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0001362310-08-000384.txt : 200801310001362310-08-000384.hdr.sgml : 2008013120080131100858ACCESSION NUMBER:0001362310-08-000384CONFORMED SUBMISSION TYPE:425PUBLIC DOCUMENT COUNT:35FILED AS OF DATE:20080131DATE AS OF CHANGE:20080131
SUBJECT COMPANY:
COMPANY DATA:COMPANY CONFORMED NAME:Bronco Drilling Company, Inc.CENTRAL INDEX KEY:0001328650STANDARD INDUSTRIAL CLASSIFICATION:DRILLING OIL & GAS WELLS [1381]IRS NUMBER:202902156STATE OF INCORPORATION:DEFISCAL YEAR END:1231
FILING VALUES:FORM TYPE:425SEC ACT:1934 ActSEC FILE NUMBER:000-51471FILM NUMBER:08562999
BUSINESS ADDRESS:STREET 1:16217 NORTH MAY AVENUECITY:EDMONDSTATE:OKZIP:73013BUSINESS PHONE:405.242.4444
MAIL ADDRESS:STREET 1:16217 NORTH MAY AVENUECITY:EDMONDSTATE:OKZIP:73013
FILED BY:
COMPANY DATA:COMPANY CONFORMED NAME:Allis Chalmers Energy Inc.CENTRAL INDEX KEY:0000003982STANDARD INDUSTRIAL CLASSIFICATION:OIL, GAS FIELD SERVICES, NBC [1389]IRS NUMBER:390126090STATE OF INCORPORATION:DEFISCAL YEAR END:1231
FILING VALUES:FORM TYPE:425
BUSINESS ADDRESS:STREET 1:5075 WESTHEIMERSTREET 2:SUITE 890CITY:HOUSTONSTATE:TXZIP:77056BUSINESS PHONE:713-369-0550
MAIL ADDRESS:STREET 1:5075 WESTHEIMERSTREET 2:SUITE 890CITY:HOUSTONSTATE:TXZIP:77056
FORMER COMPANY:FORMER CONFORMED NAME:ALLIS CHALMERS CORPDATE OF NAME CHANGE:19920703
FORMER COMPANY:FORMER CONFORMED NAME:ALLIS CHALMERS MANUFACTURING CODATE OF NAME CHANGE:19710614
4251c72189e425.htm425
Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES ANDEXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant toSection 13 OR 15(d) of The Securities Exchange Act of
1934
Date of Report (Date of earliestevent reported): January 29, 2008
ALLIS-CHALMERS ENERGYINC.
(Exact name of registrant
asspecified in its charter)
Delaware 001-02199 39-0126090 (State or other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.)
5075 Westheimer
Suite890
Houston, Texas
77056 (Address of Principal
Executive Offices) (Zip Code)
Registrants telephone number,including area code: (713) 369-0550
(Former name or former address if changed since last report.)
Check the appropriate box below if theForm 8-K filing is intended to simultaneously satisfy the filing obligation ofthe registrant under any of the following provisions:
Writtencommunications pursuant to Rule 425 under the Securities
Act (17 CFR230.425)
o Soliciting material pursuantto Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
1
Item2.02 Results of Operationsand Financial Condition.
On January31,2008, Allis-Chalmers Energy Inc., a Delaware corporation (theCompany) announced its earnings expectations for the fourthquarter and year ended December31, 2007. A copy of the Companys press releaseannouncing the expectations is attached as Exhibit99.2 to thisCurrent Report on Form 8-K.
In accordance withGeneral Instruction B.2 of Form 8-K, the information set forth in thisItem2.02 and in the exhibit referenced in this Item2.02 shall bedeemed to be furnished and not be deemed filed forpurposes of the Securities Exchange Act of 1934, as amended.
Item5.02. Departure ofDirectors or Certain Officers; Election of Directors; Appointment of CertainOfficers; Compensatory Arrangements of Certain Officers.
