided the same are not of such nature as to materially
                  adversely affect the use of the property subject thereto;

            (ii)  undetermined or inchoate liens, charges and privileges
                  incidental to current construction or current operations and
                  statutory liens, charges, adverse claims, security interests
                  or encumbrances of any nature whatsoever claimed or held by
                  any governmental authority that relate to obligations not due
                  or delinquent;
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                                      -4-

            (iii) assignments of insurance provided to landlords (or their
                  mortgagees) pursuant to the terms of any lease, and liens or
                  rights reserved in any lease for rent or for compliance with
                  the terms of such lease and that relate to obligations not due
                  or delinquent;

            (iv)  security given in the ordinary course of the Purchased
                  Business to any public utility, any municipality or government
                  or any statutory or public authority and that relate to
                  obligations not due or delinquent;

            (v)   the reservations in any original grants from the Crown of any
                  real property or interest therein and statutory exceptions to
                  title, which do not materially detract from the value of the
                  real property concerned or materially impair its use in the
                  operation of the Purchased Business;

            (vi)  the Encumbrances described in Part 1 of Schedule 12 which
                  will continue after Closing; and

            (vii) the Encumbrances described in Part 2 of Schedule 12 which
                  will be discharged by the Seller at the Closing;

      "PERSON" means any individual, corporation, partnership, joint venture,
      trust, unincorporated association, or any other judicial entity or a
      government, state or agency or political subdivision thereof;

      "PRIME RATE" means the annual variable rate of interest quoted or
      published from time to time by Royal Bank of Canada at its main branch in
      Calgary, Alberta as the "prime rate" of interest charged by it for
      Canadian dollar loans made in Canada;

      "PURCHASE PRICE" has the meaning set out in Section 3.1;

      "PURCHASED ASSETS" has the meaning set out in Section 2.1;

      "PURCHASED BUSINESS" means the business carried on by the Seller
      consisting primarily of an oilfield drilling contract business;

      "TAX ACT" means the Income Tax Act (Canada), as amended from time to
      time;

      "TIME OF CLOSING" means 2:00 p.m. (Calgary time) on the Closing Date, or
      such other time on the Closing Date as the Seller and the Purchaser may
      mutually determine;

      "US EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
      as amended from time to time;

      "US SECURITIES ACT" means the United States Securities Act of 1933, as
      amended from time to time;

      "UTI" means UTI Energy Corp., a corporation subsisting under the laws
      of the State of Delaware;
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                                      -5-

      "584022" means 584022 Alberta Ltd., a corporation subsisting under the
      laws of Alberta;

      "592655" means 592655 Alberta Ltd., a corporation subsisting under the
      laws of Alberta; and

      "700392" means 700392 Alberta Ltd., a corporation subsisting under the
      laws of Alberta.

1.2   CURRENCY

      Unless otherwise indicated, all dollar amounts in this Agreement are
expressed in Canadian funds.

1.3   SECTIONS AND HEADINGS

      The division of this Agreement into Articles, Sections and Subsections and
the insertion of headings are for convenience of reference only and shall not
affect the interpretation of this Agreement. Unless otherwise indicated, any
reference in this Agreement to an Article, Section, Subsection or Schedule
refers to the specified Article, Section or Subsection of or Schedule to this
Agreement.

1.4   NUMBER, GENDER AND PERSONS

      In this Agreement, words importing the singular number only shall include
the plural and vice versa, words importing gender shall include all genders and
words importing persons shall include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind whatsoever.

1.5   ACCOUNTING PRINCIPLES

      Any reference in this Agreement to generally accepted accounting
principles refers to generally accepted accounting principles that have been
established in Canada, including those approved from time to time by the
Canadian Institute of Chartered Accountants or any successor body thereto.

1.6   ENTIRE AGREEMENT

      Except for the provisions of the Confidentiality Agreement dated June 16,
1999 between the Seller and UTI that survive the termination of this Agreement,
this Agreement constitutes the entire agreement between the Parties with respect
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.

1.7   TIME OF ESSENCE

      Time shall be of the essence of this Agreement.
<PAGE>   10
                                      -6-

1.8   APPLICABLE LAW

      This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the Parties shall be governed
by, the laws of the Province of Alberta and the federal laws of Canada
applicable therein, and each Party irrevocably and unconditionally submits to
the non-exclusive jurisdiction of the courts of such province and all courts
competent to hear appeals therefrom.

1.9   SUCCESSORS AND ASSIGNS

      (a)   Subject to Subsection 1.9(b), no Party may assign any of its rights
            or obligations hereunder without the prior written consent of the
            other Parties.

      (b)   The Purchaser may assign its right under this Agreement in whole or
            in part to any Affiliate of UTI; provided, however, that any such
            assignment shall not relieve either the Purchaser or UTI from any of
            its obligations to the Seller or the Shareholders hereunder.
            Notwithstanding any such assignment, if an event of default occurs
            under this Agreement, the Seller shall have the option to claim
            performance or payment of the obligations from the Purchaser, UTI or
            the assignee or transferee and to bring proceedings against any or
            all of them, provided that nothing herein shall entitle the Seller
            to receive duplicate performance or payment of the same obligation.

      (c)   This Agreement shall enure to the benefit of and shall be binding on
            and enforceable by the Parties and, where the context so permits,
            their respective successors and permitted assigns.

1.10  SEVERABILITY

      If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct; provided that if the economic
or legal substance of the transactions contemplated hereby are affected in an
adverse manner to any Party by the severance of such provision, then the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.

1.11  AMENDMENTS AND WAIVERS

      No amendment or waiver of any provision of this Agreement shall be binding
on any Party unless consented to in writing by such Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision nor
shall any waiver constitute a continuing waiver unless otherwise provided.
<PAGE>   11
                                      -7-

1.12  KNOWLEDGE OR AWARENESS

      In this Agreement, references to a Party's knowledge or awareness and
similar references mean the actual knowledge of the current officers and
employees of such Party who are primarily responsible for the matters in
question after such Persons have engaged in, or caused to be performed, a
reasonable review of the relevant files and records of such Party relating to
the Purchased Assets, but without any further inquiry and does not include
knowledge or awareness of any other Person.

1.13  SCHEDULES

      The following Schedules are attached to and form part of this Agreement:

            Schedule  1  -   Financial Statements
            Schedule  2  -   Drilling Rigs and Equipment
            Schedule  3  -   Drilling Contracts
            Schedule  4  -   Leased Real Property
            Schedule  5  -   Vehicles
            Schedule  6  -   Other Agreements
            Schedule  7  -   Licenses and Permits
            Schedule  8  -   Intellectual Property
            Schedule  9  -   Allocation of Purchase Price
            Schedule 10  -   Insurance Policies
            Schedule 11  -   Consents and Approvals
            Schedule 12  -   Permitted Encumbrances
            Schedule 13  -   Subsequent Changes
            Schedule 14  -   Legal and Regulatory Proceedings
            Schedule 15  -   Environmental Matters
            Schedule 16  -   Employee Matters
            Schedule 17  -   Major Customers
            Schedule 18  -   Opinion of Seller's Counsel
            Schedule 19  -   Opinion of Purchaser's and UTI's Counsel
            Schedule 20  -   Related Transactions
            Schedule 21  -   Bill of Sale
            Schedule 22  -   Employment Terms and Employment Agreement

                                   ARTICLE 2
                      PURCHASE AND SALE OF PURCHASED ASSETS

2.1   PURCHASED ASSETS

      Upon the terms and subject to the conditions of this Agreement, the Seller
shall sell, assign and transfer to the Purchaser and the Purchaser shall
purchase from the Seller, on the Closing Date, all of the property and assets of
the Seller (other than the Excluded Assets), whether real or personal, tangible
or intangible, of every kind and description and wherever situate (collectively,
the "PURCHASED ASSETS"), including, without limitation, the following:
<PAGE>   12
                                      -8-

      (a)   DRILLING EQUIPMENT. All drilling rigs and related assets and
            ancillary equipment together with all spare parts and related assets
            necessarily incidental to the use of the drilling rigs including,
            without limitation, the drilling equipment described in Part 1 of
            Schedule 2;

      (b)   DRILLING CONTRACTS. All rights under drilling contracts under which
            Seller has agreed to provide drilling services to a third party
            including drilling contracts for which drilling services have been
            commenced by Seller prior to but have not been completed by Seller
            as of the Effective Time including, without limitation, the
            Contracts described in Schedule 3;

      (c)   LEASED REAL PROPERTY. All rights (whether as lessee or lessor) under
            leases of real property, together with all leasehold improvements
            relating thereto including, without limitation, the Leased Real
            Property described in Schedule 4;

      (d)   OFFICE EQUIPMENT. All furniture, furnishings and accessories,
            computer equipment (hardware and software, including all rights
            under licences and other agreements relating thereto), telephones,
            cellular phones, office equipment and office supplies together with
            all service, operational and other manuals and all replacement parts
            and tools with respect to the foregoing including, without
            limitation, all office equipment described in Part 2 of Schedule 2;

      (e)   OTHER MACHINERY AND EQUIPMENT. All machinery and shop equipment,
            hand tools and handling equipment including, without limitation, the
            machinery and equipment described in Part 3 of Schedule 2;

      (f)   VEHICLES. All trucks, cars and other vehicles including, without
            limitation, the vehicles described in Schedule 5;

      (g)   LEASES OF PERSONAL PROPERTY. All rights under vehicle and equipment
            leases, rental equipment contracts and office equipment leases and
            Contracts including, without limitation, the leases described in
            Schedules 2 and 5;

      (h)   INVENTORIES. All inventories including, without limitation, raw
            materials and replacement parts;

      (i)   PREPAID EXPENSES. All prepaid expenses;

      (j)   OTHER AGREEMENTS. All rights under orders or Contracts for the
            provision of goods or services (whether as buyer or seller),
            distribution and agency agreements, and other Contracts not
            otherwise referred to in this Section 2.1 including, without
            limitation, the Contracts described in Schedule 6;

      (k)   LICENCES AND PERMITS. All licences, permits, approvals, consents,
            registrations, certificates and other authorizations required to
            carry on the Purchased Business in the ordinary course including,
            without limitation, those described in Schedule 7;
<PAGE>   13
                                      -9-

      (l)   INTELLECTUAL PROPERTY. All trade or brand names, business names,
            trade marks, trade mark registrations and applications, service
            marks, service mark registrations and applications, copyrights,
            copyright registrations and applications, patents, patent
            registrations and applications and other patent rights (including
            any patents issued on such applications or rights), trade secrets,
            proprietary manufacturing information and know-how, equipment and
            parts lists and descriptions, instruction manuals, inventions,
            inventors' notes, research data, unpatented blue prints, drawings
            and designs, formulae, processes, technology and other intellectual
            property, together with all rights under licences, registered user
            agreements, technology transfer agreements and other agreements or
            instruments relating to any of the foregoing (collectively,
            "INTELLECTUAL PROPERTY") including, without limitation, the
            trademarks, copyrights, patents, licences and agreements described
            in Schedule 8;

      (m)   BOOKS AND RECORDS. All books and records (other than those required
            by law to be retained by the Seller, copies of which will be made
            available to the Purchaser), including, without limitation, customer
            lists, sales records, price lists and catalogues, sales literature,
            advertising material, manufacturing data, production records,
            employee manuals, personnel records, supply records, inventory
            records and correspondence files (together with, in the case of any
            such information that is stored electronically, the media on which
            the same is stored);

      (n)   TELEPHONE NUMBERS. The right to the use of the Seller's telephone
            and cellular numbers and facsimile numbers to the extent permitted
            by the appropriate telephone authority; and

      (o)   GOODWILL. All goodwill, together with the exclusive right for the
            Purchaser to represent itself as carrying on the Purchased Business
            in succession to the Seller and the right to use any words
            indicating that the Purchased Business is so carried on, including,
            subject to the provisions of Section 8.3, the exclusive right to use
            the name "Phelps Drilling International", or any variation thereof,
            as part of the name or style under which the Purchased Business or
            any part thereof is carried on by the Purchaser.

2.2   EXCLUDED ASSETS

      Notwithstanding the provisions of Section 2.1, the Purchased Assets shall
exclude the following property and assets of the Seller as determined at the
Effective Time (collectively, the "EXCLUDED ASSETS"):

      (a)   CASH. All cash on hand or in banks or other depositories;

      (b)   ACCOUNTS RECEIVABLE. All accounts receivable, trade accounts, notes
            receivable, and book debts due or accruing due in respect of
            services provided by the Seller prior to the Effective Time and
            which have been invoiced prior to the Effective Time;
<PAGE>   14
                                      -10-

      (c)   WORK IN PROGRESS. All work in progress consisting of services
            provided by the Seller prior to the Effective Time and which have
            not been invoiced as of the Effective Time;

      (d)   INCOME TAXES. All income tax payments and/or installments paid by
            the Seller and the right to receive any refund of income taxes paid
            by the Seller;

      (e)   PROVINCIAL SALES TAXES. All British Columbia provincial sales tax
            payments and/or installments paid by the Seller and the right to
            receive any refund of provincial sales taxes paid by the Seller;

      (f)   GST. All GST payments and/or installments paid by the Seller and the
            right to receive any refund of GST paid by the Seller;

      (g)   BANK ACCOUNTS. All bank accounts of the Seller;

      (h)   MANAGEMENT AGREEMENTS. The interest of Seller in the Management
            Agreements;

      (i)   INTERCORPORATE INDEBTEDNESS. All amounts due or accruing due to or
            by the Seller from or to 700392 or 584022 including, without
            limitation, any amounts due or accruing due from or to 700392 or
            584022 under the Management Agreements;

      (j)   31323 ALBERTA LTD. The beneficial interest of the Seller in 31323
            Alberta Ltd. and any amounts due, accruing due or payable or to
            become payable to the Seller by 31323 Alberta Ltd. or in respect of
            Seller's beneficial interest in 31323 Alberta Ltd.;

      (k)   LITIGATION. Any and all payments payable or to become payable to the
            Seller in regard to any actions, suits or proceedings;

      (l)   LIFE INSURANCE. Any and all policies of life insurance maintained by
            the Seller on the life of each shareholder; and

      (m)   WORKERS COMPENSATION. All British Columbia, Saskatchewan and Alberta
            workers compensation board prepayments of premiums paid by the
            Seller for its own account or on behalf of 584022 or 700392 and the
            right of the Seller on its own behalf or on behalf of 584022 or
            700392 to receive rebates of British Columbia, Saskatchewan or
            Alberta workers compensation board payments.

2.3   MERCHANTABILITY

      Notwithstanding anything to the contrary contained in this Agreement, the
Purchaser and UTI acknowledge that the Purchaser will acquire the Purchased
Assets on an "as is" "where is" basis and that the Seller does not make any
representation or warranty as to the fitness for purpose, condition or
merchantability of the Purchased Assets or any of them, except as expressly
provided otherwise in Article 5. Each of the Purchaser and UTI acknowledge and
agree that they have relied and shall solely rely on their own appraisal and
estimate as to the
<PAGE>   15
                                      -11-

quantum of value of the Purchased Assets and the Purchased Business and that
they have relied and shall rely on their own analysis related thereto,
notwithstanding anything to the contrary contained in this Agreement.

                                   ARTICLE 3
                                 PURCHASE PRICE

3.1   PURCHASE PRICE

      Subject to the adjustments provided for in Sections 3.2 and 3.3, the
aggregate purchase price (the "PURCHASE PRICE") payable by the Purchaser to the
Seller for the Purchased Assets shall be Cdn. $28,975,527, payable by delivery
of a bank draft or wire transfer at Closing.

3.2   ADJUSTMENTS

      (a)   APPORTIONMENT OF BENEFITS AND OBLIGATIONS. All benefits and
            obligations of any kind and nature accruing, payable or paid in
            respect of the Purchased Assets shall be apportioned between the
            Seller and the Purchaser as of the Effective Time.

      (b)   INTERIM ACCOUNTING. An interim accounting and adjustment shall be
            carried out by the Seller and a statement (the "INTERIM ACCOUNTING
            STATEMENT") shall be prepared and delivered by the Seller to the
            Purchaser at least three Business Days prior to the Closing Date
            based on the Seller's good faith estimate of all adjustments to be
            made to the Purchase Price as of the Effective Time. The Purchase
            Price shall be adjusted on the Closing Date to reflect the
            adjustments provided for in the Interim Accounting Statement. At its
            initiative or upon the reasonable request of the Seller, the
            Purchaser agrees to provide subsequent Interim Accounting
            Statement(s) after the Closing Date and before the Final Accounting
            Statement is provided, and the Seller and the Purchaser agree to
            make all reasonable efforts to agree upon these subsequent interim
            adjustments and to provide for the prompt payment of same, together
            with interest thereon at the Prime Rate from and including the
            Closing Date to but excluding the date of payment.

      (c)   FINAL ACCOUNTING. Following Closing, a final accounting shall be
            carried out by the Purchaser and a statement (the "FINAL ACCOUNTING
            STATEMENT") shall be prepared and delivered by the Purchaser to the
            Seller within nine (9) months after the Closing Date. Neither the
            Seller nor the Purchaser shall be obligated to make any further
            adjustments to the items provided for in the Final Accounting
            Statement after the Final Accounting Statement is approved or is
            deemed to have been approved.

      (d)   APPROVAL OF FINAL ACCOUNTING STATEMENT. The Seller shall have a
            period of 30 days from the date it receives the Final Accounting
            Statement in which to review the same. For the purpose of such
            review, the Purchaser agrees to permit the Seller and its authorized
            representatives to examine all working papers, schedules and other
            documentation used or prepared by the Purchaser in connection with
            the
<PAGE>   16
                                      -12-

            preparation of the Final Accounting Statement. If no objection to
            the Final Accounting Statement is given to the Purchaser by the
            Seller within such 30 day period in accordance with the provisions
            of Subsection 3.2(e), the Final Accounting Statement shall be deemed
            to have been approved as of the last day of such 30 day period.

      (e)   OBJECTION TO FINAL ACCOUNTING STATEMENT. If the Seller objects to
            the Final Accounting Statement within the 30 day period referenced
            in Subsection 3.2(d) by giving written notice to the Purchaser
            setting out in reasonable detail the nature of such objection, the
            Seller and Purchaser agree to attempt to resolve the matters in
            dispute within 15 days from the date of giving such notice. If all
            matters in dispute are resolved by the Seller and the Purchaser, the
            Final Accounting Statement shall be modified to the extent required
            to give effect to such resolution and shall be deemed to have been
            approved as of the date of such resolution.

      (f)   DISPUTE RESOLUTION. If the Seller and Purchaser cannot resolve all
            matters in dispute within the 15 day period referenced in Subsection
            3.2(e), all unresolved matters shall be submitted for resolution to
            a single arbitrator chosen by the Seller and the Purchaser, or
            failing agreement, chosen by a judge of the Court of Queen's Bench
            of Alberta (the "ARBITRATOR"). The Arbitrator shall be given access
            to all materials and information reasonably requested by it for such
            purpose. The rules and procedures to be followed in the arbitration
            proceedings shall be determined by the Arbitrator in its discretion.
            The Arbitrator's determination of all such matters shall be final
            and binding and shall not be subject to appeal by any Party. The
            fees and expenses of the Arbitrator shall be borne equally by the
            Seller and the Purchaser or in such other proportion as may be
            determined by the Arbitrator in its sole discretion. The Final
            Accounting Statement shall be modified to the extent required to
            give effect to the Arbitrator's determination and shall be deemed to
            have been approved as of the date of such determination.

      (g)   PAYMENT OF ADJUSTED AMOUNT. Any adjustments to the Purchase Price
            shall be settled by the indebted Party by cash payment to the
            recipient Party within 5 Business Days after the Final Accounting
            Statement is deemed to have been approved in accordance with this
            Section 3.2, together with interest thereon at the Prime Rate from
            and including the Closing Date to but excluding the date of payment.

3.3   ALLOCATION OF PURCHASE PRICE

      The Seller and the Purchaser agree to allocate the Purchase Price among
the Purchased Assets in accordance with Schedule 9 and to report the sale and
purchase of the Purchased Assets for all federal, provincial and local tax
purposes in a manner consistent with such allocation.
<PAGE>   17
                                      -13-

3.4   GST

      (a)   The Parties acknowledge that the Purchase Price is exclusive of the
            Goods and Services Tax ("GST") as provided for in the Excise Tax Act
            (Canada).

      (b)   Each of the Seller and the Purchaser represent and warrant to the
            other that it is a registrant for GST purposes and will continue to
            be a registrant at the Closing Date in accordance with the
            provisions of the Excise Tax Act (Canada) and that each of their GST
            registration numbers is:

            Seller    -  BN 10417 7100 RT0001

            Purchaser -  o

      (c)   The Seller represents and warrants to the Purchaser that the sale of
            the Purchased Assets is a sale of a business or part of a business
            carried on by the Seller at the time of the sale for the purposes of
            the Excise Tax Act (Canada), and the Purchaser represents and
            warrants to the Seller that the acquisition of the Purchased Assets
            represents the acquisition of all or substantially all of the
            property that can reasonably be regarded as being necessary for the
            Purchaser to be capable of carrying on the Seller's business or such
            part of the Seller's business as a business.

      (d)   The Seller and the Purchaser shall jointly prepare and execute the
            election prescribed by subsection 167(1) of the Excise Tax Act
            (Canada) and the Purchaser shall file such election in the manner
            and within the time prescribed thereto.

      (e)   Pursuant to paragraph Subsection 3.4(d) above, and subsection
            167(1.1) of the Excise Tax Act (Canada), no GST is payable by the
            Purchaser to the Seller in respect of the sale and purchase of the
            Purchased Assets.

                                   ARTICLE 4
                            ASSUMPTION OF OBLIGATIONS

4.1   ASSUMPTION OF OBLIGATIONS

      Upon the terms and subject to the conditions of this Agreement, the
Purchaser shall assume, pay, satisfy, discharge, perform and fulfill, on the
Closing Date, all prospective obligations of the Seller which are required to be
performed on or after the Effective Time (the "ASSUMED OBLIGATIONS") under:

      (a)   the Contracts described in Schedules 2 through 6 inclusive and
            Schedule 8;

      (b)   the licenses, permits, approvals, consents, registrations,
            certificates and other authorizations described in Schedule 7;
<PAGE>   18
                                      -14-

      (c)   any other Contracts entered into by the Seller in the ordinary
            course consistent with past business practice and generally accepted
            industry practice for the provision of goods or services by a third
            party to the Seller on normal commercial terms and which will not
            require an aggregate expenditure in excess of $100,000; and

      (d)   any other Contracts entered into by the Seller in the ordinary
            course consistent with past business practice and generally accepted
            industry practice for the provision of goods or services by the
            Seller to a third party on normal commercial terms and which will
            not result in the receipt of revenue in excess of an aggregate of
            $50,000.

4.2   EXCLUSION OF LIABILITIES

      Except as set forth in Section 4.1, the Purchaser shall not be obligated
to pay or perform or otherwise be responsible for any Liabilities of the Seller
including any Liabilities or claims of any kind or nature arising out of or
related to the operation of the Purchased Business, the Seller or the Purchased
Assets accrued or incurred or caused by any act, condition, or event existing or
arising on or prior to the Effective Time or relating to the Excluded Assets
(the "EXCLUDED LIABILITIES").

                                   ARTICLE 5
                   REPRESENTATIONS AND WARRANTIES OF SELLER

      The Seller represents and warrants to the Purchaser as follows:

5.1   ORGANIZATION

      The Seller is a corporation validly subsisting under the laws of the
Province of Alberta and has the corporate power to carry on the Purchased
Business as now being conducted by it and to enter into this Agreement and to
perform its obligations hereunder. The Seller is a wholly-owned subsidiary of
592655 and the Shareholders are all of the legal and beneficial shareholders of
592655.

5.2   AUTHORIZATION

      This Agreement has been duly authorized, executed and delivered by the
Seller and the Shareholders and is a legal, valid and binding obligation of the
Seller and the Shareholders, enforceable against them by the Purchaser in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors generally and except
that equitable remedies may be granted only in the discretion of a court of
competent jurisdiction.

5.3   NO CONFLICT

      The execution and delivery of this Agreement by the Seller and the
consummation of the transactions herein provided for will not result in:
<PAGE>   19
                                      -15-

      (a)   the breach or violation of any of the provisions of, or constitute a
            default under, or conflict with:

            (i)   any provision of the constating documents or by-laws or
                  resolutions of the board of directors (or any committee
                  thereof) or shareholders of the Seller;

            (ii)  any judgment, decree, order or award of any court,
                  governmental body or arbitration having jurisdiction over the
                  Seller;

            (iii) any licence, permit, approval, consent or authorization held
                  by the Seller or necessary to the operation of the Purchased
                  Business except as set forth in Schedule 11; or

            (iv)  any applicable law, statute, ordinance, regulation or rule;

      (b)   a default under any Contract to which the Seller is a party or by
            which it is or any of the Purchased Assets are bound, except for the
            notifications, consents and approvals described in Part 2 of
            Schedule 11; or

      (c)   the creation or imposition of any Encumbrance on any of the
            Purchased Assets.

5.4   NO OTHER AGREEMENTS TO PURCHASE

      No Person other than the Purchaser has any written or oral agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase or acquisition from
the Seller of any of the Purchased Assets.

5.5   SUFFICIENCY OF PURCHASED ASSETS

      The Purchased Assets owned or leased by the Seller are sufficient to carry
on the Purchased Business in a manner consistent with the past business
practices of the Seller. All the tangible Purchased Assets are situate at the
locations set out in Schedules 2 and 5.

5.6   TITLE TO PURCHASED ASSETS

      The Seller is the absolute legal and beneficial owner of and has good and
marketable title to, or in the case of leased, subleased, licensed or
sublicensed Purchased Assets, valid and subsisting leasehold interests or
licenses as the case may be in, all of the Purchased Assets, free and clear of
all Encumbrances, except Permitted Encumbrances, and is exclusively entitled to
possess and dispose of the Purchased Assets (subject only to the necessity for
obtaining the consents and approvals described in Schedule 11).

