Allis Chalmers Energy 8-K/A Financial Statements and Exhibits

Exhibit 99.4

ALLIS-CHALMERS ENERGY INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION AS OF
DECEMBER 31, 2005

	ALLIS-								ALLIS-
	CHALMERS		SPECIALTY			PRO-FORMA			CHALMERS
	CONSOLIDATED		HISTORICAL			ADJUSTMENTS			CONSOLIDATED
ASSETS
Cash and cash equivalents	$	1,920	$	17,476		$	(11,054	)AA	$	8,342
Trade receivables, net		26,964		7,254			—			34,218
Inventories		5,945		348			—			6,293
Prepaids and other		823		63			—			886
Total Current Assets		35,652		25,141			(11,054	)		49,739
Property and equipment, net		80,574		19,046		71,061		AB		170,681
Goodwill		12,417		—			—			12,417
Other intangibles, net		6,783		—			—			6,783
Debt issuance costs, net		1,298		—		5,365		AC		6,663
Other assets		631		—			—			631
Total Assets	$	137,355	$	44,187		$	65,372		$	246,914
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current maturities of long-term debt	$	5,632	$	3,084		$	(6,318	)AD	$	2,398
Trade accounts payable		9,018		1,380			—			10,398
Accrued employee benefits		1,271		—			—			1,271
Accrued interest		289		—			—			289
Accrued expenses		4,350		13,008		(12,400		)AE		4,958
Accounts payable, related parties		60		—			—			60
Total Current Liabilities		20,620		17,472			(18,718	)		19,374
Accrued postretirement benefit obligations		335		—			—			335
Long-term debt, net of current maturities		54,937		429		110,376		AD		165,742
Other long-term liabilities		588		—			—			588
		76,480		17,901			91,658			186,039
STOCKHOLERS’ EQUITY
Common stock		169		156		(156		)AF		169
Capital in excess of par value		58,889		—			—			58,889
Treasury stock, at cost		—		(736	)	736		AF		—
Retained earnings		1,817		26,866		(26,866		)AF		1,817
Total Stockholders’ Equity		60,875		26,286			(26,286	)		60,875
Total Liabilities and Stockholders’ Equity	$	137,355	$	44,187		$	65,372		$	246,914

See notes to unaudited pro forma consolidated condensed financial statements.

ALLIS-CHALMERS ENERGY INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
(In thousands, except per share data)

	ALLIS-						DIAMOND							DOWNHOLE							DELTA							CAPCOIL							W.T. ENT											SPECIALTY				ALLIS-
	CHALMERS			DIAMOND			PURCHASE				DOWNHOLE			PURCHASE				DELTA			PURCHASE				CAPCOIL			PURCHASE				W.T. ENT			PURCHASE				MI PURCHASE				SPECIALTY			PURCHASE				CHALMERS
	CONSOLIDATED			HISTORICAL			ADJUSTMENTS				HISTORICAL			ADJUSTMENTS				HISTORICAL			ADJUSTMENTS				HISTORICAL			ADJUSTMENTS				HISTORICAL			ADJUSTMENTS				ADJUSTMENTS				HISTORICAL			ADJUSTMENTS				CONSOLIDATED
Sales	$	47,726		$	5,584		$	—				4,793			—			$	3,249			—			$	5,774			—			$	3,862			—				—			$	19,109			—			$	90,097
Cost of Sales		35,300			3,565			—				3,876			—				826			298		A		4,400			398		A		2,764			(904	)	B		—				5,153			6,576		A		62,252
Gross Profit		12,426			2,019			—				917			—				2,423			(298	)			1,374			(398	)			1,098			904				—				13,956			(6,576	)			27,845
Marketing and Administrative Expense		8,199			664			163		C		872			83		C		1,798			(940	)	D		676			110		C		514			93		C		—				5,219			388		E		17,839
Income (Loss) from Operations		4,227			1,355			(163	)			45			(83	)			625			642				698			(508	)			584			811				—				8,737			(6,964	)			10,006
Other Income
Interest Income		32			—			—				—			—				4			—				—			—				—			—				—				46			(46	)	F		36
Interest Expense		(2,808	)		(59	)		59		G		(74	)		74		G		(49	)		49		G		(74	)		74		G		(44	)		(406	)	H		(733	)	H		(12	)		(9,902	)	H		(13,905	)
Other		272			(26	)		—				—			—				114			—				—			—				—			—				—				(77	)		—				283
Income (Loss) Before Taxes		1,723			1,270			(104	)			(29	)		(9	)			694			691				624			(434	)			540			405				(733	)			8,694			(16,912	)			(3,580	)
Minority Interest		(321	)		—			(524	)	I		—			—				—			—				—			—				—			—				845		J		—			—				—
Taxes		(514	)		—			—				—			—				(265	)		265		K		—			—				(113	)		113		K		—				—			—				(514	)
Net Income/ (Loss)		888			1,270			(628	)			(29	)		(9	)			429			956				624			(434	)			427			518				112				8,694			(16,912	)			(4,094	)
Preferred Dividend		(124	)		—			—				—			—				—			—				—			—				—			—				—				—			—				(124	)
Net income/ (loss) attributed to common shares	$	764		$	1,270		$	(628	)		$	(29	)	$	(9	)		$	429		$	956			$	624		$	(434	)		$	427		$	518			$	112			$	8,694		$	(16,912	)		$	(4,218	)
Pro forma net income (loss) per common share
Basic	$	0.10																																																$	(0.49	)
Diluted	$	0.09																																																$	(0.49	)
Weighted average shares outstanding
Basic		7,930																				385		L					294		L																				8,609
Diluted		9,510																				385		L					294		L																				8,609
EBITDA																																																		$	25,593	P

