AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1997
REGISTRATION NO. 333-20293

================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

AMENDMENT NO. 1
TO

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

PRIDE PETROLEUM SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

1389
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION NUMBER)

LOUISIANA 76-0069030
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

------------------------

ROBERT W. RANDALL
PRIDE PETROLEUM SERVICES, INC. PRIDE PETROLEUM SERVICES, INC.
1500 CITY WEST BLVD., SUITE 400 1500 CITY WEST BLVD., SUITE 400
HOUSTON, TEXAS 77042 HOUSTON, TEXAS 77042
(713) 789-1400 (713) 789-1400
(ADDRESS, INCLUDING ZIP CODE, (NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT) AREA CODE, OF AGENT FOR SERVICE)

------------------------

COPIES TO:

L. PROCTOR THOMAS T. MARK KELLY
BAKER & BOTTS, L.L.P. VINSON & ELKINS L.L.P.
ONE SHELL PLAZA 2300 FIRST CITY TOWER
910 LOUISIANA STREET 1001 FANNIN
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 229-1234 (713) 758-4592

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective and the
liquidating distribution contemplated by the Purchase Agreement described herein
is completed.

If the securities being registered on this Form are to be offered in
connection with the formation of a holding company, check the following box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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******************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR *
* SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH *
* OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR *
* QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. *
* *
******************************************************************************

SUBJECT TO COMPLETION DATED JANUARY 31, 1997

PROXY STATEMENT/PROSPECTUS

PROXY STATEMENT FOR THE SHAREHOLDERS OF
PRIDE PETROLEUM SERVICES, INC.
PROSPECTUS FOR THE SHAREHOLDERS OF
FORASOL-FORAMER N.V.
------------------------

This Proxy Statement/Prospectus serves as a proxy statement of Pride
Petroleum Services, Inc. ("Pride") for a special meeting of its shareholders
(the "Pride Meeting") to be held on February __, 1997 to consider and vote
upon a single, unified proposal (the "Pride Proposal") (i) to amend Pride's
Restated Articles of Incorporation to increase the authorized number of shares
of common stock, no par value, of Pride ("Pride Common Stock") from 40,000,000
to 100,000,000 and (ii) to issue approximately 11,100,000 shares of Pride Common
Stock in connection with the acquisition by Pride of the operating subsidiaries
of Forasol-Foramer N.V. ("Forasol-Foramer") pursuant to a Purchase Agreement
dated as of December 16, 1996 (the "Purchase Agreement"). The acquisition also
involves a cash payment by Pride of approximately $113,200,000.

This Proxy Statement/Prospectus also serves as a prospectus of Pride with
respect to the shares of Pride Common Stock to be distributed to shareholders of
Forasol-Foramer pursuant to the Purchase Agreement. An extraordinary general
meeting of shareholders of Forasol-Foramer (the "Forasol-Foramer Meeting")
will be held on February __, 1997 to consider and vote upon a proposal (the
"Forasol-Foramer Proposal") to approve the transactions provided for in the
Purchase Agreement, including the distribution to the shareholders of
Forasol-Foramer of the shares of Pride Common Stock and cash paid by Pride for
Forasol-Foramer's operating subsidiaries as part of the liquidation of
Forasol-Foramer and winding up of its affairs (the "Liquidating
Distribution"). In the Liquidating Distribution, the shareholders of
Forasol-Foramer will be entitled to 0.66 shares of Pride Common Stock and $6.80
in cash for each common share of Forasol-Foramer, par value NLG. 01 per share
("FFNV Common Shares"), held by them. THE LIQUIDATING DISTRIBUTION WILL BE
TAXABLE TO THE SHAREHOLDERS OF FORASOL-FORAMER AND, IN THE CASE OF MOST NON-
DUTCH SHAREHOLDERS, WILL BE SUBJECT TO DUTCH WITHHOLDING TAX. See "The Business
Combination -- Certain Tax Consequences."

A summary of the basic terms and conditions of the Purchase Agreement, the
Liquidating Distribution, certain financial and other information relating to
Pride, Forasol-Foramer and their respective subsidiaries, a summary of relevant
tax consequences of the transaction and copies of the Purchase Agreement and the
opinions of the respective financial advisors to Pride and Forasol-Foramer are
set forth in this Proxy Statement/Prospectus. Consummation of the transactions
contemplated by the Purchase Agreement (collectively, the "Business
Combination") is conditioned upon, among other things, approval of the Pride
Proposal and the Forasol-Foramer Proposal by the shareholders of Pride and of
Forasol-Foramer, respectively.

This Proxy Statement/Prospectus and the accompanying forms of proxies are
first being mailed to shareholders of Pride on or about January __, 1997 and
will be mailed to shareholders of Forasol-Foramer on or before January __, 1997.

NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE
OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PRIDE.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION OF AN OFFER OR PROXY SOLICITATION. NEITHER THE
DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE
SECURITIES OFFERED HEREBY SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF PRIDE OR FORASOL-FORAMER SINCE
THE DATE HEREOF OR THAT THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------

THE SECURITIES TO WHICH THIS PROXY STATEMENT/PROSPECTUS RELATE HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

The date of this Proxy Statement/Prospectus is January __, 1997.

TABLE OF CONTENTS

AVAILABLE INFORMATION................ 3
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE.......................... 3
SUMMARY.............................. 5
THE PRIDE MEETING.................... 16
Date, Time, Place.................. 16
The Pride Proposal to be Voted
Upon............................ 16
Quorum and Vote Required........... 16
Record Date; Stock Entitled to
Vote............................ 16
Voting and Revocation of Proxies... 16
Solicitation of Proxies............ 16
THE FORASOL-FORAMER MEETING.......... 17
Date, Time, Place.................. 17
The Forasol-Foramer Proposal to be
Voted Upon...................... 17
Vote Required...................... 17
Shares Entitled to Vote............ 17
Voting and Revocation of Proxies... 17
Solicitation of Proxies............ 17
THE PRIDE CHARTER AMENDMENT.......... 18
THE BUSINESS COMBINATION............. 19
General Description................ 19
Background of the Business
Combination..................... 20
Pride's Reasons for the Business
Combination..................... 21
Opinion of Pride's Financial
Advisor......................... 23
Forasol-Foramer's Reasons for the
Business Combination............ 27
Opinion of Forasol-Foramer's
Financial Advisor............... 28
Conduct of Businesses Pending the
Closing......................... 31
Forasol-Foramer Employee Matters... 32
Additions to Pride's Board of
Directors and Certain Related
Agreements...................... 32
Pride Management................... 33
Interests of Certain Persons....... 34
Termination and Termination
Payments........................ 34
Extension, Waiver and Amendment.... 34
Restrictions on Resales by Forasol-
Foramer Affiliates; Registration
Rights.......................... 34
Appraisal Rights................... 35
Certain Tax Consequences........... 35
Accounting Treatment............... 36
Regulatory Approvals............... 36
Source of Pride Funds.............. 36
MARKET PRICES AND DIVIDEND
POLICIES........................... 37
UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS............... 38
COMPARATIVE PER SHARE DATA........... 46
INFORMATION ABOUT PRIDE.............. 47
General............................ 47
Business Strategy.................. 47
The Dawson Transaction............. 48
International Operations........... 48
Domestic Offshore Operations....... 49
Domestic Land-Based Operations..... 49
Services Provided.................. 50
Competition........................ 51
Customers.......................... 52
Contracts.......................... 52
Seasonality........................ 53
Property........................... 53
Legal Proceedings.................. 56
Employees.......................... 56
Segment Information................ 56
SELECTED HISTORICAL FINANCIAL DATA OF
PRIDE.............................. 57
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF PRIDE............. 58
INFORMATION ABOUT FORASOL-FORAMER.... 66
Business Strategy.................. 66
Drilling Rig Fleet................. 67
Joint Ventures; Associations;
Management Contracts............ 71
Geographic Revenue Breakdown....... 72
Engineering........................ 72
Drilling Contracts, Marketing and
Customers....................... 73
Operational Hazards and
Insurance....................... 73
International Operations........... 74
Regulation......................... 74
Employees.......................... 75
Properties......................... 75
Competition........................ 75
Legal Proceedings.................. 75
SELECTED HISTORICAL FINANCIAL DATA OF
FORASOL-FORAMER.................... 76
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF FORASOL-FORAMER... 77
PRINCIPAL SHAREHOLDERS OF PRIDE AND
FORASOL-FORAMER.................... 88
COMPARISON OF THE CAPITAL SHARES OF
PRIDE AND FORASOL-FORAMER.......... 89
Pride Common Stock................. 89
Pride Preferred Stock.............. 89
FFNV Common Shares................. 90
Comparison of Voting and Other
Rights.......................... 90
LEGAL MATTERS........................ 93
INDEPENDENT PUBLIC ACCOUNTANTS....... 93
INDEX TO FINANCIAL STATEMENTS........ F-1
APPENDIX A: PURCHASE AGREEMENT....... A-1
APPENDIX B: OPINION OF SIMMONS &
COMPANY INTERNATIONAL.............. B-1
APPENDIX C: OPINION OF JEFFERIES &
COMPANY, INC....................... C-1

AVAILABLE INFORMATION

Pride and Forasol-Foramer are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, and other information (and in the case of
Pride, proxy statements) with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information may be
inspected and copied or obtained by mail upon the payment of the Commission's
prescribed rates at the public reference facilities maintained by the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and
at the following Regional Offices of the Commission: Northwest Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World
Trade Center, New York, New York 10048. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains an
Internet web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission (http://www:sec.gov).

Pride has filed with the Commission a registration statement on Form S-4
(together with all amendments, supplements, and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Pride Common Stock to be issued
pursuant to the Purchase Agreement. The information contained herein with
respect to Pride and its subsidiaries has been provided by Pride and the
information with respect to Forasol-Foramer and its subsidiaries has been
provided by Forasol-Foramer. This Proxy Statement/Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
thereto, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. The Registration Statement and any amendments
thereto, including exhibits filed as a part thereof, are available for
inspection and copying as set forth above. Statements contained in this Proxy
Statement/Prospectus or in any document incorporated in this Proxy
Statement/Prospectus by reference as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

THIS PROXY STATEMENT/PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY REFERENCE
THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE TO ANY PERSON UPON REQUEST DIRECTED TO ROBERT W.
RANDALL, SECRETARY, AT PRIDE'S PRINCIPAL EXECUTIVE OFFICES LOCATED AT 1500 CITY
WEST BLVD., SUITE 400, HOUSTON, TEXAS 77042.

Pride hereby undertakes to provide, without charge, to each person,
including any beneficial owner of Pride Common Stock or FFNV Common Shares, to
whom a copy of this Proxy Statement/Prospectus has been delivered, upon the
written or oral request of any such person, a copy of any and all of the
documents referred to below which have or may be incorporated herein by
reference, other than exhibits to such documents, unless such exhibits are
specifically incorporated herein by reference. Requests for such documents
should be directed to the person indicated in the immediately preceding
paragraph.

The following documents, which have been filed with the Commission pursuant
to the Exchange Act, are hereby incorporated herein by reference:

(1) Pride's Annual Report on Form 10-K for the year ended December
31, 1995;

(2) Pride's Proxy Statement relating to the annual meeting of the
shareholders of Pride held on May 16, 1996;

(3) Pride's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1996;

(4) Pride's Current Report on Form 8-K filed March 20, 1996; and

(5) Pride's Current Report on Form 8-K filed May 15, 1996, as amended
by a Form 8-K/A filed June 4, 1996.

All documents and reports filed by Pride pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the Pride and Forasol-Foramer Meetings shall
be deemed to be incorporated by reference herein and to be a part hereof from
the respective dates of filing of such documents or reports. All information
appearing in this Proxy Statement/Prospectus or in any document incorporated
herein by reference is not necessarily complete and is qualified in its entirety
by the information and financial statements (including notes thereto) appearing
in the documents incorporated herein by reference and should be read together
with such information and documents.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein (or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein) modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Proxy Statement/Prospectus except as so modified or
superseded.

SUMMARY

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/PROSPECTUS. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS AND THE APPENDICES
HERETO, WHICH SHAREHOLDERS ARE URGED TO READ CAREFULLY IN THEIR ENTIRETY. AS
USED HEREIN, UNLESS THE CONTEXT OTHERWISE REQUIRES, "PRIDE" REFERS TO PRIDE
PETROLEUM SERVICES, INC. AND ITS SUBSIDIARIES AND "FORASOL-FORAMER" REFERS TO
FORASOL-FORAMER N.V. AND ITS SUBSIDIARIES.

THE PARTIES TO THE BUSINESS COMBINATION

PRIDE is a leading international and domestic provider of well servicing,
workover, contract drilling, completion and plugging and abandonment services,
both on land and offshore. Pride's fleet of 644 owned rigs is one of the world's
largest, consisting of 421 land-based rigs in the United States (prior to the
transaction with Dawson Production Services, Inc. described below), 133
land-based rigs in Argentina, 43 land-based and two barge rigs in Venezuela, 19
land-based rigs in Colombia and three land-based rigs in other international
markets and 23 offshore platform rigs located in the Gulf of Mexico. Pride
performs maintenance and workovers necessary to operate producing oil and gas
wells efficiently and provides contract drilling of new wells in certain
international and offshore markets. Pride also provides services for the
completion of newly drilled oil and gas wells and plugging and abandonment
services at the end of a well's useful life. Pride Petroleum Services, Inc. is a
Louisiana corporation with its principal executive offices located at 1500 City
West Blvd., Suite 400, Houston, Texas 77042. Its telephone number at such
address is (713) 789-1400.

On December 23, 1996, Pride entered into a definitive agreement to sell to
Dawson Production Services, Inc. ("Dawson") substantially all of the assets
used in Pride's domestic, land-based well servicing operations, including 407 of
Pride's 421 land-based rigs, for an aggregate purchase price of approximately
$136 million (the "Dawson Transaction"). The sale is expected to generate
pre-tax proceeds of approximately $90 million, net of repayment of debt related
to the assets to be sold. Pride intends to use the net proceeds from the Dawson
Transaction to partially fund the cash portion of the consideration to be paid
for the acquisition of Forasol-Foramer. During the nine months ended September
30, 1996 and the year ended December 31, 1995, the operations to be sold
generated revenues of $87.3 million and $113.1 million, respectively, and
earnings from operations of $4.4 million and $7.0 million, respectively.
Consummation of the Dawson Transaction is subject to various conditions,
including Dawson's completion of certain financings. Dawson is engaged in the
business of providing workover and other production services for oil and gas
wells.

FORASOL-FORAMER is a holding company that provides onshore and offshore
drilling, workover and related services through subsidiaries and joint ventures
to oil and gas companies worldwide. Forasol-Foramer currently provides services
in more than 20 countries, with significant operations in Africa and South
America. It operates a diverse fleet of seven tender-assisted rigs, four barge
rigs, two semisubmersible rigs and 29 land-based rigs. Forasol-Foramer also
provides well engineering, integrated drilling services, turnkey wells and
project management to its customers. As part of its operations, Forasol-Foramer
focuses on niche markets and on developing innovative drilling solutions through
research and development and rig design in conjunction with its major customers.
Forasol-Foramer is a Dutch corporation, the principal operating subsidiary of
which is Forasol S.A., a French company that maintains its executive offices at
16 bis, rue Grange Dame Rose, BP 100-78 143, Velizy-Villacoublay Cedex, France.
Its telephone number at such address is 33 (1) 3070-5858.

Forasol-Foramer owns its operating companies through its wholly owned
subsidiary, Forasub B.V., a Dutch private limited company (the "F-F
Subsidiary"). The Purchase Agreement provides that Pride will acquire all of
the outstanding capital stock of the F-F Subsidiary.

THE PRIDE MEETING AND VOTE REQUIRED

The Pride Meeting will be held on February , 1997 at 9:00 a.m., Houston
time, at the Westchase Hilton, 9999 Westheimer, Houston, Texas, at which time
the shareholders of Pride will be asked to approve the Pride Proposal (i) to
amend Pride's Restated Articles of Incorporation to increase the number of
authorized shares of Pride Common Stock from 40,000,000 to 100,000,000 (the
"Pride Charter Amendment") and (ii) to issue approximately 11,100,000 shares
of Pride Common Stock, together with approximately $113,200,000 in cash,
pursuant to the Purchase Agreement, which is attached hereto as Appendix A.

The record holders of Pride Common Stock at the close of business on
January 21, 1997 are entitled to notice of and to vote at the Pride Meeting. On
that date, there were outstanding 28,527,656 shares of Pride Common Stock held
by 1,956 shareholders of record, each of which shares is entitled to one vote.

Approval of the Pride Proposal will require the affirmative vote of the
holders of a majority of the outstanding shares of Pride Common Stock
represented in person or by proxy, and constituting a quorum, at the Pride
Meeting.

As of December 31, 1996, the directors and executive officers of Pride and
their affiliates beneficially owned an aggregate of 2,461,934 shares, or 8.6%,
of the Pride Common Stock entitled to vote at the Pride Meeting.

THE FORASOL-FORAMER MEETING AND VOTE REQUIRED

The Forasol-Foramer Meeting will be held on February , 1997 at 10:00
a.m., Netherlands time, at the offices of Trenite Van Doorne, Weena 666, 3012 CN
Rotterdam, at which time the shareholders of Forasol-Foramer will be asked to
approve the Forasol-Foramer Proposal to approve the transactions contemplated by
the Purchase Agreement, including the Liquidating Distribution to the
shareholders of Forasol-Foramer and the liquidation of Forasol-Foramer and
winding up of its affairs, as a result of which the shareholders of
Forasol-Foramer will be entitled to 0.66 shares of Pride Common Stock and $6.80
in cash (less any applicable Dutch withholding taxes) for each FFNV Common Share
held by them.

Approval of the Forasol-Foramer Proposal will require the affirmative vote
of the holders of a majority of the outstanding FFNV Common Shares.

There are currently outstanding 16,650,290 FFNV Common Shares, with each
such share being entitled to vote on the Forasol-Foramer Proposal. Three
Forasol-Foramer shareholders, namely Sertofin B.V., a Dutch company, Gialos
B.V., a Dutch company, and Compagnie Financiere de Services Petroliers S.A., a
French company (collectively, the "Forasol Controlling Shareholders"), own an
aggregate of 10,010,000, or 60.1%, of the FFNV Common Shares entitled to vote at
the Forasol-Foramer Meeting. THE FORASOL CONTROLLING SHAREHOLDERS, EACH OF WHICH
IS A PARTY TO THE PURCHASE AGREEMENT, HAVE PROVIDED AN UNDERTAKING THAT, SUBJECT
TO CERTAIN CONDITIONS THAT WOULD CAUSE A TERMINATION OF THE PURCHASE AGREEMENT,
EACH OF THEM WILL VOTE ALL OF THE FFNV COMMON SHARES HELD BY THEM IN FAVOR OF
THE FORASOL-FORAMER PROPOSAL AT THE FORASOL-FORAMER MEETING AND, UPON PRIDE'S
REQUEST, WILL PROMPTLY CONSTITUTE AND APPOINT AN EXECUTIVE OFFICER OF PRIDE TO
ACT AS THEIR AGENT, PROXY AND ATTORNEY-IN-FACT TO CAUSE SUCH SHARES TO BE VOTED
IN FAVOR OF THE FORASOL-FORAMER PROPOSAL. ACCORDINGLY, APPROVAL OF THE
FORASOL-FORAMER PROPOSAL BY THE SHAREHOLDERS OF FORASOL-FORAMER IS ASSURED.

THE PRIDE CHARTER AMENDMENT

Pride is currently authorized to issue 40,000,000 shares of Pride Common
Stock, of which 28,527,656 shares were issued and outstanding as of January 21,
1997 and 9,468,579 shares are reserved for issuance upon conversion of Pride's
convertible subordinated debentures and under Pride's stock option and stock
purchase plans, leaving 2,003,765 authorized shares that have not been issued or
reserved for issuance. The Purchase Agreement contemplates that Pride will (i)
issue approximately 11,000,000 shares of Pride Common Stock for distribution to
the shareholders of Forasol-Foramer and 110,000 shares upon surrender of certain
options to purchase FFNV Common Shares and (ii) reserve up to an additional
387,200 shares for

issuance upon exercise of options to purchase FFNV Common Shares that will be
converted into Pride stock options. Thus, approximately 9,500,000 additional
shares that currently are not authorized for issuance by Pride's Restated
Articles of Incorporation will be required to complete the Business Combination.
Pride's Board of Directors has unanimously approved an increase in the number of
shares of authorized Pride Common Stock from 40,000,000 to 100,000,000, so that,
in addition to the number of additional shares that will be required to complete
the Business Combination, there will be sufficient authorized, unissued and
unreserved shares of Pride Common Stock available in the future for issuance, at
the discretion of the Board of Directors, for acquisitions, stock splits, stock
dividends, equity financings, employee benefit plans and other corporate
purposes. Except for the shares to be issued in the Business Combination,
however, there are no proposals for any such issuances of additional shares of
Pride Common Stock pending before Pride's Board of Directors. If the Pride
Proposal is approved at the Pride Meeting, the Pride Charter Amendment will be
implemented only if the Business Combination is consummated.

THE BUSINESS COMBINATION

Pursuant to the Purchase Agreement, at a closing to be held after
satisfaction or waiver of the conditions set forth therein (the "Closing"),
Pride will purchase from Forasol-Foramer the capital stock of the F-F Subsidiary
for a number of shares of Pride Common Stock and an amount of cash based on the
number of FFNV Common Shares outstanding (the "Purchase Consideration"). Based
on the current number of outstanding FFNV Common Shares, the Purchase
Consideration will consist of 10,989,191 shares of Pride Common Stock
(representing approximately 27.8% of the Pride Common Stock to be outstanding
immediately after the Closing) and $113,221,972 in cash. An additional 110,000
shares of Pride Common Stock will be issued to two senior executives of
Forasol-Foramer whose employment will be terminated in the Business Combination
upon such executives' surrender of their options to purchase FFNV Common Shares,
and up to an additional 387,200 shares of Pride Common Stock will be reserved
for future issuance for Pride stock options into which outstanding FFNV options
will be converted.

As soon as practicable following delivery of the Purchase Consideration,
Forasol-Foramer, which is a holding company having no significant assets (other
than its interests, through the F-F Subsidiary, in its operating subsidiaries
and joint ventures) and no significant liabilities, will cause the Liquidating
Distribution of the Purchase Consideration to be made to its shareholders who
are registered in its register of shareholders when the Liquidating Distribution
is made on the basis of 0.66 shares of Pride Common Stock and $6.80 in cash
(less any applicable Dutch withholding taxes) for each of the FFNV Common Shares
held by such shareholders. To facilitate a proper determination of those holders
of FFNV Common Shares who are entitled to participate in the Liquidating
Distribution, Forasol-Foramer intends to cause trading in such shares on the
Nasdaq National Market to be suspended at the close of trading on ____________,
February __, 1997. THE TRANSACTION WILL GENERALLY BE TAXABLE TO
FORASOL-FORAMER'S SHAREHOLDERS. SEE "THE BUSINESS COMBINATION -- CERTAIN TAX
CONSEQUENCES" ON PAGES 35 AND 36. As soon as practicable following the
Liquidating Distribution, Forasol-Foramer will take such steps as may be
necessary to wind up its affairs and cease its corporate existence. Since
Forasol-Foramer will have no assets other than the Purchase Consideration
provided by Pride, its shareholders will not receive any additional
distributions upon its final liquidation. In the Purchase Agreement, Pride has
agreed to assume Forasol-Foramer's closing costs, including the cost to wind up
its affairs and liquidate.

The Business Combination is subject to the satisfaction of certain
conditions, including approval of the Pride Proposal and the Forasol-Foramer
Proposal by the respective shareholders of Pride and Forasol-Foramer, the
listing of the Pride Common Stock included in the Purchase Consideration on the
Nasdaq National Market and the material accuracy of each party's representations
and warranties in the Purchase Agreement.

Consummation of the Business Combination, including the filing of the Pride
Charter Amendment with the Secretary of State of Louisiana and the Liquidating
Distribution, is expected to occur no more than five business days after all of
the conditions to Closing contained in the Purchase Agreement have been

satisfied or waived. If the Pride Proposal and the Forasol-Foramer Proposal are
approved at the respective special meetings, the parties expect that the Closing
will occur on or about February __, 1997, although there can be no assurance as
to whether or when the Closing will occur.

RECOMMENDATION OF THE PRIDE BOARD OF DIRECTORS AND OPINION OF PRIDE'S FINANCIAL
ADVISOR

THE BOARD OF DIRECTORS OF PRIDE HAS UNANIMOUSLY APPROVED ALL OF THE
TRANSACTIONS CONTEMPLATED BY THE PRIDE PROPOSAL, BELIEVES THAT THE PRIDE CHARTER
AMENDMENT AND THE BUSINESS COMBINATION ARE FAIR TO AND IN THE BEST INTERESTS OF
PRIDE AND ALL OF ITS SHAREHOLDERS, AND RECOMMENDS THAT PRIDE'S SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE PRIDE PROPOSAL. FOR A DISCUSSION OF THE FACTORS
CONSIDERED BY THE BOARD OF DIRECTORS OF PRIDE IN REACHING ITS CONCLUSIONS
REGARDING THE BUSINESS COMBINATION, SEE "THE BUSINESS COMBINATION -- PRIDE'S
REASONS FOR THE BUSINESS COMBINATION."

Simmons & Company International has rendered its opinion to the Board of
Directors of Pride to the effect that, as of December 4, 1996, the acquisition
by Pride of the F-F Subsidiary for the Purchase Consideration is fair to Pride
and its shareholders from a financial point of view. A copy of such opinion,
dated December 4, 1996, is attached hereto as Appendix B and should be read in
its entirety with respect to the assumptions made, the matters considered and
limitations of the review undertaken by Simmons & Company International in
rendering such opinion. See "The Business Combination -- Opinion of Pride's
Financial Advisor."

ACTION OF THE FORASOL-FORAMER SUPERVISORY BOARD AND OPINION OF FORASOL-FORAMER'S
FINANCIAL ADVISOR

THE BOARD OF SUPERVISORY DIRECTORS OF FORASOL-FORAMER HAS UNANIMOUSLY
APPROVED ALL OF THE TRANSACTIONS CONTEMPLATED BY THE FORASOL-FORAMER PROPOSAL
AND BELIEVES THAT THE BUSINESS COMBINATION IS FAIR TO AND IN THE BEST INTERESTS
OF FORASOL-FORAMER AND ALL OF ITS SHAREHOLDERS. FOR A DISCUSSION OF THE FACTORS
CONSIDERED BY THE BOARD OF SUPERVISORY DIRECTORS OF FORASOL-FORAMER IN REACHING
ITS CONCLUSIONS REGARDING THE BUSINESS COMBINATION, SEE "THE BUSINESS
COMBINATION -- FORASOL-FORAMER'S REASONS FOR THE BUSINESS COMBINATION."

Jefferies & Company, Inc. has rendered its opinion to the Board of
Supervisory Directors of Forasol-Foramer to the effect that, as of December 16,
1996, the Purchase Consideration to be received by the shareholders of
Forasol-Foramer is fair from a financial point of view to such shareholders. A
copy of such opinion, dated December 16, 1996, is attached hereto as Appendix C
and should be read in its entirety with respect to the assumptions made, the
matters considered and limitations of the review undertaken by Jefferies &
Company, Inc. in rendering such opinion. See "The Business
Combination -- Opinion of Forasol-Foramer's Financial Advisor."

