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Allis-Chalmers Energy Expands and Refinances Bank Credit Facility and Closes Acquisitions

Posted on: Tuesday, 12 July 2005, 06:00 CDT

HOUSTON, July 12 /PRNewswire-FirstCall/ -- Allis-Chalmers Energy Inc. today announced that it has entered into a new $55 million bank credit facility. The proceeds of the facility were used to acquire a 45% equity interest in AirComp LLC from M-I LLC, to purchase the compressed air drilling equipment of WT Enterprise, Inc., which operates under the name of Lone Star Air Service, to replace the company's existing debt facilities and for general working capital purposes. As a result of the purchase of M-I's interest, the Company now owns 100% of the equity interest in AirComp.

The new facility consists of a $13 million revolving credit facility, an $18 million term loan facility and a $24 million acquisition facility, all of which mature in two years.

AirComp provides compressed air and associated hammer and bit services to the drilling, geothermal, completion and workover markets from its operating locations in San Angelo and Fort Stockton, Texas, Farmington, New Mexico, and Grand Junction, Colorado. AirComp has a fleet of over 90 compressors and boosters and is the world's second largest provider of compressed air drilling services. The acquisition of Lone Star will expand these capabilities by increasing the current inventory with an additional 22 compressors, 9 boosters and 8 mist pumps.

"The new financing facility represents another important step in strengthening our balance sheet and our ability to execute our future growth strategies," stated Micki Hidayatallah, the Company's Chairman and Chief Executive Officer. "We are very excited about the acquisition of M-I's minority interest in AirComp and the Lone Star assets, both of which increase our capabilities in the underbalanced drilling sector."

About Allis-Chalmers Energy

Allis-Chalmers Energy Inc. provides a variety of products and services to the oil and natural gas industry. Through its subsidiaries, Allis-Chalmers is engaged in providing specialized equipment and operations to install casing and production tubing required to drill and complete oil and gas wells, directional and horizontal drilling services, the rental of "hevi-wate" spiral drill pipe and related oilfield services, services to enhance production through the installation of small diameter coiled tubing and chemicals into producing oil and gas wells and air drilling services to natural gas exploration and development operators.

Forward- Looking Statements

This Press Release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934) regarding Allis-Chalmers Energy's business, financial condition, results of operations and prospects. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Press Release.

Although forward-looking statements in this Press Release reflect the good faith judgment of management, such statements can only be based on facts and factors currently known to management. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, demand for oil and natural gas drilling services in the areas and markets in which the Company operates, competition, obsolescence of products and services, the Company's ability to obtain financing to support its operations, environmental and other casualty risks, and the impact of government regulation. Further information about the risks and uncertainties that may impact the Company are set forth in the Company's most recent filings on Form 10K (including without limitation in the "Risk Factors" Section) and Form 10-Q, and in the Company's other SEC filings and publicly available documents. Readers are urged not to place undue reliance on these forward- looking statements, which speak only as of the date of this Press Release. The Company undertakes no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Press Release.

CONTACT: Victor M. Perez, CFO Allis-Chalmers Energy 713-369-0550 Lisa Elliott, Sr. VP DRG&E 713-529-6600

Allis-Chalmers Energy Inc.

CONTACT: Victor M. Perez, CFO, Allis-Chalmers Energy, +1-713-369-0550,Lisa Elliott, Sr. VP, DRG&E, +1-713-529-6600

Source: PRNewswire-FirstCall

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