On January29,2008, Burt A. Adams resigned as President and Chief Operating Officer of theCompany, effective February28, 2008. Mr.Adams will continue underthe terms of his current employment agreement until the effective date of hisresignation. Mr.Adams will remain as a member of the Companysboard of directors.
Item7.01. RegulationFD Disclosure.
The Company will bemaking presentations beginning January31, 2008 to certain investors. Thepresentation materials are attached hereto as Exhibit99.1 to this report.
The informationprovided in Item2.02 above is incorporated by reference in thisItem7.01.
In accordance withGeneral Instruction B.2 of Form 8-K, the information set forth in thisItem7.01 and in the exhibits referenced in this Item7.01 shall bedeemed to be furnished and not be deemed filed forpurposes of the Securities Exchange Act of 1934, as amended.
Important Additional Information
In connection with the proposed merger transaction between Allis-Chalmers and Bronco Drilling Company, Inc.,Allis-Chalmers and Bronco Drilling will file a joint proxy statement/prospectus and both companies will file otherrelevant documents concerning the proposed merger transaction with the SEC. INVESTORS ARE URGED TO READ THE JOINT PROXYSTATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY WILLCONTAIN IMPORTANT INFORMATION REGARDING THE MERGER. Investors and security holders may obtain a free copy of the jointproxy statement/prospectus (when available) and the other documents free of charge at the website maintained by the SECat www.sec.gov.
The documents filed with the SEC by Allis-Chalmers may be obtained free of charge from Allis-Chalmers website atwww.alchenergy.com or by calling Allis-Chalmers Investor Relations department at (713)369-0550. The documents filedwith the SEC by Bronco Drilling may be obtained free of charge from Bronco Drillings website at www.broncodrill.com orby calling Bronco Drillings Investor Relations department at (405)242-4444. Investors and security holders are urgedto read the joint proxy statement/prospectus and the other relevant materials when they become available before makingany voting or investment decision with respect to the proposed merger transaction. Allis-Chalmers and Bronco Drillingand their respective directors and executive officers may be deemed to be participants in the solicitation of proxiesfrom the respective stockholders of each company in connection with the merger transaction. Information about thedirectors and executive officers of Allis-Chalmers and their ownership of Allis-Chalmers common stock is set forth inits proxy statement filed with the SEC on April30, 2007. Information about the directors and executive officers ofBronco Drilling and their ownership of Bronco Drilling common stock is set forth in its proxy statement filed with theSEC on April30, 2007. Investors may obtain additional information regarding the interests of such participants byreading the joint proxy statement/prospectus for the Merger when it becomes available.
Item9.01. Financial Statements and Exhibits.
(d)Exhibits
Exhibit
Number Description
Presentation dated January2008.
Press release dated January31, 2008.
2
SIGNATURES
Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned hereunto dulyauthorized.
ALLIS-CHALMERS ENERGY INC.
By:
/s/ Victor M. Perez
Name:
Victor M. Perez
Title:
Chief Financial Officer
3
EXHIBIT INDEX
Exhibit
Number Description
Presentation dated January2008.
Press release dated January31, 2008.
4
EX-99.12c72189exv99w1.htmEXHIBIT 99.1
Filed by Bowne Pure Compliance
Exhibit 99.1
Filed by Allis-Chalmers Energy Inc. pursuant
to Rule425 under the Securities Act of 1933
and deemed filed pursuant to Rule14a-12 under the
Securities Exchange Act of 1934
Subject Company: Bronco Drilling Company, Inc.