5.7   LEASED REAL PROPERTY
      The Seller is not the beneficial or registered owner of and has not agreed
to acquire any real property or any interest in any real property other than the
Leased Real Property described in Schedule 4. The Seller is not a party to any
lease or agreement to lease in respect of any real
<PAGE>   20
                                      -16-

property, whether as lessor or lessee, other than the leases (the "LEASES")
described in Schedule 4. Schedule 4 sets out the parties to each of the Leases,
their dates of execution and expiry dates, any options to renew, the locations
of the leased lands and premises and the rent payable thereunder. Except as
described in Schedule 4, the Seller occupies the Leased Property and has the
exclusive right to occupy and use the Leased Property. Each of the Leases is in
good standing and in full force and effect, and neither the Seller nor any other
party thereto is in breach of any covenants, conditions or obligations contained
therein. The Seller has provided to the Purchaser a true and complete copy of
each Lease and all amendments thereto referred to in Schedule 4.

5.8   INTELLECTUAL PROPERTY

      Schedule 8 sets out all registered or pending Intellectual Property
(including particulars of registration or application for registration) and all
licences, registered user agreements and other Contracts that comprise or relate
to Intellectual Property. The Intellectual Property comprises all trade or brand
names, business names, trade marks, service marks, copyrights, patents, trade
secrets, know-how, inventions, designs and other industrial or intellectual
property necessary to conduct the Purchased Business. The Seller is the
beneficial owner of the Intellectual Property, free and clear of all
Encumbrances, and is not a party to or bound by any Contract or any other
obligation whatsoever that limits or impairs its ability to sell, transfer,
assign or convey, or that otherwise affects, the Intellectual Property. No
Person has been granted any interest in or right to use all or any portion of
the Intellectual Property. To the knowledge of the Seller, the conduct of the
Purchased Business does not infringe upon the industrial or intellectual
property rights, domestic or foreign, of any other Person. Neither the Seller
nor the Shareholders are aware of a claim of any infringement or breach of any
industrial or intellectual property rights of any other Person, nor have the
Seller or the Shareholders received any notice that the conduct of the Purchased
Business, including the use of the Intellectual Property, infringes upon or
breaches any industrial or intellectual property rights of any other Person, and
the Seller and the Shareholders have no knowledge of any infringement or
violation of any of the Seller's rights in the Intellectual Property. Neither
the Seller nor the Shareholders are aware of any state of facts that casts doubt
on the validity or enforceability of any of the Intellectual Property. The
Seller has provided to the Purchaser a true and complete copy of all Contracts
and amendments thereto that comprise or relate to the Intellectual Property
referred to in Schedule 8.

5.9   INSURANCE

      The Seller has insured the Purchased Assets set forth in Schedules 2, 4
and 5 in accordance with the Seller's normal business practices against loss or
damage by all insurable hazards or risks and such insurance coverage will be
continued in full force and effect up to and including the Time of Closing.
Schedule 10 sets out all insurance policies (specifying the insurer, the amount
of the coverage, the type of insurance, the policy number and any pending claims
thereunder) maintained by the Seller on the Purchased Assets set forth in
Schedules 2, 4 and 5 as of the date hereof and true and complete copies of the
most recent inspection reports, if any, received from insurance underwriters or
others as to the condition of the Purchased Assets. The Seller is not in default
with respect to any of the provisions contained in any such insurance policy and
has not failed to give any notice or present any claim under any such insurance
policy,
<PAGE>   21
                                      -17-

in due and timely fashion. The Seller has provided to the Purchaser a true copy
of each insurance policy referred to in Schedule 10.

5.10  MATERIAL CONTRACTS

      The Schedules describe each of the following material subsisting Contracts
relating to the Purchased Business or Purchased Assets to which the Seller is a
party or by which it or any of the Purchased Assets is bound:

      (a)   any Contract for the purchase or supply of materials, supplies,
            equipment or services involving more than $50,000 in respect of any
            one such Contract or more than $100,000 in respect of all such
            Contracts;

      (b)   any employment, consulting or management Contract or any other
            Contract with any officer, employee or consultant, other than oral
            Contracts of indefinite hire terminable by the Seller without cause
            or reasonable notice;

      (c)   any profit sharing, bonus, stock option, pension, retirement,
            disability, stock purchase, medical, dental, hospitalization,
            insurance or similar plan or agreement providing benefits to any
            current or former director, officer, employee or consultant;

      (d)   any Encumbrance registered against any of the Purchased Assets or a
            leasing transaction of the type required to be capitalized in
            accordance with generally accepted accounting principles;

      (e)   any distributor, sales, advertising, agency or manufacturer's
            representative Contract;

      (f)   any collective bargaining agreement or other Contract with any
            labour union;

      (g)   any Contracts for capital expenditures in excess of $50,000 in
            respect of any one such Contract or in excess of $100,000 in the
            aggregate in respect of all such Contracts;

      (h)   any Contract for the sale of any assets;

      (i)   any Contract pursuant to which the Seller is a lessor of any
            machinery, equipment, motor vehicles, office furniture, fixtures or
            other personal property;

      (j)   any non-competition or similar Contract;

      (k)   any licence, franchise or other agreement that relates in whole or
            in part to any Intellectual Property;

      (l)   any agreement of guarantee, support, indemnification, assumption or
            endorsement of, or any other similar commitment with respect to, the
            obligations, Liabilities (whether accrued, absolute, contingent or
            otherwise) or indebtedness of any other
<PAGE>   22
                                      -18-

            Person, except for cheques endorsed for collection in the ordinary
            course of the Purchased Business, which obligations, Liabilities or
            indebtedness the Purchaser shall be obligated to pay, satisfy or
            perform or otherwise be responsible;

      (m)   any Contract that expires, or may expire if the same is renewed or
            extended at the option of any Person other than the Seller, more
            than one year after the date of this Agreement;

      (n)   any Contract entered into by the Seller other than in the ordinary
            course of the Purchased Business; or

      (o)   any other Contract which is material to the Seller or the absence of
            which would have a material adverse effect on the Purchased Business
            or the Purchased Assets.

Except as described in the Schedules, the Seller has performed all of the
obligations required to be performed by it and is entitled to all benefits
under, and is not in default or alleged to be in default in respect of, any
Contract relating to the Purchased Business or Purchased Assets to which it is a
party or by which it is bound; the Seller has not received payment under any
Contract for any goods or services not yet provided by the Seller under such
Contract; all such Contracts are in good standing and in full force and effect,
and no event, condition or occurrence exists that, after notice or lapse of time
or both, would constitute a default under any of the foregoing. The Seller has
provided to the Purchaser a true and complete copy of each Contract listed or
described in the Schedules and all amendments thereto, except for oral
Contracts.

5.11  COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATION

      To the knowledge of the Seller, the Seller has complied in all material
respects with all laws, statutes, ordinances, regulations, rules, judgments,
decrees or orders applicable to the Purchased Business or the Purchased Assets.
Schedule 7 sets out a complete and accurate list of all licences, permits,
approvals, consents, certificates, registrations and authorizations (whether
governmental, regulatory or otherwise) (the "LICENCES") held by or granted to
the Seller, and there are no other licences, permits, approvals, consents,
certificates, registrations or authorizations necessary to carry on the
Purchased Business or to own or lease any of the Purchased Assets. Each Licence
is valid, subsisting, in good standing, and transferable or assignable to the
Purchaser, except as noted otherwise in Schedule 7. The Seller has received no
notice of nor is the Seller in default or breach of any Licence and, to the
knowledge of the Seller, no proceeding is pending or threatened to revoke or
limit any Licence. The Seller has provided to the Purchaser a true and complete
copy of each Licence and all amendments thereto referred to in Schedule 7.

5.12  CONSENTS AND APPROVALS

      (a)   REGULATORY CONSENTS. There is no requirement to make any filing
            with, give any notice to or to obtain any licence, permit,
            certificate, registration, authorization, consent or approval of,
            any governmental or regulatory authority as a condition to the
            lawful consummation of the transactions contemplated by this
            Agreement, except for the filings, notifications, licences, permits,
            certificates, registrations, consents and approvals described in
            Part 1 of Schedule 11 or that relate solely to
<PAGE>   23
                                      -19-

            the identity of the Purchaser or the nature of any business carried
            on by the Purchaser.

      (b)   THIRD PARTY CONSENTS. There is no requirement under any Contract
            relating to the Purchased Business or Purchased Assets to which the
            Seller is a party or by which it is bound to give any notice to, or
            to obtain the consent or approval of, any party to such agreement,
            instrument or commitment relating to the consummation of the
            transactions contemplated by this Agreement, except for the
            notifications, consents and approvals described in Part 2 of
            Schedule 11.

5.13  FINANCIAL STATEMENTS

      The Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods,
are correct and complete, and present fairly the assets, Liabilities and
financial condition of the Seller as at the respective dates of the Financial
Statements and the sales, earnings and results of operations of the Seller for
the respective periods covered by the Financial Statements. The Seller has
provided to the Purchaser true and complete copies of the Financial Statements.

5.14  BOOKS AND RECORDS

      The books and records of the Seller fairly and correctly set out and
disclose, in accordance with Canadian generally accepted accounting principles,
the financial position of the Seller as at the date hereof, and all financial
transactions of the Seller relating to the Purchased Business have been
accurately recorded in such books and records.

5.15  ABSENCE OF CHANGES

      Since September 1, 1999, the Purchased Business has been carried on only
in the ordinary and normal course consistent with the Seller's past business
practice and, except as set forth in the Financial Statements or as described in
Schedule 13 there has not been:

      (a)   any material adverse change in the condition (financial or
            otherwise), assets, Liabilities, operations, earnings, business or
            prospects of the Purchased Business;

      (b)   any damage, destruction or loss (whether or not covered by
            insurance) affecting Purchased Assets having a value in excess of
            $100,000 in each instance or $200,000 in the aggregate;

      (c)   any Liability or Contract incurred or entered into by the Seller in
            connection with the Purchased Business, other than those incurred or
            entered into in the ordinary and normal course of the Purchased
            Business and consistent with the Seller's past business practice;

      (d)   any labour trouble adversely affecting the Purchased Business or the
            Purchased Assets;
<PAGE>   24
                                      -20-

      (e)   any sale, assignment, transfer, licenses, disposition, pledge,
            mortgage or granting of a security interest or other Encumbrance on
            or over any Purchased Assets;

      (f)   any write-down or write-off of any inventory, accounts or notes
            receivable or any portion thereof relating to the Purchased Business
            in amounts exceeding $50,000 in each instance or $100,000 in the
            aggregate;

      (g)   any amendment, termination or waiver of any rights of value to the
            Purchased Business in amounts exceeding $100,000 in each instance or
            $200,000 in the aggregate;

      (h)   any general increase in the compensation of employees of the Seller
            or any increase in any such compensation or bonus payable to any
            officer, employee, consultant or agent thereof or the execution of
            any employment contract with any officer or employee, or the making
            of any loan to, or engagement in any transaction with, any employee,
            officer or director of the Seller in relation to the Purchased
            Business, other than the general industry-wide wage increase
            averaging approximately 5.67% which occurred on October 1, 1999;

      (i)   any capital expenditures or commitments relating to the Purchased
            Business or Purchased Assets in excess of $200,000 in the aggregate;

      (j)   any change in the maintenance procedures followed by the Seller;

      (k)   any change in the accounting or tax practices followed by the
            Seller; or

      (l)   any change in the credit terms offered to customers of, or by
            suppliers to, the Purchased Business.

5.16  NON-ARM'S LENGTH TRANSACTIONS

      (a)   Except for Contracts of employment and any Contracts which do not
            form part of the Purchased Assets or the Assumed Obligations, the
            Seller is not party to any Contract with any officer, director,
            employee, shareholder or any other Person not dealing at arm's
            length with the Seller (within the meaning of the Tax Act) or any
            Affiliate or Associate of any of the foregoing.

      (b)   No officer, director or shareholder of the Seller and no entity that
            is an Affiliate or Associate of one or more of such individuals:

            (i)   owns, directly or indirectly, any interest in (except for
                  shares representing less than five per cent of the outstanding
                  shares of any class or series of any publicly traded company),
                  or is an officer, director, employee or consultant of, any
                  Person that is, or is engaged in business as, a competitor of
                  the Purchased Business or a lessor, lessee, supplier,
                  distributor, sales agent or customer of the Purchased
                  Business; or
<PAGE>   25
                                      -21-

            (ii)  owns, directly or indirectly, in whole or in part, any
                  property that the Seller uses in the operation of the
                  Purchased Business.

5.17  LITIGATION

      Except as described in Schedule 14, there are no actions, suits or
proceedings (whether or not purportedly on behalf of the Seller) pending or, to
the best knowledge of the Seller, threatened against or affecting the Seller at
law or in equity or before or by any federal, provincial, municipal or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before or by an arbitrator or
arbitration board. The Seller is not aware of any ground on which any such
action, suit or proceeding might be commenced with any reasonable likelihood of
success.

5.18  RESIDENCY

      The Seller is a resident of Canada for the purposes of the Tax Act.

5.19  ENVIRONMENTAL MATTERS

      (a)   Except as described in Schedule 15, the Seller has been and is in
            compliance in all material respects with all applicable federal,
            provincial, municipal and local laws, statutes, ordinances, by-laws
            and regulations, and other directives and decisions rendered by any
            ministry, department or administrative or regulatory agency
            ("ENVIRONMENTAL LAWS") relating to the protection of the
            environment, occupational health and safety or the manufacture,
            processing, distribution, use, treatment, storage, disposal,
            transport or handling of any pollutants, contaminants, chemicals or
            industrial toxic or hazardous wastes or substances.

      (b)   The Seller has never received any notice of nor been prosecuted for
            non-compliance with any Environmental Laws with respect to the
            Purchased Business or the Purchased Assets.

      (c)   The Seller has delivered to the Purchaser a true and complete copy
            of all environmental audits, evaluations, assessments, studies or
            tests relating to the Purchased Business or Purchased Assets of
            which it is aware.

5.20  EMPLOYEE MATTERS

      (a)   Part 1 of Schedule 16 contains a complete and accurate list of the
            names of all individuals who are full-time, part-time or casual
            Employees as of the date of this Agreement specifying the length of
            employment, job title and rate of salary or hourly pay and
            commission or bonus entitlements (if any) for each such Employee.
            Except as described in Part 1 of Schedule 16, there are no
            complaints, claims or charges outstanding, or to the best of the
            knowledge of the Seller, anticipated, nor are there any orders,
            decisions, directions or convictions currently registered or
            outstanding by any tribunal or agency against or in respect of the
            Seller under or in respect of any employment legislation. Part 1 of
            Schedule 16 also identifies any Employees as of the date of this
            Agreement in respect of whom
<PAGE>   26
                                      -22-

            the Seller has been advised by the Workers' Compensation Board of
            British Columbia, Saskatchewan or Alberta that such Employees are in
            receipt of benefits under the applicable Workers' Compensation Act.
            To the knowledge of the Seller, the Seller is in compliance in all
            material respects with all applicable employment legislation.

      (b)   Part 2 of Schedule 16 identifies each retirement, pension, bonus,
            stock purchase, profit sharing, stock option, deferred compensation,
            severance or termination pay, insurance, medical, hospital, dental,
            vision care, drug, sick leave, disability, salary continuation,
            legal benefits, unemployment benefits, vacation, incentive or other
            compensation plan or arrangement or other employee benefit that is
            maintained, or otherwise contributed to or required to be
            contributed to, by the Seller for the benefit of Employees or former
            employees of the Seller (the "EMPLOYEE PLANS") and a true and
            complete copy of each Employee Plan has been furnished to the
            Purchaser. To the knowledge of the Seller, each Employee Plan has
            been maintained in compliance in all material respects with its
            terms and with the requirements prescribed by any and all statutes,
            orders, rules and regulations that are applicable to such Employee
            Plan.

      (c)   The Seller has not made any Contracts with any labour union or
            employee association nor made commitments to or conducted
            negotiations with any labour union or employee association with
            respect to any future agreements, and the Seller is not aware of any
            current attempts to organize or establish any labour union or
            employee association with respect to any Employees of the Seller nor
            is there any certification of any such union with regard to a
            bargaining unit.

5.21  CUSTOMERS AND SUPPLIERS

      (a)   Schedule 17 sets out the major customers of the Purchased Business,
            being those customers of the Purchased Business accounting for more
            than 10% of revenue during either the period January 1, 1996 to
            February 29, 2000, or the last 12 calendar months. To the knowledge
            of the Seller there has been no termination or cancellation of, and
            no modification or change in, the Seller's business relationship
            with any major customer or group of major customers. The Seller has
            no reason to believe that the benefits of any relationship with any
            of the major customers or suppliers of the Purchased Business will
            not continue after the Closing Date in substantially the same manner
            as prior to the date of this Agreement.

      (b)   Except as set forth in Schedule 17, the Seller has not derived any
            of its revenues during its last fiscal year from sales to, or
            within, the United States or from services performed in the United
            States.

5.22  Y2K COMPLIANCE

      To the knowledge of the Seller, all of the Purchased Assets are Year 2000
Compliant to the extent applicable. For the purposes of this Agreement, "Year
2000 Compliant" means that:
<PAGE>   27
                                      -23-

      (a)   neither the performance nor the functionality of the Purchased
            Assets will be affected by dates prior to, during, or after the year
            2000, or by any changes to the field configuration which contains
            the date information within any part of the Purchased Assets caused
            by the advent of the year 2000;

      (b)   the Purchased Assets are and will be capable of accurate and timely
            processing, storage, inputting, outputting, displaying, sorting and
            sequencing of any data or input which includes an indication of or
            reference to a date; and

      (c)   the Purchased Assets are and will be capable of accurate and timely
            identification, manipulation, and calculation using dates outside
            the 1900 - 1999 year range.

5.23  FULL DISCLOSURE

      To the knowledge of the Seller, there are no facts pertaining to the
Seller, the Purchased Business or the Purchased Assets which could reasonably be
expected to have a material adverse effect on the Purchased Business or the
Purchased Assets and which have not been disclosed in this Agreement or the
Schedules.

5.24  BROKERS

      No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Seller.

5.25  31323 ALBERTA LTD.

      The assets of 31323 Alberta Ltd. consists of agreements, securities and
other investments and none of those agreements, securities or other investments
are or have been used by the Seller in carrying on the Purchased Business.

                                   ARTICLE 6
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

      The Purchaser and UTI, jointly and severally, represent and warrant to the
Seller as follows:

6.1   ORGANIZATION

      The Purchaser is a corporation validly subsisting under the laws of the
Province of Alberta and has the corporate power to enter into this Agreement and
to perform its obligations hereunder. UTI is a corporation validly subsiding
under the laws of the State of Delaware and has the corporate power to enter
into this Agreement and to perform its obligations hereunder.
<PAGE>   28
                                      -24-

6.2   AUTHORIZATION

      This Agreement has been duly authorized, executed and delivered by each of
the Purchaser and UTI and are legal, valid and binding obligations of the
Purchaser and UTI enforceable against the Purchaser and UTI, as the case may be,
by the Seller in accordance with the terms of this Agreement, except as such
enforcement may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies may only be
granted in the discretion of a court of competent jurisdiction.

6.3   NO CONFLICT

      The execution and delivery of this Agreement by each of the Purchaser and
UTI and the consummation of the transactions herein provided for will not result
in the violation of any provision of, or constitute a default under, or conflict
with or cause the acceleration of any obligation of the Purchaser or UTI under:

      (a)   any provision of the constating documents or by-laws or resolutions
            of the board of directors (or any committee thereof) or shareholders
            of the Purchaser or UTI;

      (b)   any judgment, decree, order or award of any court, governmental body
            or arbitrator having jurisdiction over the Purchaser or UTI;

      (c)   any applicable law, statute, ordinance, regulation or rule; or

      (d)   any Contract to which the Purchaser or UTI is a party or by which
            the Purchaser or UTI are bound.

6.4   CONSENTS AND APPROVALS

      (a)   REGULATORY CONSENTS. There is no requirement for either the
            Purchaser or UTI to make any filing with, give any notice to or
            obtain any licence, permit, certificate, registration,
            authorization, consent or approval of, any government or regulatory
            authority as a condition to the lawful consummation of the
            transactions contemplated by this Agreement and that would
            materially adversely affect the Purchaser's or UTI's ability to
            consummate the transactions contemplated by this Agreement.

      (b)   THIRD PARTY CONSENTS. Except for notices to UTI's lenders and any
            applicable stock exchange, there is no requirement under any
            Contract to which either the Purchaser or UTI is a party or by which
            either the Purchaser or UTI is bound, to give notice to, obtain the
            consent or approval of, any party to such Contract relating to the
            transactions contemplated by this Agreement that would materially
            adversely affect the Purchaser's or UTI's ability to consummate the
            transactions contemplated by this Agreement.
<PAGE>   29
                                      -25-

6.5   INVESTMENT CANADA

      The Purchaser will comply with the Investment Canada Act and the
Competition Act to the extent, if any, applicable to the transactions referred
to in this Agreement including, without limitation, the related transactions
contemplated by the agreements listed in Schedule 20.

6.6   BROKERS

      No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
either the Purchaser or UTI.

                                   ARTICLE 7
                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES

7.1   SURVIVAL OF  REPRESENTATIONS AND WARRANTIES

      Notwithstanding the Closing or any investigation made by or on behalf of
the Party entitled to the benefit thereof, the representations and warranties
contained in this Agreement and in all certificates and documents delivered
pursuant to or contemplated by this Agreement shall survive the Closing of the
transactions contemplated hereby and shall not be merged in any conveyances or
other documents provided pursuant to this Agreement, provided that no claim may
be made by one Party against any other Party, pursuant to or based upon any of
these representations and warranties unless written notice thereof with
reasonable particulars shall have been provided by such Parties to the other
Party within 18 months following the Closing.

                                    ARTICLE 8
                                    COVENANTS

8.1   ACCESS TO PURCHASED BUSINESS AND PURCHASED ASSETS

      The Seller shall permit the Purchaser to conduct a due diligence review of
the Purchased Assets and the records and documents related thereto and to the
Purchased Business. The Seller shall forthwith make available to the Purchaser
and its authorized representatives and, if requested by the Purchaser, provide a
copy to the Purchaser of, all title documents, Contracts, financial statements,
policies, plans, reports, licences, orders, permits, books of account,
accounting records and all other documents, information and data relating to the
Purchased Business. The Seller shall afford the Purchaser and its authorized
representatives every reasonable opportunity to have free and unrestricted
access to the Purchased Assets during normal business hours and all other
property and assets utilized in the Purchased Business. At the request of the
Purchaser, the Seller shall execute such consents, authorizations and directions
as may be necessary to permit any inspection of the Purchased Business or any of
the Purchased Assets or to enable the Purchaser or its authorized representative
to obtain full access to all files and records relating to any of the Purchased
Assets maintained by governmental or other public authorities. At the
Purchaser's request, the Seller shall co-operate with the Purchaser in arranging
any such meetings as the Purchaser should reasonably request with:
<PAGE>   30
                                      -26-

      (a)   Employees;

      (b)   customers, suppliers, distributors or others who have or have had a
            business relationship with the Seller in respect of the Purchased
            Business; and

      (c)   the auditors, solicitors or any other persons engaged or previously
            engaged to provide services to the Seller who have knowledge of
            matters relating to the Purchased Business or Purchased Assets.

      In particular, without limitation, the Seller shall permit the Purchaser's
representatives or consultants to conduct all such testing and inspection in
respect of environmental matters at such locations of the Purchased Business as
the Purchaser may determine, in its sole discretion, as may be required to
satisfy the Purchaser in respect of such matters and the Seller shall permit the
representatives or consultants of the Purchaser to conduct a physical review of
the equipment of the Purchased Business as the Purchaser reasonably deems
necessary so as to enable the Purchaser to appraise and/or estimate the quantum
of value of such equipment. The exercise of any rights of inspection by or on
behalf of the Purchaser under this Section 8.1 shall not mitigate or otherwise
affect any of the representations and warranties of the Seller hereunder, which
shall continue in full force and effect as provided in Section 7.1.
Notwithstanding the foregoing or anything to the contrary contained in this
Agreement, each of the Purchaser and UTI acknowledge and agree that it has
relied and shall rely solely on its own appraisal and estimate of the quantum of
value of the Purchased Assets and the Purchased Business and that it has relied
and shall rely on its own analysis related thereto.

8.2   DELIVERY OF BOOKS AND RECORDS

      At the Time of Closing, there shall be delivered to the Purchaser by the
Seller all the books and records described in Section 2.1. The Purchaser agrees
that it will preserve the books and records so delivered to it for a period of 4
years from the Closing Date, or for such longer period as is required by any
applicable law, and will permit the Seller or its authorized representatives
reasonable access thereto in connection with the affairs of the Seller relating
to its matters, but the Purchaser shall not be responsible or liable to the
Seller for or as result of any accidental loss or destruction of or damage to
any such books or records. Until March 1, 2001, the Seller will be permitted
reasonable access to the computer system which relates to the Purchased Assets
to handle accounts payable, payrolls and other accounting matters relating to
the Seller.