     See notes to unaudited pro forma consolidated condensed financial statements.

ALLIS-CHALMERS ENERGY INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
(In thousands, except per share data)

	ALLIS-						DELTA							CAPCOIL							W.T. ENT											SPECIALTY				ALLIS-
	CHALMERS			DELTA			PURCHASE				CAPCOIL			PURCHASE				W.T. ENT			PURCHASE				MI PURCHASE				SPECIALTY			PURCHASE				CHALMERS
	CONSOLIDATED			HISTORICAL			ADJUSTMENTS				HISTORICAL			ADJUSTMENTS				HISTORICAL			ADJUSTMENTS				ADJUSTMENTS				HISTORICAL			ADJUSTMENTS				CONSOLIDATED
Sales	$	105,344		$	821		$	—			$	2,161			—			$	2,057			—				—			$	31,439			—			$	141,822
Cost of Sales		74,763			211			82		A		1,458			132		A		1,331			(286	)	M		—				7,280			5,564		A		90,535
Gross Profit		30,581			610			(82	)			703			(132	)			726			286				—				24,159			(5,564	)			51,287
Marketing and Administrative Expense		17,363			985			(665	)	D		421			28		C		342			75		C		—				19,632			(12,449	)	N		25,732
Income (Loss) from Operations		13,218			(375	)		583				282			(160	)			384			211				—				4,527			6,885				25,555
Other Income
Interest Income		—			3			—				—			—				—			—				—				136			(136	)	F		3
Interest Expense		(4,397	)		(11	)		11		G		(26	)		(16	)	G		(17	)		(102	)	H		(366	)	H		(185	)		(9,691	)	H		(14,800	)
Other		186			116			—				—			—				—			—				—				72							374
Income (Loss) Before Taxes		9,007			(267	)		594				256			(176	)			367			109				(366	)			4,550			(2,942	)			11,132
Minority Interest		(488	)		—			—				—			—				—			—				488		J		—			—				—
Taxes		(1,344	)		(142	)		142		K		(87	)		87		K		(111	)		111		K		—				—			—				(1,344	)
Net Income/ (Loss)		7,175			(409	)		736				169			(89	)			256			220				122				4,550			(2,942	)			9,788
Preferred Dividend		—			—			—				—			—				—			—				—				—			—				—
Net income/ (loss) attributed to common shares	$	7,175		$	(409	)	$	736			$	169		$	(89	)		$	256		$	220			$	122			$	4,550		$	(2,942	)		$	9,788
Pro forma net income (loss) per common share
Basic	$	0.48																																		$	0.65
Diluted	$	0.44																																		$	0.60
Weighted average shares outstanding
Basic		14,832						55		O					62		O																				14,949
Diluted		16,238						55		O					62		O																				16,355
EBITDA																																				$	43,131	P

See notes to unaudited pro forma consolidated condensed financial statements.