Commission File No.: 000-51471
Corporate Presentation
January 2008
Allis-Chalmers Energy
Forward-Looking Statements
This presentation is presented as a brief company overview for the information of investors, analystsand other parties with an interest in Allis-Chalmers Energy Inc. (herein referred to as "the Company","Allis-Chalmers" and by its stock exchange ticker, "ALY"). The management of Allis-Chalmers hopesthat this presentation will encourage analysts and investors to investigate more about the Companythrough its Securities and Exchange Commission (SEC) filings, press releases and other publicmaterials. This presentation does not constitute an offer to sell or a solicitation of an offer to buy anysecurities of the Company. This presentation contains forward-looking statements, including, inparticular, statements about ALY's business, financial condition, plans, strategies and prospects.Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similarexpressions are intended to identify forward-looking statements but are not the exclusive means ofidentifying forward-looking statements. These statements are based on the Company's currentassumptions, expectations and projections about future events based on facts known to theCompany and are subject to a wide range of business risks. The Company encourages investors toreview the information regarding the risks inherent to Allis-Chalmers and the energy industry in whichit operates, as described in its Form 10-K for the year ended December 31, 2006, and in subsequentfilings with the SEC. This presentation does not purport to be all-inclusive or to contain all of theinformation that a reader may desire as to the structure or the affairs of the Company. Although theCompany believes that the assumptions reflected in these forward-looking statements arereasonable, the Company can give no assurance that these assumptions will prove to be correct orthat financial or market forecasts, savings or other benefits anticipated in the forward-lookingstatements will be achieved. Forward-looking statements are not guarantees of future performanceand actual results may differ materially from those projected. The information contained in thispresentation is only current as of its date, and the Company undertakes no obligation to update thispresentation unless otherwise required by law.
Important Additional Information
In connection with the proposed merger transaction between Allis-Chalmers and Bronco Drilling Company, Inc.,Allis-Chalmers and Bronco Drilling will file a joint proxy statement/prospectus and both companies will file otherrelevant documents concerning the proposed merger transaction with the SEC. INVESTORS ARE URGED TO READ THE JOINT PROXYSTATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY WILLCONTAIN IMPORTANT INFORMATION REGARDING THE MERGER. Investors and security holders may obtain a free copy of the jointproxy statement/prospectus (when available) and the other documents free of charge at the website maintained by the SECat www.sec.gov.
The documents filed with the SEC by Allis-Chalmers may be obtained free of charge from Allis-Chalmers website atwww.alchenergy.com or by calling Allis-Chalmers Investor Relations department at (713)369-0550. The documents filedwith the SEC by Bronco Drilling may be obtained free of charge from Bronco Drillings website at www.broncodrill.com orby calling Bronco Drillings Investor Relations department at (405)242-4444. Investors and security holders are urgedto read the joint proxy statement/prospectus and the other relevant materials when they become available before makingany voting or investment decision with respect to the proposed merger transaction. Allis-Chalmers and Bronco Drillingand their respective directors and executive officers may be deemed to be participants in the solicitation of proxiesfrom the respective stockholders of each company in connection with the merger transaction. Information about thedirectors and executive officers of Allis-Chalmers and their ownership of Allis-Chalmers common stock is set forth inits proxy statement filed with the SEC on April30, 2007. Information about the directors and executive officers ofBronco Drilling and their ownership of Bronco Drilling common stock is set forth in its proxy statement filed with theSEC on April30, 2007. Investors may obtain additional information regarding the interests of such participants byreading the joint proxy statement/prospectus for the Merger when it becomes available.
Multi-Faceted Oilfield Services Company
Directional Drilling
UnderbalancedDrilling
Tubular Services
Production Services
Rental Services
International Drilling
Premium drill pipe andspecialized rentalequipment
Drilling, completion,workover and relatedservices in Argentina
Well planning & engineeringservices, directional drillingpackages, downhole motors,measurement-while-drilling
Compressed air equipment,bits, chemicals and productsfor underbalanced drilling
Specialized equipment andoperators for casing andtubing services
Wire line services, landand offshore pumpingservices and coil tubing
Proven Growth Strategy
Mitigate cyclical risk through balanced operations
Expand geographically internationally and domestically
Prudently pursue strategic, complementary acquisitions
Expand products and services
Since 2004, invested $196 million in capex for organic growth
Current capital budget of $140 million in 2008
Increase utilization of assets in the U.S.
Invest in new technology
Shape organic and acquisition growth efforts to providebalance between:
Onshore vs. offshore
Drilling vs. production
Domestic vs. international
Natural gas vs. crude oil
Rental tools vs. service vs.contract drilling
Diversified Cash Flow Stream Rental Services International Drilling Directional Drilling Underbalanced Drilling Tubular Services Production Services 92.9 160.3 69.4 36 41 27.2
Does not include general corporate items.