8.3   CHANGE OF NAME
      The Seller agrees that before December 31, 2000 it shall change its name
and the names of any of its Associates or Affiliates that include the words
"Phelps Drilling" or "Phelps Drilling International" to a name that does not
include such words or any part thereof or any similar words. The Seller agrees
that from and after the Closing Date neither the Seller nor any of its
Associates or Affiliates will use the words "Phelps Drilling" or "Phelps
Drilling International" or any variation thereof or any similar words in any
active business or other activity which might create any confusion over these
names.
<PAGE>   31
                                      -27-

8.4   CONDUCT OF PURCHASED BUSINESS PRIOR TO CLOSING

      Without in any way limiting any other obligations of the Seller hereunder,
during the period from the date hereof to the Time of Closing:

      (a)   CONDUCT BUSINESS IN THE ORDINARY COURSE. The Seller shall conduct
            the Purchased Business and maintain the Purchased Assets in a proper
            and prudent manner consistent with past practice and generally
            accepted industry practice. In addition, the Seller shall not,
            without the prior written consent of the Purchaser (such consent not
            to be unreasonably withheld), (i) enter into any transaction or
            refrain from doing any action that, if effected before the date of
            this Agreement, would constitute a breach of any representation,
            warranty, covenant or other obligation of the Seller contained
            herein, or (ii) make any material decisions or enter into any
            material Contracts with respect to the Purchased Business or the
            Purchased Assets other than the entering into or performance of
            drilling contracts and maintenance and repair activities that are
            entered into or conducted in the ordinary course of business and in
            a proper and prudent manner consistent with past business practice
            and generally accepted industry practice;

      (b)   CONTINUE INSURANCE. The Seller shall (i) continue to maintain in
            full force and effect all policies of insurance or renewals thereof
            now in effect, (ii) take out, at the expense of the Purchaser, such
            additional insurance as may be reasonably requested by the Purchaser
            and (iii) give all notices and present all claims under all policies
            of insurance in a due and timely fashion;

      (c)   REGULATORY CONSENTS. The Seller shall use its best efforts to
            obtain, at or prior to the Time of Closing, from all appropriate
            federal, provincial, municipal or other governmental or regulatory
            bodies, the licences, permits, consents, approvals, certificates,
            registrations and authorizations described in Part 1 of Schedule 11;

      (d)   PRESERVE GOODWILL. The Seller shall use its best efforts to preserve
            intact the Purchased Business and Purchased Assets and to carry on
            the Purchased Business as currently conducted, and the Seller shall
            use its best efforts to promote and preserve for the Purchaser the
            goodwill of suppliers, customers and others having business
            relations with the Seller;

      (e)   DISCHARGE LIABILITIES. The Seller shall pay and discharge the
            Liabilities of the Seller relating to the Purchased Business in the
            ordinary course in accordance and consistent with the previous
            practice of the Seller, except those contested in good faith by the
            Seller;

      (f)   CORPORATE ACTION. The Seller shall use its best efforts to take or
            cause to be taken all necessary corporate action, steps and
            proceedings to approve or authorize validly and effectively the
            transfer of the Purchased Assets to the Purchaser and the execution
            and delivery of this Agreement and the other agreements and
            documents contemplated hereby and to cause all necessary meetings of
            directors and shareholders of the Seller to be held for such
            purpose; and
<PAGE>   32
                                      -28-

      (g)   BEST EFFORTS. The Seller shall use its best efforts to satisfy the
            conditions contained in Section 9.1.

8.5   THIRD PARTY CONSENTS AND NOVATIONS

      (a)   The Seller shall promptly give such notices to third parties and use
            its best efforts to obtain such third party consents and novations
            as the Purchaser or the Seller may reasonably deem necessary or
            desirable in connection with the transactions contemplated by this
            Agreement including, without limitation, those consents and
            novations described in Schedule 11. The Purchaser shall cooperate
            and use its best efforts to assist the Seller in giving such notices
            and obtaining such consents and novations.

      (b)   Each of the Seller and the Purchaser agree that, in the event any
            consent or novation necessary or desirable to preserve for the
            Purchased Business any right or benefit under any lease, license,
            contract, commitment or other agreement or arrangement to which the
            Seller is a party is not obtained or in the reasonable opinion of
            the Seller should not be obtained prior to the Closing, the Seller
            will, subsequent to the Closing, cooperate with the Purchaser in
            attempting to obtain such consent or novation as promptly thereafter
            as practicable. Until such consent or novation is obtained or if
            such consent or novation cannot be obtained, the Seller shall use
            its best efforts to provide the Purchaser with the rights and
            benefits of the affected lease, license, contract, commitment or
            other agreement or arrangement (collectively, the "NON-ASSIGNABLE
            RIGHTS") for the term of such lease, license, contract or other
            agreement or arrangement, and, if the Seller provides such rights
            and benefits, the Purchaser shall assume the obligations and burdens
            thereunder and indemnify and save harmless the Seller in respect
            thereof. In particular, the Seller shall, at the request of the
            Purchaser:

            (i)   hold any such Non-Assignable Rights in trust for the Purchaser
                  or act as agent for the Purchaser;

            (ii)  enforce any rights of the Seller arising from such
                  Non-Assignable Rights against the issuer thereof or the other
                  party or parties thereto;

            (iii) take all such actions and do, or cause to be done, all such
                  things at the request of the Purchaser as shall reasonably be
                  necessary and proper in order that the value of any
                  Non-Assignable Rights shall be preserved and shall enure to
                  the benefit of the Purchaser; and

            (iv)  pay over to the Purchaser, all monies collected by or paid to
                  the Seller in respect of such Non-Assignable Rights in respect
                  of amounts due or accruing due subsequent to the Effective
                  Time.

8.6   EMPLOYEES

      (a)   Each of the Employees listed in Schedule 16 shall be employed by the
            Purchaser, effective as of the Time of Closing, on terms and
            conditions of employment no
<PAGE>   33
                                      -29-

            less favourable in the aggregate than the terms and conditions of
            his or her current employment with the Seller. The Seller shall not
            terminate any of the Employees listed in Schedule 16. The Seller and
            the Purchaser agree that the employment of the Employees listed in
            Schedule 16 shall continue uninterrupted by the Seller and the
            Purchaser. The Purchaser shall indemnify and hold harmless the
            Seller from and against all Losses suffered or incurred by the
            Seller as a result of any claims for termination benefits or other
            benefits by any Employees listed in Schedule 16 who are terminated
            by the Purchaser. The Seller shall indemnify and hold harmless the
            Purchaser from and against all Losses suffered or incurred by the
            Purchaser as a result of any claims for termination benefits or
            other benefits by any Employees who were terminated by the Seller or
            who refuse to continue their employment with the Purchaser. No
            Employee shall be entitled to any rights under this Section 8.6 or
            under any other provisions of this Agreement. Nothing in this
            Section 8.6 shall obligate the Purchaser to employ any Employees who
            refuse to continue their employment with the Purchaser.

      (b)   All of the Shareholders shall be employed by the Purchaser,
            effective as at the Time of Closing, on terms and conditions no less
            favourable in the aggregate than the terms and conditions of his or
            her current employment with the Seller. Except as provided for in
            any employment/consulting agreement between the Purchaser and the
            Shareholders as provided for in Sections 9.1(f) and 9.2(e), the
            Purchaser shall have no Liability to the Shareholders for
            termination benefits or any other benefits arising prior to the Time
            of Closing upon the expiry or termination of their
            employment/consulting agreement with the Purchaser, and the Seller
            shall indemnify the Purchaser from and against all Losses resulting
            from any claim for such benefits by the Shareholders against the
            Purchaser.

      (c)   The Seller shall continue to employ all the Employees listed in
            Schedule 16 until the Time of Closing, except for any employees who
            prior to the Time of Closing:

            (i)   are terminated by the Seller for cause;

            (ii)  are terminated by the Seller with the Purchaser's consent,
                  which consent shall not be unreasonably withheld;

            (iii) voluntarily resign; or

            (iv)  retire.

      (d)   The Seller and its Affiliates shall not attempt in any way to
            discourage any of the Employees listed in Schedule 16 from
            continuing their employment with the Purchaser following the
            Closing.

8.7   EMPLOYEE PLANS

      Subject to Section 8.6(b), except for severance and termination benefits
accruing to the Employees listed in Schedule 16, the Purchaser shall not assume
any Liability for accrued benefits under any of the Employee Plans. The
Purchaser agrees that it will establish
<PAGE>   34
                                      -30-

replacement plans in replacement of the Employee Plans (the "REPLACEMENT PLANS")
for all Employees who continue their employment with the Purchaser from and
after the Time of Closing. The terms and conditions of such Replacement Plans
shall be no less favourable in the aggregate than the Employee Plans. For the
purpose of determining the eligibility of an Employee for benefits under the
Replacement Plans, his or her period of employment shall include employment with
both the Seller and the Purchaser and shall be deemed not to have been
interrupted at the Time of Closing provided that no Employee shall be entitled
to benefits under any disability plan sponsored by the Purchaser in respect of
any condition existing at or event occurring prior to the Time of Closing.
Except for severance and termination benefits accruing to the Employees listed
in Schedule 16, for which benefits the Purchaser has agreed to assume Liability
from the respective date each such Employee commenced employment with the Seller
or any predecessor of the Seller, the Employees shall begin to accrue benefits
under the Replacement Plans as of the Time of Closing in respect of their
employment by the Purchaser. The Purchaser agrees to obtain the required
approvals of the applicable federal and provincial regulatory authorities in
connection with the establishment and registration of the Replacement Plans.

8.8   FINANCIAL STATEMENT COOPERATION

      The Seller agrees, at the cost and expense of the Purchaser, to cooperate
with the Purchaser and to assist the Purchaser's outside auditors in the
preparation of any financial statements relating to the Purchased Assets and the
Seller that may be reasonably requested by the Purchaser or UTI for filing with
the Securities and Exchange Commission in connection with any filings that may
be made by the Purchaser or UTI under the US Securities Act or the US Exchange
Act. Such financial statements shall consist of (i) such audited balance sheets
and audited statements of operations, cash flows and changes in equity together
with the notes thereon and (ii) such unaudited interim balance sheet and
unaudited interim statements of operations, cash flows and changes in equity, if
any, in each case as the Purchaser or UTI shall reasonably deem to be required
by the Purchaser or UTI.

8.9   EXCLUSIVITY

      From the date hereof until the Closing, neither the Seller nor any of the
Shareholders will directly or indirectly initiate discussions with or engage in
negotiations with any Person other than the Purchaser for any sale of the
Purchased Business or any of the Purchased Assets, whether through any sale of
assets, sale of shares, reorganization or otherwise.

8.10  NON-COMPETITION

      (a)   Each of the Seller and the Shareholders acknowledges that pursuant
            to this Agreement the Purchaser will purchase from the Seller the
            goodwill of the Seller and the Purchased Business, and that to
            induce the Purchaser to pay the Purchase Price, the protection and
            maintenance of such goodwill constitutes a legitimate interest to be
            protected by the Purchaser and UTI by this covenant not to compete.
            Therefore, each of the Seller and the Shareholders agrees, severally
            and not jointly, that for the period (the "NONCOMPETITION PERIOD")
            commencing upon the Closing Date and ending upon the fifth
            anniversary (the "ENDING DATE") of the
<PAGE>   35
                                      -31-

            Closing Date, he, she or it shall not, directly or indirectly,
            either as an employee, employer, consultant, agent, principal,
            partner, shareholder (other than a shareholder of 5% or less of a
            publicly traded company), corporate officer or director, or in any
            other individual or representative capacity, engage or participate
            in the land contract drilling business in North America (such entire
            geographic area is hereinafter referred to as the "NONCOMPETITION
            AREA") provided that nothing herein shall restrict the Seller or any
            Shareholder upon his or her cessation of employment with the
            Purchaser from providing well-site drilling consulting services to
            operators. Each of the Seller and the Shareholders represents to the
            Purchaser that the enforcement of the restriction contained in this
            Section 8.10 would not be unduly burdensome to it, having regard to
            the provisions set forth in Section 8.6. Each of the Seller and the
            Shareholders further represents and acknowledges that it has
            willingly entered into this agreement not to compete and is willing
            and able to compete in other geographical areas not prohibited by
            this Section 8.10.

      (b)   Each of the Seller and the Shareholders agrees that in addition to
            the application of the provisions set forth in Article 11, a breach
            or violation of this covenant not to compete shall entitle the
            Purchaser and UTI, as a matter of right, to an injunction issued by
            any court of competent jurisdiction, restraining any further or
            continued breach or violation of this covenant. Such right to an
            injunction shall be cumulative and in addition to, and not in lieu
            of, any other remedies to which the Purchaser or UTI may show itself
            justly entitled. Further, each of the Seller and the Shareholders
            agrees that during any period in which it is in breach of this
            covenant not to compete, the Noncompetition Period applicable to
            such Seller or Shareholder who is in breach of this covenant shall
            be extended for the amount of time that it is in breach hereof.

      (c)   Each of the Seller and the Shareholders agrees, severally and not
            jointly, that for the Noncompetition Period it will not, either
            directly or indirectly, (i) solicit for employment, or allow any
            corporation or business entity controlled directly or indirectly by
            or affiliated with the Seller or any such Shareholder to solicit for
            employment, any Person that at that time is, or at any time during
            the 12 month period immediately preceding the Closing Date was, an
            employee, consultant or agent of the Seller, the Purchaser, UTI or
            any of their Affiliates (except that this shall not prohibit
            reasonable and customary general solicitations of employment through
            the media) or (ii) make known to any Person that is engaged in the
            contract land drilling business in the Non-Competition Area or
            executive recruiting or search firms that have clients engaged in
            such business, the names of any Person that at that time is, or at
            any time during the 12-month period immediately preceding the
            Closing Date was, an employee, consultant or agent of the Purchaser,
            the Seller or any of their Affiliates relating to the Purchased
            Business.

      (d)   Notwithstanding anything contained herein to the contrary, the
            existence of any claim or cause of action of the Seller against the
            Purchaser or UTI, whether predicated on this Agreement or otherwise,
            shall not constitute a defence to the
<PAGE>   36
                                      -32-

            enforcement by the Purchaser of the covenants of the Seller and the
            Shareholders contained in this Section 8.10.

      (e)   The Parties agree that the limitations contained in this Section
            8.10 with respect to geographic area, duration and scope of activity
            are reasonable. However, if any court shall determine that the
            geographic area, duration or scope of activity of any restriction
            contained in this Section 8.10 is unenforceable, it is the intention
            of the Parties that such restrictive covenant set forth herein shall
            not thereby be terminated but shall be deemed amended to the extent
            required to render it valid and enforceable.

8.11  UPDATE OF SCHEDULES

      From the date hereof through and including the Closing Date, the Seller
may correct or update any of the Schedules. Any such correction or update shall
be made by actual delivery of an amended Schedule, marked to show changes (the
"Amended Schedule"), which Amended Schedule shall replace the original Schedule
hereto. The Purchaser shall be given a reasonable opportunity to review any
Amended Schedule prior to Closing and shall have the right to postpone the
Closing for up to two Business Days to review any Amended Schedule delivered on
or immediately before the Closing Date. The Purchaser shall have the right to
terminate this Agreement at any time prior to the Closing if it is not
satisfied, acting reasonably, with any information contained in any Amended
Schedule.

                                   ARTICLE 9
                              CONDITIONS OF CLOSING

9.1   CONDITIONS OF CLOSING IN FAVOUR OF PURCHASER

      The sale and purchase of the Purchased Assets is subject to the following
terms and conditions for the exclusive benefit of the Purchaser, to be performed
or fulfilled at or prior to the Time of Closing:

      (a)   CLOSING DELIVERIES. The Seller shall have delivered to the Purchaser
            the documents required to be delivered pursuant to Section 10.2;

      (b)   REPRESENTATIONS AND WARRANTIES. The representation and warranties of
            the Seller contained in this Agreement shall be true and correct in
            all material respects at the Time of Closing with the same force and
            effect as if such representations and warranties were made at and as
            of such time, and a certificate of the Seller, dated the Closing
            Date to that effect shall have been delivered to the Purchaser, such
            certificate to be in form and substance satisfactory to the
            Purchaser, acting reasonably;

      (c)   COVENANTS. All of the terms, covenants and conditions of this
            Agreement to be complied with or performed by the Seller at or
            before the Time of Closing shall have been complied with or
            performed in all material respects, and a certificate of the Seller
            dated the Closing Date to that effect shall have been delivered to
            the
<PAGE>   37
                                      -33-

            Purchaser, such certificate to be in form and substance satisfactory
            to the Purchaser, acting reasonably;

      (d)   REGULATORY CONSENTS. There shall have been obtained from all
            appropriate federal, provincial, municipal or other governmental or
            administrative bodies such licences, permits, consents, approvals,
            certificates, registrations and authorizations as are required to be
            obtained by the Seller to permit the change of ownership of the
            Purchased Assets contemplated hereby, including, without limitation,
            those described in Part 1 of Schedule 11, in each case in form and
            substance satisfactory to the Purchaser, acting reasonably;

      (e)   CONTRACTUAL CONSENTS. The Seller shall have given or obtained the
            notices, consents and approvals described in Part 2 of Schedule 11,
            in each case in form and substance satisfactory to the Purchaser,
            acting reasonably;

      (f)   EMPLOYMENT/CONSULTING AGREEMENTS. The Purchaser shall have entered
            into employment/consulting agreements with the Shareholders which
            are consistent with the terms and the form of agreement attached as
            Schedule 22;

      (g)   NO ACTION OR PROCEEDING. No legal or regulatory action or proceeding
            shall be pending or threatened by any Person to enjoin, restrict or
            prohibit the purchase and sale of the Purchased Assets contemplated
            hereby;

      (h)   NO MATERIAL DAMAGE. No material damage or physical alteration to the
            whole or any material part of the Purchased Assets or the Purchased
            Business, which would materially affect the value of the Purchased
            Assets or the Purchased Business, shall have occurred between the
            date hereof and the Time of Closing;

      (i)   NO MATERIAL ADVERSE CHANGE. There shall have been no material
            adverse changes in the condition (financial or otherwise), of the
            assets, Liabilities, operations, earnings, business or prospects of
            the Purchased Business since the date of the most recent Financial
            Statements;

      (j)   NO ENCUMBRANCES. The Seller shall have provided for the discharge of
            the Encumbrances listed in Part 2 of Schedule 12 to the satisfaction
            of the Purchaser, acting reasonably;

      (k)   CONTINUED OPERATION. During the period from the date hereof to the
            Time of Closing, the Seller shall have operated the Purchased
            Business in a proper and prudent manner in accordance with generally
            accepted industry practices;

      (l)   LEGAL OPINION. The Seller shall have delivered to the Purchaser a
            favourable opinion of counsel to the Seller in the form annexed
            hereto as Schedule 18;

      (m)   DUE DILIGENCE. The Purchaser shall have completed, within 14 days
            following execution of this Agreement by the Parties, satisfactory
            due diligence regarding the Purchased Assets, the results of which
            are in all respects satisfactory to the Purchaser in its sole
            discretion;
<PAGE>   38
                                      -34-

      (n)   BOARD APPROVAL. UTI shall have obtained, within 14 days following
            execution of this Agreement by the Parties, the approval of its
            board of directors for the matters set out herein; and

      (o)   COMPLETE TRANSACTION. This Agreement constitutes one part of a three
            part transaction, and accordingly shall not be binding unless the
            related transactions contemplated by the agreements listed in
            Schedule 20 are closed concurrent with the Closing of the
            transactions contemplated by this Agreement.

      If any of the conditions contained in this Section 9.1 shall not be
performed or fulfilled at or prior to the Time of Closing to the sole
satisfaction of the Purchaser, acting reasonably, the Purchaser may, by notice
to the Seller, terminate this Agreement, provided that the Purchaser may also
bring an action pursuant to Article 11 against the Seller and/or the
Shareholders for damages suffered by the Purchaser where the non-performance or
non-fulfillment of the relevant condition is a result of a breach of covenant,
representation or warranty by the Seller. Any such condition may be waived in
whole or in part by the Purchaser without prejudice to any claims it may have
for breach of covenant, representation or warranty.

9.2   CONDITIONS OF CLOSING IN FAVOUR OF SELLER

      The sale and purchase of the Purchased Assets is subject to the following
terms and conditions for the exclusive benefit of the Seller, to be performed or
fulfilled at or prior to the Time of Closing:

      (a)   CLOSING DELIVERIES. The Purchaser shall have delivered to the Seller
            the Purchase Price and documents required to be delivered pursuant
            to Section 10.3;

      (b)   REPRESENTATIONS AND WARRANTIES. The representations and warranties
            of the Purchaser and UTI contained in this Agreement shall be true
            and correct in all material respects at the Time of Closing with the
            same force and effect as if such representations and warranties were
            made at and as of such time, and a certificate of each of the
            Purchaser and UTI, dated the Closing Date, to that effect shall have
            been delivered to the Seller each such certificate to be in form and
            substance satisfactory to the Seller, acting reasonably;

      (c)   COVENANTS. All of the terms, covenants and conditions of this
            Agreement to be complied with or performed by the Purchaser and UTI
            at or before the Time of Closing shall have been complied with or
            performed in all material respects, and a certificate of each of the
            Purchaser and UTI, dated the Closing Date, to that effect shall have
            been delivered to the Seller, each such certificate to be in form
            and substance satisfactory to the Seller, acting reasonably;

      (d)   REGULATORY CONSENTS. There shall have been obtained from all
            appropriate federal, provincial, municipal or other governmental or
            administrative bodies such licences, permits, consents, approvals,
            certificates, registrations and authorizations as are required to be
            obtained by the Purchaser to permit the change of ownership of the
            Purchased Assets contemplated hereby, including those described in
            Part I
<PAGE>   39
                                      -35-

            of Schedule 11, in each case in form and substance satisfactory to
            the Seller, acting reasonably;

      (e)   EMPLOYMENT/CONSULTING AGREEMENTS. The Purchaser shall have entered
            into employment/consulting agreements with the Shareholders which
            are consistent with the terms and the form of agreement attached as
            Schedule 22;

      (f)   NO ACTION OR PROCEEDING. No legal or regulatory action or proceeding
            shall be pending or threatened by any person to enjoin, restrict or
            prohibit the purchase and sale of the Purchased Assets contemplated
            hereby;

      (g)   LEGAL OPINIONS. The Purchaser and UTI shall have delivered to the
            Seller favourable opinions of counsel to the Purchaser and UTI in
            the form annexed hereto as Schedule 19;

      (h)   APPROVALS. The Seller shall have obtained, within five Business Days
            following execution of this Agreement, the approval of its board of
            directors and of its shareholders for the matters set out herein;
            and

      (i)   COMPLETE TRANSACTION. This Agreement constitutes one part of a three
            part transaction, and accordingly shall not be binding unless the
            related transactions contemplated by the agreements listed in
            Schedule 20 are closed concurrent with the Closing of the
            transactions contemplated by this Agreement.

      If any of the conditions contained in this Section 9.2 shall not be
performed or fulfilled at or prior to the Time of Closing to the satisfaction of
the Seller acting reasonably, the Seller may, by notice to the Purchaser and
UTI, terminate this Agreement, provided that the Seller may also bring an action
pursuant to Article 11 against the Purchaser and/or UTI for damages suffered by
the Seller where the non-performance or non-fulfillment of the relevant
condition is as a result of a breach of covenant, representation or warranty by
the Purchaser and UTI. Any such condition may be waived in whole or in part by
the Seller without prejudice to any claims it may be have for breach of
covenant, representation or warranty.

                                   ARTICLE 10
                       CLOSING AND TRANSFER OF POSSESSION

10.1  PLACE OF CLOSING

      The Closing shall take place at the Time of Closing at the offices of
Macleod Dixon in Calgary, Alberta.

10.2  CLOSING DELIVERIES BY SELLER

      At the Closing the Seller shall deliver to the Purchaser:

      (a)   an executed counterpart of the Bill of Sale plus any other deeds,
            conveyances, bills of sale, assurances, transfers, assignments and
            any other documentation
<PAGE>   40
                                      -36-

            necessary or reasonably required to transfer the Purchased Assets to
            the Purchaser with a good and marketable title, free and clear of
            all Encumbrances whatsoever except for Permitted Encumbrances.

      (b)   a certificate of corporate status and an officer's certificate,
            certified by a senior officer of the Seller as of the Closing Date,
            which certificate shall include copies of its constating documents
            and by-laws and of the resolution authorizing the execution,
            delivery and performance by the Seller of this Agreement and any
            documents to be provided by it pursuant to the provisions hereof;

      (c)   a receipt for the Purchase Price;

      (d)   the certificates and other documents required to be delivered
            pursuant to Section 9.1; and

      (e)   all such other documents relevant to the closing of the transactions
            contemplated hereby as the Purchaser, acting reasonably, may
            request.

10.3  CLOSING DELIVERIES BY PURCHASER

      At the Closing the Purchaser shall deliver to the Seller:

      (a)   the Purchase Price by bank draft or wire transfer;

      (b)   an executed counterpart of the Bill of Sale;

      (c)   certificates of corporate status and officers' certificates,
            certified by a senior officer of each of the Purchaser and of UTI as
            of the Closing Date, which certificates shall include copies of
            constating documents and by-laws and of the resolution authorizing
            the execution, delivery and performance by the Purchaser and UTI of
            this Agreement and any documents to be provided by them pursuant to
            the provisions hereof;

      (d)   the certificates and other documents required to be delivered
            pursuant to Section 9.2; and

      (e)   all such other documents relevant to the closing of the transactions
            contemplated hereby as the Seller, acting reasonably, may request.

10.4  FURTHER ASSURANCES

      From and after the Closing Date, each Party to this Agreement covenants
and agrees that it will at all times after the Closing Date, at the expense of
the requesting Party, promptly execute and deliver all such documents,
including, without limitation, all such additional conveyances, transfers,
consents and other assurances and do all such other acts and things as any other
Party, acting reasonably, may from time to time request be executed or done in
order to better evidence or perfect or effectuate any provision of this
Agreement or of any agreement or
<PAGE>   41
                                      -37-

other document executed pursuant to this Agreement or any of the respective
obligations intended to be created hereby or thereby.

10.5  TRANSFER OF POSSESSION AND TITLE

      Subject to compliance with the terms and conditions hereof, the transfer
of possession of and title to the Purchased Assets shall be deemed to take
effect as at the Time of Closing.

10.6  RISK OF LOSS

      From the date hereof up to the Time of Closing, the Purchased Assets shall
be and remain at the risk of the Seller. If, prior to the Time of Closing, all
or any part of the Purchased Assets that are necessary to carry on the Purchased
Business as currently conducted are destroyed or damaged by fire or any other
casualty or shall be appropriated, expropriated or seized by governmental or
other lawful authority, the Purchaser may elect to complete the purchase without
reduction of the Purchase Price, in which event all proceeds of insurance or
compensation for expropriation or seizure shall be paid to the Purchaser at the
Time of Closing and all right and claim of the Seller to any such amounts not
paid by the Closing Date shall be assigned at the Time of Closing to the
Purchaser.

