Allis-Chalmers Offers $437.8 Million to Acquire Bronco Drilling

Allis-Chalmers Energy Inc. and Bronco Drilling Company, Inc. reported that they have entered into a definitive merger agreement providing for the acquisition of Bronco Drilling Company, Inc. by Allis-Chalmers Energy Inc.

Allis-Chalmers believes strategic combination creates a more diversified international oilfield services provider with critical mass in the U.S., and broadens the service and equipment capabilities of both companies.

The merger is expected to enhance domestic and international growth opportunities, and is expected to facilitate relocation of newly acquired and certain underutilized drilling and workover rigs of Bronco Drilling to Latin America and North African markets.

The merger agreement provides that at the effective time of the merger, stockholders of Bronco Drilling will receive merger consideration with an aggregate value of approximately $437.8 million, comprised of (a) an aggregate of $280.0 million in cash and (b) Allis-Chalmers common stock having an aggregate value of approximately $157.8 million. The number of shares will be based on the average closing price of Allis-Chalmers common stock for a ten-trading day period ending two days prior to the closing. The combined consideration totals $16.33 per share for Bronco Drilling, a 21.8% premium to the closing price of Bronco Drilling's common stock on January 23, 2008 and an 18.2% premium to the past 10 days' average closing stock price of Bronco Drilling. Allis-Chalmers has received a financing commitment for up to $350 million to cover the cash component of the merger consideration, repayment of assumed Bronco Drilling debt and transaction expenses. Allis-Chalmers and Bronco Drilling anticipate that receipt of the merger consideration will be taxable to Bronco Drilling's stockholders.

The merger will result in a combined company with an implied enterprise value of approximately $1.4 billion, based upon the closing stock price of Allis-Chalmers on Tuesday, January 22, 2008. The merger agreement provides for a subsidiary of Allis-Chalmers to merge with and into Bronco Drilling, with Bronco Drilling surviving as a wholly-owned subsidiary of Allis-Chalmers.

Upon completion of the transaction, which Allis-Chalmers and Bronco Drilling expect to occur in mid-2008, it is anticipated that Allis-Chalmers' stockholders will own approximately 72.1%, and that Bronco Drilling's stockholders will own approximately 27.9% of the combined company, based on Allis-Chalmers' closing stock price on Tuesday, January 22, 2008.

The boards of directors of both Allis-Chalmers and Bronco Drilling have approved the merger agreement. The transaction is subject to customary conditions and regulatory approvals and the approval by stockholders of each of Allis-Chalmers and Bronco Drilling.

With respect to the merger, Frank Harrison, Bronco Drilling's Chairman and Chief Executive Officer stated, "We are very pleased to have reached this agreement with Allis-Chalmers and believe it presents a compelling opportunity for our stockholders. We believe the combined entity creates a unique investment opportunity for both sets of stockholders. The combined company will be a fully-integrated oilfield service company with diversified business lines, substantial international exposure and exciting growth opportunities not currently found in a company of similar size."

Micki Hidayatallah will remain as Chairman and Chief Executive Officer of Allis-Chalmers following the merger. Mr. Hidayatallah stated, "We are very excited about this pending acquisition that is in conformity with our strategic criteria. We expect the combined company to enhance our product offering and expand our geographic footprint in the domestic and international markets. Internationally, Allis-Chalmers will increase its presence in the North African and Latin American markets."

Mr. Hidayatallah also noted, "The opportunity to deploy drilling and workover rigs to the high growing international markets is very compelling. Bronco Drilling is uniquely positioned to take advantage of this opportunity because of its in-house capability of converting and rebuilding rigs for international operations. Although demand for land drilling and workover rigs remains strong in the international markets, there continues to be long delays in manufacturing and delivery cycles."

Mr. Hidayatallah went on to state, "We anticipate the merged company's presence in Mexico, Libya, Argentina and Bolivia will provide a solid foundation for international expansion. Bronco Drilling's management team has built a company in a very short time frame that has a reputation for excellence in all its operations. The combined company will be a diversified service company that provides its domestic and international customers with skilled operators and technologically advanced equipment in a safe environment."

Mr. Hidayatallah added, "Currently, Allis-Chalmers operates internationally in Argentina, Mexico, and Bolivia. Bronco Drilling has a 25% equity stake in a contract drilling business in Libya which will operate 33 drilling and workover rigs. We expect the combined company to actively pursue further international opportunities after the merger. We believe we will be able to provide the domestic and international markets with directional, underbalanced drilling, coil tubing, drilling and completion services together with rental equipment as the oil industry seeks to exploit conventional and unconventional resources both in the U.S. and overseas."

The composition of the board of directors of Allis-Chalmers will not be changed in connection with the merger.