($ in millions)
($ in millions)
Do not rely on just one segment for financial and operational results
Strive to diversify revenue and cash flow stream through:
Organic growth of existing business lines
Strategic acquisitions
YTD 9/30/07 Pro Forma Revenue
YTD 9/30/07 Operating Income + D&A Rental Services International Drilling Directional Drilling Underbalanced Drilling Tubular Services Production Services 60.8 38.4 16.1 11.8 12.4 15.7
2002 - 2003 business lines: Tubular Services, Directional Drilling,Underbalanced Drilling
2006 - Established: Rental Services, International Drilling, Production Services
Diversified with increased exposure to offshore, international and production
Successful Execution of Growth Strategy
Note: (1) 2007 period pro-forma for all acquisitions;
(2) LTM 9/30/07 includes pretax gain on sale of assets of $8.9 million;
(3) Adjusted EBITDA net income + interest expense + income taxes + D&A + stock based compensation.
2003 2004 2005 2006 PF - LTM 9/30/07 Revenue 33 48 105 307 557 Adjusted EBITDA 9 8 20 89.5 192
$33
$8
$20
$105
$9
$48
$307
$93
($ in millions)
$192
$557
Bronco Strategic Rationale
Expected to be accretive to ALY shareholders
Potential to cross-sell additional ALY services to Bronco customers
Potential revenue synergies from moving rigs to international locations
Combined balance sheet remains sound, allowing for future organicgrowth and strategic acquisitions
Strategic combination creates a more diversified international oilfieldservices provider with critical mass in the U.S., and broadens the serviceand equipment capabilities of both companies
Provides immediate access to a large number of land drilling rigs in theU.S. and Libya
The merger is expected to enhance domestic and international growthopportunities, and is expected to facilitate relocation of newly acquiredand certain underutilized drilling and workover rigs of Bronco Drilling toLatin America and North African markets
Operational
Financial / Potential
Synergies
Proposed Merger With Bronco Drilling
Merger consideration with an aggregate value of approximately $437.8million:
Transaction will require shareholder approval for both Allis-Chalmers andBronco Drilling
Cash portion of transaction to be arranged through new debt financing andexisting balance sheet cash - bridge commitment received
Expected closing in mid 2008
$280 million in cash
$157.8 million in ALY common stock
Bronco Drilling Company Overview
Bronco provides contract land drilling services tooil and natural gas exploration and productioncompanies
The Company's core operating areas are in:
Oklahoma (Anadarko Basin & Woodford Shale)
Texas (Barnett Shale & Cotton Valley)
Colorado (Piceance Basin)
Arkansas (Arkoma Basin)
North Dakota (Williston Basin)
Current fleet consists of 56 land drilling rigs and 58workover rigs
Bronco entered the production services industry inearly 2007 by acquiring Eagle Well Service, Inc.