CERTAIN UNDERTAKINGS OF PRIDE

Pride has provided covenants and undertakings that will survive the
Closing, including undertakings to (i) provide certain severance benefits and
other arrangements for members of senior management of Forasol S.A. who are not
retained in their present or equivalent positions for at least two years, (ii)
provide those management employees of Forasol S.A. who continue to be employed
with compensation and benefits that are no less favorable than those they are
currently receiving and are otherwise at least as favorable as those provided to
management employees of Pride holding comparable positions, (iii) convert all of
Forasol-Foramer's outstanding employee stock options, both vested and unvested,
into options to purchase shares of Pride Common Stock (subject to their prior
surrender in exchange for a cash payment) on the basis of 1.1 shares of Pride
Common Stock for each FFNV Common Share covered by the Forasol-Foramer options
and provide for accelerated vesting of the right to exercise such options, (iv)
increase the number of directors comprising the Board of Directors of Pride to
include, for a period of up to five years and subject to their re-election at
future annual meetings of the shareholders of Pride, two individuals nominated
by the Forasol Controlling Shareholders, (v) create an Executive Management
Committee of Pride having general

responsibility for strategic planning of Pride's worldwide operations that will
include two of the present executive officers of Forasol S.A. (who shall also be
elected as executive officers of Pride), (vi) continue to maintain in France the
principal office of Forasol S.A., including but not limited to its technical,
engineering and research and development functions, and (vii) indemnify the
present and former directors, officers and employees of Forasol-Foramer and its
subsidiaries against claims arising out of acts or omissions occurring at or
prior to the Closing to the fullest extent permitted by applicable laws and
corporate organizational documents. In addition, Pride will issue 110,000 shares
of Pride Common Stock to two senior executives of Forasol-Foramer whose
employment will be terminated in the Business Combination upon such executives'
surrender of their outstanding options to purchase FFNV Common Shares. Such two
executives are expected to be the initial nominees of the Forasol Controlling
Shareholders to serve on Pride's Board of Directors. The Forasol Controlling
Shareholders, the persons designated to serve on the Board of Directors of
Pride, the members of management of Forasol S.A. designated to serve on Pride's
new Executive Management Committee and as executive officers of Pride, and the
employees of Forasol-Foramer and its subsidiaries who hold options to purchase
FFNV Common Shares that will be converted into options to purchase Pride Common
Stock may all be deemed to have interests in the Business Combination in
addition to any interests they may have, directly or through affiliates, as
shareholders of Forasol-Foramer generally.

AGREEMENTS OF THE FORASOL CONTROLLING SHAREHOLDERS

The Forasol Controlling Shareholders collectively will receive
approximately 6.6 million shares of Pride Common Stock as a result of the
Liquidating Distribution. Each Forasol Controlling Shareholder has agreed that
so long as the Board of Directors of Pride includes a person designated by it or
its affiliates, and for a period of not less than 90 days after Pride's Board of
Directors ceases to include any person so designated, such Forasol Controlling
Shareholder and its affiliates will not (i) participate in any unsolicited offer
to acquire control of Pride or in any election contest relating to Pride, (ii)
vote its shares of Pride Common Stock in the election of Pride directors for any
person other than the persons nominated by Pride's Board of Directors, (iii)
vote in favor of any business combination or any other transaction with a third
party that has not been approved by at least a majority of the members of
Pride's Board of Directors, or (iv) increase its ownership in Pride such that it
and its affiliates, together with all nonaffiliated Forasol Controlling
Shareholders and their affiliates, would own or control more than 20% of Pride's
outstanding voting securities. The Forasol Controlling Shareholders have also
agreed that as of the Closing, all technical services agreements and other
contracts or arrangements they have with Forasol-Foramer and any of its
subsidiaries providing for payments or compensation to them in any form shall be
terminated.

TERMINATION AND TERMINATION PAYMENTS

EXTENSION, WAIVER AND AMENDMENT

The Purchase Agreement provides that it may be amended by the parties at
any time before or after approval of the Pride Proposal and the Forasol-Foramer
Proposal by the respective shareholders of Pride and Forasol-Foramer; provided
that after such approvals have been obtained, there can be no amendment that by
law would require further approval by such shareholders without such further
approval. Pride or Forasol-Foramer may extend the time of performance of any of
the obligations of the other party, waive compliance with such obligations or
conditions with respect to those obligations or waive inaccuracies in any
representations and warranties of the other party.

RESTRICTIONS ON RESALES BY FORASOL-FORAMER AFFILIATES; REGISTRATION RIGHTS

Pride will obtain from each of the Forasol Controlling Shareholders and
from each other shareholder of Forasol-Foramer identified by it as an
"affiliate" of Forasol-Foramer an agreement to the effect that such
shareholder will not transfer any shares of Pride Common Stock received by it as
a result of the Liquidating Distribution except in compliance with the
applicable provisions of the Securities Act and the regulations of the
Commission thereunder. Pride will grant the Forasol Controlling Shareholders
certain rights to have Pride register the shares of Pride Common Stock received
by them in the Liquidating Distribution for sale to the public. Such
registration rights, which require specified minimum amounts of Pride Common
Stock to be registered and sold in an underwritten public offering, expire at
the end of three years.

CERTAIN TAX CONSEQUENCES

The Liquidating Distribution will be a taxable event for United States
federal income tax purposes on which a holder of FFNV Common Shares will
recognize gain or loss in an amount equal to the difference between the amount
realized on the Liquidating Distribution (the fair market value of the shares of
Pride Common Stock and the amount of cash received) and the tax basis for such
holder's FFNV Common Shares. In addition, a portion of the Liquidating
Distribution will be treated as a dividend, which is generally subject to Dutch
withholding tax. Any applicable Dutch withholding tax will be withheld from the
cash portion of the Liquidating Distribution. A HOLDER WHO SELLS HIS FFNV COMMON
SHARES PRIOR TO BECOMING ENTITLED TO THE LIQUIDATING DISTRIBUTION WILL NOT BE
SUBJECT TO DUTCH WITHHOLDING TAX ON SUCH SALE. See "The Business
Combination -- Certain Tax Consequences."

APPRAISAL RIGHTS

Under applicable law, neither Pride's nor Forasol-Foramer's shareholders
will be entitled to any appraisal or dissenter's rights in connection with the
Business Combination.

ACCOUNTING TREATMENT

The Business Combination will be accounted for by Pride as a purchase under
generally accepted accounting principles ("GAAP") in the United States.

REGULATORY APPROVALS

Neither the Business Combination nor any other transaction contemplated by
the Purchase Agreement is subject to any material regulatory review or approval.

SOURCE OF PRIDE FUNDS

Foramer. Pride will obtain such funds from working capital, existing or new
credit lines and from the sale of its domestic land-based operations. See
"Information About Pride -- Dawson Transaction."

COMPARISON OF PRIDE COMMON STOCK AND FFNV COMMON SHARES

The rights of Pride's shareholders and other corporate matters relating to
Pride Common Stock are controlled by Pride's Restated Articles of Incorporation
and Bylaws and by the Louisiana Business Corporation Law. The rights of
Forasol-Foramer shareholders and other corporate matters relating to the FFNV
Common Shares are controlled by Forasol-Foramer's Articles of Association and by
the laws of The Netherlands. Following the Liquidating Distribution,
shareholders of Forasol-Foramer will become shareholders of Pride whose rights
will be governed by Pride's Restated Articles of Incorporation and Bylaws and by
applicable provisions of the Louisiana Business Corporation Law. As permitted by
Louisiana law, Pride's Restated Articles of Incorporation provide that directors
of Pride are elected for five-year terms. See "Comparison of the Capital Shares
of Pride and Forasol-Foramer."

SHARE MARKET PRICES

On October 25, 1996, the last trading day prior to announcement by Pride
and Forasol-Foramer that they had reached a preliminary agreement concerning the
Business Combination, the last sale price of Pride Common Stock on the Nasdaq
National Market (trading symbol: "PRDE") was $15 1/4 per share (indicating a
pre-tax value of the Liquidating Distribution of $16.87 per FFNV Common Share),
and the last sale price of FFNV Common Shares on the Nasdaq National Market
(trading symbol: "FSOLF") was $13 7/8 per share.

On January __, 1997, the last sale price of Pride Common Stock on the
Nasdaq National Market was $_ per share (indicating a pre-tax value of the
Liquidating Distribution of $____ per FFNV Common Share), and the last sale
price of FFNV Common Shares on the Nasdaq National Market was $____ per share.
Following the Business Combination, Pride Common Stock will continue to be
listed on the Nasdaq National Market under the symbol "PRDE" and the listing
of FFNV Common Shares on the Nasdaq National Market will be terminated.

For information regarding historical high and low market prices of the
Pride Common Stock and FFNV Common Shares, see "Market Prices and Dividend
Policies."

FORASOL-FORAMER RECENT DEVELOPMENTS

In the offshore sector, Forasol-Foramer recently received significant
contracts for its two semisubmersibles, the NYMPHEA and SOUTH SEAS DRILLER. The
NYMPHEA, which is currently working for Chevron in West Africa, is scheduled to
begin a four-year contract with Petrobras in Brazil in June 1997, following an
upgrade at a cost of approximately $6 million. The SOUTH SEAS DRILLER received a
296-day contract with options for three additional wells from Soeker in South
Africa. Forasol-Foramer is currently negotiating an additional contract for the
SOUTH SEAS DRILLER in West Africa. In addition, Forasol-Foramer has been
selected by Baker Hughes Inteq for a three-year contract for the upgrading and
management of a Lagoven barge in Venezuela. Forasol-Foramer anticipates
investing $4.5 million in capital expenditures on the project.

In the onshore sector, Forasol-Foramer recently secured two contracts for
two of its ultra-heavy land rigs, the NATIONAL 1625/3 and NATIONAL 1320/2. The
NATIONAL 1625/3 began mobilizing in November 1996 to Argentina, where it will
work for Total under a one-year contract plus one six-month option. The NATIONAL
1320/2 received a six-month contract with two options to drill for Mobil in
Algeria.

FORWARD-LOOKING INFORMATION

The statements included in this Proxy Statement/Prospectus regarding future
financial performance and results and the other statements that are not
historical facts are forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. The words
"anticipate," "estimate," "expect," "predict," "project" and similar
expressions are also intended to

identify forward-looking statements. Such statements are subject to numerous
risks, uncertainties and assumptions, including but not limited to uncertainties
relating to industry and market conditions, prices of crude oil and natural gas,
foreign exchange and currency fluctuations and other factors discussed in this
Proxy Statement/Prospectus and in Pride's and Forasol-Foramer's other filings
with the Commission. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual outcomes
may vary materially from those indicated.

SUMMARY HISTORICAL FINANCIAL DATA

The following tables set forth summary historical and pro forma financial
and operating information for Pride and Forasol-Foramer as of the dates and for
the periods indicated. The following data should be read in conjunction with the
Unaudited Pro Forma Financial Statements, including the notes thereto,
"Selected Historical Financial Data of Pride," "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Pride," "Selected
Historical Financial Data of Forasol-Foramer," "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Forasol-Foramer"
and the consolidated financial statements of Pride and Forasol-Foramer
(including the notes thereto) included elsewhere in this Proxy
Statement/Prospectus. The historical consolidated information for the nine
months ended September 30, 1995 and 1996 for Pride, for the six months ended
June 30, 1995 and 1996 and for the nine months ended September 30, 1996 for
Forasol-Foramer are unaudited. Results of operations for the six months ended
June 30, 1996 for Forasol-Foramer and for the nine months ended September 30,
1996 for Pride and Forasol-Foramer are not necessarily indicative of the results
of operations for the full year.

PRIDE PETROLEUM SERVICES, INC.

NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Revenues................................ $ 127,099 $ 182,336 $ 263,599 $ 198,512 $ 283,593
Operating costs......................... 100,305 139,653 188,252 143,376 202,796
Depreciation and amortization........... 6,407 9,550 16,657 12,077 19,987
Selling, general and administrative..... 17,572 25,105 32,418 23,620 34,120
--------- --------- --------- --------- ---------
Earnings from operations................ $ 2,815 $ 8,028 $ 26,272 $ 19,439 $ 26,690
========= ========= ========= ========= =========
Net earnings(1)......................... $ 5,940 $ 6,214 $ 15,359 $ 11,227 $ 14,454
========= ========= ========= ========= =========
Net earnings per share(1)............... $ .36 $ .30 $ .60 $ .44 $ .52
========= ========= ========= ========= =========
OTHER OPERATING DATA:
EBITDA(2)............................... $ 9,087 $ 17,273 $ 44,616 $ 33,156 $ 47,152

BALANCE SHEET DATA (AT END OF PERIOD):
Working capital......................... $ 21,758 $ 26,640 $ 31,302 $ 28,914 $ 59,731
Property and equipment, net............. 62,823 139,899 178,488 173,264 361,759
Total assets............................ 109,981 205,193 257,605 256,818 529,604
Long-term debt, net of current
portion............................... 200 42,096 61,136 58,817 97,947
Convertible subordinated debentures..... -- -- -- -- 80,500
Shareholders' equity.................... 69,126 111,385 131,239 126,546 192,669

- ------------

(1) Net earnings for the year ended December 31, 1993 include $3,835,000 ($.23
per share) cumulative effect of change in accounting for income taxes. See
Note 6 of Notes to Consolidated Financial Statements of Pride.

(2) EBITDA (earnings before interest, taxes, depreciation and amortization) is
presented here to provide additional information about Pride's operations.
EBITDA should not be considered as an alternative to net income as an
indicator of Pride's operating performance or as an alternative to cash
flows as a better measure of liquidity.

FORASOL-FORAMER N.V.

SIX MONTHS ENDED NINE MONTHS
YEAR ENDED DECEMBER 31, JUNE 30, ENDED
------------------------------- -------------------- SEPTEMBER 30,
1993 1994 1995 1995 1996 1996
--------- --------- --------- --------- --------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

INCOME STATEMENT DATA:
Revenues................................ $ 151,926 $ 148,304 $ 171,500 $ 83,333 $ 89,680 $ 137,640
Operating costs......................... 105,995 104,398 127,491 58,640 72,390 108,536
Depreciation and amortization........... 19,966 20,292 20,264 10,063 10,851 16,598
Selling, general and administrative..... 15,330 16,216 17,660 8,556 8,484 12,606
--------- --------- --------- --------- --------- -------------
Operating income (loss)................. $ 10,635 $ 7,398 $ 6,085 $ 6,074 $ (2,045) $ (100)
========= ========= ========= ========= ========= =============
Net income (loss)....................... $ 2,947 $ 936 $ (4,013) $ 1,129 $ (4,261) $ (3,410)
========= ========= ========= ========= ========= =============
Net income (loss) per share............. $ .31 $ .10 $ (.40) $ .11 $ (.36) $ (.25)
========= ========= ========= ========= ========= =============
OTHER OPERATING DATA:
EBITDA(1)............................... 30,601 27,690 26,349 16,137 8,806 16,498

BALANCE SHEET DATA (AT END OF PERIOD):
Working capital......................... $ (7,899) $ (21,230) $ (26,219) $ 19,579 $ 5,202
Property and equipment, net............. 209,284 212,726 230,372 229,288 239,272
Total assets............................ 324,272 317,623 333,055 356,185 350,803
Long-term debt, net of current
portion............................... 44,968 34,898 40,258 27,928 25,783
Long-term leases, net of current
portion............................... 39,655 30,899 44,538 33,089 34,597
Shareholders' equity.................... 120,531 126,880 123,005 188,642 189,448

- ------------

(1) EBITDA (earnings before interest, taxes, depreciation and amortization) is
presented here to provide additional information about Forasol-Foramer's
operations. EBITDA should not be considered as an alternative to net income
as an indicator of Forasol-Foramer's operating performance or as an
alternative to cash flows as a better measure of liquidity.

SUMMARY UNAUDITED PRO FORMA
COMBINED FINANCIAL DATA
The following tables set forth summary unaudited pro forma combined
financial information for Pride as of the dates and for the periods indicated.
The summary unaudited pro forma combined financial information illustrates the
effect of (i) the acquisition of Quitral-Co S.A.I.C. by Pride, (ii) the
acquisition of Forasol-Foramer by Pride, (iii) the sale of Pride's U.S.
land-based well servicing operations to Dawson, and (iv) the related financing
transactions. The unaudited pro forma combined financial information does not
purport to represent what Pride's financial position or results of operations
actually would have been had the acquisition of Quitral-Co, the acquisition of
Forasol-Foramer, the sale of Pride's U.S. land-based well servicing operations
and the related financing transactions in fact occurred at or prior to the dates
or periods indicated. Furthermore, the unaudited pro forma combined financial
information does not reflect changes which may occur as the result of
post-combination activities and other matters. The following data should be read
in conjunction with the Unaudited Pro Forma Combined Financial Statements,
including the notes thereto, included elsewhere in this Proxy
Statement / Prospectus.

YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
------------------------------------------------- -----------------------------------
PRIDE PRIDE/ PRO PRIDE PRIDE/
PRIDE PRO FORASOL FORMA PRIDE PRO FORASOL
HISTORICAL FORMA(1) COMBINED(2) COMBINED(3) HISTORICAL FORMA(1) COMBINED(2)
---------- -------- ----------- ----------- ---------- -------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Revenues.............................. $263,599 $458,163 $ 629,663 $ 516,548 $283,593 $346,803 $ 484,443
Operating costs....................... 188,252 346,237 470,728 384,551 202,796 252,137 358,423
Depreciation and amortization......... 16,657 28,064 55,028 49,643 19,987 24,314 45,937
Selling, general and administrative... 32,418 39,063 53,223 39,719 34,120 37,281 47,262
---------- -------- ----------- ----------- ---------- -------- -----------
Earnings from operations.............. $ 26,272 $44,799 $ 50,684 $ 42,635 $ 26,690 $33,071 $ 32,821
========== ======== =========== =========== ========== ======== ===========
Net earnings.......................... $ 15,359 $17,778 $ 11,240 $ 7,990 $ 14,454 $16,607 $ 9,777
========== ======== =========== =========== ========== ======== ===========
Net earnings per share
Primary........................... $ .60 $ .70 $ .31(4) $ .22 $ .52 $ .60 $ .25(4)
========== ======== =========== =========== ========== ======== ===========
Fully diluted..................... $ .60 $ .65 $ * $ * $ .50 $ .56 $ *
========== ======== =========== =========== ========== ======== ===========
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....................... $ 31,302 $ 59,731 $59,731 $ 21,733
Property and equipment, net........... 178,488 361,759 361,759 761,083
Total assets.......................... 257,605 529,604 529,604 1,017,259
Long-term debt, net of current
portion............................. 61,136 97,947 97,947 203,730
Long-term leases, net of current
portion............................. -- -- -- 34,597
Convertible subordinated debentures... -- 80,500 80,500 80,500
Shareholders' equity.................. 131,239 192,669 192,669 362,969

PRO
FORMA
COMBINED(3)
-----------

STATEMENT OF OPERATIONS DATA:
Revenues.............................. $ 397,153
Operating costs....................... 290,667
Depreciation and amortization......... 41,867
Selling, general and administrative... 37,010
-----------
Earnings from operations.............. $ 27,609
===========
Net earnings.......................... $ 9,347
===========
Net earnings per share
Primary........................... $ .24
===========
Fully diluted..................... $ *
===========
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....................... $ 46,133
Property and equipment, net........... 717,983
Total assets.......................... 982,909
Long-term debt, net of current
portion............................. 142,830
Long-term leases, net of current
portion............................. 34,597
Convertible subordinated debentures... 80,500
Shareholders' equity.................. 417,169

- ------------

* Anti-dilutive.

(1) Illustrates the effect of the acquisition of Quitral-Co S.A.I.C. on the
Pride Historical data, assuming such acquisition had been consummated at
the beginning of the periods presented. See Note 1 of Notes to Unaudited
Pro Forma Combined Financial Statements.

(2) Illustrates the effect of the acquisition of Forasol-Foramer on the Pride
Pro Forma data, assuming such acquisition had been consummated at the
beginning of the periods presented.

(3) Illustrates the effect of the sale of Pride's U.S. land-based well
servicing operations on the Pride/Forasol Combined data, assuming such
sale had been consummated at the beginning of the periods presented.

(4) PRIDE'S MANAGEMENT DOES NOT BELIEVE THAT FORASOL-FORAMER'S OPERATING
RESULTS FOR THE PERIODS PRESENTED, OR THEIR EFFECT UPON PRO FORMA COMBINED
EARNINGS PER SHARE, ARE INDICATIVE OF THE OPERATING PERFORMANCE THAT IS
EXPECTED TO BE ACHIEVED FOLLOWING THE BUSINESS COMBINATION. SEE THE
INTRODUCTION TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS AT
PAGE 38. SEE ALSO "THE BUSINESS COMBINATION -- PRIDE'S REASONS FOR THE
BUSINESS COMBINATION" AND " -- OPINION OF PRIDE'S FINANCIAL ADVISOR."

THE PRIDE MEETING

DATE, TIME, PLACE

The Pride Meeting will be held at the Westchase Hilton, 9999 Westheimer,
Houston, Texas on ____________, February __, 1997, at 9:00 a.m., Houston time.

THE PRIDE PROPOSAL TO BE VOTED UPON

Pride shareholders will be asked to approve the Pride Proposal (i) to amend
Pride's Restated Articles of Incorporation to increase the number of authorized
shares of Pride from 40,000,000 to 100,000,000 and (ii) to issue approximately
11,100,000 shares of Pride Common Stock, together with a cash payment of
approximately $113,200,000, pursuant to the Purchase Agreement. The two parts of
the Pride Proposal are being submitted for approval and adoption by Pride's
shareholders as a single, unitary proposal.

THE BOARD OF DIRECTORS OF PRIDE HAS UNANIMOUSLY APPROVED THE PRIDE PROPOSAL
AND RECOMMENDS A VOTE FOR APPROVAL BY THE SHAREHOLDERS OF PRIDE.

QUORUM AND VOTE REQUIRED

The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Pride Common Stock at the Pride Meeting is necessary to
constitute a quorum. The affirmative vote of the holders of a majority of the
outstanding shares of Pride Common Stock represented in person or by proxy, and
constituting a quorum, is required to adopt and approve the Pride Proposal.

RECORD DATE; STOCK ENTITLED TO VOTE

The Board of Directors of Pride has established January 21, 1997 as the
date to determine those record holders of Pride Common Stock entitled to notice
of and to vote at the Pride Meeting. On that date, there were 28,527,656 shares
of Pride Common Stock outstanding, with each share entitled to one vote. As of
December 31, 1996, 2,461,934 of such shares, or 8.6%, were beneficially owned by
the directors and executive officers of Pride and their affiliates.

VOTING AND REVOCATION OF PROXIES

Shares represented by all properly executed proxies received in time for
the Pride Meeting will be voted at such meeting in the manner specified by the
holders thereof. Proxies that do not contain voting instructions will be voted
FOR approval of the Pride Proposal. It is not expected that any matter other
than the Pride Proposal will be brought before the Pride Meeting. If, however,
other matters are properly presented, the persons named as proxies will vote in
accordance with their judgment with respect to such matters.

Any holder of Pride Common Stock has the right to revoke his or her proxy
at any time prior to the voting thereof at the Pride Meeting by (i) filing a
written revocation with the Secretary of Pride prior to the voting of such
proxy, (ii) giving a duly executed proxy bearing a later date, or (iii)
attending the Pride Meeting and voting in person. Attendance by a shareholder
will not itself revoke his or her proxy.

SOLICITATION OF PROXIES

Solicitation of proxies for use at the Pride Meeting may be made in person
or by mail, telephone, telecopy or telegram. Pride will bear the cost of the
solicitation of proxies from Pride shareholders. In addition, directors,
officers and employees of Pride may solicit proxies from shareholders by
telephone, telecopy or telegram or in person. Pride has requested banking
institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of Pride Common Stock
held of record by such entities, and Pride will, upon the request of such record
holders, reimburse reasonable forwarding expenses. In addition, Pride has
retained Georgeson & Company Inc. to assist in the solicitation of proxies.
Pride anticipates that it will incur total fees of approximately $10,000, plus
reimbursement of certain out-of-pocket expenses, for this service.

This Proxy Statement/Prospectus and the accompanying proxy card are first
being mailed to shareholders of Pride on or about January __, 1997.

THE FORASOL-FORAMER MEETING

DATE, TIME, PLACE

The Forasol-Foramer Meeting will be held at the offices of Trenite Van
Doorne, Weena 666, 3012 CN, Rotterdam, on ____________, February __, 1997, at
10:00 a.m., Netherlands time.

THE FORASOL-FORAMER PROPOSAL TO BE VOTED UPON

Forasol-Foramer shareholders will be asked to approve the Forasol-Foramer
Proposal, which consists of proposals (i) to approve the transactions provided
for in the Purchase Agreement, (ii) to dissolve Forasol-Foramer as of the
Closing, including entrusting the Board of Managing Directors of Forasol-Foramer
with the liquidation of all its assets and liabilities, without any specific
remuneration in this respect, and to designate International Drilling Management
B.V., a wholly owned subsidiary of the F-F Subsidiary, to be custodian for the
accounts and other records of Forasol-Foramer for a period of 10 years after the
completion of the liquidation, and (iii) to make the Liquidating Distribution.

THE BOARD OF SUPERVISORY DIRECTORS OF FORASOL-FORAMER HAS UNANIMOUSLY
APPROVED THE FORASOL-FORAMER PROPOSAL.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the outstanding FFNV
Common Shares represented in person or by proxy is required to adopt and approve
the Forasol-Foramer Proposal. THE FORASOL CONTROLLING SHAREHOLDERS, EACH OF
WHICH IS A PARTY TO THE PURCHASE AGREEMENT, HAVE PROVIDED AN UNDERTAKING THAT,
SUBJECT TO CERTAIN CONDITIONS THAT WOULD CAUSE A TERMINATION OF THE PURCHASE
AGREEMENT, EACH OF THEM WILL VOTE ALL OF THE FFNV COMMON SHARES HELD BY THEM IN
FAVOR OF THE FORASOL-FORAMER PROPOSAL AT THE FORASOL-FORAMER MEETING AND, UPON
PRIDE'S REQUEST, WILL PROMPTLY CONSTITUTE AND APPOINT AN EXECUTIVE OFFICER OF
PRIDE TO ACT AS THEIR AGENT, PROXY AND ATTORNEY-IN-FACT TO CAUSE SUCH SHARES TO
BE VOTED IN FAVOR OF THE FORASOL-FORAMER PROPOSAL. ACCORDINGLY, APPROVAL OF THE
FORASOL-FORAMER PROPOSAL BY THE SHAREHOLDERS OF FORASOL-FORAMER IS ASSURED.

SHARES ENTITLED TO VOTE
There are currently 16,650,290 FFNV Common Shares outstanding, with each
share entitled to one vote. Of such shares, 24,000 are beneficially owned by the
directors and executive officers of Forasol-Foramer or their affiliates. Any
shareholder who establishes his legal ownership of FFNV Common Shares as of the
date of the Forasol-Foramer Meeting will be entitled to attend and/or, in person
or by proxy, vote such shares at the meeting. A beneficial owner who holds
shares through a brokerage firm or otherwise in "street name" may establish
his ownership and right to vote by becoming a registered owner of FFNV Common
Shares prior to the meeting.

VOTING AND REVOCATION OF PROXIES

Shares represented by all properly executed proxies received in time for
the Forasol-Foramer Meeting will be voted at such meeting in the manner
specified by the holders thereof. It is not expected that any matter other than
the Forasol-Foramer Proposal will be brought before the Forasol-Foramer Meeting.

Any holder of FFNV Common Shares has the right to revoke his or her proxy
at any time prior to the voting thereof at the Forasol-Foramer Meeting by (i)
filing a written revocation with the Secretary of Forasol-Foramer prior to the
voting of such proxy, (ii) giving a duly executed proxy bearing a later date, or
(iii) attending the Forasol-Foramer Meeting and voting in person. Attendance by
a shareholder will not itself revoke his or her proxy.

SOLICITATION OF PROXIES

Solicitation of proxies for use at the Forasol-Foramer Meeting may be made
in person or by mail, telephone, telecopy or telegram. Forasol-Foramer will bear
the cost of the solicitation of proxies from Forasol-Foramer shareholders. In
addition, directors, officers and employees of Forasol-Foramer may solicit

proxies from shareholders by telephone, telecopy or telegram or in person.
Forasol-Foramer has requested banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of FFNV Common Shares held of record by such entities, and
Forasol-Foramer will, upon the request of such record holders, reimburse
reasonable forwarding expenses.

