Allis Chalmers Energy 8-K Entry into a Material Definitive Agreement

EXHIBIT 99.3

Introduction

     Our unaudited pro forma as adjusted balance sheet as of September 30, 2006 reflects the following transactions as if they occurred on September 30, 2006 (in thousands):

• Our acquisition of substantially all of the assets and properties of OGR, for approximately $291.0 million in cash and 3.2 million shares of our common stock valued at $51.4 million. The acquisition was funded with the proceeds of a $300.0 million bridge loan. The following table summarizes the preliminary allocation of the purchase price to the estimated fair value of the assets acquired and the liabilities assumed as if the acquisition occurred on September 30, 2006 (in thousands):

Current assets	$	15,497
Property and equipment		201,651
Intangibles including goodwill		124,059
Other long-term assets		4,801
Total assets acquired		346,008
Current liabilities		2,848
Total liabilities assumed		2,848
Net assets acquired	$	343,160

We expect to incur approximately $0.8 million of acquisition costs in connection with this acquisition. OGRs’ historical property and equipment values are expected to be increased by approximately $171.0 million based on third-party valuations. We do not expect any material differences from the preliminary allocation of the purchase price and actual purchase price allocation; and

•

Our acquisition of Petro-Rentals, Incorporated, or Petro-Rentals, which was completed on October 16, 2006 for approximately $29.8 million in cash, which includes the payment of approximately $9.5 million of debt, and 246,761 shares of our common stock. The acquisition was funded with cash on hand remaining from our August 2006 equity and debt securities offerings. The following table summarizes the preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed as if the acquisition occurred on September 30, 2006 (in thousands):

Current assets	$	9,017
Property and equipment		28,200
Intangibles including goodwill		3,312
Other long-term assets		2
Total assets acquired		40,531
Current liabilities		2,333
Other long term liabilities		7,000
Total liabilities assumed		9,333
Net assets acquired	$	31,198

We expect to incur approximately $82,000 of acquisition costs in connection with this acquisition. Petro-Rentals’ historical property and equipment values are expected to be increased by approximately $15.0 million based on third-party valuations. We do not expect any material differences from the preliminary allocation of the purchase price and actual purchase price allocation.

     Our unaudited pro forma as adjusted condensed consolidated statement of operations for the nine months ended September 30, 2006 reflects the following transactions as if such transactions occurred on January 1, 2005:

• Our acquisition of Rogers Oil Tools, Inc. or Rogers, which closed on April 3, 2006. The following table summarizes the allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Current assets	$	4,520
Property and equipment		9,866
Intangible assets		1,131
Total assets acquired		15,517
Current liabilities		1,717
Other long term liabilities		100
Total liabilities assumed		1,817
Net assets acquired	$	13,700

We paid the purchase price with $11.3 million in cash (of which we borrowed $5.0 million under our line of credit), a $750,000 seller financed note and 125,285 newly issued shares of our common stock, which had a value of $1.7 million. We incurred approximately $341,000 of acquisition costs in connection with the Rogers acquisition. Rogers’ historical property and equipment book values were increased by approximately $8.4 million based on third-party valuations. Intangible assets include $981,000 assigned to patents and $150,000 assigned to a non-compete agreement based on third-party valuations and an employment contract. The intangibles have a weighted-average useful life of 11 years;

•

Our acquisition of DLS Drilling, Logistics & Service Corporation, or DLS, which closed August 14, 2006. The following table summarizes the allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Current assets	$	54,370
Property and equipment		150,441
Other long-term assets		21
Total assets acquired		204,832
Current liabilities		36,530
Long-term debt		6,114
Intercompany note		17,256
Other long term liabilities		27,000
Total liabilities assumed		86,900
Net assets acquired	$	117,932

	We paid the purchase price with included $93.7 million in cash, $38.1 million in our common stock, $3.4 million of acquisition costs, less approximately $17.3 million of debt assigned to us. The cash component of the acquisition was funded from the proceeds of the August 2006 offering of our 9.0% senior notes and the sale of an additional 3.45 million shares of our common stock. We incurred approximately $3.4 million of acquisition costs in connection with the DLS acquisition. DLS historical property and equipment values were increased by approximately $42.7 million based on third-party valuations;
•	the sale of $95.0 million aggregate principal amount of notes in August 2006;
•	our issuance of an additional 3.45 million shares of our common stock in order to fund a portion of the cash component of the purchase price for the DLS acquisition;

• our acquisition of Petro-Rentals, for approximately $29.8 million in cash and 246,761 shares of our common stock; and

• our acquisition of substantially all of the assets and properties of OGR, for approximately $291.0 million in cash and 3.2 million shares of our common stock. The historical results shown for OGR are for the nine months ended July 31, 2006.