Bronco was founded in 2001 and is headquarteredin Edmond, Oklahoma
Source: Corporate website
Geographic Footprint
Bronco currently owns 56 land drilling rigs of which 45 were marketed across various regions inthe United States as of December 31, 2007 and 11 were held in inventory
In November 2007, Bronco announced plans to expand internationally
25% equity stake in Challenger Ltd., an Isle of Man Company with principal operations in Libya,provider of oil and gas land drilling and workover services
Bronco will provide Challenger with six drilling rigs - five from its existing fleet and one newlyconstructed rig
Challenger will purchase four rigs from Bronco's existing fleet
Arkoma Basin:
2 Operating Rigs
Anadarko Basin:
17 Operating Rigs
Cotton Valley:
5 Operating Rigs
Woodford Shale:
11 Operating Rigs
Piceance Basin:
2 Operating Rigs
Williston Basin:
1 Operating Rig
Barnett Shale:
1 Operating Rig
Source: website and press releases
Geographic Footprint (Cont'd)
Bronco Geographic Footprint Post Libya Rig Deployment
Upon the deployment of the rigsassociated to the Challengertransaction, Bronco will move atotal of nine rigs out of the currentfleet of 65 to Libya. Four of themoved rigs were sold toChallenger as part of thetransaction with the remaining fiverigs operating as part of Bronco'sfleet (One additional rig underconstruction will be move to Libyaas well)
Rigs Sold to Challenger
Rigs Contributed to Challenger
United States:
56 total rigs
45 marketed rigs
Libya:
6 Bronco rigs moved includingone newly constructed rig
4 rigs sold to Challenger
Source: website and press releases
Business Overview
Rental Services 2004 2005 2006 9 mos 2007 0.6 5.1 51.5 92.9
Specialized rental equipment for onshoreand offshore operations: premium drill pipe,spiral heavy weight drill pipe, blow outpreventors and valves and handling tools
138 employees
Significant expansion through acquisitions
Specialty Rental Tools January 2006
Oil & Gas Rental Services December 2006
Balanced mix of onshore/offshore work
Texas, Oklahoma, Louisiana, Mississippi,Colorado, offshore in the Gulf of Mexicoand Malaysia, Colombia, Russia and Mexico
Revenue
Operating Income + D&A
Source: Spears & Associates, Inc.
($ in millions)
($ in millions)
$0.6
$5.1
$92.9 2004 2005 2006 9 mos 2007 0 1.8 33.6 60.8
$0.0
$1.8
$60.8
$51.5
$33.6
Directional Drilling 2004 2005 2006 9 mos 2007 3.5 8.3 19.1 16.1
Well planning and engineering services,directional drilling packages, downholemotor technology and other services,including logging-while-drilling (LWD)and measurement-while-drilling (MWD)
Horizontal and directional drilling areamong the fastest growing segments ofthe oilfield services industry - currently43% of wells in US
Team of 120 directional drillers - 245employees total
Approximately 300 downhole motors
Three recent acquisitions in 2007 added140 motors, directional drillers and MWDtools - expanded geographic reach; sixnew MWD kits for January 2008
Revenue
Operating Income + D&A
($ in millions)
($ in millions)
2004 2005 2006 9 mos 2007 24.8 43.9 72.8 69.4
$24.8
$43.9
$72.8
$69.4
$3.5
$8.3
$19.1
$16.1
Tubular Services 2004 2005 2006 9 mos 2007 10.4 20.9 50.9 41
Specialized equipment and trainedoperators for pipe handling services:casing and tubing installation, changingout drill pipe and retrieving productiontubing
322 employees
Acquisition of Rogers (May 2006) providedproducts with new technology
Significant presence in Mexican market
Acquisition of Rebel Rentals (October2007) provides additional tubing runningequipment for domestic and Mexicanmarket
10 new casing Running Tools on order forearly 2008
Revenue
Operating Income + D&A
($ in millions)
2004 2005 2006 9 mos 2007 4.8 7 16.5 12.4
($ in millions)
$10.4
$20.9
$50.9
$41.0
$4.8
$7.0
$16.5
$12.4
International Drilling 2004 2005 2006 9 mos 2007 20 22 37.9 38.4
Acquisition of DLS in August of 2006 -over 40 years of experience
2nd largest provider of land drilling &workover services in Argentina
