3982--3/7/2008--Allis_Chalmers_Energy

related topics

{operation, international, foreign}

{stock, price, share}

{operation, natural, condition}

{gas, price, oil}

{cost, contract, operation}

{cost, regulation, environmental}

{debt, indebtedness, cash}

{personnel, key, retain}

{financial, litigation, operation}

{competitive, industry, competition}

{stock, price, operating}

{investment, property, distribution}

{control, financial, internal}

{customer, product, revenue}

Failure to maintain effective disclosure controls and procedures and/or internal controls over financial reporting could have a material adverse effect on our operations. Historically, we have been dependent on a few customers operating in a single industry; the loss of one or more customers could adversely affect our financial condition and results of operations. Our international operations may expose us to political and other uncertainties, including risks of: Environmental liabilities could result in substantial losses. Products liability claims relating to discontinued operations could result in substantial losses. We may be subject to claims for personal injury and property damage, which could materially adversely affect our financial condition and results of operations. The loss of key executives would adversely affect our ability to effectively finance and manage our business, acquire new businesses, and obtain and retain customers. Risks Associated With Our Industry Cyclical declines in oil and natural gas prices may result in reduced use of our services, affecting our business, financial condition and results of operations and our ability to meet our capital expenditure obligations and financial commitments. Our industry is highly competitive, with intense price competition. We may experience increased labor costs or the unavailability of skilled workers and the failure to retain key personnel could hurt our operations. Severe weather could have a material adverse impact on our business. Our business may be affected by terrorist activity and by security measures taken in response to terrorism. We are subject to government regulations. Risks Associated With Our International Drilling Business and Industry A material or extended decline in expenditures by oil and gas companies due to a decline or volatility in oil and gas prices, a decrease in demand for oil and gas or other factors may reduce demand for our International Drilling services and substantially reduce our revenues, profitability, cash flows and/or liquidity. A majority of our International Drilling segment s revenues are derived from one customer. The termination of the contract with this customer could have a significant negative effect on the revenue and results of operations from our International Drilling segment. Our International Drilling s operations and financial condition could be affected by union activity and general labor unrest. Additionally, our International Drilling s labor expenses could increase as a result of governmental regulation of payments to employees. Rig upgrade, refurbishment and construction projects are subject to risks, including delays and cost overruns, which could have an adverse effect on our International Drilling segment s results of operations and cash flows. An oversupply of comparable rigs in the geographic markets in which we compete could depress the utilization rates and dayrates for our rigs and materially reduce our revenues and profitability. Worldwide political and economic developments may hurt our operations materially. Devaluation of the Argentine peso will adversely affect our International Drilling segment s results of operations. Argentina continues to face considerable political and economic uncertainty. An increase in inflation could have a material adverse effect on our results of operations. Some of our customers may seek to cancel or renegotiate some of our International Drilling contracts during periods of depressed market conditions or if we experience operational difficulties. We are subject to numerous governmental laws and regulations, including those that may impose significant liability on us for environmental and natural resource damages. We are subject to hazards customary for drilling operations, which could adversely affect our financial performance if we are not adequately indemnified or insured. Risks Associated With an Investment in Our Common Stock In connection with our acquisitions of DLS and substantially all the assets of OGR, the DLS sellers have the right to designate two nominees for election to our board of directors and OGR has the right to designate one nominee for election to our board of directors. The interests of the DLS sellers and OGR may be different from yours. Our stock price may decrease in response to various factors, which could adversely affect our business and cause our stockholders to suffer significant losses. These factors include: Existing stockholders interest in us may be diluted by additional issuances of equity securities. We do not expect to pay dividends on our common stock, and investors will be able to receive cash in respect of the shares of common stock only upon the sale of the shares. Substantial sales of our common stock could adversely affect our stock price. Risks Associated With Our Indebtedness We have a substantial amount of debt, which could adversely affect our financial health and prevent us from making principal and interest payments on our outstanding senior notes and our other debt. If we fail to obtain additional financing, we may be unable to refinance our existing debt, expand our current operations or acquire new businesses, which could result in a failure to grow or result in defaults in our obligations under our credit agreement, our outstanding senior notes or our other debt securities.

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3982--3/7/2008--Allis_Chalmers_Energy_Inc.