THE PRIDE CHARTER AMENDMENT

Pride is currently authorized to issue 40,000,000 shares of Pride Common
Stock, of which 28,527,656 shares are issued and outstanding and 9,468,579
shares are reserved for issuance upon conversion of Pride's convertible
subordinated debentures and under Pride's stock option and stock purchase plans,
leaving 2,003,765 authorized shares that have not been issued or reserved for
issuance. In the Business Combination with Forasol-Foramer, Pride will (i) issue
approximately 11,000,000 shares of Pride Common Stock for distribution to the
shareholders of Forasol-Foramer and 110,000 shares upon surrender of certain
options to purchase FFNV Common Shares and (ii) reserve up to an additional
387,200 shares for issuance upon exercise of options to purchase FFNV Common
Shares that will be converted into Pride stock options. Thus, approximately
9,500,000 additional shares that presently are not authorized for issuance by
Pride's Restated Articles of Incorporation will be required to complete the
Business Combination.

Pride's Board of Directors has unanimously approved an increase in the
number of authorized shares of Pride Common Stock from 40,000,000 to
100,000,000, such that after completing the Business Combination, there will be
approximately 50,500,000 unissued and unreserved shares of Pride Common Stock
available for future issuance. The Board of Directors will have full authority
to issue the entire amount of such additional authorized but unissued and
unreserved shares of Pride Common Stock for such purposes and on such terms as
it may determine without further action on the part of Pride's shareholders.
However, any such issuance would be subject to the requirements of applicable
law, of governmental or regulatory bodies and of any securities exchange on
which Pride Common Stock is listed or admitted to trading at the time. The
Nasdaq National Market, on which the Pride Common Stock is now listed, currently
requires shareholder approval as a prerequisite to listing shares in certain
instances, including acquisition transactions where the issuance could increase
the number of outstanding shares by 20% or more.

The Board of Directors believes that the increase in the number of
authorized shares of Pride Common Stock will be advantageous to Pride and its
shareholders because it will provide Pride with added flexibility for
acquisitions, stock splits, stock dividends, equity financings, employee benefit
plans and other transactions involving the use of capital stock.

Except for the shares required to complete the Business Combination, the
Pride Charter Amendment will not change the number of shares of Pride Common
Stock currently outstanding or the rights of the holders of such stock. Pride
shareholders will not have any preemptive rights to acquire the additional
shares of Pride Common Stock authorized by the Pride Charter Amendment upon the
issuance thereof.

Depending upon the nature and terms thereof, the issuance of additional
shares of Pride Common Stock in the future could, under certain circumstances,
render more difficult or discourage an attempt to obtain control of Pride. For
example, the issuance of shares of Pride Common Stock in a public or private
sale, merger or similar transaction would increase the number of Pride's
outstanding shares, thereby diluting the interest of a party seeking to take
control of Pride. The Pride Charter Amendment has not, however, been included in
the Pride Proposal in response to any effort to obtain control of Pride.

If Pride's shareholders approve the Pride Proposal, Pride will cause the
Pride Charter Amendment to become effective by making an appropriate filing with
the Secretary of State of the State of Louisiana only upon consummation of the
Business Combination.

THE BUSINESS COMBINATION

THE INFORMATION UNDER THIS CAPTION INCLUDES A SUMMARY OF CERTAIN TERMS AND
PROVISIONS OF THE PURCHASE AGREEMENT WHICH IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE PURCHASE AGREEMENT, A COPY OF WHICH IS ATTACHED AS APPENDIX A
TO THIS PROXY STATEMENT/PROSPECTUS AND INCORPORATED HEREIN BY REFERENCE.

GENERAL DESCRIPTION

Pursuant to the Purchase Agreement, at the Closing, Pride will purchase
from Forasol-Foramer the capital stock of the F-F Subsidiary for the Purchase
Consideration. Based on the current number of outstanding FFNV Common Shares,
the Purchase Consideration will consist of 10,989,191 shares of Pride Common
Stock (representing approximately 27.8% of the Pride Common Stock to be
outstanding immediately after the Closing) and $113,221,972 in cash. An
additional 110,000 shares of Pride Common Stock will be issued to two senior
executives of Forasol-Foramer whose employment will be terminated in the
Business Combination upon such executives' surrender of their outstanding
options to purchase FFNV Common Shares, and up to an additional 387,200 shares
of Pride Common Stock will be reserved for future issuance for Pride stock
options into which outstanding stock options of Forasol-Foramer will be
converted.

As soon as practicable following delivery of the Purchase Consideration,
Forasol-Foramer, which is a holding company having no significant assets (other
than its interests, through the F-F Subsidiary, in its operating subsidiaries
and joint ventures) and no significant liabilities, will cause the Liquidating
Distribution of the Purchase Consideration to be made to its registered
shareholders on the basis of 0.66 shares of Pride Common Stock and $6.80 in cash
(subject to applicable Dutch withholding taxes) for each of the FFNV Common
Shares held by such shareholders. As soon as practicable following the
Liquidating Distribution, Forasol-Foramer will take such steps as may be
necessary to wind up its affairs and cease its corporate existence.
Forasol-Foramer will appoint its wholly owned subsidiary, International Drilling
Management B.V. ("IDM"), as liquidator. IDM, in turn, will authorize American
Stock Transfer & Trust Company, the transfer agent and registrar for FFNV Common
Shares, to act as the distribution agent for the Liquidating Distribution (the
"Distribution Agent"). Since Forasol-Foramer will have no assets other than the
Purchase Consideration provided by Pride, its shareholders will not receive any
additional distributions upon its final liquidation. In the Purchase Agreement,
Pride has agreed to assume Forasol-Foramer's closing costs, including the cost
to wind up its affairs and liquidate.

The Business Combination is subject to the satisfaction of certain
conditions, including approval of the Pride Proposal and the Forasol-Foramer
Proposal by the respective shareholders of Pride and Forasol-Foramer, the
listing of the Pride Common Stock included in the Purchase Consideration on the
Nasdaq National Market and the accuracy of each party's representations and
warranties in all material respects.

Consummation of the Business Combination, including the filing of Pride's
Charter Amendment with the Secretary of State of Louisiana and the Liquidating
Distribution, is expected to occur not more than five business days after all of
the conditions to Closing contained in the Purchase Agreement have been
satisfied or waived. If the Pride Proposal and the Forasol-Foramer Proposal are
approved at the respective special meetings, the parties expect that the Closing
will occur on or about February __, 1997, although there can be no assurance as
to whether or when the Closing will occur.

At the Closing, the Purchase Consideration will be delivered to the
Distribution Agent. Not later than five business days following the Closing,
Forasol-Foramer will cause the Distribution Agent to distribute the Purchase
Consideration, subject to the withholding of any applicable taxes (see "The
Business Combination -- Certain Tax Consequences"), to the holders of FFNV
Common Shares who are registered in Forasol-Foramer's register of shareholders
when the Liquidating Distribution is made. TO FACILITATE A PROPER DETERMINATION
OF THOSE HOLDERS OF FFNV COMMON SHARES WHO ARE ENTITLED TO PARTICIPATE IN THE
LIQUIDATING DISTRIBUTION, FORASOL-FORAMER INTENDS TO CAUSE TRADING IN SUCH
SHARES ON THE NASDAQ NATIONAL MARKET TO BE SUSPENDED AT THE CLOSE OF TRADING ON
____________, FEBRUARY __, 1997. No fractional shares of Pride Common Stock will
be distributable, and Forasol-Foramer will make, and will cause the Distribution
Agent to make, such adjustments with respect to any fractional shares of Pride

Common Stock otherwise distributable as it may deem to be fair and equitable or
as otherwise may be required by applicable law.

BACKGROUND OF THE BUSINESS COMBINATION

Pride's strategy for revenue and earnings growth has for some time included
acquisitions in both international and offshore markets. Consistent with this
strategy, Pride continually evaluates opportunities for acquisitions worldwide.
In early October 1996, Pride approached Jefferies & Company, Inc.
("Jefferies") regarding a possible business combination of Pride and
Forasol-Foramer, after which Jefferies began discussions with Forasol-Foramer
regarding such possibility.

Prior to its initial contacts with Pride, Forasol-Foramer had for a number
of years been exploring ways to expand its operations and asset base to improve
its competitive position in the markets in which it operates. The Board of
Supervisory Directors of Forasol-Foramer recognized that in order to remain
competitive in a rapidly consolidating market and have the financial wherewithal
to fund capital expenditures required to meet customer requirements,
Forasol-Foramer needed to reach a certain critical mass in its assets and
operations. Forasol-Foramer hired Jefferies in December 1994 to assist it in
reviewing all of its strategic options, including potential financing
alternatives to enhance shareholder value. As part of this exercise,
Forasol-Foramer reviewed several presentations prepared by Jefferies that
analyzed its strategic alternatives, including potential combination
transactions and rig acquisitions, and provided detailed information on
potential candidates. During this time, Forasol-Foramer also had informal
discussions with several other drilling companies regarding potential
combinations or rig acquisitions.

In May 1996, Forasol-Foramer completed an initial public offering of
6,900,000 shares on the Nasdaq National Market. During the fall of 1996,
Jefferies had several meetings with Forasol-Foramer's management and members of
its Board of Supervisory Directors to discuss issues related to
Forasol-Foramer's strategy and its strengths and weaknesses, including among
other things (i) a review of Forasol-Foramer's stock performance since the
initial public offering, (ii) an analysis of Forasol-Foramer's competitive
position in the industry and (iii) the ability of Forasol-Foramer to grow
through independent rig acquisitions. These discussions further confirmed
Forasol-Foramer's belief that it needed to explore potential for growth through
mergers and acquisitions.

During September 1996, Forasol-Foramer held discussions with several
companies regarding the feasibility of a business combination to take advantage
of existing market conditions, and Forasol-Foramer received a written indication
of interest regarding a potential combination from one such company. However,
due to a variety of reasons, none of these discussions progressed to a
definitive stage. As stated previously, in early October, Pride approached
Jefferies regarding a possible business combination of Pride and
Forasol-Foramer, after which Jefferies consulted with Forasol-Foramer regarding
a possible combination of the two companies.

During the next several weeks, Pride and Forasol-Foramer had a series of
discussions and several meetings, during which they reviewed the assets,
operations and general structure of each company as well as the potential
combination benefits, including consolidation opportunities in common business
areas and enhanced marketing and operating capabilities. Pride expressed the
reasons for Pride's interest in acquiring Forasol-Foramer, which included among
other things, Pride's desire to enter the deepwater drilling business and to
realize synergies from consolidation of international onshore operations. Pride
indicated its intent to make a proposal to Forasol-Foramer to acquire the
company and discussed the possible composition of the consideration. The parties
decided to further pursue investigation of a business combination of Pride and
Forasol-Foramer.

During the week of October 21, 1996, Pride submitted a written proposal to
acquire Forasol-Foramer for a consideration consisting of Pride Common Stock and
cash. Forasol-Foramer responded that it would consider the offer and indicated
its interest in entering into negotiations.

On October 25, 1996, a special meeting of the Board of Supervisory
Directors of Forasol-Foramer was held to discuss strategic growth opportunities,
and specifically potential mergers and acquisitions. At the meeting the Board of
Supervisory Directors received a presentation from Jefferies which provided an

analysis of (i) Forasol-Foramer's current operations, financial position and
future outlook and matters relating to the FFNV Common Shares, including stock
price performance, trading volume, liquidity and float and Forasol-Foramer's
value relative to comparable companies in the offshore drilling industry; (ii)
factors relevant to determining how to enhance shareholder value; (iii) Pride's
offer to acquire Forasol-Foramer and the pro forma effect on shareholder value
to Forasol-Foramer of a business combination of Pride and Forasol-Foramer; and
(iv) other strategic business opportunities available to Forasol-Foramer. The
Board of Supervisory Directors discussed the various strategic opportunities
that could enhance the value of Forasol-Foramer to its shareholders and decided
to continue negotiations with Pride for a possible business combination.

Meetings were held on October 26 and 27, 1996 in Paris attended by Ray
Tolson and Paul Bragg of Pride, members of Forasol-Foramer's Board of
Supervisory Directors and representatives from Jefferies to negotiate terms of
the possible combination of Pride and Forasol-Foramer.

On October 27, 1996, Pride and Forasol-Foramer entered into a letter of
intent setting forth the framework governing the terms of the proposed Business
Combination of the two companies. Pursuant to the letter of intent, Pride and
Forasol-Foramer agreed, among other things, (i) that Pride would purchase
substantially all of the business of Forasol-Foramer for consideration
equivalent to $6.80 cash and 0.66 shares of Pride Common Stock for each FFNV
Common Share; (ii) to submit a definitive purchase agreement for approval by
their respective boards of directors as promptly as practicable; (iii) to
include in the purchase agreement certain terms and conditions, including (a)
for two positions on Pride's Board of Directors to be filled by one individual
designated by Soletanche Group and one individual designated by Ackermans & van
Haaren Group; and (b) for Gerard Godde, Chief Operating Officer of
Forasol-Foramer, to be Senior Vice-President of Pride, President and Chief
Operating Officer of the continuing operations of Forasol-Foramer and member of
Pride's Executive Management Committee, and for John O'Leary, Manager of
Marketing and Business Development of Forasol S.A., to be elected to Pride's
Executive Management Committee and to executive positions at Pride and
Forasol-Foramer; and (iv) to pay break-up or termination fees ranging from $5
million to $20 million under certain circumstances. Before the commencement of
trading on October 28, 1996, Pride and Forasol-Foramer each issued a press
release announcing the execution of the letter of intent.

From and after October 27, 1996, the parties continued to conduct due
diligence with respect to each other and to negotiate definitive documentation
for the Business Combination. Subsequent negotiations among representatives of
Forasol-Foramer, the Forasol-Foramer Controlling Shareholders and Pride took
place in numerous meetings, telephone conversations and correspondence that
transpired between October 28, 1996 and December 19, 1996.

On December 4, 1996, at a regularly scheduled meeting of Pride's Board of
Directors, following presentations from Pride's management and legal counsel and
delivery by Simmons & Company International ("Simmons") of its oral opinion
that as of such date the Purchase Consideration was fair to the shareholders of
Pride from a financial point of view, Pride's Board of Directors approved the
Business Combination and authorized management to execute and deliver the
Purchase Agreement. On December 16, 1996, at a special meeting of
Forasol-Foramer's Board of Supervisory Directors, following a presentation from
Jefferies & Co., Inc. and delivery of its oral opinion that as of such date the
Purchase Consideration was fair to the shareholders of Forasol-Foramer from a
financial point of view, Forasol-Foramer's Board of Supervisory Directors
approved the proposed Business Combination and authorized execution of the
Purchase Agreement with Pride. On December 19, 1996, Pride and Forasol-Foramer
executed the Purchase Agreement.

PRIDE'S REASONS FOR THE BUSINESS COMBINATION

Since 1993, Pride has changed dramatically the composition of its business
by entering international and offshore markets, primarily through acquisition of
established operators in geographic areas with well developed oil industries. To
date, Pride has concentrated these efforts in South America and the U.S. Gulf of
Mexico, acquiring four businesses in Argentina, two businesses in Venezuela, two
businesses in

Colombia and the largest fleet of modular platform rigs in the Gulf of Mexico.
Pride has further developed these businesses by constructing new or refurbishing
and deploying existing rigs from its fleet to these markets. In acquiring and
developing its business in these new markets, Pride has sought to consolidate
market share and achieve critical mass in terms of size to obtain resulting cost
benefits. Pride believes that its successful implementation of this strategy has
resulted in substantial revenue growth and improved operating results.

Pride has continued to pursue acquisition opportunities in both its
principal international and offshore markets as well as new geographic regions
with growth potential. In evaluating potential acquisition candidates, Pride
identified Forasol-Foramer as a business that met its acquisition and growth
objectives. Forasol-Foramer, like Pride, operates a diverse fleet of rigs that
includes offshore assets and land-based drilling and workover rigs.
Additionally, Forasol-Foramer has a significant concentration of rigs in South
America, particularly in Argentina and Venezuela. The Board of Directors
believes that the combination of Forasol-Foramer's South American operations
with those of Pride will result in Pride's further achievement of critical mass
and the resulting cost benefits of economies of scale. Furthermore,
Forasol-Foramer has significant operations in Africa, both onshore in the
countries of North Africa and offshore West Africa, giving Pride access to these
important markets through established operations.

In its evaluation of Forasol-Foramer, the Board of Directors placed
considerable significance on Forasol-Foramer's deep-water operating
capabilities. The Board of Directors believes that acquiring such capabilities
will significantly increase Pride's abilities to service the needs of its
customers throughout the world in this rapidly expanding segment of the oil
industry and that the size of the combined business will increase Pride's
financial strength to further develop the deep-water business.

Pride has also strived to build a globally focused company. Pride believes
that Forasol-Foramer's headquarters in France will give it improved access to
important European and Asian Pacific customers. Additionally, because the pool
of experienced oilfield laborers in the United States is currently very tight,
Pride anticipates a potential benefit in the ability of Forasol-Foramer to
attract certain skilled European employees to fill operating positions created
in the expansion of Pride's business.

The Board of Directors of Pride has determined that the Business
Combination is in the best interests of Pride and the holders of Pride Common
Stock. In arriving at its determination, the Board of Directors of Pride
considered the advice of management regarding the businesses and operations of
Forasol-Foramer and the advice of management, legal counsel and Simmons
regarding the terms and provisions of the Purchase Agreement. The Board of
Directors of Pride gave substantial consideration to the internal analyses
prepared by management, the analyses prepared and presented by Simmons and the
opinion of Simmons, dated December 4, 1996. In addition, the Board of Directors
of Pride considered a number of factors, including the following:

(i) an analysis of the financial performance, operations, assets,
business condition and business prospects of Pride and Forasol-Foramer,
including the projected financial performance of Pride and Forasol-Foramer;

(ii) the potential consolidation cost savings and economies of scale
that could result from the Business Combination;

(iii) the potential for increased stability of earnings and cash flow
of Pride following the Business Combination due to greater diversification
of geographic operations and assets and the contracted status of certain of
Forasol-Foramer's assets;

(iv) the potential business synergies to be achieved by the
combination of the relative strengths of Pride and Forasol-Foramer,
particularly in respect of customer base, geographic areas and management
expertise with certain classes of assets, including (a) the belief of the
Board of Directors of Pride that expansion into certain international
markets served by Forasol-Foramer may create additional possibilities for
Pride to pursue its strategic objective of deploying excess domestic rig
capacity in more profitable international markets and (b) the belief of the
Board of Directors of Pride that Forasol-

Foramer's rigs and services may be deployed into certain markets where
Pride has a stronger presence than Forasol-Foramer;

(v) the potential opportunities for growth of revenues and earnings in
new markets currently served by Forasol-Foramer, but not currently served
by Pride, due to the expertise of the management of Forasol-Foramer in
these areas;

(vi) the market consolidation that would take place in certain Latin
American markets upon consummation of the Business Combination;

(vii) the outlook of the worldwide onshore and offshore drilling
industry, along with other economic and market conditions, including stable
oil and natural gas prices;

(viii) the structure of the Business Combination and the terms of the
Purchase Agreement, which were the result of arms'-length negotiations
between Pride and Forasol-Foramer;

(ix) the presentations, advice and opinion of Simmons, that, as of the
date of such opinion, the Purchase Consideration to be received by the
holders of FFNV Common Shares was fair, from a financial point of view, to
the holders of Pride Common Stock;

(x) the belief of the Board of Directors of Pride that the increased
size of Pride following the Business Combination may enhance the ability of
Pride to pursue further strategic acquisitions;

(xi) the historical market prices and trading volumes of the Pride
Common Stock and the Forasol-Foramer Common Shares; and

(xii) the belief of the Board of Directors of Pride that the increased
size of Pride following the Business Combination may provide increased
market float of Pride Common Stock and increase investor interest.

In determining whether the Business Combination was in the best interests
of Pride and the holders of the Pride Common Stock, the Board of Directors of
Pride considered the factors above as a whole and did not find it practicable
to, and did not, quantify or otherwise attempt to assign specific or relative
weights to such factors.

OPINION OF PRIDE'S FINANCIAL ADVISOR

On December 4, 1996, Simmons orally presented a summary of the analyses
prepared pursuant to the rendering of its opinion to the Board of Directors of
Pride. Subsequently, Simmons delivered to the Board of Directors of Pride its
written opinion, dated December 4, 1996, that as of such date, the Purchase
Consideration to be paid by Pride in the Business Combination was fair from a
financial point of view to the holders of Pride Common Stock.

The full text of Simmons' fairness opinion, dated December 4, 1996, which
sets forth the assumptions made, general procedures followed, matters considered
and limits on the review undertaken, is attached to this Proxy
Statement/Prospectus as Appendix B and incorporated herein by reference.
Simmons' opinion is directed only to the fairness, from a financial point of
view, to the holders of Pride Common Stock of the Purchase Consideration to be
paid by Pride in the Business Combination and does not constitute a
recommendation to any holder of Pride Common Stock as to how such shareholder
should vote on the Pride Proposal. The summary of Simmons' opinion set forth
below is qualified in its entirety by reference to the full text of such opinion
attached as Appendix B. The holders of Pride Common Stock are urged to read the
opinion in its entirety.

In connection with rendering its opinion, Simmons reviewed and analyzed,
among other things, the following: (i) a draft of the Purchase Agreement; (ii)
publicly available financial statements and other information concerning Pride;
(iii) certain internal information, primarily financial in nature, concerning
the business and operations of Pride furnished by Pride for purposes of Simmons'
analysis; (iv) certain publicly available information concerning the trading of,
and the trading market for, Pride Common Stock; (v) publicly available financial
statements and other information concerning Forasol-Foramer; (vi) certain
internal information, primarily financial in nature, concerning the business and
operations of Forasol-

Foramer furnished by Forasol-Foramer at Pride's request for purposes of Simmons'
analysis; (vii) certain publicly available information concerning the trading
of, and the trading market for, FFNV Common Shares; (viii) certain publicly
available information with respect to certain other companies that Simmons
believed to be comparable to Pride or Forasol-Foramer (the "Comparable
Companies") and the trading markets for certain of Comparable Companies'
securities; (ix) certain publicly available information concerning the estimates
of the future operating and financial performance of Pride, Forasol-Foramer and
Comparable Companies prepared by industry experts unaffiliated with either Pride
or Forasol-Foramer; and (x) certain publicly available information concerning
the nature and terms of certain other transactions considered relevant to the
inquiry. Further, Simmons made such other analyses and examinations as deemed
necessary or appropriate. Simmons also met with certain officers and employees
of Pride and Forasol-Foramer to discuss the foregoing, as well as other matters
believed relevant to the inquiry.

In arriving at its opinion, Simmons assumed and relied upon the accuracy
and completeness of all of (i) the financial and other information provided by
Pride and Forasol-Foramer, or publicly available, including without limitation,
information with respect to asset conditions, tax positions, liability reserves
and business contract terms, and (ii) the representations and warranties of
Forasol-Foramer and Pride contained in the Purchase Agreement. Simmons did not
attempt independently to verify any of such information, representations or
warranties. Simmons did not conduct a physical inspection of any of the assets,
properties or facilities of Pride or Forasol-Foramer, nor did Simmons make or
obtain any independent evaluations or appraisals of any of such assets,
properties or facilities, other than estimates contained in certain publicly
available information. Simmons' opinion necessarily is based upon general
economic, market and financial conditions as they then existed and could be
evaluated and on the information made available at the date of such opinion.

In connection with its presentation to the Board of Directors of Pride on
December 4, 1996, Simmons advised the Board of Directors of Pride that in
evaluating the Purchase Consideration to be paid in the Business Combination by
Pride, Simmons performed a variety of preliminary financial and comparative
analyses with respect to Pride and Forasol-Foramer. Prior to delivery of the
written opinion, Simmons performed procedures to review the assumptions on which
such analyses were based. The analyses performed by Simmons pursuant to the
rendering of its opinion include those described below:

ANALYSIS OF SELECTED PUBLICLY TRADED COMPARABLE COMPANIES. Simmons
reviewed certain publicly available financial, operating and stock market
information as of December 3, 1996 for Pride, Forasol-Foramer and the Comparable
Companies. Simmons reviewed a number of publicly traded oil service and
equipment companies in preparing its Comparable Companies analysis, including
Atwood Oceanics, Inc., Cliffs Drilling Company, ENSCO International
Incorporated, Falcon Drilling Company, Inc., Key Energy Group, Inc., Marine
Drilling Companies, Inc., Nabors Industries, Inc., Noble Drilling Corporation,
Parker Drilling Company, Pool Energy Services Co. and Smedvig asa. For Pride and
the Comparable Companies, Simmons calculated, among other things, multiples of
market stock price to "TTM" (trailing twelve months ending with the most
recently publicly reported period) earnings and cash flow per share and to
estimated 1996 and 1997 earnings and cash flow per share (derived from estimates
prepared by industry experts unaffiliated with either Pride or Forasol-Foramer).
For Forasol-Foramer, Simmons calculated, among other things, multiples of the
implied consideration at December 3, 1996 (obtained by multiplying the closing
stock price for Pride Common Stock on December 3, 1996 by 0.66 and adding $6.80)
to TTM earnings and cash flow per share and to estimated 1996 and 1997 earnings
and cash flow per share. For Pride, Forasol-Foramer and the Comparable
Companies, Simmons also calculated multiples of "Adjusted Total Market
Capitalization" (the total market capitalization less cash balances in excess
of five percent of operating revenues) to TTM "EBDIT" (earnings before
depreciation, interest and taxes) and to estimated 1996 and 1997 EBDIT (derived
from estimates prepared by industry experts unaffiliated with either Pride or
Forasol-Foramer).

An analysis of the multiples of market stock price to TTM earnings per
share, to estimated 1996 earnings per share and to estimated 1997 earnings per
share yielded 24.3x, 23.7x and 16.4x, respectively, for Pride, and averages
(excluding the highest and lowest values) of 43.1x, 33.5x and 18.8x for the

Comparable Companies. An analysis of the multiples of the implied consideration
at December 3, 1996 to the TTM earnings per share and to estimated 1996 earnings
per share resulted in negative multiples for Forasol-Foramer, while an analysis
of the multiple of the implied consideration at December 3, 1996 to the
estimated 1997 earnings per share yielded 13.5x for Forasol-Foramer. An analysis
of the multiples of market stock price to TTM cash flow per share, to estimated
1996 cash flow per share and to estimated 1997 cash flow per share yielded 9.8x,
9.7x and 8.2x, respectively, for Pride, and averages (excluding the highest and
lowest values) of 19.5x, 16.4x and 11.6x for the Comparable Companies. An
analysis of the multiples of the implied consideration at December 3, 1996 to
TTM cash flow per share, to estimated 1996 cash flow per share and to estimated
1997 cash flow per share yielded 25.9x, 15.8x and 7.1x for Forasol-Foramer. An
analysis of Adjusted Total Market Capitalization to TTM EBDIT, to estimated 1996
EBDIT and to estimated 1997 EBDIT yielded 9.5x, 8.9x and 7.5x, respectively, for
Pride, 21.5x, 16.0x and 7.2x for Forasol-Foramer and averages (excluding the
highest and lowest values) of 16.1x, 12.9x and 9.3x for the Comparable
Companies.

ANALYSIS OF SELECTED COMPARABLE TRANSACTIONS. Simmons reviewed thirteen
transactions involving the acquisition of all or part of certain companies that
were generally focused on operating drilling and/or workover rigs. Simmons
calculated the multiples of acquisition price or transaction value to TTM
revenues and TTM EBDIT and calculated the multiples for adjusted acquisition
price (defined as acquisition price less the value of debt assumed in the
transaction) to TTM net income of such companies.

For these transactions, the calculations yielded, excluding values that
Simmons believed were not meaningful, a range of acquisition price to TTM
revenues of 0.8x to 8.6x, with an average (excluding the highest and lowest
values) of 3.6x, a range of acquisition price to TTM EBDIT of 5.5x to 35.0x,
with an average (excluding the highest and lowest values) of 16.9x and a range
of adjusted acquisition price to TTM net income of 14.4x to 47.3x, with an
average (excluding the highest and lowest values) of 24.4x. Simmons then
compared the results of these calculations to the multiples of acquisition price
to TTM revenues and TTM EBDIT, and the multiple of adjusted acquisition price to
TTM net income of Forasol-Foramer, based on the implied consideration at
December 3, 1996. The multiples of acquisition price to TTM revenues and TTM
EBDIT were 2.2x and 21.7x, respectively, for Forasol-Foramer and the multiple of
adjusted acquisition price to TTM net income of Forasol-Foramer was a negative
value.