     Our unaudited pro forma as adjusted condensed consolidated statement of operations for the year ended December 31, 2005 reflects the following transactions as if such transactions occurred on January 1, 2005:

• Our acquisition of Delta Rental Service, Inc., or Delta, which closed on April 1, 2005. The following table summarizes the allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Current assets	$	1,327
Property and equipment		5,529
Intangible assets		150
Total assets acquired		7,006
Current liabilities		633
Long-term debt		523
Total liabilities assumed		1,156
Net assets acquired	$	5,850

We paid the purchase price with approximately $4.5 million in cash, newly issued shares of our common stock valued at approximately $1.0 million and two promissory notes totaling $350,000 in principal amount. We incurred approximately $28,000 of acquisition costs in connection with the Delta acquisition. Delta’s historical property and equipment values were increased by approximately $4.2 million based on third-party valuations. The fair value of the $150,000 non-compete intangible asset was based on the related employment contract and has a useful life of 3 years;

• Our acquisition of Capcoil Tubing Services, Inc., or Capcoil, which closed on May 2, 2005. The following table summarizes the allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Current assets	$	1,706
Property and equipment		2,908
Other long-term assets		11
Intangible assets		1,389
Goodwill		184
Total assets acquired		6,198
Current liabilities		847
Long-term debt		1,851
Total liabilities assumed		2,698
Net assets acquired	$	3,500

We paid the purchase price with approximately $2.7 million in cash and newly issued shares of our common stock valued at approximately $750,000. We incurred approximately $26,000 of acquisition costs in connection with the Capcoil acquisition. Capcoil’s historical property and equipment book values were increased by approximately $1.0 million based on third-party valuations. Intangible assets include $1.0 million assigned to non-compete agreements included in employment contracts and $364,000 assigned to customer lists based on third-party valuations. The intangibles have a weighted-average useful life of 5 years;

• Our acquisition of the assets of W.T. Enterprises, Inc., or W.T. Ent, which closed on July 11, 2005. The following table summarizes the allocation of the purchase price to the estimated fair value of the assets at the date of acquisition (in thousands):

Property and equipment	$	4,500
Intangible assets		1,481
Goodwill		82
Total assets acquired	$	6,063

We paid the purchase price with borrowing under our line of credit. We incurred approximately $63,000 of acquisition costs in connection with the W.T. Ent acquisition. W.T. Ent historical property and equipment book values were increased by approximately $3.0 million based on third-party valuations. Intangible assets include $600,000 assigned to non-compete agreements and $881,000 assigned to customer lists based on third-party valuations. The intangibles have a weighed-average useful life of 8 years.

• Our acquisition of the minority interest in AirComp LLC from M-I LLC and a subordinated note in the principal amount of $4.8 million, which closed on July 11, 2005. We paid the purchase price with $7.1 million in cash from borrowing under our line of credit and the issuance of a new $4.0 million 5% subordinated note;

• Our acquisition of Specialty Rental Tools, Inc., or Specialty, which closed on January 18, 2006. The following table summarizes the allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Accounts receivable	$	7,167
Other current assets		425
Property and equipment		90,540
Total assets acquired		98,132
Current liabilities		2,058
Long-term debt		74
Total liabilities assumed		2,132
Net assets acquired	$	96,000

We paid the purchase price with net proceeds from or issuance of 9% senior notes in January 2006. We incurred approximately $453,000 of acquisition costs in connection with the Specialty acquisition. Specialty’s historical property and equipment book values were increased by approximately $71.5 million based on third-party valuations.