                                   ARTICLE 11
                                 INDEMNIFICATION

11.1  INDEMNIFICATION BY SELLER AND SHAREHOLDERS

      The Seller and the Shareholders jointly and severally agree to
indemnify and save harmless the Purchaser from all Losses suffered or incurred
by the Purchaser as a result of or arising directly or indirectly out of or in
connection with:

      (a)   any breach by the Seller of or any inaccuracy of any representation
            or warranty of the Seller contained in this Agreement or in any
            agreement, certificate or other document delivered pursuant hereto;

      (b)   any breach or non-performance by the Seller of any covenant to be
            performed by it that is contained in this Agreement or in any
            agreement, certificate or other document delivered pursuant hereto;

      (c)   the Excluded Liabilities or the Excluded Assets; and

      (d)   the operation of the Purchased Business, or the ownership of the
            Purchased Assets, prior to the Time of Closing.

11.2  INDEMNIFICATION BY PURCHASER AND UTI

      The Purchaser and UTI jointly and severally agree to indemnify and save
harmless the Seller from all Losses suffered or incurred by the Seller as a
result of or arising directly or indirectly out of or in connection with:
<PAGE>   42
                                      -38-

      (a)   any breach by the Purchaser or UTI of or any inaccuracy of any
            representation or warranty contained in this Agreement or in any
            agreement, instrument, certificate or other document delivered
            pursuant hereto;

      (b)   any breach or non-performance by the Purchaser or UTI of any
            covenant to be performed by it that is contained in this Agreement
            or in any agreement, certificate or other document delivered
            pursuant hereto;

      (c)   the Assumed Obligations;

      (d)   any GST which becomes payable by the Seller in respect of the sale
            of the Purchased Assets other than as a result of a
            misrepresentation or breach by the Seller; and

      (e)   the operation of the Purchased Business, or the ownership of the
            Purchased Assets, on or after the Time of Closing.

11.3  LIMITATIONS ON INDEMNIFICATION

      (a)   Notwithstanding the foregoing provisions of this Article, but
            subject to (c) below, no Party shall be liable under the
            indemnifications in Section 11.1 or 11.2 unless and until the
            aggregate amount of liability thereunder exceeds Cdn. $25,000.

      (b)   Notwithstanding the foregoing provisions of this Article, but
            subject to (c) below, the aggregate liability of the Seller and the
            Shareholders to the Purchaser under the indemnification provisions
            of this Agreement, and the aggregate liability of the Purchaser and
            UTI to the Seller under the indemnification provisions of this
            Agreement, shall be limited in each case to an amount equal to the
            Purchase Price.

      (c)   The limitations on the liability of any Party under this Agreement
            shall only apply to the extent that there is not any fraud or wilful
            misconduct on the part of such Party, and all such limits on the
            liability of any Party shall lapse and be of no force and effect if
            and to the extent that there is or has been fraud or wilful
            misconduct on the part of such Party in connection with the matter
            with respect to which any claim against such Party is made
            hereunder.

      (d)   All indemnification to which an indemnified Party may be entitled
            pursuant to the provisions of this Article shall be net of any
            insurance coverage paid to the indemnified Party with respect
            thereto, and shall exclude any claims arising from the indemnified
            Party's gross negligence or willful misconduct after the Closing.

      (e)   Except for those covenants contained in Article 8 and which are
            intended to survive Closing as provided in Article 8, no Party shall
            be liable under the indemnifications in Section 11.1 or 11.2 unless
            written notice of the claim as provided for in Section 11.4 is given
            by the Indemnified Party (as defined in Section 11.4) to the
            Indemnifying Party (as defined in Section 11.4), within 18 months
            following the Closing.
<PAGE>   43
                                      -39-

11.4  NOTICE OF CLAIM

      In the event that a Party (the "INDEMNIFIED PARTY") shall become aware of
any claim, proceeding or other matter (a "CLAIM") in respect of which any other
Party (the "INDEMNIFYING PARTY") agreed to indemnify the Indemnified Party
pursuant to this Agreement, the Indemnified Party shall promptly give written
notice thereof to the Indemnifying Party. Such notice shall specify whether the
Claim arises as a result of a claim by a Person against the Indemnified Party (a
"THIRD PARTY CLAIM") or whether the Claim does not so arise (a "DIRECT CLAIM"),
and shall also specify with reasonable particularity (to the extent that the
information is available):

      (a)   the factual basis for the Claim; and

      (b)   the amount of the Claim, if known.

      If, through the fault of the Indemnified Party, the Indemnifying Party
does not receive notice of any Claim in time to effectively contest the
determination of any liability susceptible of being contested, the Indemnifying
Party shall be entitled to set off against the amount claimed by the Indemnified
Party the amount of any Losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.

      In the event that a Shareholder shall, within 18 months following the
Closing, become aware of a Claim arising from a breach of any representation and
warranty contained in Section 5.6 (Title to Purchased Assets), Section 5.10
(Material Contracts) or Section 5.19 (Environmental Matters), such Shareholder
severally agrees to give prompt written notice thereof to the Purchaser and UTI.
This obligation is in addition to any disclosure obligations which such
Shareholder may owe to the Purchaser in such Shareholder's capacity as an
employee of the Purchaser or otherwise.

11.5  DIRECT CLAIMS

      With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have 30 days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the affected Claim, together with all such
other information as the Indemnifying Party may reasonably request. If both
affected Parties agree at or prior to the expiration of such 30 day period (or
any mutually agreed upon extension thereof) to the validity and amount of such
Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the
full agreed upon amount of the Claim, failing which the matter shall be referred
to binding arbitration in such manner as the Parties may agree or shall be
determined by a court of competent jurisdiction.

11.6  THIRD PARTY CLAIMS

      With respect to any Third Party Claim, the Indemnifying Party shall have
the right, at its expense, to participate in or assume control of the
negotiation, settlement or defence of the Claim and, in such event, the
Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified
Party's out-of-pocket expenses as a result of such participation or assumption.
If the
<PAGE>   44
                                      -40-

Indemnifying Party elects to assume such control, the Indemnified Party shall
have the right to participate in the negotiation, settlement or defence of such
Third Party Claim and to retain counsel to act on its behalf, provided that the
fees and disbursements of such counsel shall be paid by the Indemnified Party
unless the Indemnifying Party consents to the retention of such counsel or
unless the named parties to any action or proceeding include both the
Indemnifying Party and the Indemnified Party and a representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to the actual or potential differing interests between them
(such as the availability of different defences). If the Indemnifying Party,
having elected to assume such control, thereafter fails to defend the Third
Party Claim within a reasonable time, the Indemnified Party shall be entitled to
assume such control and the Indemnifying Party shall be bound by the results
obtained by the Indemnified Party with respect to such Third Party Claim. If any
Party Claim is of a nature such that the Indemnified Party is required by
applicable law to make a payment to any Person (a "THIRD PARTY") with respect to
the Third Party Claim before the completion of settlement negotiations or
related legal proceedings, the Indemnified Party may make such payment and the
Indemnifying Party shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for such payment. If the amount of any liability
of the Indemnified Party under the Third Party Claim in respect of which such a
payment was made, as finally determined, is less than the amount that was paid
by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall,
forthwith after receipt of the difference from the Third Party, pay the amount
of such difference to the Indemnifying Party.

11.7  SETTLEMENT OF THIRD PARTY CLAIMS

      If the Indemnifying Party fails to promptly assume control of the defence
of any Third Party Claim, the Indemnified Party shall have the exclusive right
to contest, settle or pay the amount claimed. Whether or not the Indemnifying
Party assumes control of the negotiation, settlement or defence of any Third
Party Claim, the Indemnifying Party shall not settle any Third Party Claim
without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that the liability of the
Indemnifying Party shall be limited to the proposed settlement amount if any
such consent is not obtained for any reason.

11.8  CO-OPERATION

      The Indemnified Party and the Indemnifying Party shall co-operate fully
with each other with respect to Third Party Claims, and shall keep each other
fully advised with respect thereto (including supplying copies of all relevant
documentation promptly as it becomes available).

11.9  SCOPE

      The provisions of this Article 11 shall apply to any Claim for breach of
any covenant, representation, warranty or other provision of this Agreement or
any agreement, certificate or other document delivered pursuant to this
Agreement (other than a claim for specific performance or injunctive relief)
with the intent that all such Claims shall be subject to the limitations and
other provisions contained in this Article 11.
<PAGE>   45
                                      -41-

                                   ARTICLE 12
                       TERMINATION; REMEDIES; LIMITATIONS

12.1  TERMINATION AGREEMENT

      This Agreement and the transactions contemplated hereby may be terminated
at any time prior to the Closing:

      (a)   by the mutual consent of the Seller, the Purchaser and UTI; or

      (b)   if the Closing has not occurred by May 17, 2000, then

            (i)   by the Purchaser if any condition specified in Section 9.1 has
                  not been satisfied on or before such date, and shall not have
                  been waived by the Purchaser, or

            (ii)  by the Seller if any condition specified in Section 9.2 has
                  not been satisfied on or before such date, and shall not have
                  been waived by the Seller;

            provided, in each case, that the failure to consummate the
            transactions contemplated hereby on or before such date did not
            result from the failure by the Party or Parties seeking termination
            of this Agreement to fulfill any undertaking or commitment provided
            for herein on the part of such Party or Parties that is required to
            be fulfilled on or prior to Closing.

12.2  EFFECT OF TERMINATION

      Without limiting any Party's respective rights, Liabilities and remedies
hereunder, in the event of termination of this Agreement by the Purchaser or the
Seller pursuant to Subsection 12.1(b), written notice thereof shall forthwith be
given by the terminating Party to the other Party or Parties hereto, and this
Agreement shall thereupon terminate.

                                   ARTICLE 13
                                  MISCELLANEOUS

13.1  NOTICES

      (a)   Any notice or other communication required or permitted to be given
            hereunder shall be in writing and shall be delivered in person,
            transmitted by telecopy or similar means of recorded electronic
            communication or sent by registered mail, charges prepaid, addressed
            as follows:
<PAGE>   46
                                      -42-

            (i)   if to the Seller or the Shareholders:

                  PHELPS DRILLING INTERNATIONAL LTD.
                  Hanover Place, Suite 1450
                  101-6th Avenue S.W.
                  Calgary, Alberta  T2P 3P4

                  Attention:  T.V. Dumont
                  Fax No.:  (403) 262-2497

            with a copy to:

                  FIELD ATKINSON PERRATON
                  1900 First Canadian Centre
                  350 - 7th Avenue S.W.
                  Calgary, Alberta T2P 3N9

                  Attention:  Mr. Brian Yaworski
                  Fax No:  (403) 264-7084

            (ii)  if to the Purchaser or UTI:

                  PHELPS DRILLING LTD. or UTI ENERGY CORP.
                  c/o UTI Energy Corp.
                  16800 Greenspoint Park, Suite 225N
                  Houston, Texas  77060

                  Attention:  Chief Executive Officer
                  Fax No.:  (281) 875-9145

            with a copy to:

                  MACLEOD DIXON
                  3700 Canterra Tower
                  400 - 3rd Avenue S.W.
                  Calgary, Alberta
                  T2P 4H7

                  Attention:  Mr. Richard P. Borden
                  Fax No.  (403) 264-5973

      (b)   Any such notice or other communication shall be deemed to have been
            given and received on the day on which it was delivered or
            transmitted (or, if such day is not a Business Day, on the next
            following Business Day) or, if mailed, on the third Business Day
            following the date of mailing; provided, however, that if at the
            time of mailing or within three Business Days thereafter there is or
            occurs a labour dispute or other event that might reasonably be
            expected to disrupt the delivery of documents by mail, any notice or
            other communication hereunder shall be
<PAGE>   47
                                      -43-

            delivered or transmitted by means of recorded electronic
            communication as aforesaid.

      (c)   A Party may at any time change its address for service from time to
            time by giving notice to the other Party in accordance with this
            Section 13.1

13.2  CONSULTATION

      Prior to the Closing and except as required by any applicable law or any
regulatory or stock exchange requirement, no Party shall issue any press release
or make any public announcement without the prior written consent of the other
Parties, which consent shall not be unreasonably withheld or delayed. Upon the
Closing, the Parties shall consult with each other before issuing any press
release or making any other public announcement with respect to this Agreement
or the transactions contemplated hereby.

13.3  DISCLOSURE

      Prior to any press release or public announcement of the transaction
contemplated hereby pursuant to Section 13.2, no Party shall disclose this
Agreement or any aspects of the transaction contemplated hereby except to its
board of directors, its senior management, its legal, accounting, financial or
other professional advisors or its lenders, all on a "need to know basis", or as
otherwise may be required by any applicable law or any regulatory authority or
stock exchange having jurisdiction.

13.4  BEST EFFORTS

      The Parties acknowledge and agree that, for all purposes of this
Agreement, an obligation on the part of one Party to use its best efforts to
obtain from any Person any waiver, consent, approval, permit, licence or other
document shall not require such Party to make any payment to such Person for the
purpose of procuring the same, other than payments for amounts due and payable
to such Person, payments for incidental expenses incurred by such Person and
payments required by any applicable law or regulation.
<PAGE>   48
                                      -44-

13.5  COUNTERPARTS

      This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which taken together shall constitute one and
the same instrument.

      IN WITNESS WHEREOF this Agreement has been executed by the Parties as of
the date first above written.

                                    PHELPS DRILLING INTERNATIONAL LTD.

                                    By:  _____________________________________

                                    By:  _____________________________________

                                      SHAREHOLDERS

--------------------------------      ------------------------------------
Witness                               THEODORE V. DUMONT

--------------------------------      ------------------------------------
Witness                               DONALD E. NAKONECHNY

--------------------------------      ------------------------------------
Witness                               ARTHUR G. HIBBARD

--------------------------------      ------------------------------------
Witness                               GORDON E. VAN EATON

--------------------------------      ------------------------------------
Witness                               JOHN W. MILLER
<PAGE>   49
                                      -45-

                                      PHELPS DRILLING LTD.

                                      By:
                                          ------------------------------------

                                      By:
                                          ------------------------------------

                                      UTI ENERGY CORP.

                                      By:
                                          ------------------------------------

                                      By:
                                          ------------------------------------

<PAGE>   50
                                   SCHEDULE 9

                          ALLOCATION OF PURCHASE PRICE

Class 41 Tangible Depreciable Property                            ____________

<PAGE>   51
                                   SCHEDULE 21

              ASSIGNMENT, BILL OF SALE AND ASSUMPTION AGREEMENT

      This Assignment, Bill of Sale and Assumption Agreement (the
"Agreement") is dated effective the _______ day of April, 2000, and made
between Phelps Drilling International Ltd. (the "Seller") and Phelps Drilling
Ltd. (the "Purchaser").

      WHEREAS the Seller, the shareholders of the Seller's parent, the Purchaser
and UTI Energy Corp. entered into an Asset Purchase Agreement dated as of the
________ day of March, 2000 (the "Purchase and Sale Agreement") providing, among
other things, for the sale by the Seller to the Purchaser of the Purchased
Assets;

      AND WHEREAS pursuant to the Purchase and Sale Agreement, the Seller and
the Purchaser are required to execute and deliver this Agreement in connection
with the consummation of the transactions contemplated by the Purchase and Sale
Agreement;

      AND WHEREAS any capitalized term used but not defined in this Agreement
shall have the meaning ascribed to such term in the Purchase and Sale Agreement;

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

1.    ASSIGNMENT OF ASSETS. The Seller hereby assigns, transfers, conveys, sells
      and delivers to the Purchaser, and the Purchaser hereby accepts, all
      right, title and interest of the Seller in and to the Purchased Assets, TO
      HAVE AND TO HOLD the Purchased Assets unto the Purchaser forever, together
      with all rights belonging or pertaining thereto.

2.    FURTHER ASSURANCES RE PURCHASED ASSETS.  The Seller hereby covenants to
      execute and deliver to the Purchaser all such other and further
      instruments of assignment and transfer, and all such notices, releases
      and other documents that would more fully and specifically assign and
      transfer to and vest in the Purchaser the title and interest of the
      Seller in and to all of the Purchased Assets hereby assigned and
      transferred, or intended to be assigned and transferred free and clear
      of all Encumbrances whatsoever except for Permitted Encumbrances.  To
      the extent that, with respect of any of the Purchased Assets, no
      assignment document other than this Agreement is executed, the parties
      intend that this Agreement constitutes the conveyance, transfer and
      assignment of such Purchased Assets.

3.    ASSUMPTION OF OBLIGATIONS.  The Purchaser hereby assumes, in accordance
      with the terms of the Purchase and Sale Agreement, the Assumed
      Obligations.

4.    FURTHER ASSURANCES RE ASSUMED OBLIGATIONS. The Purchaser hereby covenants
      to execute and deliver to the Purchaser all such other and further
      instruments of assumption, and all such notices, releases and other
      documents that would more fully and specifically assume all of the Assumed
      Obligations.
<PAGE>   52
                                      -2-

5.    GOVERNING LAW. This Agreement and the rights and obligations of the Seller
      and the Purchaser hereunder shall be governed by, interpreted and enforced
      in accordance with the laws of the Province of Alberta without giving
      effect to principles thereof relating to conflicts of law rules that would
      direct application of laws of another jurisdiction, except to the extent
      that it is mandatory that the law of another jurisdiction shall apply.

6.    CONFLICT AND INCONSISTENCY, NO MERGER.  To the extent any conflict or
      inconsistency exists between the provisions of this Agreement and the
      Purchase and Sale Agreement, the provisions of the Purchase and Sale
      Agreement shall govern.  The terms and provisions of the Purchase and
      Sale Agreement (including, without limitation, the representations,
      warranties and covenants therein) shall not merge, be extinguished or
      otherwise affected by the delivery and execution of this Agreement or
      any other document delivered pursuant to Section 2 of this Agreement or
      Section 10.2 or Section 10.3 of the Purchase and Sale Agreement.

7.    BINDING EFFECT.  This Agreement shall be binding upon and shall enure
      to the benefit of the parties hereto and their respective successors
      and assigns.

8.    COPIES.  This Agreement may be executed in counterpart, each of which
      shall be deemed an original and which shall constitute one and the same
      instrument.

      IN WITNESS WHEREOF, the Seller and the Purchaser have executed this
Agreement as of the day and year first above written.

                                    PHELPS DRILLING INTERNATIONAL LTD.

                                    BY: ______________________________________

                                    BY: ______________________________________

                                    PHELPS DRILLING LTD.

                                    BY: ______________________________________

<PAGE>   53
                                   SCHEDULE 22

                         PART 1: SUMMARY OF KEY TERMS OF

                         EMPLOYMENT AND NON-COMPETITION

1.    COMPENSATION AND BENEFITS

      Each Employee's compensation package will include salary and benefits
      which are no less favourable in the aggregate than his or her current
      salary and benefits. For greater certainty, shareholder bonuses will be
      excluded from the new compensation package.

2.    SEVERANCE

      For the purposes of determining severance obligations, the term of
      employment for all Employees will be deemed to include their prior service
      with the Phelps group of companies. These severance obligations will be
      subject to the express termination provisions agreed to in any employment
      contracts entered into with the Purchaser.

3.    KEY EMPLOYMENT AGREEMENTS

      Employment agreements will be entered into with the following employees
      upon the following terms:
<TABLE>
<CAPTION>
      NAME                    TITLE                       TERM DATE            NOTICE PERIOD
      ----                    -----                       ---------            -------------
<S>                           <C>                         <C>                   <C>
      Donald Nakonechny       VP Operations               May 31, 2001          60 days
      Theodore Dumont         VP Finance                  December 31, 2000     60 days
      Art Hibbard             VP Contracts                May 31, 2003          9 months
      John Miller             Drilling Superintendent     May 31, 2001          60 days
      Gordon Van Eaton        Drilling Superintendent     May 31, 2002          60 days
</TABLE>

      The term of any of the above employment agreements with terms less than 3
      years may be extended prior to Closing for up to 3 years if such employee
      wishes.

      In the absence of any notice of termination from either party, each of the
      above employment agreements will automatically extend on a rolling month
      by month basis.

      The notice period refers to the amount of advance notice that must be
      given to terminate each employment agreement on the expiry date of the
      employment agreement. Any termination by the Purchaser prior to the expiry
      date will obligate the Purchaser to pay severance for the balance of the
      term unless such termination is for just cause.
<PAGE>   54
                                      -2-

4.    NON-COMPETITION AGREEMENTS

      The five shareholders of 592655 Alberta Ltd. and 584022 Alberta Ltd.
      will be required to enter into 5 year non-competition agreements in
      accordance with the Asset Purchase Agreement.

      No other shareholders will be required to enter into non-competition
      agreements pursuant to the applicable Asset Purchase Agreements.

<PAGE>   55
                                   SCHEDULE 22

                      PART 2: FORM OF EMPLOYMENT AGREEMENT

                              EMPLOYMENT AGREEMENT

      This Employment Agreement (this "Agreement") is made and entered into this
o day of March, 2000, by and between Phelps Drilling Ltd., an Alberta
corporation (the "Company"), and o, an individual whose primary residence is
located at o, Alberta (the "Employee").

                            W I T N E S S E T H :
                            - - - - - - - - - -

      WHEREAS, the Company desires to employ Employee on the terms set forth
below to provide management services to the Company, and Employee is willing to
accept such employment and provide such services on such terms.

      NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto do hereby agree:

1.    DEFINITIONS.  As used in this Agreement, the following terms have the
      meanings set forth below:

      (a)   "Affiliates" means UTI Energy Corp. and its direct and indirect
            subsidiaries.

      (b)   "Disability" shall be deemed to have occurred when Employee shall
            have been unable to fully and competently perform the duties
            hereunder for a period of at least six consecutive months by reason
            of mental or physical illness or other incapacity.

      (c)   "Notice of Termination" means a notice that sets forth the date of
            termination and, in the event of termination for cause, the facts
            and circumstances claimed to provide a basis for termination of
            Employee's employment.

2.    TERM. The term of employment of Employee under this Agreement shall
      commence on the date hereof (the "Commencement Date") and shall continue
      until o (the "Initial Period") and month-to-month thereafter (the
      "Additional Monthly Periods"), unless sooner terminated in accordance with
      this Agreement. The Initial Period and the Additional Monthly Periods are
      hereinafter referred to together as the "Scheduled Term of Employment".

3.    DUTIES.  During the Scheduled Term of Employment as provided in Section
      2, the Company will employ Employee in a managerial capacity as [insert
      job title] with responsibilities for o together with such other
      responsibilities as the Company may from time to time determine during
      the term of this Agreement, provided that any change in the Employee's
      responsibilities will not result in a material change to the Employee's
      position, duties or responsibilities.  Employee will comply with all
      provisions of all applicable laws, with all corporate documents
      governing the conduct of the business and affairs of the Company and
      its Affiliates and with all applicable policies of the Company
<PAGE>   56
                                      -2-

      and its Affiliates, including any policies regarding transactions of the
      Company or its Affiliates in foreign countries. Employee agrees to devote
      substantially all of his business time to the performance of his duties
      hereunder.

4.    COMPENSATION.

      (a)   The Company agrees to pay to Employee a minimum base annual salary
            of $o ("Annual Base Salary") for all services provided under this
            Agreement, payable in accordance with the normal payroll practices
            of the Company.

      (b)   In addition to the payments set forth in Section 4(a) above,
            Employee shall be entitled to reimbursement of business expenses in
            accordance with the Company's policies and be eligible to
            participate in the employee benefit plans (including bonus plans at
            the Company's discretion) and maintained by the Company for its
            employees in general. Employee also shall be entitled to such fringe
            benefits and vacation time as are made available to other employees
            of the Company having similar responsibilities to Employee. The
            Company shall have the right to deduct from all payments to be made
            under this Agreement any federal, provincial or local taxes and
            pension or unemployment contributions required by law to be withheld
            from such payments. Employee shall participate in the health care
            plans available to the Company's employees. Increases in the costs
            associated with the Company's health care plans will not increase
            Employee's Annual Base Salary.

5.    NONDISCLOSURE OF CONFIDENTIAL INFORMATION.

      (a)   Employee agrees that he will not, except with the consent of the
            Company, disclose to others (except for advising agents and
            employees of the Company), directly or indirectly, any confidential,
            non-public information relating to the business, prospects, or plans
            of the Company or its Affiliates and that he will not use such
            information except in the performance of his duties hereunder.
            Notwithstanding the previous sentence, Employee shall not be in
            violation of this section in the event of a disclosure pursuant to a
            court action or governmental rule, regulation, or proceeding (an
            "Ordered Disclosure") provided Employee has notified the Company or
            its Affiliates of such Ordered Disclosure within five business days
            of being personally served with such Ordered Disclosure. Employee
            agrees to cooperate in good faith with the Company in responding to
            such Ordered Disclosure in order to prevent, limit or impose
            restrictions on such Ordered Disclosure. In no event, however, shall
            this section require Employee to take action or otherwise cause
            Employee to be in violation of any law or result in contempt of such
            Ordered Disclosure.

      (b)   Upon termination of his employment with the Company, Employee shall
            surrender to the Company any and all work papers, reports, manuals,
            documents, and the like (including all originals and copies thereof)
            in his possession which contain confidential information relating to
            the business, prospects or plans of the Company or its Affiliates.
<PAGE>   57
                                      -3-

      (c)   Employee agrees that during the effectiveness of his covenant not to
            compete set forth in Section 6(a), he will endorse strategies of the
            Company, and following his termination of employment with the
            Company, will not disclose or cause to be disclosed any negative,
            adverse or derogatory comments or information of a substantial
            nature about the Company or its Affiliates, the management of the
            Company or its Affiliates, any product or service provided by the
            Company or its Affiliates or the future prospects of the Company or
            its Affiliates; provided that following termination of the covenant
            not to compete in Section 6 below and in the event Employee is
            competing with the Company, Employee may make comments and disclose
            information as is reasonable and customary by a competitor in the
            land drilling business so long as the disclosure of information does
            not violate Sections 5(a) or 5(b) above. The Company may seek the
            assistance, cooperation or testimony of Employee following any
            termination of his employment with the Company in connection with
            any investigation, litigation or proceeding arising out of matters
            within the knowledge of Employee and related to his position as an
            officer or employee of the Company, and in any such instance,
            Employee shall provide such assistance, cooperation or testimony as
            is reasonably requested and the Company shall pay Employee's
            reasonable costs and expenses in connection therewith. In addition,
            if such assistance, cooperation or testimony requires more than a
            nominal commitment of Employee's time, the Company will compensate
            Employee for such time at a per diem rate derived from Employee's
            salary from the Company at the time of Employee's termination. Such
            assistance shall not unduly interfere with Employee's activities
            following such termination.