PREMIUM ANALYSIS. Simmons calculated the premium to holders of FFNV Common
Shares of the implied consideration at October 25, 1996 (obtained by multiplying
the closing stock price for Pride Common Stock on October 25, 1996 by 0.66 and
adding $6.80) to the closing stock prices for FFNV Common Shares on such date
and on the dates one week and four weeks prior thereto. Based on the closing
price of $15.25 for Pride Common Stock on October 25, 1996, Simmons calculated
premiums to the holders of FFNV Common Shares equal to 21.6% of the closing
price for FFNV Shares on October 25, 1996; 21.6% of the closing price for FFNV
Common Shares one week prior; and 40.5% of the closing price for FFNV Common
Shares four weeks prior.

Simmons also analyzed average acquisition premiums for nineteen other
acquisitions of public companies in the oilfield services and equipment
industry. The average premium (excluding the highest and lowest values) to last
closing price prior to the announcement of such transactions was 25.4%, the
average premium (excluding the highest and lowest values) to the closing price
one week prior to the announcement was 28.8%, and the average premium (excluding
the highest and lowest values) to the closing price four weeks prior to the
announcement was 37.8%.

Simmons also reviewed average acquisition premiums for 640 acquisitions of
public companies between January 1, 1987 and November 26, 1996. The average
premium to last closing price prior to announcement of such transactions was
29.4%, the average premium to the closing price one week prior to announcement
was 33.5%, and the average premium to the closing price four weeks prior to the
announcement was 37.9%.

PRO FORMA BUSINESS COMBINATION ANALYSIS. Simmons performed an analysis of
the effect of the Business Combination on the earnings per share and cash flow
per share of Pride Common Stock for the projected results for the years ending
December 31, 1997 and December 31, 1998, which assumed that the

Business Combination was consummated on January 1, 1997. For projected operating
results and certain combination assumptions, Simmons relied on information
prepared by the management of Pride and Forasol-Foramer, and did not attempt to
independently verify such information. In performing this analysis, Simmons also
assumed that annual consolidation cost savings of $8 million were fully realized
as of January 1, 1997, and that one-time costs associated with the Business
Combination of $8 million were capitalized. The cash portion of the Purchase
Consideration was assumed to be financed at an interest rate of 10%. This
analysis indicated that the pro forma impact of the Business Combination was
accretive to the earnings and cash flow per share of Pride Common Stock in both
1997 and 1998.

Simmons also analyzed the balance sheet impact of the Business Combination.
At September 30, 1996, the total debt-to-total book capitalization of Pride and
Forasol-Foramer combined was 51.5%. Pride's stand-alone total debt-to-total book
capitalization at September 30, 1996 was 52.3%.

RELATIVE CONTRIBUTION ANALYSIS. Simmons analyzed the relative
contributions of Pride and Forasol-Foramer to, among other things, the combined
pro forma revenues, EBDIT, net income, cash flow and total market capitalization
of the two companies, assuming completion of the Business Combination (without
giving effect to any transaction adjustments or cost savings). Based on
estimated 1996 results, Simmons calculated contributions by Pride of 71% of
combined revenues, 75% of combined EBDIT, 100% of combined net income and 74% of
combined cash flow. Based on projected 1997 results, Simmons calculated
contributions by Pride of 69% of combined revenues, 65% of combined EBDIT, 63%
of combined net income and 61% of combined cash flow. Based on the terms of the
Business Combination and the closing price for Pride Common Stock on December 3,
1996, Simmons calculated the contribution of Pride to the total market
capitalization of the two companies of 64%.

DISCOUNTED CASH FLOW ANALYSIS. Simmons developed five-year projections
based on two-year projections prepared by the respective managements of Pride
and Forasol-Foramer to calculate projected future cash flows for Pride and
Forasol-Foramer. In developing the five-year projections, Simmons used similar
assumptions for revenue and cost growth for each company beyond year two.
Simmons then performed discounted cash flow analyses based on the unlevered free
cash flows generated by Pride and Forasol-Foramer, generating terminal values
based on a multiple of year five EBDIT and applying appropriate discount rates.

The purpose of this analysis was to determine the value of Pride and
Forasol-Foramer, both on a stand-alone basis, a combined basis and relative to
each other. Consolidation savings were only incorporated in the analysis of the
value of the combined entity. The closing price of Pride Common Stock on
December 3, 1996 was within the range of values for Pride on a stand-alone basis
calculated by the analysis and the implied consideration at December 3, 1996 for
Forasol-Foramer was within the range of values calculated for Forasol-Foramer on
a stand-alone basis. The range of values calculated for the combined entity per
share of Pride Common Stock exceeded the range of values calculated for Pride on
a stand-alone basis by $1.53 to $1.94 per share.

The foregoing summary does not purport to be a complete description of the
analyses performed by Simmons or of its presentations to the Board of Directors
of Pride. The preparation of financial analyses and fairness opinions is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Simmons believes that its analyses (and the summary set
forth above) must be considered as a whole, and that selecting portions of such
analyses and of the factors considered by Simmons, without considering all of
such analyses and factors, could create an incomplete view of the processes
underlying the analyses conducted by Simmons and its opinion. Simmons made no
attempt to assign specific weights to particular analyses. Any estimates
contained in Simmons' analyses are not necessarily indicative of actual values,
which may be significantly more or less favorable than as set forth therein.
Estimates of values of companies do not purport to be appraisals or necessarily
reflect the prices at which companies may actually be sold. Because such
estimates are inherently subject to uncertainty, Simmons does not assume
responsibility for their accuracy.

of debt and equity, and the management and underwriting of sales of equity and
debt to the public. Simmons has previously rendered investment banking services
to Pride in connection with transactions for which Simmons received customary
compensation. In addition, in the ordinary course of business, Simmons may
actively trade the securities of Pride and Forasol-Foramer for its own account
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in such securities. Simmons is acting as a financial advisor
to Pride in this transaction and will receive a customary fee for its services.

FORASOL-FORAMER'S REASONS FOR THE BUSINESS COMBINATION

The Board of Supervisory Directors of Forasol-Foramer has unanimously
determined that the terms of the Purchase Agreement and the transactions
contemplated thereby are fair to and in the best interests of Forasol-Foramer
and all of its shareholders. The Board of Supervisory Directors of
Forasol-Foramer believes that this combination meets its strategic growth
objective of creating a larger, more diversified drilling company that will be
able to compete more effectively in the areas of the world in which it operates.
The Board of Supervisory Directors further believes that the combined company
will be better able to pursue further growth opportunities through acquisitions
and mergers. Accordingly, the Board of Supervisory Directors of Forasol-Foramer
has unanimously approved the Purchase Agreement and has submitted it for
approval by the shareholders of Forasol-Foramer. In reaching its determination,
the Board of Supervisory Directors of Forasol-Foramer consulted with
Forasol-Foramer management, as well as its legal counsel and financial advisors
and considered a number of factors, including, without limitation, the
following:

(i) information concerning the financial performance and condition,
assets, liabilities, business operations and prospects of each of
Forasol-Foramer and Pride on both a historical and prospective basis, and
Forasol-Foramer's projected future performance and prospects as a separate
entity and on a combined basis with Pride;

(ii) recent and prior market prices per share of FFNV Common Shares
and Pride Common Stock;

(iii) the potential value of Forasol-Foramer's business and of Pride's
business;

(iv) the opportunity for future liquidity associated with Pride Common
Stock due to its high trading volume as compared to the trading volume of
FFNV Common Shares;

(v) the Board's belief that the FFNV Common Shares would trade at
higher multiples comparable to those of other drilling companies due to
improved liquidity and greater investor interest;

(vi) the opportunity afforded Forasol-Foramer shareholders to maintain
a publicly traded equity investment in a larger combined enterprise in the
drilling industry and to participate in the growth and appreciation of the
business of the combined company;

(vii) the Board's belief that the future business prospects of the
combined company are strong due to the large size of the onshore and
offshore fleet and geographic diversity of operations;

(viii) the opportunity afforded Forasol-Foramer shareholders to share
in the potential synergies and cost savings achieved through consolidation;

(ix) enhanced marketing capabilities and operating expertise of the
combined company;

(x) the terms and conditions of the Purchase Agreement, including the
proposed structure of the Business Combination;

(xi) the Purchase Consideration of cash and Pride Common Stock to be
paid by Pride to Forasol-Foramer;

(xii) recent consolidation in and the outlook for the offshore
drilling industry;

(xiii) the Board's belief that the increased size of the combined
company will enhance its ability to pursue further acquisitions; and

(xiv) the financial analysis and opinion of Jefferies described below.

In determining the Business Combination was fair to and in the best
interests of Forasol-Foramer and all of its shareholders, the Board of
Supervisory Directors considered the factors above as a whole and did not assign
specific or relative weights to such factors. The Board of Supervisory Directors
believes that the Business Combination is an opportunity for Forasol-Foramer
shareholders to participate in a combined enterprise that has significantly
greater business and financial resources than Forasol-Foramer would have absent
the Business Combination.

OPINION OF FORASOL-FORAMER'S FINANCIAL ADVISOR

Jefferies acted as financial advisor to Forasol-Foramer's Board of
Supervisory Directors in connection with the transactions contemplated by the
Purchase Agreement. The Board of Supervisory Directors instructed Jefferies, in
its role as financial advisor, to evaluate the fairness of the Business
Combination to Forasol-Foramer's shareholders from a financial point of view
and, in such regard, to conduct such investigations as Jefferies deemed
appropriate for such purpose. No limitations were imposed upon Jefferies with
respect to the investigations made or procedures followed by it in rendering its
opinion.

On December 16, 1996, Jefferies delivered its oral opinion (which was
subsequently confirmed in writing) (the "Jefferies Opinion") to the Board of
Supervisory Directors to the effect that, as of December 16, 1996, and based on
the assumptions stated therein, the Purchase Consideration to be received by the
holders of FFNV Common Shares pursuant to the Purchase Agreement is fair, from a
financial point of view, to such holders. The Purchase Consideration was based
on negotiations between Pride and Forasol-Foramer to which Jefferies provided
certain assistance. The Jefferies Opinion is directed only to the fairness of
the Purchase Consideration to be paid in the Business Combination from a
financial point of view and does not constitute a recommendation to any
shareholder (or any other person) as to how such person should vote with respect
to the Business Combination. A copy of the Jefferies Opinion, dated December 16,
1996, is attached hereto as Appendix C. Shareholders of Forasol-Foramer are
urged to read the Jefferies Opinion in its entirety for an explanation of the
assumptions made, matters considered and limits of the review undertaken by
Jefferies.

In its review and analysis and in rendering its opinion, Jefferies has
assumed and relied upon the accuracy and completeness of the representations and
warranties made by Pride and Forasol-Foramer in the Purchase Agreement, as well
as all the financial and other information, provided to it by Forasol-Foramer's
and Pride's management or publicly available, including without limitations,
information with respect to tax positions, contingent liabilities, condition of
assets and material contract terms, and Jefferies did not assume any
responsibility for the independent verification of such information. Jefferies
did not conduct a physical inspection of any of the properties or facilities of
Forasol-Foramer or Pride, nor did Jefferies make or consider any independent
evaluations or appraisals of any of such properties or facilities. Pursuant to
the terms of the Purchase Agreement, Jefferies also assumed that the Business
Combination will be accounted for as a purchase transaction in accordance with
generally accepted accounting principles.

In rendering its opinion as expressed herein, Jefferies reviewed (i) the
Purchase Agreement; (ii) the historical and current financial condition and
results of operations of Forasol-Foramer and Pride; (iii) certain non-public
financial and non-financial information prepared by the management of
Forasol-Foramer and Pride, which data was made available to Jefferies in its
role as financial advisor to Forasol-Foramer; (iv) published information
regarding the financial performance and operating characteristics of a selected
group of companies which Jefferies deemed comparable; (v) business prospects of
Forasol-Foramer and Pride when taking into consideration the impact of the
Business Combination; (vi) the historical and current market price for FFNV
Common Shares and Pride Common Stock and for the equity securities of certain
other companies with businesses that Jefferies considered relevant to its
inquiry; (vii) publicly available information, including research reports on
companies Jefferies considered relevant to its inquiry; and (viii) the nature
and terms of other recent acquisition transactions in the offshore drilling
industry. Jefferies also met with certain officers and employees of
Forasol-Foramer and Pride to discuss the foregoing as well as other matters
believed relevant to its opinion.

In evaluating the Purchase Consideration to be paid in the Business
Combination by Pride, Jefferies performed a variety of financial and comparative
analyses with respect to Pride and Forasol-Foramer, including those described
below:

PERFORMANCE OF FFNV COMMON SHARES. Jefferies analysis of the performance
of FFNV Common Shares consisted of an historical analysis of closing prices and
trading volumes from May 10, 1996, the date that Forasol-Foramer completed its
initial public offering (the "IPO"). For the seven-day and thirty-day periods
preceding October 28, 1996, FFNV Common Shares averaged $14.28 per share and
$13.07 per share, respectively, and averaged $12.97 per share since the IPO,
based on daily closing sale prices as reported by the Nasdaq National Market.
Jefferies observed that an implied purchase price of $16.87 per share based upon
the Purchase Consideration and Pride's closing price of $15.25 per share on
October 25, 1996 (the last trading day before the signing of the letter of
intent) represented premiums of 18% and 29% to the average prices of FFNV Common
Shares for the seven-day and thirty-day periods preceding October 28, 1996,
respectively, and a 30% premium to Forasol-Foramer's average price since the
IPO. In addition Jefferies observed that a second implied purchase price of
$19.18 per share based upon the Purchase Consideration and Pride's closing stock
price of $18.75 per share on December 6, 1996 represented premiums of 34% and
47% to the average prices of FFNV Common Shares for the seven-day and thirty-day
periods preceding October 28, 1996, respectively, and a 48% premium to
Forasol-Foramer's average price since the IPO.

COMPARABLE COMPANY ANALYSIS. Comparable company analysis examines a
company's trading characteristics relative to a group of publicly traded peers.
Jefferies analyzed the trading characteristics of companies in the offshore
drilling industry and in the onshore drilling and workover industry. Companies
in the offshore drilling industry that were examined include Atwood Oceanics,
Inc., Cliffs Drilling Company, Diamond Offshore Drilling, Inc., ENSCO
International Incorporated, Falcon Drilling Company, Inc., Global Marine, Inc.,
Marine Drilling Companies, Inc., Noble Drilling Corporation, Reading and Bates
Corporation, Rowan Companies, Inc., Smedvig asa and Transocean Offshore Inc.
(the "Offshore Peers"). Companies in the onshore drilling and workover
industry that were examined include Nabors Industries, Inc., Parker Drilling
Company, Pool Energy Services Co., and Helmerich & Payne, Inc. (the "Onshore
Peers").

Balance sheet information used in connection with the ratios provided below
with respect to the Offshore Peers and the Onshore Peers (collectively, the
"Comparable Companies") and Pride was as of the most recent financial
statements publicly available for each company. Market information used in
calculating the ratios was as of October 25, 1996, the last trading day prior to
the initial public announcement of the Business Combination, unless otherwise
noted. Earnings per share ("EPS"), cash flow per share ("CFPS") and earnings
before interest, taxes and depreciation and amortization ("EBITDA") estimates
for Forasol-Foramer, Pride and the Comparable Companies were obtained from
Jefferies' energy research group and publicly available research reports.

Jefferies analyzed the relative stock price performance and value for Pride
and Forasol-Foramer compared to the Comparable Companies. Among the market
trading information considered in the evaluation were the stock price movement
of Forasol-Foramer, Pride and the Comparable Companies in 1996 and the ratios as
of the last trading day before the initial public announcement of the Business
Combination of market price to EPS estimates, market price to CFPS estimates and
total enterprise value (defined as market capitalization plus the book value of
total financial debt less cash) to EBITDA estimates for 1997 and 1998. This
analysis indicates that (i) the ratios of market price to 1997 and 1998 EPS
estimates were 14.5x and 13.3x, respectively, for Pride and 12.1x and 7.5x,
respectively, for Forasol-Foramer; (ii) the average ratios of market price to
1997 and 1998 EPS estimates were 16.0x and 12.6x, respectively, for the Offshore
Peers, and 22.8x and 20.6x, respectively, for the Onshore Peers; (iii) the
ratios of market price to 1997 and 1998 CFPS estimates were 8.1x and 7.7x,
respectively, for Pride and 5.7x and 4.3x, respectively, for Forasol-Foramer;
(iv) the average ratios of market price to 1997 and 1998 CFPS estimates were
9.9x and 8.2x, respectively, for the Offshore Peers and 11.2x and 9.4x,
respectively, for the Onshore Peers; (v) the ratios of total enterprise value to
EBITDA for 1997 and 1998 were 8.8x and 8.0x, respectively, for Pride

and 6.0x and 4.7x, respectively, for Forasol-Foramer, and (vi) the average
ratios of total enterprise value to EBITDA were 8.8x and 7.3x, respectively, for
the Offshore Peers and 9.2x and 7.8x, respectively, for the Onshore Peers.
Jefferies observed that as of October 25, 1996, the common stock of Pride and
Forasol-Foramer generally traded at a discount to the Offshore Peers and Onshore
Peers. Jefferies also observed that the FFNV Common Shares appreciated 3% in
value from May 10, 1996 to October 25, 1996, relative to a 40% increase in an
index of the Offshore Peers' common stock and a 14% increase in an index of the
Onshore Peers' common stock over the same time period. Jefferies attributes
Forasol-Foramer's lower trading multiples relative to Pride and the Offshore
Peers and Onshore Peers due to Forasol-Foramer's smaller size and investor
perception of lack of suitable rig acquisition opportunities for the company in
a highly competitive acquisition environment.

No company included in the comparable company analysis as a comparison is
identical to Pride or Forasol-Foramer. In evaluating the Comparable Companies,
Jefferies made judgments and assumptions with regard to industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Pride or Forasol-Foramer, such as the
impact of competition on the business of Pride and Forasol-Foramer and the
industry generally, industry growth and the absence of any adverse material
change in the financial condition and prospects of Pride or Forasol-Foramer or
the industry or in the financial markets in general. Due to the inherent
differences between the operations of Pride or Forasol-Foramer and the
Comparable Companies, a purely quantitative mathematical analysis (such as
determining the average) is not in itself a meaningful method of using
comparable company data.

COMPARABLE TRADING ANALYSIS. Jefferies analyzed the implied equity value
of Forasol-Foramer by applying average trading multiples for 1996 and 1997 as of
December 6, 1996, including the ratio of market price to EPS estimates, market
price to CFPS estimates and total enterprise value to EBITDA estimates, of
selected comparable companies (the "Selected Comparable Companies") to
research analyst estimates of Forasol-Foramer's earnings, operating cash flow
and EBITDA for the years 1996 and 1997. The Selected Comparable Companies
include Falcon Drilling Company, Smedvig asa, Nabors Industries, Inc. and Parker
Drilling Company. The Selected Comparable Companies were selected based on
general business, operating and financial characteristics compared to those of
Forasol-Foramer. Jefferies applied a discount of 30% to the average trading
multiples of the Selected Comparable Companies based on the fact that all of the
Selected Comparable Companies are significantly larger in size relative to
Forasol-Foramer.

Jefferies observed that the implied equity value of Forasol-Foramer based
on the comparable trading analysis was $15.92 per share compared to the implied
purchase prices as of October 25, 1996 and December 6, 1996 of $16.87 per share
and $19.18 per share, respectively. Because of the inherent differences among
the Selected Comparable Companies, Jefferies believes that an appropriate use of
a comparable trading analysis in this instance involves qualitative judgments
concerning differences among the operating and financial characteristics of
Forasol-Foramer and Selected Comparable Companies, which judgments are reflected
in the Jefferies Opinion.

COMPARABLE TRANSACTION ANALYSIS. Jefferies performed an analysis of
several recent acquisition transactions ("Comparable Transactions") in the
offshore drilling industry since 1995 with total transaction values (defined as
the value of cash and securities paid plus the book value of total financial
debt assumed less the amount of cash assumed) ranging from $100 million to $500
million. In the comparable transaction analysis, Jefferies considered the
one-year projected EBITDA of the targets in the Comparable Transactions, based
on research analyst projections at the date of the transaction. This analysis
indicated an average acquisition multiple of 6.9x the one-year projected EBITDA
of the targets in the Comparable Transactions. Jefferies observed that the
implied equity value of Forasol-Foramer is $17.14 per share based on the
acquisition multiple of 6.9x and the 1997 projected EBITDA of Forasol-Foramer as
provided by research analyst estimates.

PREMIUM ANALYSIS. Jefferies analyzed implied share premiums paid in
selected negotiated transactions completed in the offshore drilling industry
since January 1, 1995. This analysis indicated that the average premiums to the
targets' share prices for the one-day, one-week, four-week and eight-week
periods

prior to announcement of the transactions were 6%, 6%, 22% and 22%,
respectively, during this period. Jefferies observed that the implied equity
value per share of Forasol-Foramer's common stock based on the average premiums
paid in offshore drilling mergers since 1995 for the one-day, one-week,
four-week and eight-week periods prior to October 28, 1996 was $14.76, $14.72,
$14.58 and $14.38, respectively, relative to the implied purchase prices of
$16.87 per share and $19.18 per share on October 25, 1996 and December 6, 1996,
respectively.

PRO FORMA ANALYSIS OF THE BUSINESS COMBINATION. Jefferies analyzed certain
pro forma financial effects of the Business Combination assuming that the
Business Combination was treated as a purchase transaction. The operating and
financial data used by Jefferies in this analysis were provided by the
management of Pride and Forasol-Foramer. Jefferies observed that, assuming $8
million of cost savings and synergies, the Business Combination would have an
accretive effect on earnings per share to Pride of approximately 19% for the
calendar year 1997 and approximately 32% for the calendar year 1998.

PRO FORMA TRADING ANALYSIS. Jefferies analyzed the implied equity value
per share to Forasol-Foramer's shareholders by applying the average trading
multiples, including market price to EPS estimates, market price to CFPS
estimates and total enterprise value to EBITDA estimates for 1997 and 1998, as
of December 6, 1996, of the Offshore Peers to the pro forma earnings, cash flow
and EBITDA of the combined company for 1997 and 1998. Jefferies observed that
the implied equity value to Forasol-Foramer shareholders based on the pro forma
trading analysis and the Purchase Consideration was $24.44 per share,
representing 71%, 87% and 88% premiums to the average FFNV Common Share prices
of $14.28, $13.07 and $12.97 per share for the seven-day, thirty-day and since
the IPO periods.

The foregoing summary does not purport to be a complete description of the
analyses performed by Jefferies. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances. In arriving at its opinion, Jefferies did not attribute any
particular weight to any analysis or factors considered by it, but rather, made
qualitative judgments as to the significance and relevance of each analysis and
factor. Jefferies believes that its analyses must be considered as a whole, and
that selecting portions of such analyses and of the factors considered by
Jefferies, without considering all of such analyses and factors, could create an
incomplete view of the process underlying its opinion. The preparation of
fairness opinions is a complex process and is not necessarily susceptible to
partial analysis or summary description.

Jefferies is an investment banking firm with substantial experience in
transactions similar to the Business Combination and is familiar with
Forasol-Foramer and its business. As part of its investment banking business,
Jefferies is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes.

Jefferies will be paid customary fees for its role as financial advisor to
Forasol-Foramer in this transaction. Jefferies has previously rendered certain
investment banking and financial advising services to Forasol-Foramer for which
it has received customary compensation. In the normal course of its business,
Jefferies trades in Forasol-Foramer Common Stock for its own account and for the
account of its customers, and, accordingly, may at any time hold a long or short
position therein.

CONDUCT OF BUSINESSES PENDING THE CLOSING

In the Purchase Agreement, Pride and Forasol-Foramer have agreed that until
the Closing, except as otherwise contemplated by the Purchase Agreement, each of
them and their respective subsidiaries will (i) carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, (ii) use all reasonable efforts to preserve
intact their respective present business organizations, and (iii) keep available
the services of its current officers and employees and endeavor to preserve its
relationships with customers, suppliers and others having business dealings with
them to the end that the goodwill and ongoing business of Pride and
Forasol-Foramer, respectively, shall not be impaired in any material respect at
the Closing. Each of the parties has also agreed that without the

consent of the other party, neither Pride nor Forasol-Foramer nor any of their
respective subsidiaries will take certain specific actions, including (i) the
declaration or payment of dividends (other than dividends or other distributions
from subsidiaries), (ii) acquire or agree to acquire another business where the
aggregate purchase price exceeds $10,000,000, (iii) grant increases in the
compensation of or benefits provided to its directors, officers or employees,
(iv) incur any indebtedness or commit to any capital expenditures which are not
provided for in previously approved capital budgets or (v) take or fail to take
any other action that would reasonably be expected to (a) cause any
representational warranty in the Purchase Agreement or any statement and any
schedule thereto to be inaccurate, incomplete or misleading or (b) prevent or
materially impede, interfere with or delay the consummation of the transactions
contemplated by the Purchase Agreement.

The Purchase Agreement also prohibits Forasol-Foramer and each of the
Forasol Controlling Shareholders, as well as their respective officers,
directors, employees, agents and other representatives, from directly or
indirectly soliciting, initiating, or encouraging acquisition proposals that
would compete with the proposed Business Combination. Such prohibition does not
prohibit responses to unsolicited proposals.

FORASOL-FORAMER EMPLOYEE MATTERS

Following the Closing, those members of the senior management of Forasol
S.A. who are not retained in their present or equivalent positions for at least
two years will be afforded certain agreed severance benefits and other
arrangements, and those management employees of Forasol S.A. who continue to be
employed by that firm or its successor shall be entitled to compensation and
benefits that are no less favorable than those they are currently receiving and
are otherwise at least as favorable as those provided to management employees of
Pride and its subsidiaries holding comparable positions at comparable employment
locations (giving due regard to differences in cost of living, competitive
conditions and other similar factors). All other employees of Forasol-Foramer
and its subsidiaries, so long as their employment by Pride and its subsidiaries
continues, shall be entitled to employee benefits comparable to those they were
receiving immediately prior to the Closing and, to the extent legally
permissible, their years of service and level of seniority with Forasol-Foramer
and its subsidiaries shall be recognized for purposes of the terms of employment
and eligibility, vesting and benefit determinations under Pride's employee
benefits plans.

Following the Closing of the Business Combination, outstanding options to
purchase a total of 352,000 FFNV Common Shares (and any stock appreciation
rights relating thereto), both vested and unvested, will be converted into
options to purchase shares of Pride Common Stock (subject to their prior
surrender in exchange for a cash payment) on the basis of 1.1 shares of Pride
Common Stock for each FFNV Common Share covered by the Forasol-Foramer options,
and the vesting of the right to exercise such options will be accelerated.

ADDITIONS TO PRIDE'S BOARD OF DIRECTORS AND CERTAIN RELATED AGREEMENTS

The Forasol Controlling Shareholders collectively will receive
approximately 6.6 million shares of Pride Common Stock as a result of the
Liquidating Distribution, or approximately 16.7% of the shares of Pride Common
Stock to be outstanding. Half of such shares will be distributed to Sertofin
B.V., a wholly owned subsidiary of Ackermans & van Haaren Group ("AVH"), a
publicly traded company listed on the Brussels Stock Exchange. The remaining
half of such 6.6 million shares will be distributed to Gialos B.V. and Compagnie
Financiere de Services Petroliers S.A., both wholly owned subsidiaries of
Soletanche Group ("Soletanche"), a privately held French company a major
shareholder of which is GTM Entrepose S.A., a publicly traded company listed on
the Paris Stock Exchange. AVH and Soletanche are not affiliated with each other.
See "Principal Shareholders of Pride and Forasol-Foramer." Until the fifth
anniversary of the Closing Date, AVH on the one hand and Soletanche on the other
hand will each be entitled to nominate a director to the Board of Directors of
Pride provided that they, respectively, continue to own, directly or indirectly,
50% or more of the shares of Pride Common Stock distributed to them in the
Liquidating Distribution. One of such nominees, as determined by agreement
between AVH and Soletanche, will serve as Vice Chairman of the Board of
Directors of Pride.

It is expected that AVH will initially designate Christian J. Boon Falleur
and that Soletanche will initially designate Remi Dorval to serve on the Board
of Directors of Pride. It is further expected that Mr. Dorval will initially be
designated to serve as Vice Chairman of the Board of Directors of Pride. The
continuing service of such individuals on Pride's Board of Directors is subject
to their election by the shareholders of Pride at the next annual meeting at
which directors are to be elected.