• our issuance of $160.0 million aggregate principal amount of 9% senior notes in January 2006;

• our acquisition of Rogers, which closed on April 3, 2006, for $11.3 million cash (of which we borrowed $5.0 million under our debt facility), the issuance of a $750,000 three year promissory note and the issuance of 125,285 shares of our common stock;

• our acquisition of DLS, which closed August 14, 2006 for $93.7 million in cash and the issuance of 2.5 million shares of our common stock to the sellers as the stock component of the purchase price for DLS;

• our sale of $95.0 million aggregate principal amount of notes in August 2006;

• our issuance of an additional 3.45 million shares of our common stock in order to fund a portion of the cash component of the purchase price for the DLS acquisition;

• our acquisition of Petro-Rentals, for approximately $29.8 million in cash and 246,761 shares of our common stock; and

• our acquisition of substantially all of the assets and properties of OGR, for approximately $291.0 million in cash and 3.2 million shares of our common stock. The historical results shown for OGR are for the year ended October 31, 2005.

     However, the pro forma as adjusted statement of operations information presented below does not give effect to our immaterial acquisition of Target Energy, Inc., which was acquired effective August 1, 2005, and our acquisition of certain casing and tubing assets from Patterson Services, Inc. on September 1, 2005.

     Adjustments for the above-listed transactions on an individual basis are presented in the notes to the unaudited pro forma as adjusted financial statements.

     Certain information normally included in the financial statements prepared in accordance with GAAP has been condensed or omitted in accordance with the rules and regulations of the SEC. The unaudited pro forma as adjusted financial statements and accompanying notes should be read in conjunction with the historical financial statements and related notes thereto appearing elsewhere herein. The unaudited pro forma as adjusted consolidated condensed financial statements do not purport to be indicative of the results of operations or financial position that we actually would have achieved if the transactions had been consummated on the dated indicated, nor do they project our results of operations or financial position of any future period or date.

ALLIS-CHALMERS ENERGY INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2006

	Allis-Chalmers				Petro Rentals						OGR				Allis-Chalmers
	Consolidated		Petro Rentals		Purchase				OGR		Purchase				Consolidated
	Historical		Historical		Adjustments				Historical		Adjustments				Pro Forma
Assets
Cash and cash equivalents	$	50,311	$	2,769	$	(27,291	)	A	$	4,595	$	(1,466	)	A	$	28,918
Investments		—		219		—				19,643		(19,643	)	H		219
Trade receivables, net		85,156		4,989		—				13,400		—				103,545
Inventories		25,813		401		—				1,349		—				27,563
Prepaids and other		6,374		639		—				319		—				7,332
Total Current Assets		167,654		9,017		(27,291	)			39,306		(21,109	)			167,577
Property and equipment, net		341,483		13,187		15,013		B		30,694		170,957		B		571,334
Goodwill		12,417		—		1,752		C		—		104,059		C		118,228
Other intangibles, net		6,802		—		1,560		C		—		20,000		C		28,362
Debt issuance costs, net		8,585		—		—				—		5,500		A		14,085
Other assets		155		2		—				8,320		(3,519	)	H		4,958
Total Assets	$	537,096	$	22,206	$	(8,966	)		$	78,320	$	275,888			$	904,544
Liabilities and Stockholders’ Equity
Current maturities of long-term debt	$	8,493	$	2,017	$	(1,601	)	A	$	—	$	300,000		A	$	308,909
Trade accounts payable		26,311		408		—				916		—				27,635
Accrued employee benefits		10,050		36		300		D		—		—				10,386
Accrued interest		4,950		—		—				—		—				4,950
Accrued expenses		16,754		1,173		82		E		1,932		—				19,941
Total Current Liabilities		66,558		3,634		(1,219	)			2,848		300,000				371,821
Accrued postretirement benefit obligations		304		—		—				—		—				304
Long-term debt, net of current maturities		262,466		5,494		(5,494	)	A		—		—				262,466
Other long-term liabilities		27,300		1,140		5,860		F		—		—				34,300
		356,628		10,268		(853	)			2,848		300,000				668,891
Stockholders’ equity
Common stock		246		101		(99	)	G		115		(83	)	I		280
Capital in excess of par value		153,135		—		3,823		G		20,207		31,121		I		208,286
Accumulated other comprehensive income		—		7		(7	)	G		1,266		(1,266	)	I		—
Retained earnings		27,087		11,830		(11,830	)	G		53,884		(53,884	)	I		27,087
Total Stockholders’ Equity		180,468		11,938		(8,113	)			75,472		(24,112	)			235,653
Total Liabilities and Stockholders’ Equity	$	537,096	$	22,206	$	(8,966	)		$	78,320	$	275,888			$	904,544

See notes to unaudited pro forma consolidated financial statements.