6.    COVENANT NOT TO COMPETE WITH THE COMPANY.

      (a)   Employee agrees that, until the later of termination of this
            Agreement pursuant to Section 7 or expiration of the Scheduled Term
            of Employment, he shall not, directly or indirectly, either as an
            employee, employer, consultant, agent, principal, partner,
            shareholder (other than a shareholder of 5% or less of a publicly
            traded company), corporate officer or director, or in any other
            individual or representative capacity, engage or participate in the
            land contract drilling business in North America provided that
            nothing herein shall restrict the Employee upon his cessation of
            employment with the Company from providing well-site drilling
            consulting services to operators.

      (b)   Employee acknowledges that a remedy at law for any breach or
            attempted breach of this Section 6 will be inadequate and further
            agrees that any breach of this Section 6 will result in irreparable
            harm to the Company and its business and the Company shall, in
            addition to any other remedy that may be available to it, be
            entitled to specific performance and injunctive and other equitable
            relief in case of any such breach or attempted breach. Employee
            acknowledges that this covenant not to compete is being provided in
            connection with the Company's employment of Employee and that this
            Section 6 contains reasonable limitations as to time, geographical
            area and scope of activity to be restrained that do not impose a
<PAGE>   58
                                      -4-

            greater restraint than is necessary to protect the goodwill or other
            business interest of the Company.

      (c)   Whenever possible, each provision of this Section 6 shall be
            interpreted in such a manner as to be effective and valid under
            applicable law but if any provision of this Section 6 shall be
            prohibited by or invalid under applicable law, such provision shall
            be ineffective to the extent of such prohibition or invalidity,
            without invalidating the remaining provisions of this Section 6. If
            any provision of this Section 6 shall, for any reason, be judged by
            any court of competent jurisdiction to be invalid or unenforceable,
            such judgment shall not affect, impair or invalidate the remainder
            of this Section 6 but shall be confined in its operation to the
            provision of this Section 6 directly involved in the controversy in
            which such judgment shall have been rendered. In the event that the
            provisions of this Section 6 should ever be deemed to exceed the
            time or geographic limitations permitted by applicable laws, then
            such provision shall be reformed to the maximum time or geographic
            limitations permitted by applicable law.

7.    TERMINATION.

      (a)   The employment of Employee by the Company hereunder shall
            automatically terminate upon Employee's death or Disability. In
            addition, the employment of Employee by the Company may be
            terminated by the Company at any time for any reason whatsoever upon
            o months prior notice (subject to Section 7(c)) or upon providing
            the payment provided for in Section 7(c) in lieu of notice (except
            for termination for "cause" by the Company for which no prior
            written notice is required). The employment of the Employee by the
            Company may also be terminated by the Employee at any time for any
            reason upon o months prior notice. Any termination of Employee's
            employment by the Company or by Employee (other than termination
            pursuant to the first sentence of this Section 7(a)) shall be
            communicated by written Notice of Termination to the other party
            hereto in accordance with Section 14. Employee understands and
            agrees that the Company may terminate the Employment of Employee at
            any time with or without Cause by notice to the Employee as provided
            herein.

      (b)   Upon termination of the employment of Employee for any reason ,
            Employee shall be entitled to receive, and the Company shall pay
            Employee (or, if such termination is caused by Employee's death, his
            estate or as may be directed by the legal representatives of such
            estate) within 30 days following the termination date, any unpaid
            amounts payable to Employee under Section 4(a) through the date of
            termination.

      (c)   In addition to the amounts to which Employee is entitled under
            Section 7(b), (i) if Employee's employment is terminated by the
            Company during the Initial Term, whether or not notice is given in
            accordance with Section 7(a), for any reason other than for cause,
            the Company shall, within 30 days following the termination date,
            pay to Employee an amount equal to the Annual Base Salary plus an
            allowance for the value of accrued employment benefits, calculated
            from the
<PAGE>   59
                                      -5-

            termination date until the later of the expiration of the Initial
            Term or the end of the notice period in Section 7(a), as the case
            may be; or (ii) if Employee's employment is terminated by the
            Company during the Additional Monthly Periods, for any reason other
            than cause, the Company shall, within 30 days following the
            termination date, pay to the Employee an amount equal to the Annual
            Base Salary plus an allowance for the value of accrued employment
            benefits, calculated from the termination date until the end of the
            notice period provided in Section 7(a). This amount shall be payable
            either in a lump sum or in equal monthly installments, at the option
            of the Company.

      (d)   The compensation set forth in this Section 7 shall be the only
            compensation payable as a result of such termination and, except as
            may otherwise be expressly provided in any employee benefit plans in
            which the Employee is participating at the date of his termination,
            Employee shall not be entitled to any other rights he may have under
            any other employee benefit plan or arrangement.

      (e)   In the event that any employment standards legislation provides for
            termination compensation in excess of the termination compensation
            set out in this Agreement, then such legislation shall prevail to
            the extent of such incremental compensation.

8.    ADDITIONAL REMEDIES. In the event of a breach or a threatened breach of
      the terms of Section 5 and 6 by Employee, the Company shall, in addition
      to all other remedies, be entitled to a temporary or permanent injunction
      or a decree for specific performance, in accordance with the provisions
      hereof, without showing any actual damage or that monetary damages would
      not provide an adequate remedy and without any bond or other security
      being required.

9.    NONASSIGNMENT. This Agreement is personal to Employee and shall not be
      assigned by him. Employee shall not hypothecate, delegate, encumber,
      alienate, transfer, or otherwise dispose of his rights and duties
      hereunder. The Company may assign this Agreement without Employee's
      consent to any Affiliate or to any other entity who, in connection with
      such assignment, acquires all or substantially all of the Company's
      assets, or into or with which the Company is merged or consolidated.

10.   INDEMNIFICATION.  Employee shall be entitled to indemnification rights
      as set forth in the Company's corporate documents, as they may exist
      from time to time.

11.   WAIVER.  The waiver by the Company of a breach by Employee of any
      provision of this Agreement shall not be construed as a waiver of any
      subsequent breach by Employee.

12.   SEVERABILITY.  Should any provision of this Agreement be held
      unenforceable or invalid, then the parties hereto agree that such
      provision shall be deemed modified to the extent necessary to render it
      lawful and enforceable, or if such a modification is not possible
      without materially altering the intention of the parties hereto, then
      such provision shall be severed from this Agreement.  In such case the
      validity of the remaining provisions shall
<PAGE>   60
                                      -6-

      not be affected and this Agreement shall be construed as if such provision
      were not contained herein.

13.   GOVERNING LAW.  This Agreement shall be construed by, subject to, and
      governed in accordance with the laws of the Province of Alberta.

14.   NOTICES. Any notice, request, communication, instruction or other document
      to be given hereunder by any party hereto to any other party shall be in
      writing and delivered personally, by facsimile (with receipt confirmed) or
      by registered or certified mail, postage prepaid:

      (a)   If to the Company:

                  Phelps Drilling Ltd.
                  Suite 1450, 101 - 6th Avenue S.W.
                  Calgary, Alberta
                  T2P 3P4

                  Facsimile:   (403) 262-2497
                  Attention:   o

      (a)   If to Employee:

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

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

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

                  Facsimile:
                             ------------------

      Any notice which is delivered personally in the manner provided herein
      shall be deemed to have been duly given to the party to whom it is
      directed upon actual receipt by such party (or its agent for notices
      hereunder). Any notice which is addressed and mailed in the manner herein
      provided shall be conclusively presumed to have been duly given to the
      party to which it is addressed at the close of business, local time of the
      recipient, on the third day after the day it is so placed in the mail. Any
      notice which is sent by facsimile shall be deemed to have been duly given
      to the party to which it is addressed upon telephonic confirmation of the
      same as provided herein. A copy of any notices delivered by facsimile
      shall promptly be mailed in the manner herein provided to the party to
      which such notice was given.

15.   ENTIRE AGREEMENT.  This Agreement sets forth the entire understanding
      of the parties and supersedes all prior agreements, arrangements, and
      communications, whether oral or written, and this Agreement shall not
      be modified or amended except by written agreement of the Company and
      Employee.  Notwithstanding the foregoing, nothing in this Agreement
      shall modify or supercede any non-competition covenant given by the
      Employee in any separate agreement to which the Employee and the
      Company is a party.
<PAGE>   61
                                      -7-

16.   CONSTRUCTION. Words used in the masculine apply equally to the feminine,
      and wherever the context dictates, the plural should be read as the
      singular and the singular as the plural. References to Sections are to
      Sections of this Agreement. The headings at the beginning of each section
      are inserted for convenience only and are not intended to describe,
      interpret, define, or limit the scope, extent, or intent of this
      Agreement.

17.   COUNTERPARTS.  This Agreement may be executed in separate counterparts,
      each of which will be deemed to be an original, but all of which shall
      be considered one and the same instrument.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.

                                    COMPANY:

                                    PHELPS DRILLING LTD.

                                    By: _____________________________________
                                        o

                                    EMPLOYEE:

                                    __________________________________________
                                    o<PAGE>   1
                                                                    EXHIBIT 10.3

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

                            ASSET PURCHASE AGREEMENT

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

                THIS AGREEMENT made the 24th day of March, 2000,

                                     AMONG:

                               700392 ALBERTA LTD.

                                       and

                            THE MAJOR SHAREHOLDERS OF

                               700392 ALBERTA LTD.

                                       and

                              PHELPS DRILLING LTD.

                                       and

                                UTI ENERGY CORP.

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                   <C>                                                                                      <C>
ARTICLE 1             INTERPRETATION.............................................................................1
         1.1          Defined Terms..............................................................................1
         1.2          Currency...................................................................................5
         1.3          Sections and Headings......................................................................5
         1.4          Number, Gender and Persons.................................................................5
         1.5          Accounting Principles......................................................................5
         1.6          Entire Agreement...........................................................................5
         1.7          Time of Essence............................................................................5
         1.8          Applicable Law.............................................................................6
         1.9          Successors and Assigns.....................................................................6
         1.10         Severability...............................................................................6
         1.11         Amendments and Waivers.....................................................................6
         1.12         Knowledge or Awareness.....................................................................7
         1.13         Schedules..................................................................................7

ARTICLE 2             PURCHASE AND SALE OF PURCHASED ASSETS......................................................7
         2.1          Purchased Assets...........................................................................7
         2.2          Excluded Assets............................................................................9
         2.3          Merchantability...........................................................................10

ARTICLE 3             PURCHASE PRICE............................................................................10
         3.1          Purchase Price............................................................................10
         3.2          Adjustments...............................................................................10
         3.3          Allocation of Purchase Price..............................................................12
         3.4          GST.......................................................................................12

ARTICLE 4             ASSUMPTION OF OBLIGATIONS.................................................................13
         4.1          Assumption of Obligations.................................................................13
         4.2          Exclusion of Liabilities..................................................................13

ARTICLE 5             REPRESENTATIONS AND WARRANTIES OF SELLER..................................................14
         5.1          Organization..............................................................................14
         5.2          Authorization.............................................................................14
         5.3          No Conflict...............................................................................14
         5.4          No Other Agreements to Purchase...........................................................15
         5.5          Sufficiency of Purchased Assets...........................................................15
         5.6          Title to Purchased Assets.................................................................15
         5.7          Leased Real Property......................................................................15
         5.8          Intellectual Property.....................................................................15
         5.9          Insurance.................................................................................16
         5.10         Material Contracts........................................................................16
         5.11         Compliance with Laws; Governmental Authorization..........................................18
         5.12         Consents and Approvals....................................................................18
         5.13         Financial Statements......................................................................18
         5.14         Books and Records.........................................................................19
         5.15         Absence of Changes........................................................................19
         5.16         Non-Arm's Length Transactions.............................................................20
         5.17         Litigation................................................................................20
</TABLE>

<PAGE>   3

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                   <C>                                                                                      <C>
         5.18         Residency.................................................................................20
         5.19         Environmental Matters.....................................................................20
         5.20         Employee Matters..........................................................................21
         5.21         Customers and Suppliers...................................................................21
         5.22         Y2K Compliance............................................................................21
         5.23         Full Disclosure...........................................................................22
         5.24         Brokers...................................................................................22

ARTICLE 6             REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................................22
         6.1          Organization..............................................................................22
         6.2          Authorization.............................................................................22
         6.3          No Conflict...............................................................................22
         6.4          Consents and Approvals....................................................................23
         6.5          Investment Canada.........................................................................23
         6.6          Brokers...................................................................................23

ARTICLE 7             SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................................23
         7.1          Survival of Representations and Warranties................................................23

ARTICLE 8             COVENANTS.................................................................................24
         8.1          Access to Purchased Business and Purchased Assets.........................................24
         8.2          Delivery of Books and Records.............................................................25
         8.3          Change of Name............................................................................25
         8.4          Conduct of Purchased Business Prior to Closing............................................25
         8.5          Third Party Consents and Novations........................................................26
         8.6          Financial Statement Cooperation...........................................................27
         8.7          Exclusivity...............................................................................27
         8.8          Update of Schedules.......................................................................27

ARTICLE 9             CONDITIONS OF CLOSING.....................................................................28
         9.1          Conditions of Closing in Favour of Purchaser..............................................28
         9.2          Conditions of Closing in Favour of Seller.................................................29

ARTICLE 10            CLOSING AND TRANSFER OF POSSESSION........................................................31
         10.1         Place of Closing..........................................................................31
         10.2         Closing Deliveries by Seller..............................................................31
         10.3         Closing Deliveries by Purchaser...........................................................31
         10.4         Further Assurances........................................................................32
         10.5         Transfer of Possession and Title..........................................................32
         10.6         Risk of Loss..............................................................................32

ARTICLE 11            INDEMNIFICATION...........................................................................32
         11.1         Indemnification by Seller and Major Shareholders..........................................32
         11.2         Indemnification by Purchaser and UTI......................................................33
         11.3         Limitations on Indemnification............................................................33
         11.4         Notice of Claim...........................................................................34
         11.5         Direct Claims.............................................................................35
         11.6         Third Party Claims........................................................................35
         11.7         Settlement of Third Party Claims..........................................................35
         11.8         Co-operation..............................................................................36
</TABLE>

<PAGE>   4

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                   <C>                                                                                      <C>
         11.9         Scope.....................................................................................36

ARTICLE 12            TERMINATION; REMEDIES; LIMITATIONS........................................................36
         12.1         Termination Agreement.....................................................................36
         12.2         Effect of Termination.....................................................................37

ARTICLE 13            MISCELLANEOUS.............................................................................37
         13.1         Notices...................................................................................37
         13.2         Consultation..............................................................................38
         13.3         Disclosure................................................................................38
         13.4         Best Efforts..............................................................................38
         13.5         Counterparts..............................................................................39
</TABLE>

                Schedule 1         -   Financial Statements
                Schedule 2         -   Drilling Rigs and Equipment
                Schedule 3         -   Drilling Contracts
                Schedule 4         -   Leased Real Property
                Schedule 5         -   Vehicles
                Schedule 6         -   Other Agreements
                Schedule 7         -   Licenses and Permits
                Schedule 8         -   Intellectual Property
                Schedule 9         -   Allocation of Purchase Price
                Schedule 10        -   Insurance Policies
                Schedule 11        -   Consents and Approvals
                Schedule 12        -    Permitted Encumbrances
                Schedule 13        -    Subsequent Changes
                Schedule 14        -    Legal and Regulatory Proceedings
                Schedule 15        -    Environmental Matters
                Schedule 16        -    Intentionally Left Blank
                Schedule 17        -    Major Customers
                Schedule 18        -    Opinion of Seller's Counsel
                Schedule 19        -    Opinion of Purchaser's and UTI's Counsel
                Schedule 20        -    Related Transactions
                Schedule 21        -    Bill of Sale

<PAGE>   5

                            ASSET PURCHASE AGREEMENT

         THIS AGREEMENT made the 24th day of March, 2000,

AMONG:

                      700392 ALBERTA LTD., a corporation existing under the laws
                      of Alberta (hereinafter referred to as the "Seller")

                                           - and -

                      THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF UNDER THE
                      HEADING "MAJOR SHAREHOLDERS", each being a shareholder of
                      700392 Alberta Ltd. (hereinafter referred to collectively
                      as the "Major Shareholders")

                                           - and -

                      PHELPS DRILLING LTD., a corporation existing under the
                      laws of Alberta (hereinafter referred to as the
                      "Purchaser")

                                           - and -

                      UTI ENERGY CORP., a corporation existing under the laws of
                      Delaware (hereinafter referred to as "UTI")

         THIS AGREEMENT WITNESSES THAT in consideration of the respective
covenants, agreements, representations, warranties and indemnities of the
Parties herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each Party), the Parties
agree as follows:

                                    ARTICLE 1
                                 INTERPRETATION

1.1      DEFINED TERMS

         For the purposes of this Agreement, unless the context otherwise
requires, the following terms shall have the respective meanings set out below
and grammatical variations of such terms shall have corresponding meanings:

         "ABCA" means the Business Corporations Act (Alberta) as in effect on
         the date hereof;

<PAGE>   6

                                       -2-

         "Affiliate" has the meaning given to that term in the ABCA;

         "Annual Financial Statements" means the financial statements of the
         Seller prepared by the Seller's accountants on a review engagement
         basis as at and for the financial year ended May 31, 1997 and
         thereafter prepared by the Seller for the financial years ended May 31,
         1998 and May 31, 1999, including the notes thereto, copies of which are
         annexed hereto as Part 1 of Schedule 1;

         "Associate" has the meaning given to that term in the ABCA;

         "Assumed Obligations" has the meaning set out in Section 4.1;

         "Bill of Sale" means the assignment, bill of sale and assumption
         agreement in substantially in the form attached as Schedule 21;

         "Business Day" means any day of the week, except Saturday, Sunday, or
         any statutory holiday in Calgary, Alberta or Los Angeles, California;

         "Cdn. $" or "$" means lawful currency of Canada;

         "Closing" means the closing of the purchase and sale contemplated
         hereby on the Closing Date;

         "Closing Date" means April 18, 2000 or such other date as the Seller
         and the Purchaser may mutually determine;

         "Contract" means any agreement, indenture, contract, lease, deed of
         trust, licence, option, instrument or other commitment, whether written
         or oral;

         "Effective Time" means 12:01 a.m. (Calgary time) on the Closing Date;

         "Encumbrance" means any encumbrance, lien, charge, hypothecation,
         pledge, mortgage, title retention agreement, security interest of any
         nature, adverse claim, exception, reservation, easement, right of
         occupation, any matter capable of registration against title,
         preferential arrangement or restriction of any kind including, without
         limitation, any restriction on the use, voting, transfer, receipt of
         income or other exercise of any attributes of ownership;

         "Environmental Laws" has the meaning set out in Subsection 5.19(a);

         "Excluded Assets" has the meaning set out in Section 2.2;

         "Excluded Liabilities" has the meaning set out in Section 4.2;

         "Final Accounting Statement" has the meaning set out in
          Subsection 3.2(c);

         "Financial Statements" means the Annual Financial Statements and the
         Interim Financial Statements;

<PAGE>   7
                                       -3-

         "GST" has the meaning set out in Subsection 3.4(a);

         "Intellectual Property" has the meaning set out in Subsection 2.1(l);

         "Interim Accounting Statement" has the meaning set out in Subsection
         3.2(b);

         "Interim Financial Statements" means the unaudited financial statements
         of the Seller as prepared by the Seller as at and for the nine month
         period commencing June 1, 1999 and ending February 29, 2000, copies of
         which are annexed hereto as Part 2 of Schedule 1;

         "Leased Real Property" means the real property that is used in the
         Purchased Business and leased by the Seller and which is described in
         Schedule 4;

         "Liabilities" means any and all indebtedness, liabilities and
         obligations, whether accrued or fixed, absolute or contingent, matured
         or unmatured or determined or determinable, including, without
         limitation, those arising under any Contract or law;

         "Losses" means, in respect of any matter, all claims, demands,
         proceedings, losses, damages, Liabilities, deficiencies, costs and
         expenses (including, without limitation, all legal and other
         professional fees and disbursements, interest, penalties and amounts
         paid in settlement) arising directly or indirectly as a consequence of
         such matter;

         "Management Agreement" means the Management Agreement dated September
         1, 1996 between the Seller and Phelps, as amended;

         "Party" means a party to this Agreement, and "PARTIES" means all of
         such parties;

         "Permitted Encumbrances" means any of the following Encumbrances:

                  (i)      servitudes, easements, restrictions, rights-of-way
                           and other similar rights in real property or any
                           interest therein, provided the same are not of such
                           nature as to materially adversely affect the use of
                           the property subject thereto;

                  (ii)     undetermined or inchoate liens, charges and
                           privileges incidental to current construction or
                           current operations and statutory liens, charges,
                           adverse claims, security interests or encumbrances of
                           any nature whatsoever claimed or held by any
                           governmental authority that relate to obligations not
                           due or delinquent;

                  (iii)    assignments of insurance provided to landlords (or
                           their mortgagees) pursuant to the terms of any lease,
                           and liens or rights reserved in any lease for rent or
                           for compliance with the terms of such lease and that
                           relate to obligations not due or delinquent;

<PAGE>   8
                                       -4-

                  (iv)     security given in the ordinary course of the
                           Purchased Business to any public utility, any
                           municipality or government or any statutory or public
                           authority and that relate to obligations not due or
                           delinquent;

                  (v)      the reservations in any original grants from the
                           Crown of any real property or interest therein and
                           statutory exceptions to title, which do not
                           materially detract from the value of the real
                           property concerned or materially impair its use in
                           the operation of the Purchased Business;

                  (vi)     the Encumbrances described in Part 1 of Schedule 12
                           which will continue after Closing; and

                  (vii)    the Encumbrances described in Part 2 of Schedule 12
                           which will be discharged by the Seller at the
                           Closing;

         "Person" means any individual, corporation, partnership, joint venture,
         trust, unincorporated association, or any other judicial entity or a
         government, state or agency or political subdivision thereof;

         "Phelps" means Phelps Drilling International Ltd., a corporation
         subsisting under the laws of Alberta;

         "Prime Rate" means the annual variable rate of interest quoted or
         published from time to time by Royal Bank of Canada at its main branch
         in Calgary, Alberta as the "prime rate" of interest charged by it for
         Canadian dollar loans made in Canada;

         "Purchase Price" has the meaning set out in Section 3.1;

         "Purchased Assets" has the meaning set out in Section 2.1;

         "Purchased Business" means the business carried on by the Seller
         consisting primarily of an oilfield drilling contract business;

         "Tax Act" means the Income Tax Act (Canada), as amended from time to
         time;

         "Time of Closing" means 2:00 p.m. (Calgary time) on the Closing Date,
         or such other time on the Closing Date as the Seller and the Purchaser
         may mutually determine;

         "US Exchange Act" means the United States Securities Exchange Act of
         1934, as amended from time to time;

         "US Securities Act" means the United States Securities Act of 1933, as
         amended from time to time;

         "UTI" means UTI Energy Corp., a corporation subsisting under the laws
         of the State of Delaware;

<PAGE>   9
                                       -5-

         "584022" means 584022 Alberta Ltd., a corporation subsisting under the
         laws of Alberta; and

         "592655" means 592655 Alberta Ltd., a corporation subsisting under the
         laws of Alberta.

1.2      CURRENCY

         Unless otherwise indicated, all dollar amounts in this Agreement are
expressed in Canadian funds.

1.3      SECTIONS AND HEADINGS

         The division of this Agreement into Articles, Sections and Subsections
and the insertion of headings are for convenience of reference only and shall
not affect the interpretation of this Agreement. Unless otherwise indicated, any
reference in this Agreement to an Article, Section, Subsection or Schedule
refers to the specified Article, Section or Subsection of or Schedule to this
Agreement.

1.4      NUMBER, GENDER AND PERSONS

         In this Agreement, words importing the singular number only shall
include the plural and vice versa, words importing gender shall include all
genders and words importing persons shall include individuals, corporations,
partnerships, associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities of any kind whatsoever.

1.5      ACCOUNTING PRINCIPLES

         Any reference in this Agreement to generally accepted accounting
principles refers to generally accepted accounting principles that have been
established in Canada, including those approved from time to time by the
Canadian Institute of Chartered Accountants or any successor body thereto.

1.6      ENTIRE AGREEMENT

         Except for the provisions of the Confidentiality Agreement dated June
16, 1999 between Phelps and UTI that survive the termination of this Agreement,
this Agreement constitutes the entire agreement between the Parties with respect
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.

1.7      TIME OF ESSENCE

         Time shall be of the essence of this Agreement.

<PAGE>   10

                                       -6-
1.8      APPLICABLE LAW

         This Agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the Parties shall
be governed by, the laws of the Province of Alberta and the federal laws of
Canada applicable therein, and each Party irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.

1.9      SUCCESSORS AND ASSIGNS

         (a) Subject to Subsection 1.9(b), no Party may assign any of its rights
             or obligations hereunder without the prior written consent of the
             other Parties.

         (b) The Purchaser may assign its right under this Agreement in whole or
             in part to any Affiliate of UTI; provided, however, that any such
             assignment shall not relieve either the Purchaser or UTI from any
             of its obligations to the Seller or the Major Shareholders
             hereunder. Notwithstanding any such assignment, if an event of
             default occurs under this Agreement, the Seller shall have the
             option to claim performance or payment of the obligations from the
             Purchaser, UTI or the assignee or transferee and to bring
             proceedings against any or all of them, provided that nothing
             herein shall entitle the Seller to receive duplicate performance or
             payment of the same obligation.

