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

Exhibit 99.2

CONTENTS

Independent Auditor’s Report

Balance Sheets as of December 31, 2005 and 2004

Statements of Income for the Years Ended December 31, 2005 and 2004

Statements of Changes in Stockholder’s Equity for the Years Ended December 31, 2005 and 2004

Statements of Cash Flows for the Years Ended December 31, 2005 and 2004

Notes to the Financial Statements

Unaudited Balance Sheet as of September 30, 2006

Unaudited Statement of Income for the Nine Months Ended September 30, 2006

Unaudited Statement of Cash Flows for the Nine Months Ended September 30, 2006

Notes to the Unaudited Financial Statements

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors
Petro Rentals, Inc.
Broussard, Louisiana

     We have audited the accompanying balance sheets of Petro Rentals, Inc. as of December 31, 2005 and 2004, and the related statements of income, retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Petro Rentals, Inc. as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Broussard, Pochè, Lewis & Breaux, L.L.P.

Crowley, Louisiana
March 13, 2006

PETRO RENTALS, INC.

BALANCE SHEETS
December 31, 2005 and 2004

	2005		2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,052,983	$	2,854,963
Accounts receivable		3,063,555		1,803,938
Inventories		300,538		236,822
Prepaid Expenses		591,267		305,196
Investments		210,975		200,000
Due from shareholders		—		18,324
Other current assets		2,363		1,863
Total current assets	$	6,221,681	$	5,421,106
FIXED ASSETS, net		9,122,707		4,542,213
Total assets	$	15,344,388	$	9,963,319
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES
Current portion of notes payable	$	893,396	$	260,000
Accounts payable		253,226		196,094
Accrued expenses		174,483		299,238
Sales tax payable		38,190		24,929
Total current liabilities	$	1,359,295	$	780,261
LONG-TERM LIABILITIES
Long-Term portion of notes payable	$	2,585,322		—
Deferred taxes		1,140,318		397,342
Total long-term liabilities	$	3,725,640	$	397,342
STOCKHOLDER’S EQUITY
Capital stock, no par value, 300 shares authorized, issued and outstanding	$	100,950	$	100,950
Accumulated other comprehensive income		7,590		—
Retained earnings		10,150,913		8,684,766
Total stockholders’ equity	$	10,259,453	$	8,785,716
Total liabilities and stockholder’s equity	$	15,344,388	$	9,963,319

See Accompanying Notes to Financial Statements.

PETRO RENTALS, INC.

STATEMENTS OF INCOME
Years Ended December 31, 2005 and 2004

	2005		2004
Sales	$	13,596,918	$	8,663,607
Cost of sales		6,898,371		418,246
Gross profit	$	6,698,547	$	8,245,361
General and administrative expenses		3,867,152		6,296,247
Net income from operations	$	2,831,395	$	1,949,114
Other income:
Interest income	$	88,770	$	28,479
Other deductions:
Interest expenses	$	82,853	$	10,753
Income before income taxes	$	2,837,312	$	1,966,840
Provision for income taxes		1,071,165		748,780
Net income	$	1,766,147	$	1,218,060

See Accompanying Notes to Financial Statements.

PETRO RENTALS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
Years Ended December 31, 2005 and 2004

			Accumulated Other
			Comprehensive
	Capital Stock		Income		Retained Earnings			Total
Balance, December 31, 2003	$	100,950	$	—	$	7,466,706		$	7,567,656
Net income		—		—		1,218,060			1,218,060
Balance, December 31, 2004	$	100,950	$	—	$	8,684,766		$	8,785,716
Net income		—		—		1,766,147			1,766,147
Other comprehensive income:
Changes in net unrealized gain (loss) on securities available for sale, net of reclassification adjustment and tax effect		—		7,590		—			7,590
Total comprehensive income									1,733,737
Dividends paid		—		—		(300,000	)		(300,000	)
Balance, December 31, 2005	$	100,950	$	7,590	$	10,150,913		$	10,259,453

See Accompanying Notes to Financial Statements.

PETRO RENTALS, INC.