Mr. Boon Falleur is a Supervisory Director of Forasol-Foramer and Executive
Vice President of its management subsidiary, IDM. He has been affiliated with
AVH since 1972 and is currently in charge of AVH's energy services and
construction sections. Mr. Dorval is a Supervisory Director of Forasol-Foramer
and Chief Executive Officer of IDM. He has been a supervisory director of
Soletanche since 1990 and is in charge of Soletanche's interests in the oil and
gas sector. Messrs. Boon Falleur and Dorval also serve as senior executives and
board members of Forasol-Foramer's principal operating subsidiaries. In the
Business Combination, their positions as salaried employees of Forasol-Foramer
and its subsidiaries will terminate. As severance benefits, they will receive an
aggregate of 110,000 shares of Pride Common Stock upon their surrender of
options to purchase an equal number of FFNV Common Shares.

So long as the Board of Directors of Pride includes a person designated by
AVH or any of its affiliates on the one hand or Soletanche or any of its
affiliates on the other hand (or any of them has participated in the designation
of such person), and for a period of not less than 90 days after the Board of
Directors of Pride ceases to include any person so designated, such designating
shareholder may not, either directly or indirectly, individually or as a member
of any group (i) participate in any unsolicited offer to acquire control of
Pride or in any election contest relating to Pride; (ii) vote any of the shares
of Pride Common Stock distributed to it in the Liquidating Distribution in the
election of directors of Pride for any person other than the persons nominated
by the Board of Directors of Pride (including those nominated pursuant to the
agreement described above); (iii) vote in favor of any business combination or
any other transaction with a third party that has not been approved by at least
a majority of the members of Pride's Board of Directors; (iv) increase its
ownership in Pride such that it and its affiliates, together with all other non-
affiliated Forasol Controlling Shareholders and their respective affiliates,
would own or control more than 20% of Pride's outstanding voting securities; or
(v) enter into any discussion, negotiations, arrangements or understandings with
any third party with a view to taking, or advising, aiding, abetting,
soliciting, inducing or encouraging, any action prohibited by any of the
foregoing.

The Forasol Controlling Shareholders have also agreed that as of the
Closing, all technical services agreements and other contracts or arrangements
they have with Forasol-Foramer and its subsidiaries providing for payments or
compensation to them in any form shall be terminated.

PRIDE MANAGEMENT

Pride will create an Executive Management Committee having general
responsibility for strategic planning of Pride's worldwide operations. The
initial members of the committee will be Ray H. Tolson, Chairman of the Board,
President and Chief Executive Officer of Pride; Paul A. Bragg, Vice President
and Chief Financial Officer of Pride; James W. Allen, Senior Vice
President -- Operations of Pride; Gerard Godde, Managing Director of Forasol
S.A.; and John O'Leary, Manager -- Marketing and Business Development of Forasol
S.A. Mr. Godde will also be elected Senior Vice President of Pride and Mr.
O'Leary will be elected Vice President of International Marketing of Pride. Mr.
Godde will serve as President and Chief Operating Officer and Mr. O'Leary will
serve as Director of Marketing for the continuing operations of the assets and
business of the Forasol-Foramer operating companies.

Gerard Godde has been Senior Vice President and Chief Operating Officer of
IDM since April 1996 and Managing Director of Forasol S.A. since 1987. Mr. Godde
joined Forasol S.A. in 1968 and has been involved with the management of its
various offshore and land operations in Africa, the Middle East and North
America. From 1976 until he joined the executive management of Forasol S.A. in
1979, he served as Executive Vice President of Foratex, Inc. (a supply company)
and Forwest, Inc. (a land rig contractor in the United States) to develop
Forasol-Foramer's strategic plan and international business. John O'Leary has
been Manager, Marketing and Business Development of Forasol S.A. since June 1993
and is responsible for

the worldwide business development of Forasol S.A.'s offshore and onshore
businesses. Mr. O'Leary joined Forasol S.A. in August 1985 and has the specific
responsibility to develop joint ventures.

INTERESTS OF CERTAIN PERSONS

Based on the matters discussed above, the Forasol Controlling Shareholders,
the persons designated to serve on the Board of Directors of Pride, the members
of management of Forasol S.A. designated to serve on Pride's new Executive
Management Committee and as executive officers of Pride, and the officers and
employees of Forasol-Foramer and its subsidiaries who hold options to purchase
FFNV Common Shares that will be converted into Pride Common Stock and options to
purchase Pride Common Stock may all be deemed to have interests in the Business
Combination in addition to any interests they may have, directly or through
affiliates, as shareholders of Forasol-Foramer generally.

TERMINATION AND TERMINATION PAYMENTS

The Purchase Agreement may be terminated at any time prior to Closing by
mutual consent of Pride and Forasol-Foramer or by either of such parties if (i)
the Closing shall not have occurred on or before April 30, 1997; (ii) any court
or governmental entity shall have taken action to restrain, enjoin or otherwise
prohibit consummation of the Business Combination; (iii) either party fails to
obtain the required approval of its shareholders; or (iv) subject to certain
materiality thresholds where no fraud, willful misrepresentation or gross
negligence is involved, the representations and warranties of the other party
are not true and correct in all material respects and, in the case of
Forasol-Foramer, the Business Combination will result in certain taxes becoming
payable by Forasol-Foramer or its subsidiaries. Either Pride or Forasol-Foramer
may also terminate the Purchase Agreement if the Board of Directors of
Forasol-Foramer shall have approved or recommended any other proposal for the
acquisition of Forasol-Foramer or any of its subsidiaries which is deemed to be
financially superior, from the point of view of Forasol-Foramer and its
shareholders, to the transactions provided for in the Purchase Agreement;
provided that Pride shall be entitled to a termination payment of $5.0 million
plus 40% of the amount by which the total value of such other acquisition
proposal exceeds the total value of the Purchase Consideration based on the
closing market price of Pride Common Stock on October 25, 1996 (up to a maximum
aggregate payment of $20.0 million). If Pride is unable to consummate the
transactions provided for in the Purchase Agreement solely as a result of its
failure to obtain the requisite approval of its shareholders, Pride shall pay to
Forasol-Foramer $5.0 million, plus an additional $15.0 million if (i) a person
or group of persons shall have become the beneficial owner of 10% or more of the
outstanding shares of Pride Common Stock or (ii) a proxy contest to acquire
control of Pride shall have been initiated. Such break-up or termination fees
are deemed to be reasonable compensation to Pride or Forasol-Foramer, as the
case may be, to compensate such party for undertakings in the Purchase
Agreement, the incurring of costs and expenses related thereto and the loss or
potential loss of other business opportunities.

EXTENSION, WAIVER AND AMENDMENT

RESTRICTIONS ON RESALES BY FORASOL-FORAMER AFFILIATES; REGISTRATION RIGHTS

Pursuant to a Registration Rights Agreement (attached as Exhibit A to the
Purchase Agreement), AVH and Soletanche will each be entitled to one "demand"
registration and up to two "piggyback" registrations under the Securities Act
solely for the purpose of selling their shares of Pride Common Stock through
underwritten public offerings. Any demand registration must cover at least $25
million worth of Pride Common Stock and any "piggyback" registration must
cover at least $5 million worth of Pride Common Stock as to each of AVH and
Soletanche and their respective affiliates. Such registration rights expire
three years following the Closing.

APPRAISAL RIGHTS

Under applicable law, neither Pride's nor Forasol-Foramer's shareholders
will be entitled to any appraisal or dissenter's rights in connection with the
Business Combination.

CERTAIN TAX CONSEQUENCES

The following is a summary of the material United States federal income tax
consequences of the Liquidating Distribution generally applicable to United
States Holders of FFNV Common Shares, as well as the Dutch withholding tax
requirements applicable to the Liquidating Distribution. As used herein, a
"United States Holder" means a holder of FFNV Common Shares which is (i) an
individual citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in the United States or under
the law of the United States or of any State, or (iii) an estate or trust which
is not treated as a foreign estate or foreign trust for United States federal
tax purposes. This summary does not address all tax consequences that may be
relevant to United States Holders, nor does it address the tax consequences to
United States Holders that may be subject to special treatment under United
States federal income tax law, such as banks, insurance companies, thrift
institutions, regulated investment companies, real estate investment trusts,
tax-exempt organizations, and dealers in securities and currencies. This summary
addresses only FFNV Common Shares which are held as capital assets for United
States federal income tax purposes. This summary is based upon current
provisions of the United States Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury Regulations promulgated thereunder, current
administrative rulings of the United States Internal Revenue Service, court
decisions, and the provisions of the current income tax treaty between the
United States and the Netherlands (the "Treaty"), all of which are subject to
change, possibly with retroactive effect.

EACH HOLDER OF FFNV COMMON SHARES IS URGED TO CONSULT HIS OWN TAX ADVISOR
IN LIGHT OF HIS OWN PARTICULAR CIRCUMSTANCES AS TO THE TAX CONSEQUENCES OF THE
LIQUIDATING DISTRIBUTION, INCLUDING THE EFFECTS OF ANY APPLICABLE FEDERAL,
STATE, LOCAL OR FOREIGN TAX LAWS.

The shares of Pride Common Stock and cash received pursuant to the
Liquidating Distribution by a United States Holder will be treated as received
in full payment in exchange for the United States Holder's FFNV Common Shares.
Accordingly, the difference between the amount realized on the Liquidating
Distribution (the fair market value of the shares of Pride Common Stock and the
amount of cash received, including the amount of any Dutch tax withheld from
such cash as described below) and the United States Holder's basis for his FFNV
Common Shares will be treated as capital gain or loss. Because none of the FFNV
Common Shares issued to United States Holders will have been outstanding for
more than one year at the date of the Liquidating Distribution, such gain or
loss will be treated as short-term capital gain or loss. The tax basis of the
shares of Pride Common Stock received in the Liquidating Distribution will be
equal to the fair market value of such shares as of the date of the Liquidating
Distribution, and the holding period for such shares will commence on the day
after the date of the Liquidating Distribution.

The distribution of shares of Pride Common Stock and cash to United States
Holders pursuant to the Liquidating Distribution will be treated as a dividend
for Dutch tax purposes to the extent that the amount distributed per FFNV Common
Share exceeds the average paid-in capital per FFNV Common Share (14.28 Dutch
guilders). Based on recent currency translation rates, Forasol-Foramer believes
that its paid-in capital per share in U.S. dollars is approximately $7.80;
however, the applicable amount for purposes of determining Dutch withholding tax
will be based on the currency translation rate at the date the

Liquidating Distribution is made. Assuming solely for purposes of illustration
that the value per share of the Pride Common Stock on the date of the
Liquidating Distribution is $22.00 and the paid-in capital per FFNV Common Share
is $7.80, the amount deemed to be distributed for each FFNV Common Share will be
$21.32 (consisting of $6.80 in cash and the value of 0.66 shares of Pride Common
Stock) and the excess amount subject to Dutch withholding tax will be $13.52.
Except with respect to certain exempt organizations described in Articles 35 and
36 of the Treaty, such excess amount when paid to a United States Holder will be
subject to the withholding of Dutch tax at the rate of 15% (either through
initial withholding at this rate or through a refund procedure) if the United
States Holder qualifies for benefits under the Treaty, or 25% if the holder does
not so qualify. Forasol-Foramer will provide its shareholders (including,
through their brokers, beneficial owners of FFNV Common Shares) additional
information about the Dutch withholding tax and the requirements for eligibility
for the 15% withholding tax rate prior to the date of the Forasol-Foramer
Meeting. To the extent Dutch withholding tax is applicable, such tax will be
withheld from the cash otherwise distributable to a United States Holder.

The Dutch withholding tax is an income tax which, technically, is
creditable against a United States Holder's U.S. income tax liability. However,
due to the operation of the limitation on the foreign tax credit under section
904 of the Code, it is likely that most United States Holders will not be
entitled to credit any Dutch withholding tax against their U.S. tax liability. A
United States Holder may claim a deduction for such Dutch withholding tax in
determining the holder's U.S. income tax liability as long as the holder does
not claim a credit for any other foreign income taxes for the holder's taxable
year in which the Liquidating Distribution occurs. Such deduction may be subject
to various limitations, including the overall limitation on itemized deductions
under section 68 of the Code which applies to individuals whose adjusted gross
income exceeds a specified amount. A UNITED STATES HOLDER WHO SELLS HIS FFNV
COMMON SHARES PRIOR TO BECOMING ENTITLED TO THE LIQUIDATING DISTRIBUTION WILL
NOT BE SUBJECT TO DUTCH WITHHOLDING TAX ON SUCH SALE.

ACCOUNTING TREATMENT

The Business Combination will be accounted for by Pride as a purchase under
generally accepted accounting principles in the United States.

REGULATORY APPROVALS

Neither the Business Combination nor any other transaction contemplated by
the Purchase Agreement is subject to any material regulatory review or approval.

SOURCE OF PRIDE FUNDS

The maximum amount of cash expected to be required by Pride in connection
with the transactions contemplated by the Purchase Agreement is approximately
$123 million, including the cash portion of the Purchase Consideration for the
Business Combination, the fees and expenses of Pride's and Forasol-Foramer's
financial, tax and other advisors, the cost of liquidating Forasol-Foramer and
winding up its affairs, printing and registration expenses, and other
transaction costs incurred by Pride and Forasol-Foramer. Pride will obtain such
funds from working capital, existing credit lines and from the proceeds of the
sale of its domestic land-based operations. See "Information About
Pride -- Dawson Transaction." Pride also intends to file, prior to the Pride
Meeting, a shelf registration statement under the Securities Act covering up to
$500 million of debt securities and Pride Common Stock to be issued from time to
time based on market conditions and Pride's cash requirements.

MARKET PRICES AND DIVIDEND POLICIES

Pride Common Stock is listed on the Nasdaq National Market under the symbol
"PRDE." FFNV Common Shares are listed on the Nasdaq National Market under the
symbol "FSOLF"; however, prior to May 10, 1996 when Forasol-Foramer completed
an initial public offering in the United States, all of the outstanding FFNV
Common Shares were owned by the Forasol Controlling Shareholders and their
affiliates and there was no public market for such shares. The following table
sets forth the range of high and low sales prices of Pride Common Stock and FFNV
Common Shares on the Nasdaq National Market for the periods shown:

PRIDE FFNV COMMON
COMMON STOCK SHARES
---------------- --------------
HIGH LOW HIGH LOW
---- --- ---- ---
1994
First Quarter........................ $ 6 1/4 $ 4 7/8 -- --
Second Quarter....................... 5 7/8 4 3/4 -- --
Third Quarter........................ 5 7/8 4 5/8 -- --
Fourth Quarter....................... 5 1/2 4 5/8 -- --
1995
First Quarter........................ $ 7 3/8 $ 4 3/4 -- --
Second Quarter....................... 8 3/4 6 1/2 -- --
Third Quarter........................ 10 1/2 7 3/8 -- --
Fourth Quarter....................... 11 8 -- --
1996
First Quarter........................ $14 3/8 $ 9 1/8 -- --
Second Quarter....................... 18 13 5/8 $13 3/4 $ 9 5/8
Third Quarter........................ 16 3/4 11 5/8 13 1/8 9 3/4
Fourth Quarter....................... 23 1/4 13 3/8 20 11 7/8
1997
First Quarter (through January ___).. $24 3/8 $20 1/4 $21 3/4 $18 5/8

On October 25, 1996, the last trading day prior to announcement by Pride
and Forasol-Foramer that they had reached a preliminary agreement concerning the
Business Combination, the last sale price of Pride Common Stock on the Nasdaq
National Market was $15 1/4 per share (indicating a pre-tax value of the
Liquidating Distribution of $16.87 per FFNV Common Share), and the last sale
price of FFNV Common Shares on the Nasdaq National Market was $13 7/8 per share.

On January __, 1997, the last sale price of Pride Common Stock on the
Nasdaq National Market was $_ per share (indicating a pre-tax value of the
Liquidating Distribution of $______ per Forasol-Foramer share), and the last
sale price of FFNV Common Shares on the Nasdaq National Market was $_________
per share. Following the Business Combination, Pride Common Stock will continue
to be listed on the Nasdaq National Market under the symbol "PRDE" and the
listing of FFNV Common Shares on the Nasdaq National Market will be terminated.

Shareholders are advised to obtain current market quotations for Pride
Common Stock and FFNV Common Shares. No assurance can be given as to the market
price of Pride Common Stock or FFNV Common Shares at, or in the case of Pride
Common Stock, after the consummation of the Business Combination.

Both Pride and Forasol-Foramer currently have a policy of retaining all
available earnings for the development and growth of their respective
businesses. Pride does not anticipate paying dividends on the Pride Common Stock
at any time in the foreseeable future. The ability of Pride to pay cash
dividends in the future may be restricted by future borrowing agreements
(although it is not currently so restricted) and the desirability of paying such
dividends could be materially affected by U.S. and foreign tax considerations.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following Unaudited Pro Forma Combined Balance Sheet as of September
30, 1996 and the Unaudited Pro Forma Combined Statements of Operations for the
nine months ended September 30, 1996 and the year ended December 31, 1995
illustrate the effect of (i) the acquisition of Quitral-Co S.A.I.C.
("Quitral-Co") by Pride, (ii) the acquisition of Forasol-Foramer by Pride,
(iii) the sale of Pride's U.S. land-based well servicing operations to Dawson
and (iv) the related financing transactions.

The historical balance sheet and results of operations for Pride have been
derived from Pride's consolidated financial statements included elsewhere
herein. The historical results of operations for Quitral-Co have been derived
from Quitral-Co's consolidated financial statements as adjusted for U.S. GAAP
and have been translated into U.S. dollars in accordance with U.S. GAAP. The
historical balance sheet and results of operations for Forasol-Foramer have been
derived from Forasol-Foramer's consolidated financial statements included
elsewhere herein. The Unaudited Pro Forma Combined Balance Sheet has been
prepared assuming the acquisition of Forasol-Foramer by Pride, the sale of
Pride's U.S. land-based well servicing operations, and the related financing
transactions were consummated as of September 30, 1996. The Unaudited Pro Forma
Statements of Operations have been prepared assuming that such transactions were
consummated as of January 1, 1995.

The pro forma adjustments and the resulting unaudited pro forma combined
financial statements are based upon available information and certain
assumptions and estimates described in the notes to unaudited pro forma combined
financial statements. A final determination of required purchase accounting
adjustments, including the allocation of the purchase price to the assets
acquired and liabilities assumed based on their respective fair values, has not
yet been made. Accordingly, the purchase accounting adjustments reflected in the
pro forma combined financial information are preliminary and have been made
solely for purposes of developing the pro forma combined financial information.
However, Pride's management believes that the pro forma adjustments and the
underlying assumptions and estimates reasonably present the significant effects
of the transactions reflected thereby and that any subsequent changes in the
underlying assumptions and estimates (including any changes based on actual
experience after closing of the relevant transactions) will not materially
affect the pro forma combined financial statements presented herein. The pro
forma combined financial statements do not purport to represent what Pride's
financial position or results of operations actually would have been had the
acquisition of Quitral-Co, the acquisition of Forasol-Foramer, the sale of
Pride's U.S. land-based well servicing operations and the related financing
transactions occurred on the dates indicated or to project Pride's financial
position or results of operations for any future date or period. Furthermore,
the unaudited pro forma combined financial statements do not reflect changes
which may occur as the result of post-combination activities and other matters.

The unaudited pro forma combined financial statements and the notes thereto
should be read in conjunction with the historical financial statements of Pride,
including the notes thereto, the historical financial statements of
Forasol-Foramer, including the notes thereto, and the historical financial
statements of Quitral-Co, including the Notes thereto, all of which are included
elsewhere herein.

PRIDE'S PRO FORMA EARNINGS PER SHARE SET FORTH IN THIS PROXY
STATEMENT/PROSPECTUS REFLECT SUBSTANTIAL DILUTION AS A RESULT OF INCLUSION OF
THE OPERATING RESULTS OF FORASOL-FORAMER. PRIDE'S MANAGEMENT DOES NOT BELIEVE
THAT FORASOL-FORAMER'S HISTORICAL OPERATING RESULTS FOR THE YEAR ENDED DECEMBER
31, 1995 OR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 ARE INDICATIVE OF THE
OPERATING PERFORMANCE THAT IS EXPECTED TO BE ACHIEVED FOLLOWING THE BUSINESS
COMBINATION. DURING THESE HISTORICAL PERIODS, ONE OF FORASOL-FORAMER'S
SEMI-SUBMERSIBLE RIGS, THE PERFORMANCE OF WHICH SIGNIFICANTLY AFFECTS OPERATING
RESULTS, WAS STACKED AND SUBSEQUENTLY REFURBISHED. IT WAS PLACED BACK INTO
SERVICE IN THE FOURTH QUARTER OF 1996. THE WORLDWIDE MARKET FOR SEMI-SUBMERSIBLE
RIGS HAS RECENTLY EFFECTIVELY REACHED FULL UTILIZATION OF AVAILABLE UNITS. SUCH
DEMAND HAS RESULTED IN SUBSTANTIAL APPRECIATION OF PREVAILING DAY RATES FOR SUCH
RIGS. FORASOL-FORAMER HAS ENTERED INTO NEW WORK AGREEMENTS FOR BOTH OF ITS
SEMI-SUBMERSIBLE RIGS TO COMMENCE DURING 1997. THESE CONTRACTS WILL RESULT IN
DAY RATES WHICH WILL BE APPROXIMATELY DOUBLE THE RATES CURRENTLY BEING RECEIVED
BY FORASOL-FORAMER. THE NEW CONTRACTS FOR THE TWO RIGS HAVE MINIMUM TERMS OF
APPROXIMATELY FOUR YEARS AND ONE YEAR, RESPECTIVELY. ADDITIONALLY,
FORASOL-FORAMER HAS EXPERIENCED IMPROVED DEMAND FOR CERTAIN OTHER OF ITS
OFFSHORE AND LAND RIGS. THESE AND OTHER FACTORS HAVE LED PRIDE AND ITS FINANCIAL
ADVISOR TO CONCLUDE THAT FORASOL-FORAMER'S OPERATING RESULTS FOR 1997 SHOULD
SHOW SIGNIFICANT IMPROVEMENT FROM THOSE REPORTED FOR THE 1995 AND 1996 PERIODS,
AND SHOULD BE ACCRETIVE TO PRIDE'S 1997 EARNINGS PER SHARE. SEE "THE BUSINESS
COMBINATION -- PRIDE'S REASONS FOR THE BUSINESS COMBINATION" AND " -- OPINION OF
PRIDE'S FINANCIAL ADVISOR."

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(IN THOUSANDS)

BUSINESS PRIDE/ SALE OF PRO-
PRIDE FORASOL COMBINATION FORASOL U.S. LAND FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED BUSINESS COMBINED
---------- ---------- ----------- --------- --------- --------

CURRENT ASSETS
Cash and cash equivalents.......... $ 26,515 $ 23,834 $ 100,000(I) $ 27,149 $ 40,750 (R) $37,899
(123,200)(J) (30,000 )(S)
Short-term investments............. 401 -- 401 401
Trade receivables, net............. 87,268 45,370 132,638 132,638
Parts and supplies................. 24,065 -- 24,065 (2,000 )(R) 22,065
Deferred income taxes.............. 2,480 1,994 4,474 4,474
Other current assets............... 15,390 15,938 31,328 31,328
---------- ---------- --------- --------
Total current assets........ 156,119 87,136 220,055 228,805
---------- ---------- --------- --------
PROPERTY AND EQUIPMENT, NET.......... 361,759 239,272 160,052(J) 761,083 (43,100 )(R) 717,983
OTHER ASSETS
Investments in and advances to
affiliates....................... -- 9,346 9,346 9,346
Deferred income taxes.............. -- 8,710 8,710 8,710
Goodwill and other intangibles,
net.............................. 3,254 -- 3,254 3,254
Other.............................. 8,472 6,339 14,811 14,811
---------- ---------- --------- --------
Total other assets.......... 11,726 24,395 36,121 36,121
---------- ---------- --------- --------
$ 529,604 $ 350,803 $1,017,259 $982,909
========== ========== ========= ========
CURRENT LIABILITIES
Accounts payable................... $ 32,513 $ 25,983 $ 58,496 $58,496
Accrued expenses................... 31,204 30,852 62,056 $ (650 )(R) 61,406
Current portion of long-term
debt............................. 32,671 20,387 $ 20,000(I) 73,058 (9,000 )(R) 58,058
(6,000 )(S)
Current portion of long-term lease
obligations...................... -- 4,712 4,712 4,712
---------- ---------- --------- --------
Total current liabilities... 96,388 81,934 198,322 182,672
---------- ---------- --------- --------
OTHER LONG-TERM LIABILITIES.......... 13,313 9,779 23,092 23,092
LONG-TERM DEBT, NET OF CURRENT
PORTION............................ 97,947 25,783 80,000(I) 203,730 (36,900 )(R) 142,830
(24,000 )(S)
LONG-TERM LEASE OBLIGATIONS, NET OF
CURRENT PORTION.................... -- 34,597 34,597 34,597
CONVERTIBLE SUBORDINATED
DEBENTURES......................... 80,500 -- 80,500 80,500
DEFERRED INCOME TAXES................ 48,787 6,354 56,000(J) 111,141 (12,000 )(R) 99,141
MINORITY INTEREST.................... -- 2,908 2,908 2,908
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock....................... 1 94 (94)(J) 1 1
Paid-in capital.................... 142,727 140,688 (140,688)(J) 313,027 313,027
170,300(J)
Treasury stock, at cost............ (191) -- (191) (191 )
Retained earnings.................. 50,132 49,006 (49,006)(J) 50,132 54,200 (R) 104,332
Cumulative translation
adjustment....................... -- (340) 340(J) -- --
---------- ---------- --------- --------
Total shareholders'
equity..................... 192,669 189,448 362,969 417,169
---------- ---------- --------- --------
$ 529,604 $ 350,803 $1,017,259 $982,909
========== ========== ========= ========

The accompanying notes are an integral part of the pro forma combined financial
statements.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

BUSINESS PRIDE BUSINESS PRIDE/
PRIDE QUITRAL- CO COMBINATION PRO- FORASOL COMBINATION FORASOL
HISTORICAL HISTORICAL ADJUSTMENTS FORMA HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------- ---------- ----------- ---------

REVENUES............................. $ 283,593 $ 47,410 $15,800(A) $ 346,803 $ 137,640 $ 484,443
---------- ---------- ---------- ---------- ---------
COSTS AND EXPENSES
Operating costs.................... 202,796 37,001 12,340(A) 252,137 108,536 $ (2,250)(K) 358,423
Depreciation and amortization...... 19,987 2,847 950(A) 24,314 16,598 5,025(L) 45,937
530(B)
Selling, general and
administrative.................... 34,120 2,871 960(A) 37,281 12,606 (2,625)(K) 47,262
(670)(C)
---------- ---------- ---------- ---------- ---------
Total costs and expenses......... 256,903 42,719 313,732 137,740 451,622
---------- ---------- ---------- ---------- ---------
EARNINGS FROM OPERATIONS............. 26,690 4,691 33,071 (100) 32,821
OTHER INCOME (EXPENSE)
Other income (expense)............. 475 (389) (130)(A) (44) 3,060 3,016
Interest income.................... 2,044 242 80(A) 1,491 818 (870)(M) 1,439
(875)(D)
Interest expense................... (9,856) (294) (100)(A) (12,550) (6,937) (6,375)(N) (24,437)
(380)(E) 1,425(O)
(1,920)(F)
---------- ---------- ---------- ---------- ---------
Total other expense, net......... (7,337) (441) (11,103) (3,059) (19,982)
---------- ---------- ---------- ---------- ---------
EARNINGS BEFORE MINORITY INTEREST AND
INCOME TAXES........................ 19,353 4,250 21,968 (3,159) 12,839
MINORITY INTEREST.................... -- -- -- (310) (310)
---------- ---------- ---------- ---------- ---------
EARNINGS BEFORE INCOME TAXES......... 19,353 4,250 21,968 (2,849) 13,149
INCOME TAX PROVISION................. 4,899 1,091 (629)(G) 5,361 561 (2,550)(P) 3,372
---------- ---------- ---------- ---------- ---------
NET EARNINGS......................... $ 14,454 $ 3,159 $ 16,607 $ (3,410) $ 9,777
========== ========== ========== ========== =========
NET EARNINGS PER SHARE
Primary............................ $ .52 $ .60 $ .25
========== ========== =========
Fully diluted...................... $ .50 $ .56
========== ==========
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS OUTSTANDING
Primary............................ 27,539 27,539 11,099(Q) 38,638
========== ========== =========
Fully diluted...................... 33,518 621(H) 34,139
========== ==========

SALE OF PRO-
U.S. LAND FORMA
BUSINESS COMBINED
--------- --------
REVENUES............................. $ (87,290)(T) $397,153
--------
COSTS AND EXPENSES
Operating costs.................... (67,756)(T) 290,667
Depreciation and amortization...... (4,070)(T) 41,867
Selling, general and
administrative.................... (10,252)(T) 37,010
--------
Total costs and expenses......... 369,544
--------
EARNINGS FROM OPERATIONS............. 27,609
OTHER INCOME (EXPENSE)
Other income (expense)............. (230)(T) 2,786
Interest income.................... 405(U) 1,844
Interest expense................... 2,244(T) (20,293 )
1,900(V)
--------
Total other expense, net......... (15,663 )
--------
EARNINGS BEFORE MINORITY INTEREST AND
INCOME TAXES........................ 11,946
MINORITY INTEREST.................... (310 )
--------
EARNINGS BEFORE INCOME TAXES......... 12,256
INCOME TAX PROVISION................. (463)(W) 2,909
--------
NET EARNINGS......................... $ 9,347
========
NET EARNINGS PER SHARE
Primary............................ $ .24
========
Fully diluted......................
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS OUTSTANDING
Primary............................ 38,638
========
Fully diluted......................