Fleet of 52 rigs - 20 drilling, 18workover and 13 pulling rigs inArgentina and one drilling rig inBolivia
Awarded five year new-build contractfor 14 service and four drilling rigs
Operates in primarily oil-rich basins(balances natural gas exposure)
Significant portion of 2008 revenuesunder contract
(1) New rigs delivered in 4Q07 through end of 2008
Revenue (1)
Operating Income + D&A (1)
($ in millions)
($ in millions)
2004 2005 2006 9 mos 2007 112.3 129.8 173.3 160.3
$112.3
$129.8
$173.3
$20.0
$22.0
$37.9
$38.4
$160.3
Underbalanced Drilling 2004 2005 2006 9 mos 2007 2.5 7.6 13.9 11.8
Compressed air equipment, drillingbits, hammers, chemicals and otherspecialized products for underbalanceddrilling
Underbalanced drilling is among thefastest growing services
Diversified fleet allowing customized,turnkey packages - nearly 200compressors and boosters
187 employees
Texas, Oklahoma, Colorado, NewMexico, Utah, Wyoming, West Virginia,Alabama and Arkansas
11 new foam units received in 4th qtr2007
Revenue
Operating Income + D&A 2004 2005 2006 9 mos 2007 11.6 25.7 43 36.4
($ in millions)
($ in millions)
$2.5
$7.6
$43.0
$36.4
$11.8
$13.9
$11.6
$25.7
Production Services 2004 2005 2006 9 mos 2007 0 0.8 4.1 15.7
Wire line support rentals, flow back supportrentals, pressure pumping, coiled tubingsupport rentals, and tubing packages
135 employees
Counter-cyclical - tied to production vs. drilling
Significant expansion in October 2006 withacquisition of Petro-Rentals
Currently operate 8 coil tubing packages;additional 6 coil tubing packages to bedelivered in 4Q08
Locations in Texas and Louisiana with openingof new locations in Oklahoma, South Texas, andArkansas in late 2007 and in 2008
Note: 2007 results includes pretax gain on sale of assets of $8.9 million.
Revenue
Operating Income + D&A 2004 2005 2006 9 mos 2007 0.4 9.8 19.6 27.2
$4.1
$0.8
$0.0
$19.6
$0.4
$9.8
($ in millions)
($ in millions)
$27.2
$15.7
Investments in Technology CreateCompetitive Advantage
Rental Tools - Deepwater landing strings and wedge threadtechnology - strength and performance
Proprietary Rogers Hydraulic Power Tong Positioning System -safe, stable, drill pipe connection system
Patented power tong for snubbing - fast and safe hands-freeoperations
Remotely operated hydraulic "catwalk" pipe handling system forsafe delivery of tubulars to rig floor
Underbalanced Drilling - manufacture diamond-enhanced bits -improved rate of penetration
Financial Review
Growth in Profitability and Cash Flow 2004 2005 2006 9 mos 2007 47.7 105.3 307.3 427.1
2004 2005 2006 9 mos 2007 EBITDA 7.8 19.6 92.9 146.8
2004 2005 2006 9 mos 2007 Net Income 0.9 7.2 35.7 44.7
Calculated as net income + interest expense + income taxes + D&A + stock based compensation.
(2) 2007 results include pretax gain on sale of assets of $8.9 million.
Historical Revenue Growth
Historical Adjusted EBITDA(1) Growth
Historical Net Income Growth
Historical Diluted EPS Growth 2004 2005 2006 9 mos 2007 EPS 0.09 0.44 1.66 1.29
($ in millions)
($ in millions)
($ in millions)
($ in millions)
$47.7
$105.3
$307.3
$7.8
$19.6
$92.9
$35.7
$0.9
$7.2
$0.09
$0.44
$1.66
$427.1
$146.8
$44.7
$1.29
Nine Months Results
(In Millions, except per share data)
2006
For the Nine Months EndedSeptember 30
% Change
Revenue
$196.1
$427.1
117.8%
Adjusted EBITDA (1)
$60.8
$146.8
141.4%
Pretax Income
$31.5
$69.5
120.6%
Net Income
$25.3
$44.7
77.0%
Average diluted shares
20.2
34.5
70.8%
Diluted earnings per share
$1.25
$1.29
3.2%
2007
(1) Excludes non-cash stock compensation expense
Tax Rate
19.7%
35.7%
81.2%
Improved Business Diversification
Diversify revenue and cash flow stream through:
Organic growth of existing business lines
Strategic acquisitions
Nine Months Ended 9/30/07
Operating Income + D&A Rental Services International Drilling Directional Drilling Underbalanced Drilling Tubular Services Production Services 0.39 0.25 0.1 0.08 0.08 0.1
3rd Quarter 2007 - Estimated total international revenues and EBITDA were 42% and 35%, respectively, excludingCorporate items.