         (c) This Agreement shall enure to the benefit of and shall be binding
             on and enforceable by the Parties and, where the context so
             permits, their respective successors and permitted assigns.

1.10     SEVERABILITY

         If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct; provided that if the economic
or legal substance of the transactions contemplated hereby are affected in an
adverse manner to any Party by the severance of such provision, then the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.

1.11     AMENDMENTS AND WAIVERS

         No amendment or waiver of any provision of this Agreement shall be
binding on any Party unless consented to in writing by such Party. No waiver of
any provision of this Agreement shall constitute a waiver of any other provision
nor shall any waiver constitute a continuing waiver unless otherwise provided.

<PAGE>   11
                                       -7-

1.12     KNOWLEDGE OR AWARENESS

         In this Agreement, references to a Party's knowledge or awareness and
similar references mean the actual knowledge of the current officers and
employees of such Party who are primarily responsible for the matters in
question after such Persons have engaged in, or caused to be performed, a
reasonable review of the relevant files and records of such Party relating to
the Purchased Assets, but without any further inquiry and does not include
knowledge or awareness of any other Person.

1.13     SCHEDULES

         The following Schedules are attached to and form part of this
Agreement:

            Schedule 1        -     Financial Statements
            Schedule 2        -     Drilling Rigs and Equipment
            Schedule 3        -     Drilling Contracts
            Schedule 4        -     Leased Real Property
            Schedule 5        -     Vehicles
            Schedule 6        -     Other Agreements
            Schedule 7        -     Licenses and Permits
            Schedule 8        -     Intellectual Property
            Schedule 9        -     Allocation of Purchase Price
            Schedule 10       -     Insurance Policies
            Schedule 11       -     Consents and Approvals
            Schedule 12       -     Permitted Encumbrances
            Schedule 13       -     Subsequent Changes
            Schedule 14       -     Legal and Regulatory Proceedings
            Schedule 15       -     Environmental Matters
            Schedule 16       -     Intentionally Left Blank
            Schedule 17       -     Major Customers
            Schedule 18       -     Opinion of Seller's Counsel
            Schedule 19       -     Opinion of Purchaser's and UTI's Counsel
            Schedule 20       -     Related Transactions
            Schedule 21       -     Bill of Sale

                                    ARTICLE 2
                      PURCHASE AND SALE OF PURCHASED ASSETS

2.1      PURCHASED ASSETS

         Upon the terms and subject to the conditions of this Agreement, the
Seller shall sell, assign and transfer to the Purchaser and the Purchaser shall
purchase from the Seller, on the Closing Date, all of the property and assets of
the Seller (other than the Excluded Assets), whether real or personal, tangible
or intangible, of every kind and description and wherever situate (collectively,
the "PURCHASED ASSETS"), including, without limitation, the following:

         (a) Drilling Equipment. All drilling rigs and related assets and
             ancillary equipment together with all spare parts and related
             assets necessarily incidental to the use of

<PAGE>   12
                                       -8-

             the drilling rigs including, without limitation, the drilling
             equipment described in Part 1 of Schedule 2;

         (b) Drilling Contracts. All rights under drilling contracts under which
             Seller has agreed to provide drilling services to a third party
             including drilling contracts for which drilling services have been
             commenced by Seller prior to but have not been completed by Seller
             as of the Effective Time including, without limitation, the
             Contracts described in Schedule 3;

         (c) Leased Real Property. All rights (whether as lessee or lessor)
             under leases of real property, together with all leasehold
             improvements relating thereto including, without limitation, the
             Leased Real Property described in Schedule 4;

         (d) Office Equipment. All furniture, furnishings and accessories,
             computer equipment (hardware and software, including all rights
             under licences and other agreements relating thereto), telephones,
             cellular phones, office equipment and office supplies together with
             all service, operational and other manuals and all replacement
             parts and tools with respect to the foregoing including, without
             limitation, all office equipment described in Part 2 of Schedule 2;

         (e) Other Machinery and Equipment. All machinery and shop equipment,
             hand tools and handling equipment including, without limitation,
             the machinery and equipment described in Part 3 of Schedule 2;

         (f) Vehicles. All trucks, cars and other vehicles including, without
             limitation, the vehicles described in Schedule 5;

         (g) Leases of Personal Property. All rights under vehicle and equipment
             leases, rental equipment contracts and office equipment leases and
             Contracts including, without limitation, the leases described in
             Schedules 2 and 5;

         (h) Inventories. All inventories including, without limitation, raw
             materials and replacement parts;

         (i) Prepaid Expenses. All prepaid expenses;

         (j) Other Agreements. All rights under orders or Contracts for the
             provision of goods or services (whether as buyer or seller),
             distribution and agency agreements, and other Contracts not
             otherwise referred to in this Section 2.1 including, without
             limitation, the Contracts described in Schedule 6;

         (k) Licences and Permits. All licences, permits, approvals, consents,
             registrations, certificates and other authorizations required to
             carry on the Purchased Business in the ordinary course including,
             without limitation, those described in Schedule 7;

         (l) Intellectual Property. All trade or brand names, business names,
             trade marks, trade mark registrations and applications, service
             marks, service mark

<PAGE>   13

                                       -9-

             registrations and applications, copyrights, copyright registrations
             and applications, patents, patent registrations and applications
             and other patent rights (including any patents issued on such
             applications or rights), trade secrets, proprietary manufacturing
             information and know-how, equipment and parts lists and
             descriptions, instruction manuals, inventions, inventors' notes,
             research data, unpatented blue prints, drawings and designs,
             formulae, processes, technology and other intellectual property,
             together with all rights under licences, registered user
             agreements, technology transfer agreements and other agreements or
             instruments relating to any of the foregoing (collectively,
             "INTELLECTUAL PROPERTY") including, without limitation, the
             trademarks, copyrights, patents, licences and agreements described
             in Schedule 8;

         (m) Books and Records. All books and records (other than those required
             by law to be retained by the Seller, copies of which will be made
             available to the Purchaser), including, without limitation,
             customer lists, sales records, price lists and catalogues, sales
             literature, advertising material, manufacturing data, production
             records, employee manuals, personnel records, supply records,
             inventory records and correspondence files (together with, in the
             case of any such information that is stored electronically, the
             media on which the same is stored);

         (n) Telephone Numbers. The right to the use of the Seller's telephone
             and cellular numbers and facsimile numbers to the extent permitted
             by the appropriate telephone authority; and

         (o) Goodwill. All goodwill, together with the exclusive right for the
             Purchaser to represent itself as carrying on the Purchased Business
             in succession to the Seller and the right to use any words
             indicating that the Purchased Business is so carried on.

2.2      EXCLUDED ASSETS

         Notwithstanding the provisions of Section 2.1, the Purchased Assets
shall exclude the following property and assets of the Seller as determined at
the Effective Time (collectively, the "Excluded Assets"):

         (a) Cash. All cash on hand or in banks or other depositories;

         (b) Accounts Receivable. All accounts receivable, trade accounts, notes
             receivable, and book debts due or accruing due in respect of
             services provided by the Seller or Phelps on behalf of the Seller
             prior to the Effective Time and which have been invoiced by the
             Seller or by Phelps prior to the Effective Time;

         (c) Work in Progress. All work in progress consisting of services
             provided by the Seller or Phelps prior to the Effective Time and
             which have not been invoiced by the Seller or by Phelps as of the
             Effective Time;

         (d) Income Taxes. All income tax payments and/or installments paid by
             the Seller and the right to receive any refund of income taxes paid
             by the Seller;

<PAGE>   14

                                      -10-

         (e) Provincial Sales Taxes. All British Columbia provincial sales tax
             payments and/or installments paid by the Seller and the right to
             receive any refund of provincial sales taxes paid by the Seller;

         (f) GST. All GST payments and/or installments paid by the Seller and
             the right to receive any refund of GST paid by the Seller;

         (g) Bank Accounts. All bank accounts of the Seller;

         (h) Management Agreements. The interest of Seller in the Management
             Agreement;

         (i) Intercorporate Indebtedness. All amounts due or accruing due to or
             by the Seller from or to Phelps including, without limitation, any
             amounts due or accruing due from or to Phelps under the Management
             Agreement; and

         (j) Litigation. Any and all payments payable or to become payable to
             the Seller in regard to any actions, suits or proceedings.

2.3      MERCHANTABILITY

         Notwithstanding anything to the contrary contained in this Agreement,
the Purchaser and UTI acknowledge that the Purchaser will acquire the Purchased
Assets on an "as is" "where is" basis and that the Seller does not make any
representation or warranty as to the fitness for purpose, condition or
merchantability of the Purchased Assets or any of them, except as expressly
provided otherwise in Article 5. Each of the Purchaser and UTI acknowledge and
agree that they have relied and shall rely solely on their own appraisal and
estimate as to the quantum of value of the Purchased Assets and the Purchased
Business and that they have relied and shall rely on their own analysis related
thereto, notwithstanding anything to the contrary contained in this Agreement.

                                    ARTICLE 3
                                 PURCHASE PRICE

3.1      PURCHASE PRICE

         Subject to the adjustments provided for in Section 3.2, the aggregate
purchase price (the "PURCHASE PRICE") payable by the Purchaser to the Seller for
the Purchased Assets shall be Cdn. $6,217,140, payable by delivery of a bank
draft or wire transfer at Closing.

3.2      ADJUSTMENTS

         (a) Apportionment of Benefits and Obligations. All benefits and
             obligations of any kind and nature accruing, payable or paid in
             respect of the Purchased Assets shall be apportioned between the
             Seller and the Purchaser as of the Effective Time.

         (b) Interim Accounting. An interim accounting and adjustment shall be
             carried out by the Seller and a statement (the "INTERIM ACCOUNTING
             STATEMENT") shall be

<PAGE>   15
                                      -11-

             prepared and delivered by the Seller to the Purchaser at least
             three Business Days prior to the Closing Date based on the Seller's
             good faith estimate of all adjustments to be made to the Purchase
             Price as of the Effective Time. The Purchase Price shall be
             adjusted on the Closing Date to reflect the adjustments provided
             for in the Interim Accounting Statement. At its initiative or upon
             the reasonable request of the Seller, the Purchaser agrees to
             provide subsequent Interim Accounting Statement(s) after the
             Closing Date and before the Final Accounting Statement is provided,
             and the Seller and the Purchaser agree to make all reasonable
             efforts to agree upon these subsequent interim adjustments and to
             provide for the prompt payment of same, together with interest
             thereon at the Prime Rate from and including the Closing Date to
             but excluding the date of payment.

         (c) Final Accounting. Following Closing, a final accounting shall be
             carried out by the Purchaser and a statement (the "FINAL ACCOUNTING
             STATEMENT") shall be prepared and delivered by the Purchaser to the
             Seller within nine (9) months after the Closing Date. Neither the
             Seller nor the Purchaser shall be obligated to make any further
             adjustments to the items provided for in the Final Accounting
             Statement after the Final Accounting Statement is approved or is
             deemed to have been approved.

         (d) Approval of Final Accounting Statement. The Seller shall have a
             period of 30 days from the date it receives the Final Accounting
             Statement in which to review the same. For the purpose of such
             review, the Purchaser agrees to permit the Seller and its
             authorized representatives to examine all working papers, schedules
             and other documentation used or prepared by the Purchaser in
             connection with the preparation of the Final Accounting Statement.
             If no objection to the Final Accounting Statement is given to the
             Purchaser by the Seller within such 30 day period in accordance
             with the provisions of Subsection 3.2(e), the Final Accounting
             Statement shall be deemed to have been approved as of the last day
             of such 30 day period.

         (e) Objection to Final Accounting Statement. If the Seller objects to
             the Final Accounting Statement within the 30 day period referenced
             in Subsection 3.2(d) by giving written notice to the Purchaser
             setting out in reasonable detail the nature of such objection, the
             Seller and Purchaser agree to attempt to resolve the matters in
             dispute within 15 days from the date of giving such notice. If all
             matters in dispute are resolved by the Seller and the Purchaser,
             the Final Accounting Statement shall be modified to the extent
             required to give effect to such resolution and shall be deemed to
             have been approved as of the date of such resolution.

         (f) Dispute Resolution. If the Seller and Purchaser cannot resolve all
             matters in dispute within the 15 day period referenced in
             Subsection 3.2(e), all unresolved matters shall be submitted for
             resolution to a single arbitrator chosen by the Seller and the
             Purchaser, or failing agreement, chosen by a judge of the Court of
             Queen's Bench of Alberta (the "ARBITRATOR"). The Arbitrator shall
             be given access to all materials and information reasonably
             requested by it for such

<PAGE>   16

                                      -12-

             purpose. The rules and procedures to be followed in the arbitration
             proceedings shall be determined by the Arbitrator in its
             discretion. The Arbitrator's determination of all such matters
             shall be final and binding and shall not be subject to appeal by
             any Party. The fees and expenses of the Arbitrator shall be borne
             equally by the Seller and the Purchaser or in such other proportion
             as may be determined by the Arbitrator in its sole discretion. The
             Final Accounting Statement shall be modified to the extent required
             to give effect to the Arbitrator's determination and shall be
             deemed to have been approved as of the date of such determination.

         (g) Payment of Adjusted Amount. Any adjustments to the Purchase Price
             shall be settled by the indebted Party by cash payment to the
             recipient Party within 5 Business Days after the Final Accounting
             Statement is deemed to have been approved in accordance with this
             Section 3.2, together with interest thereon at the Prime Rate from
             and including the Closing Date to but excluding the date of
             payment.

3.3      ALLOCATION OF PURCHASE PRICE

         The Seller and the Purchaser agree to allocate the Purchase Price among
the Purchased Assets in accordance with Schedule 9 and to report the sale and
purchase of the Purchased Assets for all federal, provincial and local tax
purposes in a manner consistent with such allocation.

3.4      GST

         (a) The Parties acknowledge that the Purchase Price is exclusive of the
             Goods and Services Tax ("GST") as provided for in the Excise Tax
             Act (Canada).

         (b) Each of the Seller and the Purchaser represent and warrant to the
             other that it is a registrant for GST purposes and will continue to
             be a registrant at the Closing Date in accordance with the
             provisions of the Excise Tax Act (Canada) and that each of their
             GST registration numbers is:

                  Seller    - BN 89704 7999 RT0001
                  Purchaser - o

         (c) The Seller represents and warrants to the Purchaser that the sale
             of the Purchased Assets is a sale of a business or part of a
             business carried on by the Seller at the time of the sale for the
             purposes of the Excise Tax Act (Canada), and the Purchaser
             represents and warrants to the Seller that the acquisition of the
             Purchased Assets represents the acquisition of all or substantially
             all of the property that can reasonably be regarded as being
             necessary for the Purchaser to be capable of carrying on the
             Seller's business or such part of the Seller's business as a
             business.

         (d) The Seller and the Purchaser shall jointly prepare and execute the
             election prescribed by subsection 167(1) of the Excise Tax Act
             (Canada) and the

<PAGE>   17
                                      -13-

             Purchaser shall file such election in the manner and within the
             time prescribed thereto.

         (e) Pursuant to paragraph Subsection 3.4(d) above, and subsection
             167(1.1) of the Excise Tax Act (Canada), no GST is payable by the
             Purchaser to the Seller in respect of the sale and purchase of the
             Purchased Assets.

                                    ARTICLE 4
                            ASSUMPTION OF OBLIGATIONS

4.1      ASSUMPTION OF OBLIGATIONS

         Upon the terms and subject to the conditions of this Agreement, the
Purchaser shall assume, pay, satisfy, discharge, perform and fulfill, on the
Closing Date, all prospective obligations of the Seller which are required to be
performed on or after the Effective Time (the "ASSUMED OBLIGATIONS") under:

         (a) the Contracts described in Schedules 2 through 6 inclusive and
             Schedule 8;

         (b) the licenses, permits, approvals, consents, registrations,
             certificates and other authorizations described in Schedule 7;

         (c) any other Contracts entered into by the Seller in the ordinary
             course consistent with past business practice and generally
             accepted industry practice for the provision of goods or services
             by a third party to the Seller on normal commercial terms and which
             will not require an aggregate expenditure in excess of $100,000;
             and

         (d) any other Contracts entered into by the Seller in the ordinary
             course consistent with past business practice and generally
             accepted industry practice for the provision of goods or services
             by the Seller to a third party on normal commercial terms and which
             will not result in the receipt of revenue in excess of an aggregate
             of $50,000.

4.2      EXCLUSION OF LIABILITIES

         Except as set forth in Section 4.1, the Purchaser shall not be
obligated to pay or perform or otherwise be responsible for any Liabilities of
the Seller including any Liabilities or claims of any kind or nature arising out
of or related to the operation of the Purchased Business, the Seller or the
Purchased Assets accrued or incurred or caused by any act, condition, or event
existing or arising on or prior to the Effective Time or relating to the
Excluded Assets (the "EXCLUDED LIABILITIES").

<PAGE>   18
                                      -14-

                                    ARTICLE 5
                    REPRESENTATIONS AND WARRANTIES OF SELLER

         The Seller represents and warrants to the Purchaser as follows:

5.1      ORGANIZATION

         The Seller is a corporation validly subsisting under the laws of the
Province of Alberta and has the corporate power to carry on the Purchased
Business as now being conducted by it and to enter into this Agreement and to
perform its obligations hereunder.

5.2      AUTHORIZATION

         This Agreement has been duly authorized, executed and delivered by the
Seller and the Major Shareholders and is a legal, valid and binding obligation
of the Seller and the Major Shareholders, enforceable against them by the
Purchaser in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only in the
discretion of a court of competent jurisdiction.

5.3      NO CONFLICT

         The execution and delivery of this Agreement by the Seller and the
consummation of the transactions herein provided for will not result in:

         (a) the breach or violation of any of the provisions of, or constitute
             a default under, or conflict with:

             (i)   any provision of the constating documents or by-laws or
                   resolutions of the board of directors (or any committee
                   thereof) or shareholders of the Seller;

             (ii)  any judgment, decree, order or award of any court,
                   governmental body or arbitration having jurisdiction over the
                   Seller;

             (iii) any licence, permit, approval, consent or authorization held
                   by the Seller or necessary to the operation of the Purchased
                   Business except as set forth in Schedule 11; or

             (iv)  any applicable law, statute, ordinance, regulation or rule;

         (b) a default under any Contract to which the Seller is a party or by
             which it is or any of the Purchased Assets are bound, except for
             the notifications, consents and approvals described in Part 2 of
             Schedule 11; or

         (c) the creation or imposition of any Encumbrance on any of the
             Purchased Assets.

<PAGE>   19

                                      -15-

5.4      NO OTHER AGREEMENTS TO PURCHASE

         No Person other than the Purchaser has any written or oral agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase or acquisition from
the Seller of any of the Purchased Assets.

5.5      SUFFICIENCY OF PURCHASED ASSETS

         The Purchased Assets owned or leased by the Seller are sufficient to
carry on the Purchased Business in a manner consistent with the past business
practices of the Seller. All the tangible Purchased Assets are situate at the
locations set out in Schedules 2 and 5.

5.6      TITLE TO PURCHASED ASSETS

         The Seller is the absolute legal and beneficial owner of and has good
and marketable title to, or in the case of leased, subleased, licensed or
sublicensed Purchased Assets, valid and subsisting leasehold interests or
licenses as the case may be in, all of the Purchased Assets, free and clear of
all Encumbrances, except Permitted Encumbrances, and is exclusively entitled to
possess and dispose of the Purchased Assets (subject only to the necessity for
obtaining the consents and approvals described in Schedule 11).

5.7      LEASED REAL PROPERTY

         The Seller is not the beneficial or registered owner of and has not
agreed to acquire any real property or any interest in any real property other
than the Leased Real Property described in Schedule 4. The Seller is not a party
to any lease or agreement to lease in respect of any real property, whether as
lessor or lessee, other than the leases (the "Leases") described in Schedule 4.
Schedule 4 sets out the parties to each of the Leases, their dates of execution
and expiry dates, any options to renew, the locations of the leased lands and
premises and the rent payable thereunder. Except as described in Schedule 4, the
Seller occupies the Leased Property and has the exclusive right to occupy and
use the Leased Property. Each of the Leases is in good standing and in full
force and effect, and neither the Seller nor any other party thereto is in
breach of any covenants, conditions or obligations contained therein. The Seller
has provided to the Purchaser a true and complete copy of each Lease and all
amendments thereto referred to in Schedule 4.

5.8      INTELLECTUAL PROPERTY

         Schedule 8 sets out all registered or pending Intellectual Property
(including particulars of registration or application for registration) and all
licences, registered user agreements and other Contracts that comprise or relate
to Intellectual Property. The Intellectual Property comprises all trade or brand
names, business names, trade marks, service marks, copyrights, patents, trade
secrets, know-how, inventions, designs and other industrial or intellectual
property necessary to conduct the Purchased Business. The Seller is the
beneficial owner of the Intellectual Property, free and clear of all
Encumbrances, and is not a party to or bound by any Contract or any other
obligation whatsoever that limits or impairs its ability to sell, transfer,
assign or convey, or that otherwise affects, the Intellectual Property. No
Person has been granted

<PAGE>   20
                                      -16-

any interest in or right to use all or any portion of the Intellectual Property.
To the knowledge of the Seller and the Major Shareholders, the conduct of the
Purchased Business does not infringe upon the industrial or intellectual
property rights, domestic or foreign, of any other Person. Neither the Seller
nor the Major Shareholders are aware of a claim of any infringement or breach of
any industrial or intellectual property rights of any other Person, nor have the
Seller or the Major Shareholders received any notice that the conduct of the
Purchased Business, including the use of the Intellectual Property, infringes
upon or breaches any industrial or intellectual property rights of any other
Person, and the Seller and the Major Shareholders have no knowledge of any
infringement or violation of any of the Seller's rights in the Intellectual
Property. Neither the Seller nor the Major Shareholders are aware of any state
of facts that casts doubt on the validity or enforceability of any of the
Intellectual Property. The Seller has provided to the Purchaser a true and
complete copy of all Contracts and amendments thereto that comprise or relate to
the Intellectual Property referred to in Schedule 8.

5.9      INSURANCE

         The Seller has insured the Purchased Assets set forth in Schedules 2, 4
and 5 in accordance with the Seller's normal business practices against loss or
damage by all insurable hazards or risks and such insurance coverage will be
continued in full force and effect up to and including the Time of Closing.
Schedule 10 sets out all insurance policies (specifying the insurer, the amount
of the coverage, the type of insurance, the policy number and any pending claims
thereunder) maintained by the Seller on the Purchased Assets set forth in
Schedules 2, 4 and 5 as of the date hereof and true and complete copies of the
most recent inspection reports, if any, received from insurance underwriters or
others as to the condition of the Purchased Assets. The Seller is not in default
with respect to any of the provisions contained in any such insurance policy and
has not failed to give any notice or present any claim under any such insurance
policy, in due and timely fashion. The Seller has provided to the Purchaser a
true copy of each insurance policy referred to in Schedule 10.

5.10     MATERIAL CONTRACTS

         The Schedules describe each of the following material subsisting
Contracts relating to the Purchased Business or Purchased Assets to which the
Seller is a party or by which it or any of the Purchased Assets is bound:

         (a) any Contract for the purchase or supply of materials, supplies,
             equipment or services involving more than $50,000 in respect of any
             one such Contract or more than $100,000 in respect of all such
             Contracts;

         (b) any employment, consulting or management Contract or any other
             Contract with any officer, employee or consultant, other than oral
             Contracts of indefinite hire terminable by the Seller without cause
             or reasonable notice;

         (c) any profit sharing, bonus, stock option, pension, retirement,
             disability, stock purchase, medical, dental, hospitalization,
             insurance or similar plan or agreement providing benefits to any
             current or former director, officer, employee or consultant;

<PAGE>   21

                                      -17-

         (d) any Encumbrance registered against any of the Purchased Assets or a
             leasing transaction of the type required to be capitalized in
             accordance with generally accepted accounting principles;

         (e) any distributor, sales, advertising, agency or manufacturer's
             representative Contract;

         (f) any collective bargaining agreement or other Contract with any
             labour union;

         (g) any Contracts for capital expenditures in excess of $50,000 in
             respect of any one such Contract or in excess of $100,000 in the
             aggregate in respect of all such Contracts;

         (h) any Contract for the sale of any assets;

         (i) any Contract pursuant to which the Seller is a lessor of any
             machinery, equipment, motor vehicles, office furniture, fixtures or
             other personal property;

         (j) any non-competition or similar Contract;

         (k) any licence, franchise or other agreement that relates in whole or
             in part to any Intellectual Property;

         (l) any agreement of guarantee, support, indemnification, assumption or
             endorsement of, or any other similar commitment with respect to,
             the obligations, Liabilities (whether accrued, absolute, contingent
             or otherwise) or indebtedness of any other Person, except for
             cheques endorsed for collection in the ordinary course of the
             Purchased Business, which obligations, Liabilities or indebtedness
             the Purchaser shall be obligated to pay, assume or perform or
             otherwise be responsible;

         (m) any Contract that expires, or may expire if the same is renewed or
             extended at the option of any Person other than the Seller, more
             than one year after the date of this Agreement;

         (n) any Contract entered into by the Seller other than in the ordinary
             course of the Purchased Business; or

         (o) any other Contract which is material to the Seller or the absence
             of which would have a material adverse effect on the Purchased
             Business or the Purchased Assets.

Except as described in the Schedules, the Seller has performed all of the
obligations required to be performed by it and is entitled to all benefits
under, and is not in default or alleged to be in default in respect of, any
Contract relating to the Purchased Business or Purchased Assets to which it is a
party or by which it is bound; the Seller has not received payment under any
Contract for any goods or services not yet provided by the Seller under such
Contract; all such Contracts are in good standing and in full force and effect,
and no event, condition or occurrence exists that, after notice or lapse of time
or both, would constitute a default under any of the
<PAGE>   22

                                      -18-

foregoing. The Seller has provided to the Purchaser a true and complete copy of
each Contract listed or described in the Schedules and all amendments thereto,
except for oral Contracts.

