Union Drilling Enters Into Rig Construction Contract

Union Drilling, Inc. has entered into a construction contract with IDM Equipment, LLC of Houston, TX to provide a 1,600 horsepower AC Fast Moving Quicksilver Drilling System, principally for operations in Pennsylvania targeting the Marcellus Shale formation.

The Company also has received the commitment of a long-standing customer to execute a three-year drilling contract upon the rig's delivery, which is expected in June 2008. The cost of the rig, including a top drive, an air circulation system for underbalanced drilling, tubulars, handling tools and crew quarters that are not being supplied by IDM, is approximately $17 million.

Christopher D. Strong, Union Drilling's President and Chief Executive Officer, commented, "Union Drilling owns many of the largest rigs currently operating in the Appalachian Basin, and has a history of horizontally drilling the deeper formations in this area. Substantially more powerful rigs, like those we use in the Barnett Shale in Texas, may drill long horizontal sections in deeper formations more efficiently, but their design is not well-suited to the Northeast. Often the cost of flattening uneven terrain for larger rig locations and time consuming rig moves due to infrastructure constraints, such as low bridge heights and weight limitations, can more than offset the advantages of having a larger rig. We have worked closely with the engineers at IDM to make certain modifications to their standard Quicksilver Drilling System that we believe will make this rig highly effective for this market. Although it is not an immediate customer requirement, this rig also will be configured to support pad drilling, where multiple well bores are drilled from the same location."