STATEMENTS OF CASH FLOWS
Year End December 31, 2005 and 2004

	2005			2004
CASH FLOW FROM OPERATING ACTIVITIES
Net income	$	1,766,147		$	1,218,060
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,860,377			1,184,103
Provision for deferred income taxes		739,066			(13,483	)
Loss of disposal of property		—			240
(Increase) decrease in assets:
Accounts receivable		(1,259,617	)		(155,066	)
Prepaid expense		(286,071	)		1,342
Inventories		(63,716	)		(71,928	)
Other current assets		(500	)		—
Other assets		18,324			551,470
Increase (decrease) in liabilities:
Accounts payable		57,132			77,758
Accrued expenses		(111,494	)		137,392
Income tax payable					(227	)
Net cash provided by operating activities	$	2,719,648		$	2,929,661
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property	$	108,307		$	37,156
Purchase of investments		—			(200,000	)
Net withdrawals from investments		525			—
Capital expenditures		(6,549,178	)		(1,431,117	)
Net cash used in investing activities	$	(6,440,346	)	$	(1,593,961	)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid	$	(300,000	)	$	—
Proceeds from loans		4,509,888			—
Payments on borrowings	$	(1,291,170	)	$	143,236
Net cash used in financing activities	$	2,918,718		$	143,236
Net increase (decrease) in cash and cash equivalents	$	(801,980	)	$	1,478,936
Cash and cash equivalents at beginning of year		2,854,963			1,367,027
Cash and cash equivalents at end of year	$	2,052,983		$	2,854,963
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest	$	82,853		$	10,753
Income taxes	$	741,760		$	936,147
Change in unrealized gain on available for sale securities	$	7,590		$	—

See Accompanying Notes to Financial Statements.

PETRO RENTALS, INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Nature of operations:

Petro Rentals, Inc. was chartered on April 12, 1988. The Company is primarily engaged in rental of equipment related to the oil field services industry and operates in and around the southern region of Louisiana.

Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents:

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Accounts receivable:

No allowance for uncollectible accounts has been provided. Management has evaluated the accounts and believes they are all collectible. Credit extended to certain customers is uncollateralized.

Inventory:

The Company carries on the books inventory for items held for internal use. The Company values this inventory at the lower of cost or market on the first-in-first-out method.

Fixed assets:

All fixed assets are recorded at cost and depreciated over their estimated useful lives, using the straight-line method. (Estimated useful lives range from 1 to 7 years). Upon sale or retirement or other disposition of fixed assets, the cost and related accumulated depreciation are eliminated from the respective accounts, and the resulting gain or loss is included in the results of operations.

Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to expense as incurred.

Long-lived assets:

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount of fair value less cost to sell. A review of such assets of the Company has not indicated any material effect on the Company’s financial position or results of operations.

PETRO RENTALS, INC.

NOTES TO THE FINANCIAL STATEMENTS

Income taxes:

The Company provides for federal and state income taxes currently payable, as well as for those deferred because of timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal and state incentive tax credits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

Deferred taxes are provided for temporary differences between financial and tax accounting, primarily for differences in depreciation for book versus income tax purposes.

Concentration of credit risk:

At December 31, 2005, the Company had deposits with local banks approximating $2,114,940 in excess of FDIC insurance of $100,000 per depositor.

Investments:

The Company’s investments consist of the purchases of securities. The investments are recorded at fair market value.

Environmental matters:

Since the Company’s present and future operations include activities which are subject to extensive state and federal regulations, the Company may be required to clean up certain contaminated sites should they occur. The Company is currently not involved with any clean-up activities.

Advertising:

The Company conducts non-direct response advertising. These costs are expensed as incurred. Advertising costs charged to operations amounted to $249,690 and $213,291, for the years ended December 31, 2005 and 2004, respectively.

Reclassifications:

Certain amounts in prior years have been reclassified to conform to the presentation adopted in the current year.

Note 2. Accounts Receivable

As of the end of the year accounts receivable consisted of amounts due from customers for rental charges. Management believed that all accounts receivable were collectible as of the end of the year and consequently has recognized no allowance as of December 31, 2005 and 2004.

PETRO RENTALS, INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 3. Investments

The carrying amounts of investment securities as shown in the balance sheets and their approximate fair values at December 31, 2005 and 2004 were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2005:
Available for sale	$	199,475	$	14,076	$	2,576	$	210,975
December 31, 2004:
Available for sale	$	200,000	$	—	$	—	$	200,000

Note 4. Fixed Assets

Fixed assets are summarized as follows as of December 31, 2005 and 2004:

	2005			2004
Buildings and improvements	$	650,423		$	563,127
Office furniture and fixtures		468,711			409,277
Vehicles and accessories		3,080,390			1,628,144
Service and rental equipment		10,694,231			9,051,466
Coiled tubing equipment		2,985,820			—
Software		21,838			21,838
Land and land improvements		145,851			141,461
	$	18,047,264		$	11,815,313
Less: accumulated depreciation and amortization		(8,924,557	)		(7,273,100	)
Fixed assets, net	$	9,122,707		$	4,542,213

Depreciation expense amounted to $1,860,377 and $1,184,103 for the years ending December 31, 2005 and 2004.

Note 5. Related Parties

Amounts due from related parties as of December 31, 2005 and 2004 were as follows:

	2005		2004
Due from shareholder	$	—	$	18,324

This advance carried no rate of interest. Rent expense of $207,600 and $131,600 was paid to the sole shareholder of the Corporation for the rental of a building as of December 31, 2005 and 2004, respectively.