5.11     COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATION

         To the knowledge of the Seller, the Seller has complied in all material
respects with all laws, statutes, ordinances, regulations, rules, judgments,
decrees or orders applicable to the Purchased Business or the Purchased Assets.
Schedule 7 sets out a complete and accurate list of all licences, permits,
approvals, consents, certificates, registrations and authorizations (whether
governmental, regulatory or otherwise) (the "LICENCES") held by or granted to
the Seller, and there are no other licences, permits, approvals, consents,
certificates, registrations or authorizations necessary to carry on the
Purchased Business or to own or lease any of the Purchased Assets. Each Licence
is valid, subsisting, in good standing, and transferable or assignable to the
Purchaser, except as noted otherwise in Schedule 7. The Seller has received no
notice of nor is the Seller in default or breach of any Licence and, to the
knowledge of the Seller, no proceeding is pending or threatened to revoke or
limit any Licence. The Seller has provided to the Purchaser a true and complete
copy of each Licence and all amendments thereto referred to in Schedule 7.

5.12     CONSENTS AND APPROVALS

         (a) Regulatory Consents. There is no requirement to make any filing
             with, give any notice to or to obtain any licence, permit,
             certificate, registration, authorization, consent or approval of,
             any governmental or regulatory authority as a condition to the
             lawful consummation of the transactions contemplated by this
             Agreement, except for the filings, notifications, licences,
             permits, certificates, registrations, consents and approvals
             described in Part 1 of Schedule 11 or that relate solely to the
             identity of the Purchaser or the nature of any business carried on
             by the Purchaser.

         (b) Third Party Consents. There is no requirement under any Contract
             relating to the Purchased Business or Purchased Assets to which the
             Seller is a party or by which it is bound to give any notice to, or
             to obtain the consent or approval of, any party to such agreement,
             instrument or commitment relating to the consummation of the
             transactions contemplated by this Agreement, except for the
             notifications, consents and approvals described in Part 2 of
             Schedule 11.

5.13     FINANCIAL STATEMENTS

         The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior periods, are correct and complete, and present fairly the assets,
Liabilities and financial condition of the Seller as at the respective dates of
the Financial Statements and the sales, earnings and results of operations of
the Seller for the respective periods covered by the Financial Statements. The
Seller has provided to the Purchaser true and complete copies of the Financial
Statements.

<PAGE>   23

                                      -19-

5.14     BOOKS AND RECORDS

         The books and records of the Seller fairly and correctly set out and
disclose, in accordance with Canadian generally accepted accounting principles,
the financial position of the Seller as at the date hereof, and all financial
transactions of the Seller relating to the Purchased Business have been
accurately recorded in such books and records.

5.15     ABSENCE OF CHANGES

         Since September 1, 1999, the Purchased Business has been carried on in
the ordinary and normal course consistent with the Seller's past business
practice and, except as set forth in the Financial Statements or as described in
Schedule 13 there has not been:

         (a) any material adverse change in the condition (financial or
             otherwise), assets, Liabilities, operations, earnings, business or
             prospects of the Purchased Business;

         (b) any damage, destruction or loss (whether or not covered by
             insurance) affecting Purchased Assets having a value in excess of
             $100,000 in each instance or $200,000 in the aggregate;

         (c) any Liability or Contract incurred or entered into by the Seller in
             connection with the Purchased Business, other than those incurred
             or entered into in the ordinary and normal course of the Purchased
             Business and consistent with the Seller's past business practice;

         (d) any labour trouble adversely affecting the Purchased Business or
             the Purchased Assets;

         (e) any sale, assignment, transfer, licenses, disposition, pledge,
             mortgage or granting of a security interest or other Encumbrance on
             or over any Purchased Assets;

         (f) any write-down or write-off of any inventory, accounts or notes
             receivable or any portion thereof relating to the Purchased
             Business in amounts exceeding $50,000 in each instance or $100,000
             in the aggregate;

         (g) any amendment, termination or waiver of any rights of value to the
             Purchased Business in amounts exceeding $100,000 in each instance
             or $200,000 in the aggregate;

         (h) any capital expenditures or commitments relating to the Purchased
             Business or Purchased Assets in excess of $200,000 in the
             aggregate;

         (i) any change in the maintenance procedures followed by the Seller;

         (j) any change in the accounting or tax practices followed by the
             Seller; or

         (k) any change in the credit terms offered to customers of, or by
             suppliers to, the Purchased Business.

<PAGE>   24

                                      -20-

5.16     NON-ARM'S LENGTH TRANSACTIONS

         (a) Except for any Contracts which do not form part of the Purchased
             Assets or the Assumed Obligations, the Seller is not party to any
             Contract with any officer, director, employee, shareholder or any
             other Person not dealing at arm's length with the Seller (within
             the meaning of the Tax Act) or any Affiliate or Associate of any of
             the foregoing.

         (b) No officer, director or shareholder of the Seller and no entity
             that is an Affiliate or Associate of one or more of such
             individuals:

             (i)  owns, directly or indirectly, any interest in (except for
                  shares representing less than five per cent of the outstanding
                  shares of any class or series of any publicly traded company),
                  or is an officer, director, employee or consultant of, any
                  Person that is, or is engaged in business as, a competitor of
                  the Purchased Business or a lessor, lessee, supplier,
                  distributor, sales agent or customer of the Purchased
                  Business; or

             (ii) owns, directly or indirectly, in whole or in part, any
                  property that the Seller uses in the operation of the
                  Purchased Business.

5.17     LITIGATION

         Except as described in Schedule 14, there are no actions, suits or
proceedings (whether or not purportedly on behalf of the Seller) pending or, to
the best knowledge of the Seller, threatened against or affecting the Seller at
law or in equity or before or by any federal, provincial, municipal or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before or by an arbitrator or
arbitration board. The Seller is not aware of any ground on which any such
action, suit or proceeding might be commenced with any reasonable likelihood of
success.

5.18     RESIDENCY

         The Seller is a resident of Canada for the purposes of the Tax Act.

5.19     ENVIRONMENTAL MATTERS

         (a) Except as described in Schedule 15, the Seller has been and is in
             compliance in all material respects with all applicable federal,
             provincial, municipal and local laws, statutes, ordinances, by-laws
             and regulations, and other directives and decisions rendered by any
             ministry, department or administrative or regulatory agency
             ("ENVIRONMENTAL LAWS") relating to the protection of the
             environment, occupational health and safety or the manufacture,
             processing, distribution, use, treatment, storage, disposal,
             transport or handling of any pollutants, contaminants, chemicals or
             industrial toxic or hazardous wastes or substances.

<PAGE>   25

                                      -21-

         (b) The Seller has never received any notice of nor been prosecuted for
             non-compliance with any Environmental Laws with respect to the
             Purchased Business or the Purchased Assets.

         (c) The Seller has delivered to the Purchaser a true and complete copy
             of all environmental audits, evaluations, assessments, studies or
             tests relating to the Purchased Business or Purchased Assets of
             which it is aware.

5.20     EMPLOYEE MATTERS

         The Seller has no employees and has not entered into any consulting or
employment contracts or similar contracts.

5.21     CUSTOMERS AND SUPPLIERS

         (a) Schedule 17 sets out the major customers of the Purchased Business,
             being those customers of the Purchased Business accounting for more
             than 10% of revenue during either the period January 1, 1997 to
             February 29, 2000, or the last 12 calendar months. To the knowledge
             of the Seller there has been no termination or cancellation of, and
             no modification or change in, the Seller's business relationship
             with any major customer or group of major customers. The Seller has
             no reason to believe that the benefits of any relationship with any
             of the major customers or suppliers of the Purchased Business will
             not continue after the Closing Date in substantially the same
             manner as prior to the date of this Agreement.

         (b) Except as set forth in Schedule 17, the Seller has not derived any
             of its revenues during its last fiscal year from sales to, or
             within, the United States or from services performed in the United
             States.

5.22     Y2K COMPLIANCE

         To the knowledge of the Seller, all of the Purchased Assets are Year
2000 Compliant to the extent applicable. For the purposes of this Agreement,
"Year 2000 Compliant" means that:

         (a) neither the performance nor the functionality of the Purchased
             Assets will be affected by dates prior to, during, or after the
             year 2000, or by any changes to the field configuration which
             contains the date information within any part of the Purchased
             Assets caused by the advent of the year 2000;

         (b) the Purchased Assets are and will be capable of accurate and timely
             processing, storage, inputting, outputting, displaying, sorting and
             sequencing of any data or input which includes an indication of or
             reference to a date; and

         (c) the Purchased Assets are and will be capable of accurate and timely
             identification, manipulation, and calculation using dates outside
             the 1900 - 1999 year range.

<PAGE>   26

                                      -22-

5.23     FULL DISCLOSURE

         To the knowledge of the Seller, there are no facts pertaining to the
Seller, the Purchased Business or the Purchased Assets which could reasonably be
expected to have a material adverse effect on the Purchased Business or the
Purchased Assets and which have not been disclosed in this Agreement or the
Schedules.

5.24     BROKERS

         No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Seller.

                                    ARTICLE 6
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

                  The Purchaser and UTI, jointly and severally, represent and
warrant to the Seller as follows:

6.1      ORGANIZATION

         The Purchaser is a corporation validly subsisting under the laws of the
Province of Alberta and has the corporate power to enter into this Agreement and
to perform its obligations hereunder. UTI is a corporation validly subsiding
under the laws of the State of Delaware and has the corporate power to enter
into this Agreement and to perform its obligations hereunder.

6.2      AUTHORIZATION

         This Agreement has been duly authorized, executed and delivered by each
of the Purchaser and UTI and are legal, valid and binding obligations of the
Purchaser and UTI enforceable against the Purchaser and UTI, as the case may be,
by the Seller in accordance with the terms of this Agreement, except as such
enforcement may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies may only be
granted in the discretion of a court of competent jurisdiction.

6.3      NO CONFLICT

         The execution and delivery of this Agreement by each of the Purchaser
and UTI and the consummation of the transactions herein provided for will not
result in the violation of any provision of, or constitute a default under, or
conflict with or cause the acceleration of any obligation of the Purchaser or
UTI under:

         (a) any provision of the constating documents or by-laws or resolutions
             of the board of directors (or any committee thereof) or
             shareholders of the Purchaser or UTI;

         (b) any judgment, decree, order or award of any court, governmental
             body or arbitrator having jurisdiction over the Purchaser or UTI;

<PAGE>   27

                                      -23-

         (c) any applicable law, statute, ordinance, regulation or rule; or

         (d) any Contract to which the Purchaser or UTI is a party or by which
             the Purchaser or UTI are bound.

6.4      CONSENTS AND APPROVALS

         (a) Regulatory Consents. There is no requirement for either the
             Purchaser or UTI to make any filing with, give any notice to or
             obtain any licence, permit, certificate, registration,
             authorization, consent or approval of, any government or regulatory
             authority as a condition to the lawful consummation of the
             transactions contemplated by this Agreement and that would
             materially adversely affect the Purchaser's or UTI's ability to
             consummate the transactions contemplated by this Agreement.

         (b) Third Party Consents. Except for notices to UTI's lenders and any
             applicable stock exchange, there is no requirement under any
             Contract to which either the Purchaser or UTI is a party or by
             which either the Purchaser or UTI is bound, to give notice to,
             obtain the consent or approval of, any party to such Contract
             relating to the transactions contemplated by this Agreement that
             would materially adversely affect the Purchaser's or UTI's ability
             to consummate the transactions contemplated by this Agreement.

6.5      INVESTMENT CANADA

         The Purchaser will comply with the Investment Canada Act and the
Competition Act to the extent, if any, applicable to the transactions referred
to in this Agreement including, without limitation, the related transactions
contemplated by the agreements listed in Schedule 20.

6.6      BROKERS

         No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
either the Purchaser or UTI.

                                    ARTICLE 7
                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES

7.1      SURVIVAL OF REPRESENTATIONS AND WARRANTIES

         Notwithstanding the Closing nor any investigation made by or on behalf
of the Party entitled to the benefit thereof, the representations and warranties
contained in this Agreement and in all certificates and documents delivered
pursuant to or contemplated by this Agreement shall survive the Closing of the
transactions contemplated hereby and shall not be merged in any conveyances or
other document provided pursuant to this Agreement, provided that no claim

<PAGE>   28

                                      -24-

may be made by one Party against any other Party, pursuant to or based upon any
of these representations and warranties, unless written notice thereof with
reasonable particulars shall have been provided by such Party to the other Party
within 18 months following the Closing.

                                    ARTICLE 8
                                    COVENANTS

8.1      ACCESS TO PURCHASED BUSINESS AND PURCHASED ASSETS

         The Seller shall permit the Purchaser to conduct a due diligence review
of the Purchased Assets and the records and documents related thereto and to the
Purchased Business. The Seller shall forthwith make available to the Purchaser
and its authorized representatives and, if requested by the Purchaser, provide a
copy to the Purchaser of, all title documents, Contracts, financial statements,
policies, plans, reports, licences, orders, permits, books of account,
accounting records and all other documents, information and data relating to the
Purchased Business. The Seller shall afford the Purchaser and its authorized
representatives every reasonable opportunity to have free and unrestricted
access to the Purchased Assets during normal business hours and all other
property and assets utilized in the Purchased Business. At the request of the
Purchaser, the Seller shall execute such consents, authorizations and directions
as may be necessary to permit any inspection of the Purchased Business or any of
the Purchased Assets or to enable the Purchaser or its authorized representative
to obtain full access to all files and records relating to any of the Purchased
Assets maintained by governmental or other public authorities. At the
Purchaser's request, the Seller shall co-operate with the Purchaser in arranging
any such meetings as the Purchaser should reasonably request with:

         (a) customers, suppliers, distributors or others who have or have had a
             business relationship with the Seller in respect of the Purchased
             Business; and

         (b) the auditors, solicitors or any other persons engaged or previously
             engaged to provide services to the Seller who have knowledge of
             matters relating to the Purchased Business or Purchased Assets.

         In particular, without limitation, the Seller shall permit the
Purchaser's representatives or consultants to conduct all such testing and
inspection in respect of environmental matters at such locations of the
Purchased Business as the Purchaser may determine, in its sole discretion, as
may be required to satisfy the Purchaser in respect of such matters and the
Seller shall permit the representatives or consultants of the Purchaser to
conduct a physical review of the equipment of the Purchased Business as the
Purchaser reasonably deems necessary so as to enable the Purchaser to appraise
and/or estimate the quantum of value of such equipment. The exercise of any
rights of inspection by or on behalf of the Purchaser under this Section 8.1
shall not mitigate or otherwise affect any of the representations and warranties
of the Seller hereunder, which shall continue in full force and effect as
provided in Section 7.1. Notwithstanding the foregoing or anything to the
contrary contained in this Agreement, each of the Purchaser and UTI acknowledge
and agree that it has relied and shall rely solely on its own appraisal and
estimate of the quantum of value of the Purchased Assets and the Purchased
Business and that it has relied and shall rely on its own analysis related
thereto.

<PAGE>   29
                                      -25-

8.2      DELIVERY OF BOOKS AND RECORDS

         At the Time of Closing, there shall be delivered to the Purchaser by
the Seller all the books and records described in Section 2.1. The Purchaser
agrees that it will preserve the books and records so delivered to it for a
period of 4 years from the Closing Date, or for such longer period as is
required by any applicable law, and will permit the Seller or its authorized
representatives reasonable access thereto in connection with the affairs of the
Seller relating to its matters, but the Purchaser shall not be responsible or
liable to the Seller for or as result of any accidental loss or destruction of
or damage to any such books or records. Until March 1, 2001, the Seller will be
permitted reasonable access to the computer system which relates to the
Purchased Assets to handle accounting and other matters related to the Seller.

8.3      CHANGE OF NAME

         The Seller agrees that from and after the Closing Date the Seller will
not use the words "Phelps Drilling" or "Phelps Drilling International" or any
variation thereof or any similar words in any active business or other activity
which might create any confusion over these names.

8.4      CONDUCT OF PURCHASED BUSINESS PRIOR TO CLOSING

         Without in any way limiting any other obligations of the Seller
hereunder, during the period from the date hereof to the Time of Closing:

         (a) Conduct Business in the Ordinary Course. The Seller shall conduct
             the Purchased Business and maintain the Purchased Assets in a
             proper and prudent manner consistent with past practice and
             generally accepted industry practice. In addition, the Seller shall
             not, without the prior written consent of the Purchaser (such
             consent not to be unreasonably withheld), (i) enter into any
             transaction or refrain from doing any action that, if effected
             before the date of this Agreement, would constitute a breach of any
             representation, warranty, covenant or other obligation of the
             Seller contained herein, or (ii) make any material decisions or
             enter into any material Contracts with respect to the Purchased
             Business or the Purchased Assets other than the entering into or
             performance of drilling contracts and maintenance and repair
             activities that are entered into or conducted in the ordinary
             course of business and in a proper and prudent manner consistent
             with past business practice and generally accepted industry
             practice;

         (b) Continue Insurance. The Seller shall (i) continue to maintain in
             full force and effect all policies of insurance or renewals thereof
             now in effect, (ii) take out, at the expense of the Purchaser, such
             additional insurance as may be reasonably requested by the
             Purchaser and (iii) give all notices and present all claims under
             all policies of insurance in a due and timely fashion;

         (c) Regulatory Consents. The Seller shall use its best efforts to
             obtain, at or prior to the Time of Closing, from all appropriate
             federal, provincial, municipal or other governmental or regulatory
             bodies, the licences, permits, consents, approvals, certificates,
             registrations and authorizations described in Part 1 of Schedule
             11;

<PAGE>   30

                                      -26-

         (d) Preserve Goodwill. The Seller shall use its best efforts to
             preserve intact the Purchased Business and Purchased Assets and to
             carry on the Purchased Business as currently conducted, and the
             Seller shall use its best efforts to promote and preserve for the
             Purchaser the goodwill of suppliers, customers and others having
             business relations with the Seller;

         (e) Discharge Liabilities. The Seller shall pay and discharge the
             Liabilities of the Seller relating to the Purchased Business in the
             ordinary course in accordance and consistent with the previous
             practice of the Seller, except those contested in good faith by the
             Seller;

         (f) Corporate Action. The Seller shall use its best efforts to take or
             cause to be taken all necessary corporate action, steps and
             proceedings to approve or authorize validly and effectively the
             transfer of the Purchased Assets to the Purchaser and the execution
             and delivery of this Agreement and the other agreements and
             documents contemplated hereby and to cause all necessary meetings
             of directors and shareholders of the Seller to be held for such
             purpose; and

         (g) Best Efforts. The Seller shall use its best efforts to satisfy the
             conditions contained in Section 9.1.

8.5      THIRD PARTY CONSENTS AND NOVATIONS

         (a) The Seller shall promptly give such notices to third parties and
             use its best efforts to obtain such third party consents and
             novations as the Purchaser or the Seller may reasonably deem
             necessary or desirable in connection with the transactions
             contemplated by this Agreement including, without limitation, those
             consents and novations described in Schedule 11. The Purchaser
             shall cooperate and use its best efforts to assist the Seller in
             giving such notices and obtaining such consents and novations.

         (b) Each of the Seller and the Purchaser agree that, in the event any
             consent or novation necessary or desirable to preserve for the
             Purchased Business any right or benefit under any lease, license,
             contract, commitment or other agreement or arrangement to which the
             Seller is a party is not obtained or in the reasonable opinion of
             the Seller should not be obtained prior to the Closing, the Seller
             will, subsequent to the Closing, cooperate with the Purchaser in
             attempting to obtain such consent or novation as promptly
             thereafter as practicable. Until such consent or novation is
             obtained or if such consent or novation cannot be obtained, the
             Seller shall use its best efforts to provide the Purchaser with the
             rights and benefits of the affected lease, license, contract,
             commitment or other agreement or arrangement (collectively, the
             "NON-ASSIGNABLE RIGHTS") for the term of such lease, license,
             contract or other agreement or arrangement, and, if the Seller
             provides such rights and benefits, the Purchaser shall assume the
             obligations and burdens thereunder and indemnify and save harmless
             the Seller in respect thereof. In particular, the Seller shall, at
             the request of the Purchaser:

<PAGE>   31

                                      -27-

             (i)   hold any such Non-Assignable Rights in trust for the
                   Purchaser or act as agent for the Purchaser;

             (ii)  enforce any rights of the Seller arising from such
                   Non-Assignable Rights against the issuer thereof or the other
                   party or parties thereto;

             (iii) take all such actions and do, or cause to be done, all such
                   things at the request of the Purchaser as shall reasonably be
                   necessary and proper in order that the value of any
                   Non-Assignable Rights shall be preserved and shall enure to
                   the benefit of the Purchaser; and

             (iv)  pay over to the Purchaser, all monies collected by or paid to
                   the Seller in respect of such Non-Assignable Rights in
                   respect of amounts due or accruing due subsequent to the
                   Effective Time.

8.6      FINANCIAL STATEMENT COOPERATION

         The Seller agrees, at the cost and expense of the Purchaser, to
cooperate with the Purchaser and to assist the Purchaser's outside auditors in
the preparation of any financial statements relating to the Purchased Assets and
the Seller that may be reasonably requested by the Purchaser or UTI for filing
with the Securities and Exchange Commission in connection with any filings that
may be made by the Purchaser or UTI under the US Securities Act or the US
Exchange Act. Such financial statements shall consist of (i) such audited
balance sheets and audited statements of operations, cash flows and changes in
equity together with the notes thereon and (ii) such unaudited interim balance
sheet and unaudited interim statements of operations, cash flows and changes in
equity, if any, in each case as the Purchaser or UTI shall reasonably deem to be
required by the Purchaser or UTI.

8.7      EXCLUSIVITY

         From the date hereof until the Closing, neither the Seller nor any of
the Major Shareholders will directly or indirectly initiate discussions with or
engage in negotiations with any Person other than the Purchaser for any sale of
the Purchased Business or any of the Purchased Assets, whether through any sale
of assets, sale of shares, reorganization or otherwise.

8.8      UPDATE OF SCHEDULES

         From the date hereof through and including the Closing Date, the Seller
may correct or update any of the Schedules. Any such correction or update shall
be made by actual delivery of an amended Schedule, marked to show changes (the
"AMENDED SCHEDULE"), which Amended Schedule shall replace the original Schedule
hereto. The Purchaser shall be given a reasonable opportunity to review any
Amended Schedule prior to Closing and shall have the right to postpone the
Closing for up to two Business Days to review any Amended Schedule delivered on
or immediately before the Closing Date. The Purchaser shall have the right to
terminate this Agreement at any time prior to the Closing if it is not
satisfied, acting reasonably, with any information contained in any Amended
Schedule.

<PAGE>   32

                                      -28-

                                    ARTICLE 9
                              CONDITIONS OF CLOSING

9.1      CONDITIONS OF CLOSING IN FAVOUR OF PURCHASER

         The sale and purchase of the Purchased Assets is subject to the
following terms and conditions for the exclusive benefit of the Purchaser, to be
performed or fulfilled at or prior to the Time of Closing:

         (a) Closing Deliveries. The Seller shall have delivered to the
             Purchaser the documents required to be delivered pursuant to
             Section 10.2;

         (b) Representations and Warranties. The representation and warranties
             of the Seller contained in this Agreement shall be true and correct
             in all material respects at the Time of Closing with the same force
             and effect as if such representations and warranties were made at
             and as of such time, and a certificate of the Seller, dated the
             Closing Date to that effect shall have been delivered to the
             Purchaser, such certificate to be in form and substance
             satisfactory to the Purchaser, acting reasonably;

         (c) Covenants. All of the terms, covenants and conditions of this
             Agreement to be complied with or performed by the Seller at or
             before the Time of Closing shall have been complied with or
             performed in all material respects, and a certificate of the Seller
             dated the Closing Date to that effect shall have been delivered to
             the Purchaser, such certificate to be in form and substance
             satisfactory to the Purchaser, acting reasonably;

         (d) Regulatory Consents. There shall have been obtained from all
             appropriate federal, provincial, municipal or other governmental or
             administrative bodies such licences, permits, consents, approvals,
             certificates, registrations and authorizations as are required to
             be obtained by the Seller to permit the change of ownership of the
             Purchased Assets contemplated hereby, including, without
             limitation, those described in Part 1 of Schedule 11, in each case
             in form and substance satisfactory to the Purchaser, acting
             reasonably;

         (e) Contractual Consents. The Seller shall have given or obtained the
             notices, consents and approvals described in Part 2 of Schedule 11,
             in each case in form and substance satisfactory to the Purchaser,
             acting reasonably;

         (f) No Action or Proceeding. No legal or regulatory action or
             proceeding shall be pending or threatened by any Person to enjoin,
             restrict or prohibit the purchase and sale of the Purchased Assets
             contemplated hereby;

         (g) No Material Damage. No material damage or physical alteration to
             the whole or any material part of the Purchased Assets or the
             Purchased Business, which would materially affect the value of the
             Purchased Assets or the Purchased Business, shall have occurred
             between the date hereof and the Time of Closing;

<PAGE>   33

                                      -29-

         (h) No Material Adverse Change. There shall have been no material
             adverse changes in the condition (financial or otherwise), of the
             assets, Liabilities, operations, earnings, business or prospects of
             the Purchased Business since the date of the most recent Financial
             Statements;

         (i) No Encumbrances. The Seller shall have provided for the discharge
             of the Encumbrances listed in Part 2 of Schedule 12 to the
             satisfaction of the Purchaser, acting reasonably;

         (j) Continued Operation. During the period from the date hereof to the
             Time of Closing, the Seller shall have operated the Purchased
             Business in a proper and prudent manner in accordance with
             generally accepted industry practices;

         (k) Legal Opinion. The Seller shall have delivered to the Purchaser a
             favourable opinion of counsel to the Seller in the form annexed
             hereto as Schedule 18;

         (l) Due Diligence. The Purchaser shall have completed, within 14 days
             following execution of this Agreement by the Parties, satisfactory
             due diligence regarding the Purchased Assets, the results of which
             are in all respects satisfactory to the Purchaser in its sole
             discretion;

         (m) Board Approval. UTI shall have obtained, within 14 days following
             execution of this Agreement by the Parties, the approval of its
             board of directors for the matters set out herein; and

         (n) Complete Transaction. This Agreement constitutes one part of a
             three part transaction, and accordingly shall not be binding unless
             the related transactions contemplated by the agreements listed in
             Schedule 20 are closed concurrent with the Closing of the
             transactions contemplated by this Agreement.