The accompanying notes are an integral part of the pro forma combined financial
statements.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

REVENUES............................. $ 263,599 $ 194,564 $ 458,163 $ 171,500 $ 629,663
---------- ---------- ---------- ---------- ---------
COSTS AND EXPENSES
Operating costs.................... 188,252 157,985 346,237 127,491 $ (3,000)(K) 470,728
Depreciation and amortization...... 16,657 9,807 $ 1,600(B) 28,064 20,264 6,700(L) 55,028
Selling, general and
administrative................... 32,418 8,645 (2,000)(C) 39,063 17,660 (3,500)(K) 53,223
---------- ---------- ---------- ---------- ---------
Total costs and expenses..... 237,327 176,437 413,364 165,415 578,979
---------- ---------- ---------- ---------- ---------
EARNINGS FROM OPERATIONS............. 26,272 18,127 44,799 6,085 50,684
OTHER INCOME (EXPENSE)
Other income (expense)............. 1,687 (23) 1,664 382 2,046
Interest income.................... 740 502 1,242 555 (1,160)(M) 637
Interest expense................... (6,276) (5,945) (4,450)(E) (22,421) (9,338) (8,500)(N) (36,459)
(5,750)(F) 3,800(O)
---------- ---------- ---------- ---------- ---------
Total other expense, net..... (3,849) (5,466) (19,515) (8,401) (33,776)
---------- ---------- ---------- ---------- ---------
EARNINGS BEFORE MINORITY INTEREST AND
INCOME TAXES....................... 22,423 12,661 25,284 (2,316) 16,908
MINORITY INTEREST.................... -- -- -- 1,288 1,288
---------- ---------- ---------- ---------- ---------
EARNINGS BEFORE INCOME TAXES......... 22,423 12,661 25,284 (3,604) 15,620
INCOME TAX PROVISION................. 7,064 3,867 (3,425)(G) 7,506 409 (3,535)(P) 4,380
---------- ---------- ---------- ---------- ---------
NET EARNINGS FROM CONTINUING
OPERATIONS......................... $ 15,359 $ 8,794 $ 17,778 $ (4,013) $ 11,240
========== ========== ========== ========== =========
NET EARNINGS PER SHARE
Primary............................ $ 0.60 $ .70 $ .31
========== =========
----------
Fully diluted...................... $ 0.60 $ .65
========== ==========
WEIGHTED AVERAGE COMMON
SHARES AND EQUIVALENTS OUTSTANDING
Primary............................ 25,465 25,465 11,099(Q) 36,564
========== ========== =========
Fully diluted...................... 25,840 6,571(H) 32,411
========== ==========

SALE OF PRO-
U.S. LAND FORMA
BUSINESS COMBINED
--------- --------
REVENUES............................. $(113,115)(T) $516,548
--------
COSTS AND EXPENSES
Operating costs.................... (86,177)(T) 384,551
Depreciation and amortization...... (5,385)(T) 49,643
Selling, general and
administrative................... (13,504)(T) 39,719
--------
Total costs and expenses..... 473,913
--------
EARNINGS FROM OPERATIONS............. 42,635
OTHER INCOME (EXPENSE)
Other income (expense)............. (1,260)(T) 786
Interest income.................... 540(U) 1,177
Interest expense................... 821(T) (33,088 )
2,550(V)
--------
Total other expense, net..... (31,125 )
--------
EARNINGS BEFORE MINORITY INTEREST AND
INCOME TAXES....................... 11,510
MINORITY INTEREST.................... 1,288
--------
EARNINGS BEFORE INCOME TAXES......... 10,222
INCOME TAX PROVISION................. (2,148)(W) 2,232
--------
NET EARNINGS FROM CONTINUING
OPERATIONS......................... $ 7,990
========
NET EARNINGS PER SHARE
Primary............................ $ .22
========
Fully diluted......................
WEIGHTED AVERAGE COMMON
SHARES AND EQUIVALENTS OUTSTANDING
Primary............................ 36,564
========
Fully diluted......................

The accompanying notes are an integral part of the pro forma combined financial
statements.

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

1. BACKGROUND

In April 1996, Pride acquired all of the outstanding capital stock of
Quitral-Co from Perez Companc S.A., Astra C.A.P.S.A. and other shareholders for
aggregate consideration of $140,000,000, consisting of $110,000,000 in cash and
a note payable to the sellers for $30,000,000. The note payable bears interest
at a variable rate of LIBOR plus 2% payable quarterly. Payments of principal are
expected to be made in 30 monthly installments. Of the cash portion of the
purchase price, $70,000,000 was funded from Pride's working capital and
$40,000,000 from the net proceeds from two new long-term financing arrangements
with three lending institutions. Borrowings under these arrangements, which are
collateralized by substantially all of Pride's domestic land-based rig fleet and
ancillary equipment, bear interest at a variable rate of prime plus 1/2% and are
repayable in monthly installments of principal and interest over a five to six
year period.

In January 1996, Pride completed the public sale of $80,500,000 principal
amount of 6 1/4% Convertible Subordinated Debentures due 2006, which resulted in
net proceeds to Pride of approximately $77,585,000. Approximately $10,000,000 of
such net proceeds were used to repay outstanding indebtedness. The remainder of
such net proceeds was used to fund various capital projects, including the
acquisition of Quitral-Co.

In October 1996, Pride entered into a letter agreement providing for the
acquisition of Forasol-Foramer. Pursuant to the agreement, Pride will issue .66
common shares and $6.80 cash for each share of Forasol-Foramer. A definitive
purchase agreement setting forth additional specific terms and conditions was
executed in December 1996. The transaction is subject to approval by both
Pride's and Forasol-Foramer's shareholders, and is expected to close during the
first quarter of 1997. For purposes of preparing the pro forma combined
financial information included herein, it has been assumed that the cash portion
of the purchase price, approximately $113,200,000, will be funded out of working
capital and the proceeds of new bank facilities totalling $100,000,000, which it
is assumed will be repayable over a period of five years and bear interest at a
rate of 8.50% per annum. For each .25% change in the actual rate received,
Pride/Forasol Combined net income will change by $160,000 for the year ended
December 31, 1995 and $120,000 for the nine months ended September 30, 1996, and
pro forma combined net income will change by $110,000 for the year ended
December 31, 1995 and $85,000 for the nine months ended September 30, 1996.

In December 1996, Pride entered into an agreement to sell substantially all
of the assets used in its U.S. land-based well servicing operations for
$131,900,000 in cash. After federal and state income taxes and repayment of
approximately $45,900,000 of debt secured by the assets to be sold, Pride
expects the remaining net proceeds to be approximately $40,750,000. For purposes
of preparing the pro forma combined financial information included herein, it
has been assumed that $30,000,000 of such net proceeds will be used to repay the
new bank debt assumed to be incurred in connection with the acquisition of
Forasol-Foramer. The proposed sale is subject to the buyer obtaining adequate
financing, and is expected to close during the first quarter of 1997.

2. BASIS OF PRESENTATION

The accompanying unaudited pro forma combined balance sheet has been
prepared assuming the acquisition of Quitral-Co and Forasol-Foramer by Pride,
the sale of Pride's U.S. land-based well servicing operations and the related
financing transactions were consummated as of September 30, 1996. The unaudited
pro forma combined statements of operations have been prepared assuming that
such transactions were consummated as of January 1, 1995.

Net earnings per share have been computed based on the weighted average
number of common shares and common share equivalents outstanding on a pro forma
basis during the applicable period. Common share equivalents include the number
of shares issuable upon the exercise of stock options and warrants, less the
number of shares that could have been repurchased with the exercise proceeds,
using the treasury stock method. Fully diluted net earnings per share have not
been presented on a pro forma combined basis as the calculation is
anti-dilutive.

3. MANAGEMENT ASSUMPTIONS

The unaudited pro forma combined financial statements reflect the following
pro forma adjustments related to the acquisition of Quitral-Co by Pride, the
acquisition of Forasol-Foramer by Pride, the sale of Pride's U.S. land-based
well servicing operations and the related financing transactions:

QUITRAL-CO ACQUISITION

(A) Estimated Quitral-Co April 1996 operating results. Prior to the
acquisition by Pride in April 1996, the books and records of Quitral-Co were
maintained in constant Argentine pesos in accordance with Argentine GAAP, which
differs in certain respects from U.S. GAAP. Financial information in U.S.
dollars prepared in accordance with U.S. GAAP has been prepared through March
31, 1996. Such U.S. dollar, U.S. GAAP information is not available for the
period from March 31, 1996 through April 30, 1996, the date the acquisition by
Pride was consummated. Accordingly, Pride management has estimated such results
for purposes of preparing the accompanying pro forma financial information and
believes that actual results would not be materially different.

(B) Increase in depreciation and amortization expense resulting from the
preliminary allocation of the purchase cost to the assets acquired and
application of Pride's depreciation policies to such assets. Based on a
preliminary determination of the fair values of the assets and liabilities
acquired, approximately $161,420,000 was allocated to property and equipment.
The pro forma adjustment to depreciation expense was based upon an estimated
salvage value of 10% and an estimated average remaining useful life of 12.5
years for the Quitral-Co assets.

(C) Reduction in salaries, benefits and related costs resulting from the
termination in May 1996 of 35 Quitral-Co administrative personnel.

(D) Reduction in historical interest income as a result of utilization of
$70,000,000 in cash for the acquisition of Quitral-Co. Such cash amount
constituted a portion of the net proceeds from the issuance by Pride in January
1996 of $80,500,000 principal amount of 6 1/4% Convertible Subordinated
Debentures due 2006. Therefore, historical interest income on such cash amount
for the three months prior to the accquisition of Quitral-Co by Pride has been
reduced, based upon an approximate annual interest rate on investments during
the period of 5.0%.

(E) Increase in interest expense due to issuance and sale of $80,500,000
principal amount of 6 1/4% Convertible Subordinated Debentures due 2006, less
decrease in interest expense on $10,000,000 of debt, bearing interest at an
average rate of 8.5% per annum, retired with a portion of the net proceeds from
such debentures. The pro forma adjustment to interest expense relating to these
financing transactions is composed of the following:

NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(IN THOUSANDS)
Interest on convertible subordinated
debentures......................... $ 425 $ 5,000
Amortization of deferred financing
costs.............................. 25 300
Interest on debt retired............. (70) (850)
------ --------
$ 380 $ 4,450
====== ========

(F) Increase in interest expense resulting from $40,000,000 of net
borrowings pursuant to two new collateralized term loans entered into in
connection with the acquisition of Quitral-Co by Pride and the addition of a
$30,000,000 note payable to the sellers. The pro forma adjustment to interest
expense relating to these financing transactions is composed of the following:

NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(IN THOUSANDS)
Collateralized term loans.......... $1,170 $ 3,500
Note payable to sellers............ 750 2,250
-------- --------
$1,920 $ 5,750
======== ========

The pro forma adjustment to interest expense relating to these financing
transactions is based upon interest rates of 8.75% per annum for the
collateralized term loans and 7.50% per annum for the note

payable to sellers, which are the rates currently in effect for each of these
loans. For each .25% change in the actual interest rates incurred on the
collateralized term loans and the note payable to sellers, pro forma net
earnings for the year ended December 31, 1995 will change by approximately
$64,000 and $52,000, respectively. For the nine months ended September 30, 1996,
the change in pro forma net earnings would be approximately $48,000 and $38,000,
respectively.

(G) Income tax effects of the pro forma adjustments included herein, based
on a combined U.S. federal and state income tax rate of 36% and an Argentine
income tax rate of 30% for 1995 and 33% for 1996. Such rates approximate the
statutory rates in effect for the respective periods.

(H) Increase in weighted average common shares and equivalents outstanding
for fully diluted earnings per share calculation purposes, due to issuance by
Pride of $80,500,000 principal amount of 6 1/4% Convertible Subordinated
Debentures due 2006, which are convertible at a price of $12.25 per share.

FORASOL-FORAMER ACQUISITION

(I) Receipt of aggregate proceeds of $100,000,000 from anticipated new
financing arrangements.

(J) Acquisition of Forasol-Foramer by Pride for aggregate consideration of
$283,500,000, consisting of $113,200,000 cash and 11,099,000 shares of common
stock valued at $170,300,000, based on the approximate market value of Pride's
common stock prior to the date of the letter agreement of $15.50 per share. In
addition, management estimates that Pride will incur legal, accounting and other
transaction-related costs, including Forasol-Foramer's closing costs and the
cost to wind up its affairs and liquidate, totalling approximately $10,000,000.
Based on a preliminary determination of the fair values of the assets and
liabilities acquired, approximately $160,052,000 of the total purchase cost was
allocated to property and equipment. Additional adjustments to reflect the
acquisition include elimination of the equity accounts of Forasol-Foramer and to
increase the deferred income tax liability by approximately $56,000,000 to
provide for temporary differences resulting from the allocation of the pro forma
purchase cost at the statutory French income tax rate of 33%.

(K) Reduction in operating costs and general and administrative expenses,
as follows:

NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(IN THOUSANDS)
OPERATING COSTS
Closing of duplicative
Forasol-Foramer facilities in
Argentina...................... $2,250 $ 3,000
======== ========
SELLING, GENERAL AND ADMINISTRATIVE
Discontinuation of technical
service agreement with
shareholders................... $ 375 $ 500
Elimination of redundant
administrative functions....... 1,875 2,500
Closing of duplicative
facilities..................... 375 500
-------- --------
$2,625 $ 3,500
======== ========

(L) Increase in depreciation and amortization expense resulting from the
preliminary allocation of the purchase cost to the assets acquired and adoption
by Forasol-Foramer of Pride's depreciation policies, based upon an estimated
salvage value of 10% and an estimated average remaining useful life of 12.5
years for the Forasol-Foramer property and equipment.

(M) Reduction in historical interest income as a result of utilization of
a net $23,200,000 of cash for the acquisition of Forasol-Foramer, based upon an
approximate annual interest rate on investments during the period of 5.0%.

(N) Increase in interest expense resulting from $100,000,000 of borrowings
pursuant to new financing arrangements to be entered into in connection with the
acquisition of Forasol-Foramer by Pride.

(O) Reduction in interest expense resulting from use of a portion of the
net proceeds from Forasol-Foramer's public offering of common shares in May 1996
to repay indebtedness and liquidate capital lease obligations of
Forasol-Foramer. The principal amounts extinguished and the related interest
savings are as follows:

INTEREST SAVINGS
--------------------------------------
NINE MONTHS ENDED
AMOUNT SEPTEMBER 30, YEAR ENDED INTEREST
EXTINGUISHED 1996 DECEMBER 31, 1995 RATE RANGE
------------ ----------------- ----------------- -----------
(IN THOUSANDS)

Credit Facility......................... $ 20,840 $ 585 $ 1,563 7.5%
Current portion of long-term debt....... 8,650 240 637 7.1% - 7.7%
Current portion of long-term lease
obligations........................... 3,210 100 264 6.4% - 8.6%
Long-term debt.......................... 8,860 250 660 7.1% - 7.7%
Long-term lease obligations............. 8,040 250 657 6.4% - 8.6%
------------ -------- -----------------
Total......................... $ 49,600 $ 1,425 $ 3,781
============ ======== =================

Forasol-Foramer operates in tax free jurisdictions (primarily Angola) and
approximately $3,500,000 of the $3,781,000 in pro forma annual savings result
from such tax jurisdictions.

(P) Income tax effects of the pro forma adjustments included herein, based
on a combined U.S. federal and state income tax rate of 36% and a French income
tax rate of 33%. Such rates approximate the statutory rates in effect for the
period.

(Q) Estimated increase in weighted average common shares and equivalents
outstanding due to issuance of 11,099,000 shares in connection with the
acquisition of Forasol-Foramer by Pride.

SALE OF U.S. LAND-BASED WELL SERVICING OPERATIONS

(R) Receipt of net proceeds from sale of U.S. land-based well servicing
operations, net of $44,600,000 of estimated federal and state income taxes and
repayment of approximately $45,900,000 of debt collateralized by the assets to
be sold. Also, elimination of the assets to be sold and the liabilities to be
transferred and reflection of an estimated gain of approximately $54,200,000 on
the sale.

(S) Repayment of $30,000,000 of debt incurred in connection with the
acquisition of Forasol-Foramer out of the net proceeds to be received from the
sale of Pride's U.S. land-based well servicing operations.

(T) Elimination of the results of operations related to the assets of
Pride's U.S. land-based well servicing business to be sold.

(U) Restoration of a portion of the historical interest income reduced by
adjustment (M), above, as a result of a net $10,750,000 cash to be generated
from the sale of Pride's U.S. land-based well servicing operations.

(V) Elimination of interest expense on $30,000,000 of debt incurred as
part of the acquisition of Forasol-Foramer to be repaid out of the net proceeds
to be received from the sale of Pride's U.S. land-based well servicing
operations.

(W) Adjustment of income tax expense as follows:

NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(IN THOUSANDS)
Elimination of actual income tax expense
incurred by U.S. land-based
operations............................. $ (1,008) $(2,873)
Income tax effects of pro forma
adjustments based on a combined U.S.
federal and state income tax rate of
36%, which rate approximates the
combined statutory rate in effect for
the period............................ 545 725
------------------ -----------------
$ (463) $(2,148)
================== =================

COMPARATIVE PER SHARE DATA

The following table sets forth (a) selected comparative per share data for
each of Pride and Forasol-Foramer on an historical basis and (b) selected
unaudited pro forma comparative per share data assuming the Business Combination
had occurred at the beginning of each period presented. The unaudited pro forma
data reflects the Business Combination using the purchase method of accounting
and the historical financial statements of Pride. Actual adjustments, which may
include adjustments to additional assets and liabilities of the Forasol
Operating Companies, will be made on the basis of evaluations as of the Closing
and, therefore, will differ from those reflected in the unaudited pro forma
comparative per share data. The information presented in the table is derived
from and should be read in conjunction with the combined unaudited pro forma
financial statements and the separate consolidated financial statements of Pride
and Forasol-Foramer and the notes thereto appearing elsewhere or incorporated by
reference herein.

Pro forma amounts are not necessarily indicative of results of operations
or combined financial position that would have resulted had the Business
Combination been consummated at the beginning of each period indicated.

UNAUDITED PRO FORMA
-------------------------
FORASOL-
FORAMER
FORASOL- EQUIVALENT
PRIDE FORAMER COMBINED COMBINED
--------- -------- --------- -----------

Book value per common share:
December 31:
1993............................ $ 4.23 $ 12.71 $ -- $ --
1994............................ 4.64 12.68 -- --
1995............................ 5.29 12.26 -- --
September 30, 1996 (unaudited)..... 6.76 11.38 10.80 7.13

Earnings (loss) per common share:
Years ended December 31:
1993............................ $ .36 $ .31 $ -- $ --
1994............................ .30 .10 -- --
1995............................ .60 (.40) .24 .16
Nine months ended September 30,
1996 (unaudited)................ .52 (.25) .26 .17

No cash dividends were declared or paid by Pride or Forasol-Foramer for any
periods presented.

INFORMATION ABOUT PRIDE

GENERAL

Pride is a leading international and domestic provider of contract
drilling, well servicing, workover, completion and plugging and abandonment
services, both on land and offshore. Pride's fleet of 644 owned rigs (prior to
the Dawson Transaction) is one of the world's largest, consisting of 421
land-based rigs in the United States, 133 land-based rigs in Argentina, 43
land-based and two barge rigs in Venezuela, 19 land-based rigs in Colombia and
three land-based rigs in other international markets, and 23 offshore platform
rigs located in the Gulf of Mexico. See " -- The Dawson Transaction." Pride
performs maintenance and workovers necessary to operate producing oil and gas
wells efficiently and provides contract drilling of new wells in certain
international and offshore markets. Pride also provides services for the
completion of newly drilled oil and gas wells and plugging and abandonment
services at the end of a well's useful life.

BUSINESS STRATEGY

Pride's goal is to achieve revenue and earnings growth through a strategy
of (i) acquisitions in both international and domestic markets, including
related consolidation savings and economies of scale, (ii) expansion in the
offshore market through acquisitions and new rig construction, (iii) upgrades to
enhance the capabilities and profitability of its existing rig fleet and (iv)
deployment of existing domestic land-based capacity to more profitable
international markets. International and offshore operations generally have
greater profit potential than domestic land-based operations because of less
competition, higher utilization rates and stronger demand resulting from a
general trend by major oil operators toward shifting expenditures to exploration
and development activities abroad and in the Gulf of Mexico. For these reasons,
Pride has actively sought to diversify beyond its domestic land-based
operations, which prior to mid-1993 accounted for substantially all of Pride's
revenues and earnings. With the sale of Pride's domestic land-based operations
in the Dawson Transaction, Pride believes it will have effectively realigned its
business to focus on the more profitable international and offshore markets. See
" -- The Dawson Transaction."

Consistent with its strategy, in April 1996 Pride acquired Quitral-Co (now
Pride International S.A.) from Perez Companc S.A., Astra C.A.P.S.A. and other
shareholders for an aggregate purchase price of $140 million, consisting of $110
million in cash and a $30 million installment note. Prior to the acquisition,
Quitral-Co was the largest drilling and workover contractor in Argentina, where
it operated 23 drilling and 57 workover rigs. Quitral-Co also had significant
operations in Venezuela, where it operated seven drilling and 23 workover rigs.
For its fiscal year ended June 30, 1995 and the nine-month period ended March
31, 1996, Quitral-Co's consolidated revenues were approximately $175 million and
$150 million, respectively. Approximately 80% of such revenues were derived from
Quitral-Co's Argentine operations, with the remainder attributable to Venezuela.
The acquisition of Quitral-Co has been included in Pride's consolidated results
of operations from April 30, 1996, the effective date of the acquisition.

In addition to the Quitral-Co acquisition, since mid-1993, Pride has
acquired six other businesses with 62 land-based rigs serving international
markets and a fleet of 22 rigs serving the domestic offshore market. Pride has
further expanded international operations by deploying 35 underutilized rigs
from its U.S. land-based fleet to Argentina, Venezuela and Russia since entering
those markets. Additionally, in 1994 Pride constructed two drilling/workover
barge rigs now operating in Venezuela, and has constructed two new platform rigs
in the past two years, both of which are now operating in the Gulf of Mexico.

Pride believes that providing high quality equipment, employees and
services and a safe work environment is critical to its strategy. Pride has
committed substantial capital to an ongoing rig refurbishment program to provide
technological enhancements and to maintain Pride's equipment in high quality
condition. Additionally, Pride has invested in quality, safety and management
training programs. Pride believes that many smaller competitors have not
undertaken comparable maintenance and upgrading of equipment or training of
personnel, and do not have the financial resources to enable them to do so.
Pride believes that certain of its customers give significant consideration to
safety records and quality management systems of contractors in their screening
and selecting processes, and that such factors will gain further importance in
the future.

THE DAWSON TRANSACTION

On December 23, 1996, Pride entered into a definitive agreement to sell to
Dawson Production Services, Inc. substantially all of the assets used in Pride's
domestic, land-based well servicing operations, including 407 of its 421
domestic land-based rigs, for an aggregate purchase price of approximately $136
million. The sale is expected to generate pre-tax revenues of approximately $90
million, net of repayment of debt related to the assets to be sold. Pride
intends to use the net proceeds from the Dawson Transaction to partially fund
the cash portion of the consideration to be paid for the acquisition of the
operating subsidiaries of Forasol-Foramer. During the nine months ended
September 30, 1996 and the year ended December 31, 1995, the operations to be
sold generated revenues of $87.3 million and $113.1 million, respectively, and
earnings from operations of $4.4 million and $7.0 million, respectively.
Consummation of the Dawson Transaction is subject to various conditions,
including Dawson's completion of certain financings. Dawson is engaged in the
business of providing workover and production services for oil and gas wells.
Pride believes the Dawson Transaction together with the Business Combination
will effectively redeploy Pride's resources to the more profitable international
and offshore markets.

INTERNATIONAL OPERATIONS

Since the beginning of 1993, Pride has expanded its international
operations through acquisitions and deployment of underutilized domestic assets
into Argentina, Venezuela, Colombia and Russia. During the first half of 1993,
Pride deployed three rigs from its U.S. land-based fleet to Western Siberia. In
July 1993, Pride purchased established well servicing and drilling operations in
Argentina and Venezuela and, in February 1994, acquired a four-rig competitor in
Argentina. Pride has also upgraded and deployed 25 rigs from its U.S. land-based
fleet to Argentina and seven to Venezuela. In 1994, Pride built two
drilling/workover barge rigs, which were placed in operation in Venezuela in
1995 under ten-year contracts. In October 1995, Pride acquired a six-rig
drilling operation in Colombia. In April 1996, Pride acquired the rig operations
of Quitral-Co in Argentina and Venezuela and in October 1996, acquired a 13-rig
operation in Colombia and a three-rig operation in Argentina. Pride now operates
133 land-based rigs in Argentina, 43 land-based and two barge rigs in Venezuela,
19 land-based rigs in Colombia and three land-based rigs in Russia. Pride
continues to review opportunities to expand internationally.

ARGENTINA

In Argentina, Pride currently operates 133 land-based rigs, which Pride
believes represents approximately 40% of rigs in the Argentine market. Of these
rigs, 33 are drilling rigs and 100 are workover rigs. The Argentine oil
production market has experienced improved conditions in recent years as a
result of general economic reform, sales of certain state-owned oilfields to
private operators and privatization of the state-owned oil company, the
predecessor of YPF. These improved conditions have resulted in additional demand
for rig services. Argentine rig operations are mostly conducted in remote
regions of the country and require substantial fixed infrastructure and
operating support costs. Pride operates a fleet of oilfield haul trucks and
maintains camps to provide eating and sleeping accommodations for its employees
and for employees of certain of its customers. The Argentine base camps are
stocked with significant levels of spare parts and operating supplies to avoid
interruption of services. Additionally, because Pride has achieved critical mass
and is realizing certain economies of scale by acquiring and operating 133 rigs
in Argentina, it is able to allocate and recover such fixed costs efficiently.
Pride estimates that its largest competitor in Argentina has approximately 45
rigs. Pride believes that its established infrastructure and scale of operations
provide Pride with a competitive advantage in the Argentine market. See
" -- Customers."