ALLIS-CHALMERS ENERGY INC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006, EXCEPT FOR OGR WHOSE NINE MONTHS ENDED JULY 31, 2006
(In thousands, except per share data)

	Allis-Chalmers						Rogers							DLS											Petro Rentals						OGR				Allis-Chalmers
	Consolidated			Rogers			Purchase				DLS			Purchase				Offering				Petro Rentals			Purchase				OGR		Purchase				Consolidated
	Historical			Historical			Adjustments				Historical			Adjustments				Adjustments				Historical			Adjustments				Historical		Adjustments				Pro Forma
Revenues	$	193,236		$	2,085		$	—			$	103,898		$	—			$	—			$	14,653		$	—			$	56,543	$	—			$	370,415
Cost of revenues		123,184			1,105			121		AA		86,868			(606	)	AB		—				8,212			(172	)	AB		14,813		4,498		AA		238,023
Gross profit		70,052			980			(121	)			17,030			606				—				6,441			172				41,730		(4,498	)			132,392
General and administrative expense		26,494			820			33		AC		4,317			—				198		AD		3,510			117		AC		8,451		5,333		AC		49,273
Income (loss) from operations		43,558			160			(154	)			12,713			606				(198	)			2,931			55				33,279		(9,831	)			83,119
Other income (expense)
Interest, net		(12,085	)		2			(109	)	AE		(3,391	)		1,029		AF		(4,969	)	AG		(179	)		—				730		(27,318	)	AH		(46,290	)
Other		(6	)		(7	)		—				(829	)		—				—				—			—				250		(218	)	AO		(810	)
Income (loss) before taxes		31,467			155			(263	)			8,493			1,635				(5,167	)			2,752			55				34,259		(37,367	)			36,019
Taxes		(6,197	)		—			—		AI		(4,512	)		967		AJ		—		AI		(1,073	)		1,073		AI		—		—		AI		(9,742	)
Income from continuing operations		25,270			155			(263	)			3,981			2,602				(5,167	)			1,679			1,128				34,259		(37,367	)			26,277
Income from discontinued operations		—			—			—				2,375			—				—				—			—				—		—				2,375
Net income (loss)	$	25,270		$	155		$	(263	)		$	6,356		$	2,602			$	(5,167	)		$	1,679		$	1,128			$	34,259	$	(37,367	)		$	28,652
Pro forma net income (loss) per common share
Basic	$	1.33																																	$	1.03
Diluted	$	1.25																																	$	0.98
Weighted average shares outstanding
Basic		18,944						42		AK					2,361		AK		3,258		AL					247		AM				3,200		AN		28,052
Diluted		20,155						42		AK					2,361		AK		3,258		AL					247		AM				3,200		AN		29,263