Capitalization
Decreased leverage ratio -
2.36x Net debt / pro-forma LTM Adjusted EBITDA
December 31,2006
September 30,2007
($ in millions)
Cash
39.7
$
$ 63.1
Sr. Notes due 2014
255.0
$
255.0
$
Sr. Notes due 2017
- -
250.0
Other Debt
313.4
11.4
Total Debt
568.4
$
516.4
$
Stockholders' Equity
253.9
$
405.6
$
Total Capitalization
822.2
$
922.0
$
Net Debt / Capitalization
68%
53%
2008 Operational Assumptions
Rental Services
Benefit of pipe and BOP orders
Consolidation of marketing staff, consolidation of price books and tooltracking systems
Impacted by Gulf of Mexico weakness in 2nd half of 2007 and 2008
Increased emphasis on international diversification and new markets
Directional Drilling - Benefit of 2007 bolt-on acquisitions
Reduction of motor rental costs
Reduction of motor repair costs with NOV; reduction of drillers'retention bonus
Six new MWD kits in January 2008
Three new hot hole steering tools
New activity in mid-continent and West Virginia
2008 Operational Assumptions (Cont.)
Tubular Services
Benefit of Rebel Rental acquisition (October 2007)
Ten new Casing Running Tools in 1st half 2008 - (Three CRT forMexico)
Improved sales of power tongs
Strong Mexico activity; flat domestic casing and tubing business
International Drilling - 20 new drilling and service rigsdelivered 4th qtr 2007 - 3rd qtr 2008. (Four service rigs delivered4th qtr 2007)
95% average utilization of rigs
Direct costs decrease as a percentage of revenues due to priceincreases
Mud chemicals and other revenues increase due to volume andprice increases
2008 Operational Assumptions (Cont.)
Underbalanced Drilling
Full effect of eleven new foam units
Three new boosters reduce rental costs
Diamond bit costs reduced
Expanded presence in mid-continent U.S.; new business in Californiageothermal market
Seasonality in November/December
Production Services
Benefit of full year of coil tubing units received in 2007
Relocation of coil tubing units - South Texas, Oklahoma andArkansas
Reduction of fuel, travel costs and training expenses - - opening ofnew base locations
Delivery of new rental equipment and new pumps
Delivery of six new coil tubing units in 4th qtr 2008
Investment Highlights
Successful execution of growth strategy
Strategic position in high growth markets
Diversified and increased cash flow sources
Strong relationships with diversified customer base
Experienced management team
High inside ownership
Company Headquarters
5075 Westheimer, Suite 890
Houston, TX 77056
713-369-0550
www.alchenergy.com
Company Contact:
Jeffrey R. Freedman,
Vice President - Investor Relations
Allis-Chalmers Energy
EBITDA Reconciliations
Reconciliation of EBITDA and Adjusted EBITDA to GAAP Net Income
($ in millions)
For the Nine Months Ended
09/30/07 09/30/06
Net income 44.66 25.27
Depreciation and amortization 40.25 13.82
Interest expense, net 34.95 12.83
Income taxes 24.79 6.20
EBITDA 144.65 58.12
Stock compensation expense (non-cash) 2.13 2.64
Adjusted EBITDA 146.78 60.76
Supplemental Disclosure Regarding Non-GAAPFinancial Information
EBITDA represents net income (loss) before income taxes, interest anddepreciation and amortization. EBITDA is not a presentation made in accordancewith generally accepted accounting principles ("GAAP") and is not a measure offinancial condition or profitability. EBITDA should not be considered in isolation oras a substitute for "net income (loss)", the most directly comparable GAAP financialmeasure, or as an indicator of operating performance.
By presenting EBITDA, Allis-Chalmers intends to provide investors with a betterunderstanding of its core operating results to measure past performance as well asprospects for the future. Allis-Chalmers evaluates operating performance based onseveral measures, including EBITDA, as Allis-Chalmers believes it is an importantmeasure of the operational strength of its business.