PETRO RENTALS, INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 6. Notes Payable

Notes payable consisted of the following as of December 31, 2005:

Note with Regions Bank — payable on demand or if no demand is made, one payment of all outstanding principal plus all accrued interest on March 20, 2006, with interest at 4.340%, variable. Secured by assignment of premium financial agreement, disclosure statement and security agreement dated May 20, 2005, executed between Petro Rentals, Inc. and ICT Insurance.	$	132,626
Note with MidSouth Bank — this multi advance loan is payable on demand or if no demand is made, one payment of all outstanding principal plus all accrued interest on February 5, 2011, with interest at 6.04%, variable. MidSouth Bank has a continuing security interest in any and all funds that Petro Rentals, Inc. has or may have in the future on deposit with MidSouth Bank or in certificate of deposit or other deposit accounts in which Petro Rentals, Inc. is an account holder.	$	3,346,092
Notes payable consisted of the following as of December 31, 2004:
Note with Regions Bank — payable on demand or if no demand is made, one payment of all outstanding principal plus all accrued interest on January 31, 2005, with interest at 3.60%, variable. Secured by all inventory, accounts, equipment and general intangibles.	$	260,000

Aggregate maturities required on notes payable at December 31, 2005 are as follows:

2006	$	893,396
2007		912,924
2008		912,924
2009		336,359
2010 and later		423,115
	$	3,478,718

Note 7. Income Taxes

Income tax expense consisted of the following:

	2005		2004
Income taxes currently paid or payable:
Current:
Federal	$	290,577	$	645,821
State		41,375		116,442
	$	331,952	$	762,263
Deferred tax (benefit) liability
Federal	$	629,378	$	(11,536	)
State		109,835		(1,947	)
	$	739,213	$	(13,483	)
Income tax expense	$	1,071,165	$	748,780

PETRO RENTALS, INC.

NOTES TO THE FINANCIAL STATEMENTS

Deferred tax liabilities are primarily the result of differences between book and tax depreciation. The following is a reconciliation of income tax at the federal statutory rate to the provision for income taxes:

	2005		2004
Tax at statutory rate of 34%	$	1,006,391	$	710,905
State income tax, net		51,411		34,985
Non-deductible items		13,363		2,890
	$	1,071,165	$	748,780

Deferred tax liabilities at December 31, 2005 and 2004, consist of accumulated depreciation.

Note 8. Subsequent Events

Subsequent to year end, the company added a coiled tubing division. The addition of this division required the purchase of equipment of approximately $5,000,000 for which the company obtained financing through a local financial institution.

PETRO RENTALS, INC.

UNAUDITED BALANCE SHEET
September 30, 2006

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,768,575
Accounts receivable, net		4,989,308
Inventories		400,546
Prepaid Expenses		629,091
Investments		218,772
Other current assets		10,000
Total current assets		9,016,292
FIXED ASSETS, net		13,187,482
OTHER ASSETS		2,365
Total assets	$	22,206,139
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES
Current maturities of debt	$	2,016,977
Accounts payable		407,686
Accrued expenses		1,209,690
Total current liabilities		3,634,353
LONG-TERM LIABILITIES Long-term debt, net of current maturities		5,494,004
Deferred taxes		1,140,318
Total liabilities		10,268,675
STOCKHOLDER’S EQUITY
Capital stock, no par value, 300 shares authorized, issued and outstanding		100,950
Accumulated other comprehensive income		6,706
Retained earnings		11,829,808
Total stockholders’ equity		11,937,464
Total liabilities and stockholder’s equity	$	22,206,139

See Accompanying Notes to Financial Statements.

PETRO RENTALS, INC.

UNAUDITED STATEMENT OF INCOME
For The Nine Months Ended September 30, 2006

Revenues	$	14,652,499
Cost of revenues		8,211,600
Gross profit		6,440,899
General and administrative expenses		3,510,178
Net income from operations		2,930,721
Other :
Interest income		69,953
Interest expenses		(248,319	)
Income before income taxes		2,752,355
Provision for income taxes		1,073,460
Net income	$	1,678,895

See Accompanying Notes to Financial Statements.

PETRO RENTALS, INC.

UNAUDITED STATEMENT OF CASH FLOWS
For The Nine Months Ended September 30, 2006

CASH FLOW FROM OPERATING ACTIVITIES
Net income	$	1,678,895
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,286,586
Loss on disposal of property		242,483
Provision for bad debts		150,000
(Increase) in assets:
Accounts receivable		(2,075,753	)
Prepaid expense		(37,824	)
Inventories		(100,008	)
Other current assets		(10,00	)
Other assets		(2	)
Increase in liabilities:
Accounts payable		154,916
Accrued expenses		997,017
Net cash provided by operating activities		3,286,310
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property		300,690
Net purchase of investments		(9,137	)
Capital expenditures		(6,894,534	)
Net cash used in investing activities		(6,602,981	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans		4,821,738
Payments on borrowings		(789,475	)
Net cash provided by financing activities		4,032,263
Net increase in cash and cash equivalents		715,592
Cash and cash equivalents at beginning of year		2,052,983
Cash and cash equivalents at end of year	$	2,768,575

See Accompanying Notes to Financial Statements.