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

	Allis-Chalmers						Delta							Capcoil							W.T. ENT				MI						Specialty										Rogers							DLS											Petro-Rental						OGR				Allis-Chalmers
	Consolidated			Delta			Purchase				Capcoil			Purchase				W.T. ENT			Purchase				Purchase			Specialty			Purchase				Debt				Rogers		Purchase				DLS			Purchase				Offering				Petro-Rental			Purchase				OGR		Purchase				Consolidated
	Historical			Historical			Adjustments				Historical			Adjustments				Historical			Adjustments				Adjustments			Historical			Adjustments				Adjustments				Historical		Adjustments				Historical			Adjustments				Adjustments				Historical			Adjustments				Historical		Adjustments				Pro Forma
Revenues	$	105,344		$	821		$	—			$	2,161		$	—			$	2,057		$	—			$	—		$	32,709		$	—			$	—			$	8,376	$	—			$	129,849		$	—			$	—			$	13,597		$	—			$	51,316	$	—			$	346,230
Cost of revenues		74,763			211			82		AA		1,458			132		AA		1,331			187		AA		—			8,550			5,564		AA		—				4,420		499		AA		113,351			637		AB		—				6,899			960		AB		17,715		7,674		AA		244,433
Gross profit		30,581			610			(82	)			703			(132	)			726			(187	)			—			24,159			(5,564	)			—				3,956		(499	)			16,498			(637	)			—				6,698			(960	)			33,601		(7,674	)			101,797
General and administrative expense		17,363			985			—				421			28		BA		342			75		BA		—			7,232			(386	)	BB		700		BC		2,527		138		BA		3,933			—				317		BD		3,867			156		BA		7,889		5,334		BA		50,921
Income (loss) from operations		13,218			(375	)		(82	)			282			(160	)			384			(262	)			—			16,927			(5,178	)			(700	)			1,429		(637	)			12,565			(637	)			(317	)			2,831			(1,116	)			25,712		(13,008	)			50,876
Other income (expense)
Interest, net		(4,397	)		(8	)		—				(26	)		—				(17	)		—				21	BE		(49	)		(8,640	)	BF		(1,363	)	BG		53		(438	)	AE		(5,394	)		2,178		AF		(7,950	)	AG		6			—				614		(33,064	)	BI		(58,474	)
Other		186			116			—				—			—				—			—				—			72			—				—				237		—				7,127			—				—				—			—				1,958		—				9,696
Income (loss) before taxes		9,007			(267	)		(82	)			256			(160	)			367			(262	)			21			16,950			(13,818	)			(2,063	)			1,719		(1,075	)			14,298			1,541				(8,267	)			2,837			(1,116	)			28,284		(46,072	)			2,098
Minority interest		(488	)		—			—				—			—				—			—				488	BH		—			—				—				—		—				—			—				—				—			—				—		—				—
Taxes		(1,344	)		(142	)		142		AI		(87	)		87		AI		(111	)		111		AI		—	AI		—			—		AI		—		AI		—		—		AI		(3,547	)		(1,997	)	AJ		—		AI		(1,071	)		1,071		AI		—		—		AI		(6,888	)
Net income (loss) from continuing operations		7,175			(409	)		60				169			(73	)			256			(151	)			509			16,950			(13,818	)			(2,063	)			1,719		(1,075	)			10,751			(456	)			(8,267	)			1,766			(45	)			28,284		(46,072	)			(4,790	)
Discontinued operations		—			—			—				—			—				—			—				—			—			—								—		—				(4,138	)		—				—				—			—				—		—				(4,138	)
Net income (loss)	$	7,175		$	(409	)	$	60			$	169		$	(73	)		$	256		$	(151	)		$	509		$	16,950		$	(13,818	)		$	(2,063	)		$	1,719	$	(1,075	)		$	6,613		$	(456	)		$	(8,267	)		$	1,766		$	(45	)		$	28,284	$	(46,072	)		$	(8,928	)
Pro forma net income (loss) per common share
Basic	$	0.48																																																																			$	(0.36	)
Diluted	$	0.44																																																																			$	(0.36	)
Weighted average shares outstanding
Basic		14,832						56		BJ					56		BJ																									125		BK					2,500		BK		3,450		BL					247		AM				3,200		AN		24,466
Diluted		16,238						56		BJ					56		BJ																									125		BK					2,500		BK		3,450		BL					247		AM				3,200		AN		24,466	BM