         If any of the conditions contained in this Section 9.1 shall not be
performed or fulfilled at or prior to the Time of Closing to the sole
satisfaction of the Purchaser, acting reasonably, the Purchaser may, by notice
to the Seller, terminate this Agreement, provided that the Purchaser may also
bring an action pursuant to Article 11 against the Seller and/or the Major
Shareholders for damages suffered by the Purchaser where the non-performance or
non-fulfillment of the relevant condition is a result of a breach of covenant,
representation or warranty by the Seller. Any such condition may be waived in
whole or in part by the Purchaser without prejudice to any claims it may have
for breach of covenant, representation or warranty.

9.2      CONDITIONS OF CLOSING IN FAVOUR OF SELLER

         The sale and purchase of the Purchased Assets is subject to the
following terms and conditions for the exclusive benefit of the Seller, to be
performed or fulfilled at or prior to the Time of Closing:

         (a) Closing Deliveries. The Purchaser shall have delivered to the
             Seller the Purchase Price and documents required to be delivered
             pursuant to Section 10.3;

<PAGE>   34

                                      -30-

         (b) Representations and Warranties. The representations and warranties
             of the Purchaser and UTI contained in this Agreement shall be true
             and correct in all material respects at the Time of Closing with
             the same force and effect as if such representations and warranties
             were made at and as of such time, and a certificate of each of the
             Purchaser and UTI, dated the Closing Date, to that effect shall
             have been delivered to the Seller each such certificate to be in
             form and substance satisfactory to the Seller, acting reasonably;

         (c) Covenants. All of the terms, covenants and conditions of this
             Agreement to be complied with or performed by the Purchaser and UTI
             at or before the Time of Closing shall have been complied with or
             performed in all material respects, and a certificate of each of
             the Purchaser and UTI, dated the Closing Date, to that effect shall
             have been delivered to the Seller, each such certificate to be in
             form and substance satisfactory to the Seller, acting reasonably;

         (d) Regulatory Consents. There shall have been obtained from all
             appropriate federal, provincial, municipal or other governmental or
             administrative bodies such licences, permits, consents, approvals,
             certificates, registrations and authorizations as are required to
             be obtained by the Purchaser to permit the change of ownership of
             the Purchased Assets contemplated hereby, including those described
             in Part I of Schedule 11, in each case in form and substance
             satisfactory to the Seller, acting reasonably;

         (e) No Action or Proceeding. No legal or regulatory action or
             proceeding shall be pending or threatened by any person to enjoin,
             restrict or prohibit the purchase and sale of the Purchased Assets
             contemplated hereby;

         (f) Legal Opinions. The Purchaser and UTI shall have delivered to the
             Seller favourable opinions of counsel to the Purchaser and UTI in
             the form annexed hereto as Schedule 19;

         (g) Approvals. The Seller shall have obtained, within five Business
             Days following execution of this Agreement, the approval of its
             board of directors and of its shareholders for the matters set out
             herein; and

         (h) Complete Transaction. This Agreement constitutes one part of a
             three part transaction, and accordingly shall not be binding unless
             the related transactions contemplated by the agreements listed in
             Schedule 20 are closed concurrent with the Closing of the
             transactions contemplated by this Agreement.

         If any of the conditions contained in this Section 9.2 shall not be
performed or fulfilled at or prior to the Time of Closing to the satisfaction of
the Seller acting reasonably, the Seller may, by notice to the Purchaser and
UTI, terminate this Agreement, provided that the Seller may also bring an action
pursuant to Article 11 against the Purchaser and/or UTI for damages suffered by
the Seller where the non-performance or non-fulfillment of the relevant
condition is as a result of a breach of covenant, representation or warranty by
the Purchaser and UTI. Any such condition

<PAGE>   35

                                      -31-

may be waived in whole or in part by the Seller without prejudice to any claims
it may be have for breach of covenant, representation or warranty.

                                   ARTICLE 10
                       CLOSING AND TRANSFER OF POSSESSION

10.1     PLACE OF CLOSING

         The Closing shall take place at the Time of Closing at the offices of
Macleod Dixon in Calgary, Alberta.

10.2     CLOSING DELIVERIES BY SELLER

         At the Closing the Seller shall deliver to the Purchaser:

         (a) an executed counterpart of the Bill of Sale plus any other deeds,
             conveyances, bills of sale, assurances, transfers, assignments and
             any other documentation necessary or reasonably required to
             transfer the Purchased Assets to the Purchaser with a good and
             marketable title, free and clear of all Encumbrances whatsoever
             except for Permitted Encumbrances.

         (b) a certificate of corporate status and an officer's certificate,
             certified by a senior officer of the Seller as of the Closing Date,
             which certificate shall include copies of its constating documents
             and by-laws and of the resolution authorizing the execution,
             delivery and performance by the Seller of this Agreement and any
             documents to be provided by it pursuant to the provisions hereof;

         (c) a receipt for the Purchase Price;

         (d) the certificates and other documents required to be delivered
             pursuant to Section 9.1; and

         (e) all such other documents relevant to the closing of the
             transactions contemplated hereby as the Purchaser, acting
             reasonably, may request.

10.3     CLOSING DELIVERIES BY PURCHASER

         At the Closing the Purchaser shall deliver to the Seller:

         (a) the Purchase Price by bank draft or wire transfer;

         (b) an executed counterpart of the Bill of Sale;

         (c) certificates of corporate status and officers' certificates,
             certified by a senior officer of each of the Purchaser and of UTI
             as of the Closing Date, which certificates shall include copies of
             constating documents and by-laws and of the resolution authorizing
             the execution, delivery and performance by the Purchaser

<PAGE>   36

                                      -32-

             and UTI of this Agreement and any documents to be provided by them
             pursuant to the provisions hereof;

         (d) the certificates and other documents required to be delivered
             pursuant to Section 9.2; and

         (e) all such other documents relevant to the closing of the
             transactions contemplated hereby as the Seller, acting reasonably,
             may request.

10.4     FURTHER ASSURANCES

         From and after the Closing Date, each Party to this Agreement covenants
and agrees that it will at all times after the Closing Date, at the expense of
the requesting Party, promptly execute and deliver all such documents,
including, without limitation, all such additional conveyances, transfers,
consents and other assurances and do all such other acts and things as any other
Party, acting reasonably, may from time to time request be executed or done in
order to better evidence or perfect or effectuate any provision of this
Agreement or of any agreement or other document executed pursuant to this
Agreement or any of the respective obligations intended to be created hereby or
thereby.

10.5     TRANSFER OF POSSESSION AND TITLE

         Subject to compliance with the terms and conditions hereof, the
transfer of possession of and title to the Purchased Assets shall be deemed to
take effect as at the Time of Closing.

10.6     RISK OF LOSS

         From the date hereof up to the Time of Closing, the Purchased Assets
shall be and remain at the risk of the Seller. If, prior to the Time of Closing,
all or any part of the Purchased Assets that are necessary to carry on the
Purchased Business as currently conducted are destroyed or damaged by fire or
any other casualty or shall be appropriated, expropriated or seized by
governmental or other lawful authority, the Purchaser may elect to complete the
purchase without reduction of the Purchase Price, in which event all proceeds of
insurance or compensation for expropriation or seizure shall be paid to the
Purchaser at the Time of Closing and all right and claim of the Seller to any
such amounts not paid by the Closing Date shall be assigned at the Time of
Closing to the Purchaser.

                                   ARTICLE 11
                                 INDEMNIFICATION

11.1     INDEMNIFICATION BY SELLER AND MAJOR SHAREHOLDERS

         The Seller and the Major Shareholders jointly and severally agree to
indemnify and save harmless the Purchaser from all Losses suffered or incurred
by the Purchaser as a result of or arising directly or indirectly out of or in
connection with:

<PAGE>   37
                                      -33-

         (a) any breach by the Seller of or any inaccuracy of any representation
             or warranty of the Seller contained in this Agreement or in any
             agreement, certificate or other document delivered pursuant hereto;

         (b) any breach or non-performance by the Seller of any covenant to be
             performed by it that is contained in this Agreement or in any
             agreement, certificate or other document delivered pursuant hereto;

         (c) the Excluded Liabilities or the Excluded Assets; and

         (d) the operation of the Purchased Business, or the ownership of the
             Purchased Assets, prior to the Time of Closing.

11.2     INDEMNIFICATION BY PURCHASER AND UTI

         The Purchaser and UTI jointly and severally agree to indemnify and save
harmless the Seller from all Losses suffered or incurred by the Seller as a
result of or arising directly or indirectly out of or in connection with:

         (a) any breach by the Purchaser or UTI of or any inaccuracy of any
             representation or warranty contained in this Agreement or in any
             agreement, instrument, certificate or other document delivered
             pursuant hereto;

         (b) any breach or non-performance by the Purchaser or UTI of any
             covenant to be performed by it that is contained in this Agreement
             or in any agreement, certificate or other document delivered
             pursuant hereto;

         (c) the Assumed Obligations;

         (d) any GST which becomes payable by the Seller in respect of the sale
             of the Purchased Assets other than as a result of a
             misrepresentation or breach by the Seller; and

         (e) the operation of the Purchased Business, or the ownership of the
             Purchased Assets, on or after the Time of Closing.

11.3     LIMITATIONS ON INDEMNIFICATION

         (a) Notwithstanding the foregoing provisions of this Article, but
             subject to (c) below, no Party shall be liable under the
             indemnifications in Section 11.1 or 11.2 unless and until the
             aggregate amount of liability thereunder exceeds Cdn. $25,000.

         (b) Notwithstanding the foregoing provisions of this Article, but
             subject to (c) below, the aggregate liability of the Seller and the
             Major Shareholders to the Purchaser under the indemnification
             provisions of this Agreement, and the aggregate liability of the
             Purchaser and UTI to the Seller under the indemnification
             provisions of this Agreement, shall be limited in each case to an
             amount equal to the Purchase Price.

<PAGE>   38

                                      -34-

         (c) The limitations on the liability of any Party under this Agreement
             shall only apply to the extent that there is not any fraud or
             wilful misconduct on the part of such Party, and all such limits on
             the liability of any Party shall lapse and be of no force and
             effect if and to the extent that there is or has been fraud or
             wilful misconduct on the part of such Party in connection with the
             matter with respect to which any claim against such Party is made
             hereunder.

         (d) All indemnification to which an indemnified Party may be entitled
             pursuant to the provisions of this Article shall be net of any
             insurance coverage paid to the indemnified Party with respect
             thereto, and shall exclude any claims arising from the indemnified
             Party's gross negligence or willful misconduct after the Closing.

         (e) Except for those covenants contained in Article 8 and which are
             intended to survive Closing as provided in Article 8, no Party
             shall be liable under the indemnifications in Section 11.1 or 11.2
             unless written notice of the claim as provided for in Section 11.4
             is given by the Indemnified Party (as defined in Section 11.4) to
             the Indemnifying Party (as defined in Section 11.4), within 18
             months following the Closing.

11.4     NOTICE OF CLAIM

         In the event that a Party (the "INDEMNIFIED PARTY") shall become aware
of any claim, proceeding or other matter (a "CLAIM") in respect of which any
other Party (the "INDEMNIFYING PARTY") agreed to indemnify the Indemnified Party
pursuant to this Agreement, the Indemnified Party shall promptly give written
notice thereof to the Indemnifying Party. Such notice shall specify whether the
Claim arises as a result of a claim by a Person against the Indemnified Party (a
"THIRD PARTY CLAIM") or whether the Claim does not so arise (a "DIRECT CLAIM"),
and shall also specify with reasonable particularity (to the extent that the
information is available):

         (a) the factual basis for the Claim; and

         (b) the amount of the Claim, if known.

         If, through the fault of the Indemnified Party, the Indemnifying Party
does not receive notice of any Claim in time to effectively contest the
determination of any liability susceptible of being contested, the Indemnifying
Party shall be entitled to set off against the amount claimed by the Indemnified
Party the amount of any Losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.

         In the event that a Major Shareholder shall, within 18 months following
the Closing, become aware of a Claim arising from a breach of any representation
and warranty contained in Section 5.6 (Title to Purchased Assets), Section 5.10
(Material Contracts) or Section 5.19 (Environmental Matters), such Major
Shareholder severally agrees to give prompt written notice thereof to the
Purchaser and UTI. This obligation is in addition to any disclosure obligations
which such Major Shareholder may owe to the Purchaser in such Major
Shareholder's capacity as an employee of the Purchaser or otherwise.

<PAGE>   39

                                      -35-
11.5     DIRECT CLAIMS

         With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have 30 days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the affected Claim, together with all such
other information as the Indemnifying Party may reasonably request. If both
affected Parties agree at or prior to the expiration of such 30 day period (or
any mutually agreed upon extension thereof) to the validity and amount of such
Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the
full agreed upon amount of the Claim, failing which the matter shall be referred
to binding arbitration in such manner as the Parties may agree or shall be
determined by a court of competent jurisdiction.

11.6     THIRD PARTY CLAIMS

         With respect to any Third Party Claim, the Indemnifying Party shall
have the right, at its expense, to participate in or assume control of the
negotiation, settlement or defence of the Claim and, in such event, the
Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified
Party's out-of-pocket expenses as a result of such participation or assumption.
If the Indemnifying Party elects to assume such control, the Indemnified Party
shall have the right to participate in the negotiation, settlement or defence of
such Third Party Claim and to retain counsel to act on its behalf, provided that
the fees and disbursements of such counsel shall be paid by the Indemnified
Party unless the Indemnifying Party consents to the retention of such counsel or
unless the named parties to any action or proceeding include both the
Indemnifying Party and the Indemnified Party and a representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to the actual or potential differing interests between them
(such as the availability of different defenses). If the Indemnifying Party,
having elected to assume such control, thereafter fails to defend the Third
Party Claim within a reasonable time, the Indemnified Party shall be entitled to
assume such control and the Indemnifying Party shall be bound by the results
obtained by the Indemnified Party with respect to such Third Party Claim. If any
Party Claim is of a nature such that the Indemnified Party is required by
applicable law to make a payment to any Person (a "THIRD PARTY") with respect to
the Third Party Claim before the completion of settlement negotiations or
related legal proceedings, the Indemnified Party may make such payment and the
Indemnifying Party shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for such payment. If the amount of any liability
of the Indemnified Party under the Third Party Claim in respect of which such a
payment was made, as finally determined, is less than the amount that was paid
by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall,
forthwith after receipt of the difference from the Third Party, pay the amount
of such difference to the Indemnifying Party.

11.7     SETTLEMENT OF THIRD PARTY CLAIMS

         If the Indemnifying Party fails to promptly assume control of the
defence of any Third Party Claim, the Indemnified Party shall have the exclusive
right to contest, settle or pay the amount claimed. Whether or not the
Indemnifying Party assumes control of the negotiation,

<PAGE>   40

                                      -36-

settlement or defence of any Third Party Claim, the Indemnifying Party shall not
settle any Third Party Claim without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that the liability of the Indemnifying Party shall be limited to the
proposed settlement amount if any such consent is not obtained for any reason.

11.8     CO-OPERATION

         The Indemnified Party and the Indemnifying Party shall co-operate fully
with each other with respect to Third Party Claims, and shall keep each other
fully advised with respect thereto (including supplying copies of all relevant
documentation promptly as it becomes available).

11.9     SCOPE

         The provisions of this Article 11 shall apply to any Claim for breach
of any covenant, representation, warranty or other provision of this Agreement
or any agreement, certificate or other document delivered pursuant to this
Agreement (other than a claim for specific performance or injunctive relief)
with the intent that all such Claims shall be subject to the limitations and
other provisions contained in this Article 11.

                                   ARTICLE 12
                       TERMINATION; REMEDIES; LIMITATIONS

12.1     TERMINATION AGREEMENT

         This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing:

         (a) by the mutual consent of the Seller, the Purchaser and UTI; or

         (b) if the Closing has not occurred by May 17, 2000, then

             (i)  by the Purchaser if any condition specified in Section 9.1 has
                  not been satisfied on or before such date, and shall not have
                  been waived by the Purchaser, or

             (ii) by the Seller if any condition specified in Section 9.2 has
                  not been satisfied on or before such date, and shall not have
                  been waived by the Seller;

             provided, in each case, that the failure to consummate the
             transactions contemplated hereby on or before such date did not
             result from the failure by the Party or Parties seeking termination
             of this Agreement to fulfill any undertaking or commitment provided
             for herein on the part of such Party or Parties that is required to
             be fulfilled on or prior to Closing.

<PAGE>   41

                                      -37-

12.2     EFFECT OF TERMINATION

         Without limiting any Party's respective rights, Liabilities and
remedies hereunder, in the event of termination of this Agreement by the
Purchaser or the Seller pursuant to Subsection 12.1(b), written notice thereof
shall forthwith be given by the terminating Party to the other Party or Parties
hereto, and this Agreement shall thereupon terminate.

                                   ARTICLE 13
                                  MISCELLANEOUS

13.1     NOTICES

         (a) Any notice or other communication required or permitted to be given
             hereunder shall be in writing and shall be delivered in person,
             transmitted by telecopy or similar means of recorded electronic
             communication or sent by registered mail, charges prepaid,
             addressed as follows:

             (i)  if to the Seller or the Major Shareholders:

                  700392 ALBERTA LTD.
                  Hanover Place, Suite 1450
                  101-6th Avenue S.W.
                  Calgary, Alberta T2P 3P4

                  Attention: T.V. Dumont
                  Fax No.: (403) 262-2497

             with a copy to:

                  FIELD ATKINSON PERRATON 1900 First Canadian Centre
                  350 - 7th Avenue S.W. Calgary, Alberta T2P 3N9

                  Attention: Mr. Brian Yaworski
                  Fax No: (403) 264-7084

             (ii) if to the Purchaser or UTI:

                  PHELPS DRILLING LTD. or UTI ENERGY CORP.
                  c/o UTI Energy Corp.
                  16800 Greenspoint Park, Suite 225N
                  Houston, Texas 77060

                  Attention:  Chief Executive Officer
                  Fax No.: (281) 875-9145

<PAGE>   42

                                      -38-

             with a copy to:

                  MACLEOD DIXON
                  3700 Canterra Tower
                  400 - 3rd Avenue S.W.
                  Calgary, Alberta
                  T2P 4H7

                   Attention:  Mr. Richard P. Borden
                   Fax No. (403) 264-5973

         (b) Any such notice or other communication shall be deemed to have been
             given and received on the day on which it was delivered or
             transmitted (or, if such day is not a Business Day, on the next
             following Business Day) or, if mailed, on the third Business Day
             following the date of mailing; provided, however, that if at the
             time of mailing or within three Business Days thereafter there is
             or occurs a labour dispute or other event that might reasonably be
             expected to disrupt the delivery of documents by mail, any notice
             or other communication hereunder shall be delivered or transmitted
             by means of recorded electronic communication as aforesaid.

         (c) A Party may at any time change its address for service from time to
             time by giving notice to the other Party in accordance with this
             Section 13.1

13.2     CONSULTATION

         Prior to the Closing and except as required by any applicable law or
any regulatory or stock exchange requirement, no Party shall issue any press
release or make any public announcement without the prior written consent of the
other Parties, which consent shall not be unreasonably withheld or delayed. Upon
the Closing, the Parties shall consult with each other before issuing any press
release or making any other public announcement with respect to this Agreement
or the transactions contemplated hereby.

13.3     DISCLOSURE

         Prior to any press release or public announcement of the transaction
contemplated hereby pursuant to Section 13.2, no Party shall disclose this
Agreement or any aspects of the transaction contemplated hereby except to its
board of directors, its senior management, its legal, accounting, financial or
other professional advisors or its lenders, all on a "need to know basis", or as
otherwise may be required by any applicable law or any regulatory authority or
stock exchange having jurisdiction.

13.4     BEST EFFORTS

         The Parties acknowledge and agree that, for all purposes of this
Agreement, an obligation on the part of one Party to use its best efforts to
obtain from any Person any waiver, consent, approval, permit, licence or other
document shall not require such Party to make any payment to such Person for the
purpose of procuring the same, other than payments for amounts due and

<PAGE>   43

                                      -39-

payable to such Person, payments for incidental expenses incurred by such Person
and payments required by any applicable law or regulation.

13.5     COUNTERPARTS

         This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which taken together shall constitute one and
the same instrument.

<PAGE>   44

                                      -40-

         IN WITNESS WHEREOF this Agreement has been executed by the Parties as
of the date first above written.

                                 700392 ALBERTA LTD.

                                 By:  _____________________________________

                                 By:  _____________________________________

                               MAJOR SHAREHOLDERS

-------------------------------  -------------------------------------
Witness                          Theodore V. Dumont

-------------------------------- -------------------------------------
Witness                          Donald E. Nakonechny

-------------------------------- ------------------------------------
Witness                          Arthur G. Hibbard

-------------------------------- ------------------------------------
Witness                          Gordon E. Van Eaton

-------------------------------- ------------------------------------
Witness                          John W. Miller

                                 PHELPS DRILLING LTD.

                                 By:  ____________________________________

                                 By:  ____________________________________

<PAGE>   45

                                      -41-

                                 UTI ENERGY CORP.

                                 By:  ____________________________________

                                 By:  ____________________________________

<PAGE>   46

                                   SCHEDULE 9

                          ALLOCATION OF PURCHASE PRICE

Class 41 Tangible Depreciable Property           ____________

<PAGE>   47

                                   SCHEDULE 21

                ASSIGNMENT, BILL OF SALE AND ASSUMPTION AGREEMENT

         This Assignment, Bill of Sale and Assumption Agreement (the
"Agreement") is dated effective the _____ day of April, 2000, and made between
700392 Alberta Ltd. (the "Seller") and Phelps Drilling Ltd. (the "Purchaser").

         WHEREAS the Seller, certain of the shareholders of the Seller, the
Purchaser and UTI Energy Corp. entered into an Asset Purchase Agreement dated as
of the ______ day of March, 2000 (the "Purchase and Sale Agreement") providing,
among other things, for the sale by the Seller to the Purchaser of the Purchased
Assets;

         AND WHEREAS pursuant to the Purchase and Sale Agreement, the Seller and
the Purchaser are required to execute and deliver this Agreement in connection
with the consummation of the transactions contemplated by the Purchase and Sale
Agreement;

         AND WHEREAS any capitalized term used but not defined in this Agreement
shall have the meaning ascribed to such term in the Purchase and Sale Agreement;

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

1.       ASSIGNMENT OF ASSETS. The Seller hereby assigns, transfers, conveys,
         sells and delivers to the Purchaser, and the Purchaser hereby accepts,
         all right, title and interest of the Seller in and to the Purchased
         Assets, TO HAVE AND TO HOLD the Purchased Assets unto the Purchaser
         forever, together with all rights belonging or pertaining thereto.

2.       FURTHER ASSURANCES RE PURCHASED ASSETS. The Seller hereby covenants to
         execute and deliver to the Purchaser all such other and further
         instruments of assignment and transfer, and all such notices, releases
         and other documents that would more fully and specifically assign and
         transfer to and vest in the Purchaser the title and interest of the
         Seller in and to all of the Purchased Assets hereby assigned and
         transferred, or intended to be assigned and transferred free and clear
         of all Encumbrances whatsoever except for Permitted Encumbrances. To
         the extent that, with respect of any of the Purchased Assets, no
         assignment document other than this Agreement is executed, the parties
         intend that this Agreement constitutes the conveyance, transfer and
         assignment of such Purchased Assets.

3.       ASSUMPTION OF OBLIGATIONS. The Purchaser hereby assumes, in accordance
         with the terms of the Purchase and Sale Agreement, the Assumed
         Obligations.

4.       FURTHER ASSURANCES RE ASSUMED OBLIGATIONS. The Purchaser hereby
         covenants to execute and deliver to the Purchaser all such other and
         further instruments of assumption, and all such notices, releases and
         other documents that would more fully and specifically assume all of
         the Assumed Obligations.

<PAGE>   48

                                       -2-

5.       GOVERNING LAW. This Agreement and the rights and obligations of the
         Seller and the Purchaser hereunder shall be governed by, interpreted
         and enforced in accordance with the laws of the Province of Alberta
         without giving effect to principles thereof relating to conflicts of
         law rules that would direct application of laws of another
         jurisdiction, except to the extent that it is mandatory that the law of
         another jurisdiction shall apply.

6.       CONFLICT AND INCONSISTENCY, NO MERGER. To the extent any conflict or
         inconsistency exists between the provisions of this Agreement and the
         Purchase and Sale Agreement, the provisions of the Purchase and Sale
         Agreement shall govern. The terms and provisions of the Purchase and
         Sale Agreement (including, without limitation, the representations,
         warranties and covenants therein) shall not merge, be extinguished or
         otherwise affected by the delivery and execution of this Agreement or
         any other document delivered pursuant to Section 2 of this Agreement or
         Section 10.2 or Section 10.3 of the Purchase and Sale Agreement.

7.       BINDING EFFECT. This Agreement shall be binding upon and shall enure to
         the benefit of the parties hereto and their respective successors and
         assigns.

8.       COPIES. This Agreement may be executed in counterpart, each of which
         shall be deemed an original and which shall constitute one and the same
         instrument.

         IN WITNESS WHEREOF, the Seller and the Purchaser have executed this
Agreement as of the day and year first above written.

                                      700392 ALBERTA LTD.

                                      By: ______________________________________

                                      By: ______________________________________

                                      PHELPS DRILLING LTD.

                                      By: ______________________________________

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