PETRO RENTALS, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Nature of operations:

Petro Rentals, Inc. was chartered on April 12, 1988. The Company is primarily engaged in rental of equipment related to the oil field services industry and operates in and around the southern region of Louisiana.

Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue recognition.

The Company provides rental equipment to its customers at per day contractual rates and recognizes the revenue when collectibility is reasonable assured. The Company’s revenue recognition policy is in accordance with generally accepted accounting principles.

Cash and cash equivalents:

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Allowance for doubtful accounts:

Accounts receivable are customer obligations due under normal trade terms. The Company sells its services to oil and natural gas exploration and production companies. The Company performs continuing credit evaluations of its customers’ financial condition and generally does not require collateral.

The allowance for doubtful accounts is based on management’s evaluation of outstanding accounts receivable at the end of the period. Bad debt expense for the nine months ended September 30, 2006, was $150,000.

Inventory:

The Company carries on the books inventory for items held for internal use. The Company values this inventory at the lower of cost or market on the first-in-first-out method.

Fixed assets:

All fixed assets are recorded at cost and depreciated over their estimated useful lives, using the straight-line method. (Estimated useful lives range from 1 to 7 years). Upon sale or retirement or other disposition of fixed assets, the cost and related accumulated depreciation are eliminated from the respective accounts, and the resulting gain or loss is included in the results of operations.

Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to expense as incurred.

PETRO RENTALS, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

Long-lived assets:

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount of fair value less cost to sell. A review of such assets of the Company has not indicated any material effect on the Company’s financial position or results of operations.

Income taxes:

The Company provides for federal and state income taxes currently payable, as well as for those deferred because of timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal and state incentive tax credits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

Deferred taxes are provided for temporary differences between financial and tax accounting, primarily for differences in depreciation for book versus income tax purposes.

Concentration of credit risk:

The Company transacts business with two financial institutions and the amount on deposit exceeded the $100,000 federally insured limit at September 30, 2006 by in excess of $2.5 million. Management believes that the financial institutions are financially sound and the risk of loss is minimal.

Investments:

The Company’s investments consist of the purchases of securities. The investments are recorded at fair market value.

Environmental matters:

Since the Company’s present and future operations include activities which are subject to extensive state and federal regulations, the Company may be required to clean up certain contaminated sites should they occur. The Company is currently not involved with any clean-up activities.

PETRO RENTALS, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

Note 2. Investments

The carrying amounts of investment securities as shown in the balance sheets and their approximate fair values at September 30, 2006 were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
September 30, 2006
Available for sale	$	208,612	$	16,258	$	6,098	$	218,772

Note 3. Fixed Assets

Fixed assets are summarized as follows as of September 30, 2006:

Buildings and improvements	$	664,779
Office furniture and fixtures		508,719
Vehicles and accessories		5,161,681
Service and rental equipment		12,559,026
Coiled tubing equipment		4,557,120
Software		21,838
Land and land improvements		199,621
		23,672,784
Less: accumulated depreciation and amortization		(10,485,302	)
Fixed assets, net	$	13,187,482

Depreciation expense amounted to $2,286,586 for the nine months ended September 30, 2006.

PETRO RENTALS, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

Note 4. Debt

The Company’s debt as of September 30, 2006:

$12.5 million loan facility with Regions Bank. The facility provides for advances up to the closing date of December 15, 2006 when the balance of the facility will be funded. The loan matures on December 15, 2011 with scheduled monthly principal payments. Interest is at a fixed rate of 7.21%.. Secured by substantially all of the Company’s assets.	$	7,094,957
Insurance premium financing to be repaid over ten months at an interest rate of 6.42%. The final payment is due March 19, 2007.		416,024
Total		7,510,981
Less current maturities		2,016,977
Long-term		5,494,004

Aggregate maturities required on notes payable at September 30, 2006 are as follows:

2007	$	2,016,977
2008		2,273,394
2009		2,442,832
2010		777,778
2011 and later		—
	$	7,510,981

Note 5. Subsequent Events

On October 17, 2006, all of the outstanding stock of the Company was sold to Allis-Chalmers Production Services, Inc., a wholly-owned subsidiary of Allis-Chalmers Energy Inc. In connection with change in ownership, all of the long-term debt was repaid.