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

A)	Reflects the cash needed to complete the acquisitions. The Petro-Rentals acquisition required a cash payment of $20.2 million and the repayment of Petro-Rentals $7.1 million of borrowings under existing credit facilities. Petro-Rentals note related to insurance premiums will not be repaid at the acquisition date. As part of the OGR transaction, the sellers were paid $291.0 million and retain the existing cash in OGR, in addition we expect to incur transaction costs of $0.8 million. The OGR transaction was funded by a $300.0 million bridge loan with net proceeds of $294.5 million. Reflects the payment of cash by the sellers of OGR as working capital at September 30, 2006 as defined in the Agreement was below the required $11.3 million by $429,000.
B)	Reflects the step-up in the basis of the fixed assets as a result of the acquisition to the lower of fair market value or actual cost.
C)	Reflects the estimated allocation of the purchase price to goodwill and other intangibles such as customer lists, patents and non-competes.
D)	Reflects the current portion of payments due to the former owner and a key member of management of Petro-Rentals.
E)	Reflects the payment of accrued expenses related to the acquisition of Petro-Rentals.
F)	Reflects the deferred taxes related to the difference between the step-up basis of the fixed assets compared to the tax basis of those assets along with the non current portion of payments due to the former owner of Petro-Rentals.
G)	Reflects the elimination of the Petro-Rentals stockholders’ equity and the issuance of common stock worth $3.8 million in the Petro-Rentals acquisition. The common stock issued to the seller of Petro-Rentals was valued at $15.50 per share, which was the average trading price of the common stock for the two day period prior to and after the date of the Petro-Rentals acquisition, including the date of the acquisition.
H)	Reflects the assets retained by the sellers in the OGR transaction.
I)	Reflects the elimination of the OGR’s stockholders’ equity and the issuance of common stock worth $51.4 million in the OGR asset purchase. The common stock issued to the sellers of OGR was valued at $16.05 per share, which was the average trading price of the common stock for the two day period prior to and after the date of the announcement of the OGR asset purchase, including the date of the announcement.
AA)	Reflects the increase in depreciation expense as a result of the step-up in basis of fixed assets.
AB)	Reflects the impact of depreciation expense as a result of the step-up in basis of fixed assets and a longer estimated life on the fixed assets.
AC)	Reflects the increase in amortization due to the increase in other intangible assets in connection with the acquisition of Rogers, Petro-Rentals and OGR. Also reflects the amortization of the bridge loan fees in connection with the OGR asset acquisition. The bridge loan fees are being amortized over 18 months, the term of the facility, therefore 6 months are amortized during the period. An additional bridge loan fee of .75% of the outstanding loan balance is due if the bridge loan is outstanding for more than 12 months. This entire fee is amortized during the period.
AD)	Reflects the amortization on the financing fees related to the offering, issuance and sale of an additional $95.0 million of senior notes in the August 2006 notes offering.
AE)	Reflects the interest expense related to cash borrowed to affect the acquisitions. In conjunction with the Rogers acquisition, we issued a $750,000 note to the seller bearing interest at 5.0% fixed and we borrowed $5.0 million under our line of credit. We assumed an 8.0% interest rate for this $5.0 million borrowing which was our borrowing rate of our committed line of credit at that time. Each 0.125% of change in this interest rate would affect interest expense by $6,250 per annum.