ALLIS-CHALMERS ENERGY INC

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS

The following pro forma adjustments have been made to the historical financial statements:

AA.)	Reflects the usage of excess cash of Specialty to pay existing debt and make distributions to seller. Also reflects borrowings from Senior Notes in excess of debt repayments and financing costs.
AB.)	Reflects the step-up in the basis of the fixed assets as a result of the acquisition of Specialty to the lower of fair market value or actual cost.
AC.)	Reflects the debt issuance costs related to the Senior Notes
AD.)	Reflects the proceeds of the Senior Notes, less debt repayment from available cash.
AE.)	Reflects the elimination of bonuses accrued by the seller of Specialty.
AF.)	Reflects the elimination of Specialty’s stockholders equity.
A.)	Reflects the increase in depreciation expense as a result of the step-up in basis of fixed assets.
B.)	Reflects the elimination of lease expense not assumed as part of the acquisition, net of additional depreciation expense of $249,000 due to the increase value of the assets acquired in the W.T. Enterprises purchase.
C.)	Reflects the increase in amortization due to the increase in other intangible assets in connection with the acquisitions of Diamond, Downhole, Capcoil and W.T. Enterprises.
D.)	Reflects the elimination of year end bonus paid to the employees of Delta.
E.)	Reflects the following changes in general and administrative cost that will result from the acquisition of Specialty:

• The elimination of director fees of $96,000,

• the elimination of officer salary of $228,000

• increased rent expense of $12,000 and

• increased amortization expense of $700,000 related to the debt issuance costs of the Senior Notes.

F.)	Reflects the elimination of interest income as the pro forma assumes excess cash was utilized to offset borrowings.
G.)	Reflects the elimination of interest expense due to historical debt not being assumed.
H.)	Reflects the interest expense related to cash borrowed to affect the acquisitions of W.T., the minority interest of M-1 and Specialty.
I.)	Reflects the 45% minority interest position of M-I on the results of operations for Diamond, which operates as a division of AirComp.
J.)	Reflects the elimination of the 45% minority interest position of M-I.
K.)	Reflects the elimination of tax provisions of the Delta and W.T. Enterprises acquisitions as Allis-Chalmers has tax net operating losses to offset net income of the acquired entities.
L.)	Reflects the issuance of shares of our common stock as part of the acquisition price. The pro forma treats the shares as having been issued at the stock price of $2.60 on January 1, 2004.

	The Delta and Capcoil acquisitions were comprised of $1.0 million in stock and $765,000 in stock, respectively.
M.)	Reflects the elimination of lease expense not assumed as part of the acquisition, net of additional depreciation expense of $187,000 due to the increase value of the assets acquired in the W.T. Enterprises purchase.
N.)	Reflects the following general and administrative cost savings that will result from the acquisition of Specialty:

• The elimination of year-end bonuses of $12.4 million

• the elimination of director fees of $96,000,

• the elimination of professional fees related to the sale of $78,000,

• decreased rent expense of $347,000,

• the elimination of officer salary of $228,000 and

• increased amortization expense of $700,000 related to the debt issuance costs of the Senior Notes.

O.)

Reflects the issuance of shares of our common stock as part of the acquisition price of Delta and Capcoil. The pro forma treats the shares as having been issued at the stock price of $4.90 on January 1, 2005. The Delta and Capcoil acquisitions were comprised of $1.0 million in stock and $765,000 in stock, respectively.

P.)

Use of EBITDA & Regulation G Reconciliation. This report contains references to EBITDA, a non-GAAP financial measure that complies with federal securities regulations when it is defined as net income (the most directly comparable GAAP financial measure) before interest, taxes, depreciation and amortization. We define EBITDA accordingly for the purposes of this report. However, EBITDA, as used and defined by Allis-Chalmers, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, we believe EBITDA is useful to an investor in evaluating our operating performance because:

• it is widely used by investors in the energy industry to measure a company’s operating performance without regard to the items excluded from EBITDA, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;

• it helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure and asset base from our operating results; and

• it is used by our management for various purposes, including as a measure of operating performance, in presentations to our board of directors, as a basis for strategic planning and forecasting, as a component for setting incentive compensation and to assess compliance in financial ratios, among others.

There are significant limitations to using EBITDA as a measure of performance, including the inability to analyze the effect of recurring and non-recurring items that are excluded from EBITDA and materially affect net income or loss, results of operations, and the lack of compatibility of the results of operations of different companies.

Reconciliations of this financial measure to net income, the most directly comparable GAAP financial measure, are provided in the table below.

	December 31,
	2005		2004
	(in thousands)
Net income (loss)	$	9,789	$	(4,094	)
Interest expense, net		14,797		13,869
Income taxes		1,344		514
Depreciation and amortization		17,201		15,304
EBITDA	$	43,131	$	25,593