EBITDA may not be comparable to similarly titled measures used by othercompanies. EBITDA is not necessarily a measure of Allis-Chalmers' ability to fundits cash needs, as it excludes certain financial information when compared to "netincome (loss)". Users of this financial information should consider the types ofevents and transactions which are excluded. A reconciliation of EBITDA to netincome (loss) follows:
EX-99.23c72189exv99w2.htmEXHIBIT 99.2
Filed by Bowne Pure Compliance
Filed by Allis-Chalmers Energy Inc. pursuant
to Rule425 under the Securities Act of 1933
and deemed filed pursuant to Rule14a-12 under the
Securities Exchange Act of 1934
Subject Company: Bronco Drilling Company, Inc.
Commission File No.: 000-51471
Contact:
Jeffrey R. Freedman
Vice President Investor Relations
Allis-Chalmers Energy Inc.
713-369-0550
New Officer Appointments, and Preliminary Unaudited
Results for the Full Year 2007
713-369-0550 P 281-768-3891 F
713-369-0550 P 281-768-3891 F
1st Quarter Full Year
($in millions) 2008 Estimate 2008 Estimate
$150 to $155
$655 to $670
$39 to $40
$188 to $193
$41 to $43
$195 to $201
(on a fully-diluted basis)
$0.21 to $0.23
$1.35 to $1.45
713-369-0550 P 281-768-3891 F
Reconciliations of this financial measure to net income, the most directly comparable GAAPfinancial measure, are provided in the table below.
713-369-0550 P 281-768-3891 F
($ in millions)
Three Months Ended Year Ended
12/31/07 12/31/07
5.6 50.3
14.9 55.1
11.3 46.3
4.1 28.9
35.9 180.6
2.7 4.8
38.6 185.4
Forward Guidance
($in millions) 1Q08E 1Q08E 2008E 2008E
Lo Case Hi Case Lo Case Hi Case
7.6 8.4 48.6 52.2
15.6 15.6 66.8 66.8
11.2 11.2 43.7 43.7
4.4 4.9 28.5 30.7
$ 38.8 $ 40.1 $ 187.6 $ 193.4
2.5 2.5 7.3 7.3
$ 41.3 $ 42.6 $ 194.9 $ 200.7
713-369-0550 P 281-768-3891 F
Important Additional Information
In connection with the proposed merger transaction between Allis-Chalmers and Bronco Drilling Company, Inc.,Allis-Chalmers and Bronco Drilling will file a joint proxy statement/prospectus and both companies will file otherrelevant documents concerning the proposed merger transaction with the SEC. INVESTORS ARE URGED TO READ THE JOINT PROXYSTATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY WILLCONTAIN IMPORTANT INFORMATION REGARDING THE MERGER. Investors and security holders may obtain a free copy of the jointproxy statement/prospectus (when available) and the other documents free of charge at the website maintained by the SECat www.sec.gov.
The documents filed with the SEC by Allis-Chalmers may be obtained free of charge from Allis-Chalmers website atwww.alchenergy.com or by calling Allis-Chalmers Investor Relations department at (713)369-0550. The documents filedwith the SEC by Bronco Drilling may be obtained free of charge from Bronco Drillings website at www.broncodrill.com orby calling Bronco Drillings Investor Relations department at (405)242-4444. Investors and security holders are urgedto read the joint proxy statement/prospectus and the other relevant materials when they become available before makingany voting or investment decision with respect to the proposed merger transaction. Allis-Chalmers and Bronco Drillingand their respective directors and executive officers may be deemed to be participants in the solicitation of proxiesfrom the respective stockholders of each company in connection with the merger transaction. Information about thedirectors and executive officers of Allis-Chalmers and their ownership of Allis-Chalmers common stock is set forth inits proxy statement filed with the SEC on April30, 2007. Information about the directors and executive officers ofBronco Drilling and their ownership of Bronco Drilling common stock is set forth in its proxy statement filed with theSEC on April30, 2007. Investors may obtain additional information regarding the interests of such participants byreading the joint proxy statement/prospectus for the Merger when it becomes available.
713-369-0550 P 281-768-3891 F
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