AF)	Reflects the elimination of interest expense due to historical debt not being assumed or replaced. Approximately $8.6 million of pre-acquisition debt of DLS remained outstanding after the acquisition. The interest rate assumed on the $8.6 million of DLS debt was 6.21%, which was the actual average interest rate on this debt up to the acquisition date. Each 0.125% change in this interest rate would affect interest expense by $10,770 per annum. The interest expense category for DLS’ historical financials also includes other bank fees and other financial expenses of approximately $2.0 million up until the acquisition date, $2.7 million at December 31, 2005.
AG)	Reflects the interest expense related to the offering, issuance and sale of $95.0 million of senior notes in the August 2006 notes offering bearing interest at 9.0% offset by reduction of interest on existing debt that were repaid in conjunction with the offerings. We repaid our $4.0 million, 5.0% subordinated note with a portion of the net proceeds of the August 2006 notes offering. We also repaid the $5.0 million of indebtedness borrowed for the Rogers acquisition under our revolving line of credit with proceeds of the August 2006 notes offering.
AH)	Reflects the interest expense related to $300.0 million bridge loan obtained to fund the OGR asset acquisition. An interest rate of 11.15% was used on the first $200.0 million of borrowing and a rate of 13.15% was used on the balance. The interest rate on the bridge increases 1.0% after 12 month. Each 0.125% change in this interest rate would affect interest expense by $375,000 per annum. The historical interest income has also been eliminated as the assets that produced the income were not acquired in the OGR asset purchase.
AI)	A statutory tax rate of 35.0% was applied to the adjustments, but since Allis-Chalmers has a net operating loss carryforward no tax expense was recorded. In addition, the Allis-Chalmers net operating loss position offsets the historical tax liabilities of the acquired companies. The net operating loss carryforward, after the historical results for Allis-Chalmers for the year ended December 31, 2005, is approximately $20.2 million.
AJ)	Income taxes for DLS were computed at the Argentina statutory tax rate of 35.0%. Allis-Chalmers has no net operating losses in Argentina to offset the tax liability.
AK)	Reflects the pro rata issuance of shares of our common stock as part of the acquisition price for Rogers and DLS. The Rogers acquisition, completed April 1, 2006, included consideration of $1,650,000 in stock which equated to 125,285 shares of our common stock. The stock component of the purchase price for the DLS acquisition, completed August 14, 2006, was fixed at 2.5 million shares of our common stock.
AL)	Reflects the pro rata issuance of shares of our common stock as a result of our August offering of 3.45 million shares of our common stock to fund a portion of the cash component of the purchase price for the DLS acquisition.
AM)	Reflects the issuance of shares of our common stock in October 2006 as part of the acquisition price for Petro-Rentals. The stock component of the purchase price for the Petro-Rentals acquisition is comprised of 246,761 shares of our common stock.
AN)	Reflects the issuance of shares of our common stock as part of the acquisition price for the OGR assets. The stock component of the purchase price for the OGR assets is comprised of 3.2 million shares of our common stock.
AO)	Reflects the elimination of investment income related to assets not acquired as part of the OGR transaction.
BA)	Reflects the increase in amortization due to the increase in other intangible assets in connection with the acquisitions of Capcoil, W. T. Ent, Rogers, Petro-Rentals and OGR. Also reflects the amortization of the bridge loan fees in connection with the OGR asset acquisition.
BB)	Reflects decreased rent expense of $386,000 per annum in connection with Specialty acquisition: We entered into a new lease for the Specialty yard with the seller. Entering into this lease was required by the purchase agreement and was a condition to the closing of the Specialty acquisition.
BC)	Reflects the amortization of the financing fees related to the $160.0 million senior notes offering in January 2006.

BD)	Reflects the amortization on the financing fees related to the $95.0 million senior notes offering in August 2006.
BE)	To acquire M-I’s 45% interest in AirComp we issued a new note for $4.0 million to replace a note for $4.8 million, both notes bore interest at 5.0%.
BF)	Reflects the interest expense on the $96.0 million of the $160.0 million of senior notes issued in January 2006 used to complete the acquisition of Specialty. The senior notes have a fixed interest rate of 9.0%.
BG)	Reflects the interest expense related to the proceeds of the $160.0 million senior notes offering in January 2006 in excess of cash needed for the Specialty acquisition. The senior notes have a fixed interest rate of 9.0%.
BH)	Reflects the elimination of the 45% minority interest position of M-I.
BI)	Reflects the interest expense related to $300.0 million bridge loan obtained to fund the OGR asset acquisition. An interest rate of 10.15% was used on the first $200.0 million of borrowing and a rate of 12.15% was used of the remaining $100.0 million. Each 0.125% change in this interest rate would affect interest expense by $375,000 per annum. The historical interest income has also been eliminated as the assets that produced the income were not acquired in the OGR asset purchase.
BJ)	Reflects the pro rata issuance of shares of our common stock as part of the acquisition price for Delta and Capcoil. The Delta acquisition, completed April 1, 2005, included consideration of $1.0 million in our common stock, or 168,161 shares of common stock. The Capcoil acquisition, completed May 2, 2005, included consideration of $765,000 in our common stock, or 243,114 shares of our common stock.
BK)	Reflects the issuance of shares of our common stock as part of the acquisition price for Rogers and DLS. The Rogers acquisition, completed April 1, 2006, included consideration of $1,650,000 in stock which equated to 125,285 shares of our common stock. The stock component of the purchase price for the DLS acquisition, completed August 14, 2006, was fixed at 2.5 million shares of our common stock.
BL)	Reflects the issuance of shares of our common stock as a result of our August offering of 3.45 million shares of our common stock to fund a portion of the cash component of the purchase price for the DLS acquisition.
BM)	The impact of common stock equivalents are anti-dilutive and accordingly are not included herein.