VENEZUELA

Pride's fleet in Venezuela currently consists of 43 land-based rigs, and
two workover/drilling barge rigs working on Lake Maracaibo. Of the 43 land-based
rigs, 32 are workover rigs and 11 are drilling rigs. In recent years, the
Venezuelan national oil company has entered into operating service agreements
with a number of international oil companies to rehabilitate and develop
approximately 80 "marginal" fields. Development of these fields is providing
additional demand for rig services in Venezuela. In July 1995, the Venezuelan
Congress enacted legislation that created a new mechanism for private sector
involvement in

the oil and gas industry in that country through production sharing contracts.
As of December 1996, eight of Venezuela's largest undeveloped properties had
been awarded to multinational oil operators for development through such
contracts, and the Venezuelan government has recently determined that 20
additional properties will be made available for development under this program.
Venezuelan government estimates indicate that $10 billion or more in new
investment will be needed over the next ten years to develop these properties.
Pride believes it is well positioned to capitalize on any resulting
opportunities.

In January 1995, Pride's two drilling/workover barge rigs began operations
on Lake Maracaibo, Venezuela, pursuant to contracts with Lagoven which run
through 2004. The two barge rigs were completed for an aggregate total cost of
approximately $42 million, which was financed on a project basis by two Japanese
trading firms. Terms of the financing agreement limit the lenders' recourse
essentially to the barge rigs, related contract proceeds and certain other of
Pride's Venezuelan assets. Pride also provided the lenders a limited guaranty
with respect to certain political risks. Pride has obtained political risk
insurance policies from OPIC to protect against political risks that could
result in potential payments under the terms of Pride's guaranty.

COLOMBIA

In October 1995, Pride purchased Marlin Colombia Drilling Co. Inc. from a
member of the Royal Dutch/Shell Group of Companies for approximately $6 million.
In October 1996, Pride acquired Ingeser de Colombia, S.A. Pride presently
operates 13 drilling rigs and six workover rigs in Colombia. The Colombian
government has recently enacted policies to encourage oil and gas exploration
and production activities and awarded additional properties for development to
major international oil operators under production sharing contracts. Pride
believes it can compete effectively for any Colombian business opportunities.

RUSSIA

In 1993, Pride formed a Russian company and deployed one workover/drilling
rig and two small well servicing rigs in Russia. These rigs have been equipped
for severe cold weather conditions and are supported by heavy equipment,
including oilfield trucks and a large capacity forklift with earth moving
capability. Pride believes that there will be significant opportunities in
Russia if, and when, the political situation in that country stabilizes and
allows a more meaningful flow of international investment capital for
rehabilitation and development of its oil fields.

DOMESTIC OFFSHORE OPERATIONS

In June 1994, Pride commenced operations in the Gulf of Mexico through the
acquisition of the largest fleet of offshore self-erecting platform workover
rigs in that market. Pride operates 23 platform rigs (approximately 45% of
available market capacity), a fleet approximately twice as large as that of its
next largest competitor. Pride has made substantial capital improvements in this
fleet and believes it has one of the most technologically advanced fleets in the
industry, which Pride believes has led to higher day rates and increased
utilization of its rigs.

Pride generally utilizes its offshore rigs to drill or workover wells from
platforms in water depths of greater than 125 feet. Platform rigs consist of
well servicing equipment and machinery arranged in modular packages which are
transported to and assembled and installed on fixed offshore platforms owned by
the customer. Fixed offshore platforms are steel tower-like structures that
stand on the ocean floor, with the top portion, or platform, above the water
level and providing the foundation upon which the platform rig is placed.
Certain of Pride's platform rigs are capable of operating at well depths of up
to 25,000 feet. Pride is performing an increasing amount of drilling and
horizontal re-entry services utilizing portable top drives, enhanced pumps and
solids control equipment for drilling fluids, in addition to providing workover
services offshore.

DOMESTIC LAND-BASED OPERATIONS

including 407 of its 421 land-based rigs. See " -- The Dawson Transaction."
Prior to the Dawson Transaction, Pride's domestic land-based fleet consisted of
421 rigs that operated from 21 service locations concentrated primarily in
California, the Permian Basin areas of West Texas and New Mexico, and the Texas
and Louisiana Gulf Coast. Historically, Pride enhanced the profitability of its
domestic land-based operations by increasing efficiency and implementing
cost-saving measures. Pride actively considered acquisition opportunities in its
three principal domestic markets when such acquisitions presented opportunities
in significant consolidation savings and operating efficiencies. In March 1995,
Pride acquired an operator of 35 well servicing rigs in New Mexico, and in
February 1996, Pride acquired a seven-rig operation in South Texas.

During 1995, Pride's average utilization rate per working day (rig hours
worked divided by total available hours) for its domestic land rigs was
approximately 50%. Pride worked 337 of its domestic land-based rigs at some time
during 1995, with most of the inactive rigs being maintained in workable
condition. Pride's inactive rigs generally can be mobilized quickly, giving
Pride substantial operating leverage to take advantage of new market
opportunities. As a result of international opportunities for Pride's services
and equipment, Pride has shipped 35 previously inactive rigs from its U.S. fleet
to international markets since mid-1993. Following the Dawson Transaction, Pride
will retain 14 domestic land-based rigs for international deployment
opportunities.

SERVICES PROVIDED

Pride provides oil field services to oil and gas exploration and production
companies, primarily through the use of mobile well servicing rigs, together
with crews of generally three to four persons. Additional items of equipment,
such as pumps, tanks, blowout preventers, power swivels, coiled tubing units and
foam units, are also provided by Pride as may be required and requested by the
customer for a particular job. Pride also provides trucking services for moving
large equipment and hauling fluids to and from the job sites of its customers.

Well servicing can be categorized as to the type of job performed:
maintenance, workover or completion.

MAINTENANCE SERVICES

Maintenance services are required on producing oil and natural gas wells to
ensure efficient, continuous operation. These services consist of routine
mechanical repairs necessary to maintain production from the well, such as
repairing parted sucker rods or replacing a defective downhole pump in an oil
well or replacing defective tubing in a gas well. Pride provides the rigs,
equipment and crews for these maintenance services, which are performed on both
oil and gas wells but which are more often required on oil wells. Many of
Pride's rigs also have pumps and tanks that can be used for circulating fluids
into and out of the well. Maintenance jobs are often performed on a series of
wells in geographic proximity to each other, typically take less than 48 hours
per well to complete and generally require little, if any, revenue-generating
equipment other than a rig.

Maintenance services are generally required throughout the life of a well.
The need for these services does not depend on the level of drilling activity
and is generally independent of short-term fluctuations in oil and gas prices.
Accordingly, the demand for maintenance services is generally more stable than
for other well servicing activities. The general level of maintenance, however,
is affected by changes in the total number of producing oil and gas wells.

WORKOVER SERVICES

In addition to needing periodic maintenance, producing oil and natural gas
wells occasionally require major repairs or modifications, called "workovers."
Workover services include the opening of new producing zones in an existing
well, recompletion of a well in which production has declined, drilling out
plugs and packers and the conversion of a producing well to an injection well
during enhanced recovery operations. These extensive workover operations are
normally performed by a well servicing rig with additional specialized accessory
equipment, which may include rotary drilling equipment, mud pumps, mud

tanks and blowout preventers, depending upon the particular type of workover
operation. Most of Pride's rigs are designed and equipped to handle the more
complex workover operations. A workover may last anywhere from a few days to
several weeks.

The level of workover services is sensitive to changes in oil and gas
prices. When oil and gas prices are low, there is little incentive to perform
workovers on wells to increase production, and operators of wells tend to defer
workover services. As oil and gas prices increase, the incentive to increase
production also improves and the number of workovers tends to increase as
operators seek to increase production by enhancing the efficiency of their wells
through workovers.

COMPLETION SERVICES

Completion services prepare a newly drilled well for production. The
completion process may involve selectively perforating the well casing at the
depth of discrete producing zones, stimulating and testing these zones and
installing downhole equipment. Newly drilled wells are frequently completed by a
well servicing rig so that an operator can avoid using a higher-cost drilling
rig any longer than necessary. The completion process may require a few days to
several weeks, depending on the nature and type of the completion, and will also
generally require additional revenue-generating equipment.

The market for well completions is directly related to drilling activity
levels, which are very sensitive to changes in oil and gas prices. During
periods of weak drilling demand, drilling contractors will frequently price the
well completion work competitively with a workover rig so that the drilling rig
stays on the job for a longer period of time. Thus, excess drilling capacity
will serve to reduce the amount of completion work available to the well
servicing industry.

DRILLING SERVICES

Pride provides contract drilling services to oil and gas operators in
international and offshore markets. Some of Pride's workover rigs that are
operating internationally can also be used for drilling, although Pride has many
specialized drilling rigs and ancillary equipment in its international
locations.

ADDITIONAL SERVICES

Pride also provides packer sales and service, oilfield trucking, plugging
and abandonment services and well bore cleaning and production enhancement
services. In addition, Pride sells oilfield supplies on a retail basis through
certain wholly owned subsidiaries.

COMPETITION

Competition in the international markets in which Pride operates is
generally limited to substantially fewer companies than in the domestic
land-based market. These companies range from large multinational competitors
offering a wide range of well servicing and drilling services to smaller,
locally owned businesses. Pride believes that it is competitive in terms of
pricing, performance, equipment, safety, availability of equipment to meet
customer needs and availability of experienced, skilled personnel in those
international areas in which it operates. Currently, Pride has strong market
positions in Argentina, Venezuela and Colombia and believes it is well
positioned in Russia.

Pride believes that in the Gulf of Mexico there are approximately 12,000
producing oil and gas wells and that such wells generally require workovers
about once every five years in order to maintain optimal production levels. The
market for offshore platform workover rig services is highly competitive, with
Pride's two most significant competitors having an aggregate of approximately 19
rigs compared to 23 for Pride.

The domestic land-based well servicing industry is highly fragmented and is
characterized by a few large companies and numerous smaller companies.
Competition is primarily on a local market basis, and Pride generally competes
with several well servicing contractors within a 50-mile radius of each service
location. Pride and its most significant competitor in this market, Pool Energy
Services Co. ("Pool"), are the largest companies serving the domestic
land-based well servicing market. Both Pride and Pool operate in multiple
geographic regions and each has in excess of 400 domestic land-based rigs. Pride
competes with

Pool in all three of Pride's principal domestic regions. Two other competitors,
each having 100 to 200 rigs, compete with Pride in separate domestic regions.
There are several regional companies that have fleets of 30 to 60 rigs which
operate from several service bases within each region. Numerous other
competitors have 10 or fewer rigs and operate in limited market areas. On
December 23, 1996, Pride entered into a definitive agreement to sell to Dawson
Production Services, Inc. substantially all of Pride's assets used in its
domestic, land-based well servicing operations, including 407 of its 421
land-based rigs. See " -- The Dawson Transaction."

Excess capacity in the well servicing industry has resulted in severe price
competition throughout much of the past decade. In the well servicing market,
possibly the most important competitive factor in establishing and maintaining
long-term customer relationships is having an experienced, skilled and well-
trained work force. In recent years, customers have placed emphasis not only on
pricing, but also increasingly on safety and quality of service. Pride believes
that certain of its customers give significant consideration to safety records
and quality management systems of contractors in their screening and selecting
processes, and that such factors will gain further importance in the future. In
that regard, Pride has directed substantial resources toward employee safety and
quality management training programs, as well as its employment review process.
While Pride's efforts in these areas are not unique, many competitors,
particularly small contractors, have not been able to undertake similar training
programs for their employees. One of the benefits of distinguishing itself in
safety and quality is that Pride has been able to establish strategic alliances
with certain major customers.

CUSTOMERS

In international markets, Pride works for government-owned oil companies,
large multinational oil companies and locally owned independent operators.
During 1995, approximately 40% of the revenues from the operations conducted in
Argentina by Pride and Quitral-Co on a pro forma basis was derived from YPF, the
successor to the operations of the former state-owned oil company. Services
provided to YPF accounted for approximately 20% of Pride's pro forma
consolidated revenues for 1995. The remainder of Pride's Argentine customers are
large multinational oil companies and locally owned independent operators.
Approximately 24% of the revenues from the operations conducted in Venezuela by
Pride and Quitral-Co in 1995 on a pro forma basis were derived from Perez
Companc S.A. Services provided to Perez Companc S.A. accounted for approximately
12% of Pride's pro forma consolidated revenues for 1995. In Venezuela, Pride
also provides services for three subsidiaries of Petroleos de Venezuela, S.A.,
the state-owned oil company, as well as multinational oil companies. In Russia,
Pride's current contracts are with joint venture entities co-owned by large
multinational operators and Russian production associations. Pride's U.S.
customers are predominantly major integrated and large independent operators.
One customer, Shell Oil Company, accounted for approximately 54% of revenues
from domestic offshore operations during 1995. Revenues from Shell Oil Company
and its affiliates from both land-based and offshore operations accounted for
approximately 8% of pro forma consolidated revenues for 1995. Approximately 60%
of revenues from domestic land-based operations were generated from Pride's 20
largest U.S. customers, with no one customer accounting for more than 10% of
such revenues in 1995.

CONTRACTS

Most of Pride's contracts provide for compensation on either an hourly or
daily basis. Under such contracts, Pride receives a fixed amount per hour or per
day for servicing or drilling the well. Such contracts also generally provide
that the customer pay for movement of the equipment to the job site, assembly
and dismantling.

In the United States, many jobs are performed on a "call-out" or "as
requested" basis and may involve one or multiple wells. Such work is performed
pursuant to Pride's published operating rates and general work terms and
conditions or according to the terms of service arrangements established with
the operators.

In international markets, contracts generally provide for longer terms.
Such contracts are often awarded to the successful bidder of the customer's
project tender. When contracting abroad, Pride may be faced with

the risks of currency fluctuation or exchange controls. Typically, Pride seeks
to limit these risks by obtaining contracts denominated to the greatest extent
possible in U.S. dollars and maximizing the portion of payments to be received
in freely convertible foreign currency or U.S. dollars. There can be no
assurance that Pride will be able to continue to take such actions. Accordingly,
Pride could be exposed to foreign currency risks, which could adversely affect
its results of operations and financial condition.

Since January 1992, currency exchange transactions in Argentina have been
governed by the country's Convertibility Law. The Convertibility Law was adopted
as the primary fiscal policy of that country's economic reform program, and has
resulted in a stable currency since its implementation. The Convertibility Law
requires the Argentine Central Bank to maintain foreign reserves equivalent to
the amount of outstanding domestic currency at a rate of one U.S. dollar to each
Argentine peso issued. The law prevents the Argentine Central Bank from printing
new money to finance the country's treasury. Pride believes the law provides
fiscal and monetary discipline and has served to control inflation by limiting
the government's ability to increase the amount of domestic currency in the
economy. The Convertibility Law also requires the Argentine Central Bank to sell
U.S. dollars to any party who presents Argentine pesos for exchange.
Accordingly, Pride has not been subjected to any significant currency exchange
risks with respect to its Argentine operations and does not contemplate such
risks so long as the Convertibility Law is maintained. Additionally,
substantially all of Pride's contracts in Argentina are denominated in U.S.
dollars.

In Venezuela, the government has from time to time imposed exchange control
policies and established arbitrary exchange rates for its currency relative to
the U.S. dollar. A deterioration in economic conditions in Venezuela resulted in
significant devaluation of the Venezuelan bolivar during the first half of 1994,
resulting in currency translation losses for Pride during that period. In
December 1995, the Venezuelan government further devalued the bolivar. This
devaluation did not result in the recognition of any material currency
translation gain or loss by Pride. In April 1996, the Venezuelan government
removed exchange control restrictions with respect to the bolivar and
effectively allowed the bolivar to float relative to the U.S. dollar. As a
result, the value of the Venezuelan bolivar has further declined relative to the
U.S. dollar, but Pride has not experienced any material currency translation
gains or losses. At present, Pride has structured its contracts in Venezuela so
that the amount of revenues denominated in local currency does not exceed its
expense requirement in bolivars. Such contract terms allow Pride to limit its
exposure to potential currency losses in certain circumstances. Pride continues
to monitor Venezuelan economic conditions and intends to take such measures as
may be practicable to limit its exposure to currency translation losses in
future periods resulting from fluctuations in the value of the Venezuelan
bolivar relative to the U.S. dollar.

Currently, foreign exchange in Colombia is carried out on a free-market
basis. However, there can be no assurances that the local monetary authorities
in that country will not implement exchange controls in the future. To date,
contracts for Pride's operations in Russia have provided for payment in U.S.
dollars.

Pride's contracts with Lagoven for the operation of the two
drilling/workover barge rigs on Lake Maracaibo, Venezuela provide for a term
that runs through 2004. Rates under the contracts are subject to contractual
escalation and are denominated in part in U.S. dollars and in part in local
currency. The portion of the rate denominated in U.S. dollars may be paid in
local currency based on prevailing exchange rates provided that exchange into
U.S. dollars can be readily effected.

SEASONALITY

In general, Pride's business activities are not significantly affected by
seasonal fluctuations. In the United States, all of Pride's rigs are located in
geographical areas not subject to severe weather that would halt operations for
prolonged periods. Pride's rigs in Russia have been winterized so that they may
continue to operate during periods of severe cold weather.

PROPERTY

Pride's property consists primarily of well servicing rigs, drilling rigs
and ancillary equipment, substantially all of which are owned by Pride.

A well servicing rig consists of a mobile carrier, engine, drawworks and
derrick. The primary function of a well servicing rig is to act as a hoist so
that pipe, rods and downhole equipment can be run into and out of a well. A
single derrick rig is able to stand up single joints of tubing in the derrick
and hang double joints of rods. A double derrick rig is able to stand up double
joints of tubing in the derrick and hang triple joints of rods. A swab unit is a
specialized piece of equipment used solely for swabbing or cleaning operations.
It includes a short derrick and small drawworks mounted on a truck. The majority
of Pride's rigs are large capacity double derrick-type units. All of Pride's
well servicing rigs can be readily moved between well sites and between
geographic areas of operations.

A drilling rig consists of engines, drawworks, a mast, pumps to circulate
the drilling fluid, blowout preventers, drill string and related equipment. The
engines power a rotary table that turns the drill string, causing the drill bit
to bore through the subsurface rock layers. Rock cuttings are carried to the
surface by the circulating drilling fluid. The intended well depth and the
drilling site conditions are the principal factors that determine the size and
type of rig most suitable for a particular drilling job.

Pride's drilling/workover barge rigs have crew quarters, storage facilities
and related equipment mounted on floating barges with the drilling equipment
cantilevered from the stern of the barge. The barges are towed to the drilling
location and are held in place by anchors while drilling or workover activities
are conducted.

Pride owns and operates vacuum, transport and winch trucks; plugging and
cementing units; hyperclean and filtration units; and foam units, pumps,
generators, power swivels, coiled tubing units and similar ancillary equipment.
Pride owns approximately 850 vehicles and leases approximately 525 others. Pride
also owns 20 sets of accommodation modules that may be leased to customers to
provide temporary living quarters for crews working on offshore platforms, as
well as several cranes utilized for lifting heavy equipment onto the platforms.

The corporate office in Houston, Texas occupies approximately 20,000 square
feet of leased space under a lease that expires in April 1998. Pride owns 19 and
leases 13 of its office and yard locations in Texas, Louisiana, Oklahoma, New
Mexico and California, not all of which are currently being used. In Argentina,
Pride owns approximately 30,000 square feet of office space in Buenos Aires and
owns eight operating bases and leases three others. In Venezuela, Pride owns one
operating base and office facility and leases two additional operating bases
with an office facility at one. In Colombia, Pride leases office space in Bogota
and operating bases in Neiva and Bucaramanga. Shore-based operations for Pride's
offshore platform rig operations are conducted from its owned facility in Houma,
Louisiana. The shore facility is located on the intracoastal waterway and
provides direct access to the Gulf of Mexico.

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations of Pride -- Liquidity and Capital Resources" for
information concerning financing arrangements in place with respect to certain
of Pride's rigs and equipment.

The following table sets forth the type, number and location of the land
rigs owned by Pride and its subsidiaries as of December 31, 1996, prior to the
sale of Pride's domestic land-based operations in the Dawson Transaction:

LAND-BASED RIGS

SINGLE DOUBLE SWAB
TOTAL DERRICK DERRICK UNIT DRILLING
----- ------- ------- ----- --------

UNITED STATES:
Southern Area
Alice, TX....................... 12 -- 12 -- --
McAllen, TX..................... 11 -- 11 -- --
Freer, TX....................... 18 5 13 -- --
Liberty, TX..................... 14 1 13 -- --
Winnsboro, TX................... 7 -- 7 -- --
Corpus Christi, TX.............. 10 -- -- 10 --
Panola, TX...................... 13 -- 7 6 --
Palestine, TX................... 3 -- 3 -- --
La Grange, TX................... 8 -- 8 -- --
El Campo, TX.................... 14 -- 13 1 --
South Houston, TX............... 10 -- 10 -- --
Lafayette, LA................... 10 -- 10 -- --
Kilgore, TX..................... 20 1 19 -- --
Central Area
Midland, TX..................... 27 -- 27 -- --
Crane, TX....................... 34 -- 34 -- --
Hobbs, NM....................... 44 -- 43 1 --
Snyder, TX...................... 16 -- 16 -- --
Artesia, NM..................... 15 -- 15 -- --
Western Area
Bakersfield, CA................. 56 24 32 -- --
Ventura, CA..................... 17 1 16 -- --
Taft, CA........................ 48 32 16 -- --
Elk City, OK (storage area) (1)...... 10 -- 10 -- --
Undergoing Refurbishment (2)......... 4 -- 2 -- 2
--
----- ------- ------- -----
Total United States (3).... 421 64 337 18 2
--
----- ------- ------- -----
INTERNATIONAL:
Argentina
Comodora Rivadavia.............. 67 1 48 -- 18
Rincon de los Sauces/Neuquen.... 40 -- 29 -- 11
Mendoza......................... 23 -- 19 -- 4
Salta........................... 3 -- 3 -- --
--
----- ------- ------- -----
Total Argentina............ 133 1 99 -- 33
--
----- ------- ------- -----
Colombia............................. 19 -- 6 -- 13
Venezuela............................ 43 -- 32 -- 11
Russia............................... 3 -- 1 2 --
--
----- ------- ------- -----
Total International........ 198 1 138 2 57
--
----- ------- ------- -----
TOTAL COMPANY........................ 619 65 475 20 59
===== ======= ======= ===== ==

- ------------

(1) No operations are conducted from this facility.

(2) These rigs are being refurbished for international deployment.

(3) Of 421 total rigs, 407 are to be sold in the Dawson Transaction.

The following table sets forth, as of December 31, 1996, certain
information concerning Pride's offshore platform and Venezuelan barge rig fleet:

OFFSHORE PLATFORM AND VENEZUELAN BARGE RIGS

RATED
RIG DRAWWORKS DRILLING
NUMBER RIG TYPE MAKE/MODEL HORSEPOWER DEPTH STATUS
- --------- --------------------------- ----------------------- ---------- --------- ----------
(IN FEET)

OFFSHORE PLATFORM RIGS
11 Light Workover Gardner Denver 3000 350 10,000 Available
14 Light Workover Gardner Denver 3000 350 10,000 Active
15 Light Workover Gardner Denver 3000 350 10,000 Stacked
30 Standard Workover Gardner Denver 500S(1) 650 15,000 Available
80 Standard Workover Gardner Denver 500S 650 15,000 Stacked
100 Standard Workover Gardner Denver 500S 650 15,000 Active
110 Standard Workover Gardner Denver 500S 650 15,000 Available
130 Standard Workover Gardner Denver 500S 650 15,000 Available
170 Standard Workover Gardner Denver 500S 650 15,000 Active
200 Improved Workover Gardner Denver 500S 650 15,000 Active
210 Improved Workover Gardner Denver 500S 650 15,000 Available
220 Improved Workover Gardner Denver 500S 650 15,000 Active
650E Improved Electric Workover Gardner Denver 500S(1) 650 15,000 Active
651E Improved Electric Workover Gardner Denver 500S(1) 650 15,000 Active
653E Improved Electric Workover Gardner Denver 500S 650 15,000 Active
750E Heavy Electric Workover Dreco 750E(1) 750 16,500 Active
751E Heavy Electric Workover OIME SL-5(1) 800 16,500 Active
951 Heavy Workover Gardner Denver 1000S 1,000 18,000 Active
952 Heavy Workover Gardner Denver 1000S 1,000 18,000 Active
1001E Heavy Electric Workover OIME SL-7(1) 1,500 20,000 Active
1002E Heavy Electric Workover OIME SL-7(1) 1,500 20,000 Active
1003E Heavy Electric Workover OIME SL-7(1) 1,500 20,000 Active
1501E Heavy Electric Workover OIME SL-7(1) 1,500 25,000 Active
VENEZUELAN BARGE RIGS
PRIDE I Drilling/Workover National 110UBDE(1) 1,500 20,000 Active
PRIDE II Drilling/Workover National 110UBDE 1,500 20,000 Active

- ------------
(1) Equipped with top-drive drilling system.

LEGAL PROCEEDINGS

Pride is routinely involved in litigation incidental to its business, which
often involves claims for significant monetary amounts, some of which would not
be covered by insurance. In the opinion of management, none of the existing
litigation will have any material adverse effect on Pride's financial condition
or results of operations.

EMPLOYEES

Prior to the Dawson Transaction, Pride employed approximately 1,000
salaried employees and approximately 6,500 hourly paid employees. Approximately
2,500 of the employees are located in the United States and approximately 5,000
are located abroad. Approximately 1,900 of Pride's domestic employees will
become employees of Dawson following the Dawson Transaction. Hourly rig crew
members comprise the vast majority of employees. Typically, a rig crew consists
of an operator, a derrick man and two crewmen on the rig floor. Offshore
platform and barge rig crews also typically include a crane operator, two
roustabouts and an electrician. In most cases, a rig supervisor oversees the rig
crew, secures work orders from customers and maintains contact with the customer
throughout the job.

None of Pride's U.S. employees are represented by a collective bargaining
unit. Many of Pride's international employees are subject to industry-wide labor
contracts within their respective countries. Management believes that Pride's
employee relations are good.

SEGMENT INFORMATION

Information with respect to revenues, earnings from operations and
identifiable assets attributable to Pride's operating segments and geographic
areas of operations for the last three fiscal years is presented in Note 12 of
the Notes to Pride's Consolidated Financial Statements and Note 7 of the Notes
to Pride's Unaudited Consolidated Financial Statements.

SELECTED HISTORICAL FINANCIAL DATA OF PRIDE

The following selected consolidated financial information as of December
31, 1994 and 1995, and for each of the three years in the period ended December
31, 1995, has been derived from the audited consolidated financial statements of
Pride included elsewhere herein. This information should be read in conjunction
with such consolidated financial statements and the notes thereto. The selected
income statement and balance sheet data for the nine-month periods ended or as
of September 30, 1995 and 1996 have been derived from the unaudited consolidated
financial statements of Pride included elsewhere herein, which include all
adjustments, consisting of normal, recurring adjustments, that Pride considers
necessary for a fair presentation of its financial position and results of
operations for these periods. Operating results for the nine-month period ended
September 30, 1996 are not necessarily indicative of the results that may be
expected for the entire year. The selected consolidated financial information as
of December 31, 1991, 1992 and 1993, and for each of the two years in the period
ended December 31, 1992, has been derived from audited consolidated financial
statements of Pride that are not included herein. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations of Pride."

NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Revenues............................. $ 112,224 $ 101,382 $ 127,099 $ 182,336 $ 263,599 $ 198,512 $ 283,593
Operating costs...................... 87,700 83,829 100,305 139,653 188,252 143,376 202,796
Depreciation and amortization........ 5,861 5,649 6,407 9,550 16,657 12,077 19,987
Selling, general and
administrative..................... 13,825 14,076 17,572 25,105 32,418 23,620 34,120
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) from operations...... 4,838 (2,172) 2,815 8,028 26,272 19,439 26,690
Other income (expense)............... 880 813 504 106 (3,849) (2,472) (7,337)
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) before income taxes
and cumulative effect of change in
accounting for income taxes........ 5,718 (1,359) 3,319 8,134 22,423 16,967 19,353
Income tax provision (benefit)....... 2,199 (517) 1,214 1,920 7,064 5,740 4,899
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss) before cumulative
effect of change in accounting for
income taxes....................... 3,519 (842) 2,105 6,214 15,359 11,227 14,454
Cumulative effect of change in
accounting for income taxes........ -- -- 3,835 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss).................. $ 3,519 $ (842) $ 5,940 $ 6,214 $ 15,359 $ 11,227 $ 14,454
========= ========= ========= ========= ========= ========= =========
Net earnings (loss) per share before
cumulative effect of change in
accounting for income tax.......... $ .22 $ (.05) $ .13 $ .30 $ .60 $ .44 $ .52
Cumulative effect of change in
accounting for income taxes........ -- -- $ .23 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss) per share........ $ .22 $ (.05) $ .36 $ .30 $ .60 $ .44 $ .52
========= ========= ========= ========= ========= ========= =========
Weighted average common shares and
equivalents outstanding............ 16,354 16,245 16,487 20,795 25,465 25,280 27,539
OTHER OPERATING DATA:
EBITDA(1)............................ $ 10,800 $ 3,482 $ 9,087 $ 17,273 $ 44,616 $ 33,156 $ 47,152
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital...................... $ 25,983 $ 29,989 $ 21,758 $ 26,640 $ 31,302 $ 28,914 $ 59,731
Property and equipment, net.......... 46,424 45,084 62,823 139,899 178,488 173,264 361,759
Total assets......................... 89,819 94,842 109,981 205,193 257,605 256,818 529,604
Long-term debt, net of current
portion............................ 4,908 3,648 200 42,096 61,136 58,817 97,947
Convertible subordinated
debentures......................... -- -- -- -- -- -- 80,500
Shareholders' equity................. 62,376 61,774 69,126 111,385 131,239 126,546 192,669

- ------------

(1) EBITDA (earnings before interest, taxes, depreciation, and amortization) is
presented here to provide additional information about Pride's operations.
EBITDA should not be considered as an alternative to net income as an
indicator of Pride's operating performance or as an alternative to cash
flows as a better measure of liquidity.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF PRIDE

GENERAL

The following discussion and analysis should be read in conjunction with
Pride's consolidated financial statements, including the notes thereto, included
elsewhere in this Proxy Statement/Prospectus or incorporated by reference
herein.

Increases and decreases in domestic well servicing and drilling activity
historically have had a significant correlation with changes in oil and natural
gas prices. International well servicing and drilling activity is also affected
by fluctuations in oil and natural gas prices, but historically to a lesser
extent than domestic activity. International rig services contracts are
typically for terms of one year or more, while domestic contracts are typically
for one or multiple wells. Accordingly, international rig services activities
generally are not as sensitive to short-term changes in oil and gas prices as
domestic operations.

Since 1993, Pride has entered into a number of transactions that have
significantly expanded Pride's operations, including the following:

o In a series of transactions from mid-1993 through September 1996,
Pride acquired established businesses in Argentina, Venezuela and
Colombia and deployed 35 rigs from its U.S. land-based fleet to
Argentina, Venezuela and Russia.

o In June 1994, Pride acquired the largest fleet of platform workover
rigs, consisting of 22 units, in the Gulf of Mexico. Four additional
platform rigs have since been constructed and added to the fleet, one
in September 1995, one in April 1996, one in October 1996 and one in
December 1996, replacing three rigs that were retired from the fleet.

o In January 1995, Pride commenced operation of two drilling/workover
barge rigs on Lake Maracaibo, Venezuela. The barge rigs were
constructed during 1994 pursuant to ten-year operating contracts
entered into with Lagoven, S.A. ("Lagoven"), a subsidiary of the
Venezuelan national oil company.

o In March 1995, Pride acquired X-Pert Enterprises, Inc. ("X-Pert"),
which operates 35 well servicing rigs in New Mexico.

o In April 1996, Pride acquired Quitral-Co S.A.I.C. from Perez Companc
S.A., Astra C.A.P.S.A. and other shareholders. Quitral-Co operates 23
drilling and 57 workover rigs in Argentina and seven drilling and 23
workover rigs in Venezuela. For its fiscal year ended June 30, 1995
and the nine-month period ended March 31, 1996, Quitral-Co's
consolidated revenues were approximately $175 million and $150
million, respectively. The acquisition has been accounted for as a
purchase, effective April 30, 1996.

o In October 1996, Pride acquired Ingeser de Colombia, S.A.
("Ingeser"). Ingeser operates seven drilling rigs and six workover
rigs in Colombia. During the twelve-month period ended June 30, 1996,
Ingeser generated revenues of approximately $16 million. The
acquisition has been accounted for as a purchase, effective October
30, 1996.

o In November 1996, Pride acquired three land-based drilling rigs and
support assets from an Argentine operator.

RESULTS OF OPERATIONS -- HISTORICAL

The following tables set forth selected consolidated financial information
of Pride by operating segment for the periods indicated:

NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)

REVENUES:
Domestic land................... $ 105,865 $ 95,860 $ 113,115 $ 85,990 $ 87,290
Domestic offshore............... -- 23,441 49,595 37,564 41,677
International................... 21,234 63,035 100,889 74,958 154,626
---------- ---------- ---------- ---------- ----------
Total revenues............. $ 127,099 $ 182,336 $ 263,599 $ 198,512 $ 283,593
========== ========== ========== ========== ==========
EARNINGS FROM OPERATIONS:
Domestic land................... $ 1,307 $ 1,184 $ 6,857 $ 4,574 $ 4,260
Domestic offshore............... -- 3,304 6,785 5,074 4,891
International................... 1,508 3,540 12,630 9,791 17,539
---------- ---------- ---------- ---------- ----------
Total earnings from
operations.............. $ 2,815 $ 8,028 $ 26,272 $ 19,439 $ 26,690
========== ========== ========== ========== ==========

NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(IN THOUSANDS)

REVENUES:
Domestic land................... 83.3% 52.6% 42.9% 43.3% 30.8%
Domestic offshore............... -- 12.9 18.8 18.9 14.7
International................... 16.7 34.5 38.3 37.8 54.5
--------- --------- --------- --------- ---------
Total revenues............. 100.0% 100.0% 100.0% 100.0% 100.0%
========= ========= ========= ========= =========
EARNINGS FROM OPERATIONS:
Domestic land................... 46.4% 14.7% 26.1% 23.5% 16.0%
Domestic offshore............... -- 41.2 25.8 26.1 18.3
International................... 53.6 44.1 48.1 50.4 65.7
--------- --------- --------- --------- ---------
Total earnings from
operations.............. 100.0% 100.0% 100.0% 100.0% 100.0%
========= ========= ========= ========= =========

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995

REVENUES. Revenues for the nine months ended September 30, 1996 increased
$85,081,000, or 43%, as compared to the corresponding period in 1995. Of this
increase, $79,668,000 was a result of expansion of Pride's international
operations, including $72,466,000 due to the acquisition of Quitral-Co in April
1996. Revenues from domestic land operations increased $1,300,000, primarily as
a result of the inclusion of operating results of X-Pert (commencing in March
1995) for nine months in the 1996 period as compared to only seven months in the
1995 period. Revenues attributable to domestic offshore operations increased
$4,113,000, due primarily to higher utilization of Pride's offshore platform
rigs.

OPERATING COSTS. Operating costs for the nine months ended September 30,
1996 increased $59,420,000, or 41%, as compared to the corresponding period in
1995. Of this increase, $53,962,000 was a result of expansion of Pride's
international operations and $1,365,000 was attributable to its domestic land
operations, principally due to the inclusion of the operating results of X-Pert
for the full period. Operating costs related to domestic offshore operations
increased $4,093,000, due to higher utilization, as discussed above.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the nine
months ended September 30, 1996 increased $7,910,000, or 65%, as compared to the
corresponding period in 1995, primarily as a

result of the Quitral-Co acquisition and additional expansion of Pride's
international and domestic offshore assets.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the nine months ended September 30, 1996 increased $10,500,000, or
44%, as compared to the corresponding period in 1995, primarily due to the
inclusion of $8,713,000 of such costs for Quitral-Co. As a percentage of
revenues, total selling, general and administrative costs were 12.0% for the
first nine months of 1996 as compared to 11.9% for the first nine months of
1995. During the period, Pride incurred certain nonrecurring expenses in
connection with consolidation of acquired operations with its existing
operations in Argentina and Venezuela.

EARNINGS FROM OPERATIONS. Earnings from operations for the nine months
ended September 30, 1996 increased $7,251,000, or 37%, as compared to the
corresponding period in 1995. Of this increase, $6,849,000 was attributable to
the Quitral-Co acquisition and $899,000 was attributable to other international
expansion. These increases were partially offset by a decrease in income from
domestic offshore operations of $183,000 due to moderately lower utilization of
Pride's offshore platform rigs during the first quarter of 1996. Earnings from
domestic land-based operations decreased by $314,000, due primarily to start-up
costs incurred during the latter part of the second quarter of 1996.

OTHER INCOME (EXPENSE). Other income (expense) for the nine months ended
September 30, 1996 included net gains from asset sales, foreign exchange
transactions and other sources. Other income (expense) for the corresponding
1995 period consisted principally of a gain of $1,049,000 from the insurance
recovery relating to a domestic land rig that was destroyed in an explosion and
fire and other miscellaneous gains of $591,000 from asset sales, insurance
recoveries, foreign exchange transactions and other sources. Interest income
increased to $2,044,000 for the nine months ended September 30, 1996 from
$577,000 for the corresponding 1995 period due to an increase in cash available
for investment. Interest expense for the nine months ended September 30, 1996
increased by $5,167,000 over the corresponding 1995 period, as a result of
interest accrued on the convertible subordinated debentures and borrowings
related to the Quitral-Co acquisition and other additions to property and
equipment. During the nine months ended September 30, 1996 and 1995, Pride
capitalized $1,152,000 and $188,000, respectively, of interest expense in
connection with construction projects.

INCOME TAX PROVISION. Pride's consolidated effective income tax rate for
the nine months ended September 30, 1996 was approximately 25%, as compared to
approximately 34% for the corresponding period in 1995. The decrease is
primarily attributable to the recognition in the first nine months of 1996 of
current tax benefits from the utilization of approximately $5,279,000 of foreign
net operating loss carryforwards. Pride had previously provided a valuation
allowance for the tax benefits of such foreign net operating loss carryforwards.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

REVENUES. Revenues for the year ended December 31, 1995 increased
$81,263,000, or 45%, as compared to the year ended December 31, 1994. Of this
increase, $37,854,000 was attributable to Pride's international operations.
Pride experienced increased activity levels in Argentina, Venezuela and Russia,
due primarily to the utilization of additional assets deployed in those areas.
Pride's offshore operations, which were acquired in mid-1994, accounted for
$26,154,000 of the increase, as those operations were included for a full year
in 1995. Revenues from Pride's domestic land-based operations increased
$17,255,000, due primarily to the addition of X-Pert in March 1995.

OPERATING COSTS. Operating costs for the year ended December 31, 1995
increased $48,599,000, or 35%, as compared to the year ended December 31, 1994.
Of this increase, $21,957,000 was attributable to Pride's international
operations, due to expansion of those operations, as discussed above,
$17,285,000 was attributable to a full year of operations for Pride's offshore
operations, and $9,357,000 was attributable to Pride's domestic land-based
operations. Pride's domestic land-based operations experienced improved
operating margins as a result of extensive cost-cutting efforts, improved safety
performance and reduced insurance costs (attributable to both reduced rates and
improved claims experience).

DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the year
ended December 31, 1995 increased $7,107,000, or 74%, as compared to the year
ended December 31, 1994, primarily as a result of expansion of Pride's domestic
offshore and international asset base.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the year ended December 31, 1995 increased $7,313,000, or 29%, as
compared to the year ended December 31, 1994, primarily as a result of the
inclusion of such costs related to acquired businesses. As a percentage of
revenues, total selling, general and administrative expenses declined to
approximately 12% in 1995 from approximately 14% in 1994.

EARNINGS FROM OPERATIONS. Pride generated earnings from operations for the
year ended December 31, 1995 of $26,272,000. Of this amount, $12,630,000 was
generated from international operations, $6,785,000 was generated from domestic
offshore operations and $6,857,000 was generated from domestic land-based
operations. During 1994, international operations generated earnings from
operations of $3,540,000, domestic offshore operations generated earnings from
operations of $3,304,000, and domestic land-based operations generated earnings
from operations of $1,184,000.

OTHER INCOME (EXPENSE). Other income (expense) for the year ended December
31, 1995 included a gain of $1,049,000 from the insurance recovery relating to
the loss of a domestic land rig, and other miscellaneous gains of $638,000 from
asset sales, other insurance recoveries, foreign exchange transactions and other
sources. Interest income increased to $740,000 for the year ended December 31,
1995 from $618,000 in 1994 due to an increase in cash available for investment.
Interest expense for the year ended December 31, 1995 increased by $6,069,000
from 1994, as a result of borrowings related to the project financing of Pride's
two drilling/workover barge rigs, acquisitions and other additions to property
and equipment.

INCOME TAX PROVISION. Pride's consolidated effective income tax rate for
the year ended December 31, 1995 increased to approximately 32% from
approximately 24% for the year ended December 31, 1994, primarily as a result of
the recognition in 1994 of current tax benefits from the utilization of
approximately $3,000,000 of foreign net operating loss carryforwards. Pride
recognized no such tax benefits from the utilization of foreign net operating
loss carryforwards in 1995.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

REVENUES. Revenues for the year ended December 31, 1994 increased
$55,237,000, or 43%, as compared to the corresponding period in 1993. Of this
increase, $41,801,000 was attributable to Pride's international operations.
Pride's expansion into Argentina and Venezuela did not begin until July 1993,
while such operations generated revenues for all of 1994. The addition of
Pride's domestic offshore operations in mid-1994 accounted for $23,441,000 of
the increase. These increases were partially offset by a $10,005,000 decline in
revenues as a result of a reduction in hours worked due to weaker demand for
Pride's domestic land operations.

OPERATING COSTS. Operating costs for the year ended December 31, 1994
increased $39,348,000, or 39%, as compared to the corresponding period in 1993.
Of this increase, $31,636,000 was attributable to Pride's international
operations and $16,875,000 was a result of the addition of Pride's offshore
operations. These increases were partially offset by a $9,163,000 decline in
operating costs as a result of reduced activity for Pride's domestic land
operations.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the year
ended December 31, 1994 increased $3,143,000, or 49%, as compared to the
corresponding period in 1993, primarily as a result of provisions for recently
acquired domestic offshore and international assets.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the year ended December 31, 1994 increased $7,533,000, or 43%, as
compared to the corresponding period in 1993, primarily as a result of the
inclusion of such costs for acquired domestic offshore and international
operations, offset somewhat by a decrease in such costs for domestic land
operations. As a percentage of

revenues, total selling, general and administrative expenses remained constant
from 1993 to 1994 at approximately 14%.

EARNINGS FROM OPERATIONS. Pride generated earnings from operations for the
year ended December 31, 1994 of $8,028,000. Of this amount, $3,540,000 was
generated from international operations (despite a loss from operations in
Russia of $1,172,000), $3,304,000 was generated from domestic offshore
operations and $1,184,000 was generated from domestic land-based operations. For
the corresponding period in 1993, domestic land operations generated earnings
from operations of $1,307,000 and international operations generated earnings
from operations of $1,508,000, including earnings of $462,000 from Russian
operations.

OTHER INCOME (EXPENSE). Other income (expense) for the year ended December
31, 1994 consisted principally of net foreign currency translation losses of
$362,000 resulting from the devaluation of the Venezuelan bolivar, partially
offset by other miscellaneous income items. Interest expense of $207,000 for the
twelve months ended December 31, 1994 resulted from debt related to Pride's
newly acquired domestic offshore operations and other short-term working capital
borrowings. During the year ended December 31, 1994, Pride capitalized $458,000
of interest expense in connection with construction projects, primarily the
construction of the two workover/drilling barge rigs sent to Venezuela. During
the corresponding period of 1993, Pride had no such borrowings or interest
expense.

INCOME TAX PROVISION. Pride's consolidated effective income tax rate for
the year ended December 31, 1994 declined to approximately 24% from
approximately 37%, before the cumulative effect of a change in accounting for
income taxes, for the corresponding period in 1993, primarily as a result of the
recognition of current tax benefits from the utilization of approximately
$3,000,000 of foreign net operating loss carryforwards.

QUITRAL-CO ACQUISITION

On April 30, 1996, Pride completed the acquisition of Quitral-Co from Perez
Companc S.A., Astra C.A.P.S.A. and other shareholders for aggregate
consideration of $140,000,000, consisting of $110,000,000 in cash and a
$30,000,000 installment note. Prior to the acquisition, Quitral-Co was the
largest drilling and workover contractor in Argentina, where it operated 23
drilling and 57 workover rigs. Quitral-Co also had significant operations in
Venezuela, where it operated seven drilling and 23 workover rigs. Of the cash
portion of the purchase price, $70,000,000 was funded from Pride's working
capital and $40,000,000 from the net proceeds of two new financing arrangements
with three lenders.

Set forth below is a discussion of summary historical financial information
and other data for Quitral-Co, which financial information was prepared in
accordance with Argentine generally accepted accounting principles. The summary
historical financial information should be read in conjunction with the
historical financial statements of Quitral-Co included elsewhere in this Proxy
Statement/Prospectus.

NINE MONTHS ENDED
YEAR ENDED JUNE 30, MARCH 31,
-------------------- --------------------
1994 1995 1995 1996
--------- --------- --------- ---------
(IN THOUSANDS OF
CONSTANT ARGENTINE
PESOS AS OF
JUNE 30, 1995)
(IN THOUSANDS OF
ARGENTINE PESOS)(1)

Net sales............................ 143,178 175,313 127,072 148,650
Costs and expenses:
Cost of sales................... 126,516 158,767 115,582 132,125
Operating expenses.............. 7,875 11,624 9,167 8,569
Other income, net............... 800 620 (69) (4,437)
Financial income and holding
(gains) losses, net........... 271 3,709 4,031 (417)
--------- --------- --------- ---------
Income (loss) from continuing
operations before income tax....... 7,716 593 (1,639) 12,810
Income tax........................... (2,528) (4,044) (3,795) (3,927)
--------- --------- --------- ---------
Income (loss) from continuing
operations......................... 5,188 (3,451) (5,434) 8,883
========= ========= ========= =========

(FOOTNOTE ON FOLLOWING PAGE)

- ------------

(1) According to a resolution adopted by the Inspeccion General de Justicia
(governmental regulatory agency for nonpublic companies), restatement in
constant money has been computed only until August 31, 1995. See Note 3 to
the March 31, 1996 unaudited financial statements of Quitral-Co.

YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994

Net sales of 175.3 million pesos for the year ended June 30, 1995 increased
32.1 million pesos, or 22.4%, from 143.2 million pesos for the year ended June
30, 1994. This increase was primarily attributable to an increase of 18.9
million pesos, or 14%, in Argentina due principally to improved utilization of
Quitral-Co's rig fleet corresponding to generally improved oil and gas
exploration and production activities during the period. Net sales from
Venezuelan operations increased 13.2 million pesos, or 172%, during the year
ended June 30, 1995. This increase is attributable primarily to Quitral-Co's
owning the Venezuelan business for the entire 1995 fiscal period as compared to
only seven months during the 1994 fiscal period. Additionally, the Venezuelan
rig fleet was increased by eleven rigs during the 1995 fiscal year in response
to strong demand, particularly from private sector operators.

The loss from continuing operations of 3.5 million pesos for the year ended
June 30, 1995 consisted of income of 3.2 million pesos from Argentine operations
and a loss of 6.7 million pesos from Venezuelan operations. The income from
operations of 5.2 million pesos for the corresponding prior year consisted of
income of 6.4 million pesos from Argentine operations and a loss of 1.2 million
pesos from Venezuelan operations. During the year ended June 30, 1995,
Quitral-Co incurred substantial expenses in connection with a major
restructuring of its recently acquired Venezuelan business. It acquired the
remaining 30% of the ownership of the entity and assumed full operating control
of the business. Major costs incurred included those to repair and upgrade rigs
and facilities, to terminate management and other employees and to settle other
obligations and commitments that originated prior to Quitral-Co's assuming
control over the business. The income from the Argentine operations decreased
3.2 million pesos in the year ended June 30, 1995 despite increased revenues
primarily because (i) financial expense increased 3.4 million pesos due to
increased borrowings primarily used to finance an increase of Pride's investment
in Venezuela and deployment of rigs to that market, and (ii) salaries and
benefits costs increased. Also, no benefit could be recognized in Argentina for
tax losses originating in Venezuela in the period.

NINE MONTHS ENDED MARCH 31, 1996 COMPARED TO NINE MONTHS ENDED MARCH 31, 1995

Net sales of 148.7 million pesos for the nine months ended March 31, 1996
increased 21.6 million pesos, or 17%, from 127.1 million pesos for the nine
months ended March 31, 1995. This increase was primarily attributable to an
increase in net sales from Venezuelan operations of 16.2 million pesos, or 118%,
during the nine months ended March 31, 1996, primarily due to expansion of the
Venezuelan rig fleet from 12 rigs at March 31, 1995 to 28 rigs at March 31,
1996, corresponding to strong demand from Venezuelan customers, particularly
private sector operators. Also, net sales from Argentine operations increased
5.4 million pesos, or 5%, due to improved utilization of Quitral-Co's rig fleet
corresponding to generally increased oil and gas exploration and production
activities during the period.

Income from continuing operations of 8.9 million pesos for the nine months
ended March 31, 1996 consisted of 3.9 million pesos from Argentine operations
and 5.0 million pesos from Venezuelan operations. The operating loss of 5.4
million pesos for the corresponding prior period consisted of 2.2 million pesos
income from Argentine operations and 7.6 million pesos loss from Venezuelan
operations. During the latter part of 1994, Quitral-Co incurred substantial
expenses in connection with a major restructuring of its recently acquired
Venezuelan business as described above. The improved income from continuing
operations in Argentina was a direct result of increased rig utilization during
the period.

LIQUIDITY AND CAPITAL RESOURCES

Pride had net working capital of $59,731,000 and $31,302,000 at September
30, 1996 and December 31, 1995, respectively. Pride's current ratio was 1.6 at
September 30, 1996 and 1.7 at December 31, 1995. In July 1996, Pride completed
the public sale of 3,450,000 shares of common stock, which resulted in net
proceeds to Pride of approximately $45,641,000. Approximately $20,200,000 of
such net proceeds were

used to repay outstanding indebtedness, approximately $12,000,000 was used to
finance the construction of two platform rigs for Pride's offshore fleet and
approximately $7,000,000 is being used to fund various capital projects for
Quitral-Co, including rig upgrades and expansion of its rig transportation
fleet. The balance of the net proceeds is available for general corporate
purposes. Management believes that Pride's available funds, including cash
generated from operations and existing bank credit lines, will be sufficient to
fund its normal ongoing capital expenditure, working capital and debt service
requirements.

Pride is active in reviewing possible expansion and acquisition
opportunities relating to all of its business segments. While Pride has no
definitive agreements, other than as disclosed herein, to acquire additional
equipment, suitable opportunities may arise in the future. The timing, size or
success of any acquisition effort and the associated potential capital
commitments are unpredictable. From time to time, Pride has one or more bids
outstanding for contracts that could require significant capital expenditures
and mobilization costs. Pride expects to fund acquisitions and project
opportunities primarily through a combination of working capital, cash flow from
operations and full or limited recourse debt or equity financing.

In January 1996, Pride completed the public sale of $80,500,000 principal
amount of convertible subordinated debentures, which resulted in net proceeds to
Pride of approximately $77,585,000. Approximately $10,000,000 of such net
proceeds were used to repay outstanding indebtedness. The remainder of such net
proceeds were used to fund a portion of the purchase price for Quitral-Co and
various other capital projects. Pride purchased Quitral-Co for aggregate
consideration of $140,000,000, consisting of $110,000,000 in cash and a note
payable to the sellers for $30,000,000. The note bears interest at LIBOR plus
2%, payable quarterly, and is expected to be repaid in thirty monthly
installments. Of the cash portion of the purchase price, $70,000,000 was funded
from Pride's working capital and $40,000,000 from the net proceeds from two new
long-term financing arrangements with three lending institutions. Borrowings
under these arrangements, which are collateralized by substantially all of
Pride's domestic land rigs and ancillary equipment, bear interest initially at
the prime rate plus 1/2% and are repayable in monthly installments of principal
and interest over a five-to-six-year period. Pride may elect to convert the
borrowings to a fixed rate of interest at any time during the term.

In October 1996, Pride acquired all of the outstanding capital stock of
Ingeser for aggregate consideration of $5,500,000, consisting of $4,000,000 cash
and a contingent note payable to the sellers for $1,500,000. Based on the debt
assumed and the working capital position of Ingeser, the transaction was valued
at approximately $12,000,000. In November 1996, Pride acquired three land-based
drilling rigs and other support assets from a competitor in Argentina for
$8,200,000 cash.

As of September 30, 1996, Pride had domestic bank commitments providing for
guidance lines of credit of $18,000,000, against which letters of credit of
$8,652,000 were outstanding. Substantially all of these letters of credit have
been issued in favor of Pride's insurance carriers to guarantee payment of
Pride's share of insured claims. As of September 30, 1996, Pride had accrued
approximately $6,761,000 of claims liabilities, of which $4,349,000 was included
in current liabilities and $2,412,000 was included in other long-term
liabilities in the unaudited consolidated balance sheet. Pride has estimated the
amount and timing of payment of these liabilities based on actuarial studies
provided by the insurance carriers and past experience. Due to the nature of
Pride's business and the structure of its insurance program, the occurrence of a
significant event against which Pride is not fully insured, or a number of
lesser events against which Pride is insured, but subject to substantial
deductibles, could significantly affect the operating results of Pride for a
given period.

During 1994, Pride entered into long-term financing arrangements with two
Japanese trading companies in connection with the construction and operation of
two drilling/workover barge rigs. The loans are collateralized by the barge rigs
and related charter contracts. At September 30, 1996, the outstanding balance of
these loans was $39,812,000. The loans are being repaid from the proceeds of the
related charter contracts in equal monthly installments of principal and
interest through July 2004. In addition, a portion of the contract proceeds is
being held in trust to assure the timely payment of future debt service
obligations.

At September 30, 1996, $2,435,000 of such contract proceeds are being held in
trust as security for the lenders, and are not presently available for use by
Pride.

In connection with operating, upgrading and expanding its offshore platform
rig fleet, Pride has established credit facilities with a lending institution in
the aggregate amount of $30,000,000. As of September 30, 1996, $2,970,000 of
secured term loans were outstanding pursuant to this facility.

During the nine months ended September 30, 1996, Pride spent approximately
$15,100,000 on additions to its offshore assets, including: (i) construction of
two new state-of-the-art diesel electric platform rigs, (ii) major rig
refurbishments and (iii) auxiliary equipment such as top-drive drilling systems
and larger capacity pumps and generators, and improved living quarters. Pride
recently completed construction of an additional platform rig for an estimated
cost of $6,000,000. Capital expenditures for offshore assets for the nine months
ended September 30, 1995 were approximately $12,800,000.

In September 1995, Pride entered into an agreement with a financial
institution for the sale and leaseback of up to $10,000,000 of equipment to be
used in Pride's business. During 1995, Pride received proceeds of $5,500,000
pursuant to this facility relating to the construction of a new platform rig.
Pride has annual purchase and lease renewal options at projected future fair
market values under the agreement. The lease has been classified as an operating
lease for financial statement purposes. Rentals on the initial transaction are
$1,167,000 annually. The net book value of the equipment has been removed from
the balance sheet and the excess of $483,000 realized on the transaction has
been deferred and is being amortized as a reduction of the lease expense over
the maximum lease term of five years. In April 1996, the amount of the facility
was increased to $10,800,000, and $5,300,000 of proceeds were received by Pride
in connection with the sale and leaseback of a second newly-constructed offshore
platform rig. Rentals on the second transaction are $1,083,000 annually. In
October 1996, Pride established a new sale and leaseback facility with the same
financial institution for an additional $12 million. In November 1996 Pride
received proceeds of $5.1 million on the facility relating to the sale and
leaseback of a newly-constructed offshore platform rig. Annual rentals
associated with this transaction are $821,000.

International rig refurbishment and deployment costs for the nine months
ended September 30, 1996 and 1995 were approximately $16,400,000 and
$13,700,000, respectively. Capital expenditures related to the completion of the
two drilling/workover barge rigs in the first nine months of 1995 were
approximately $3,800,000. Other international capital expenditures, excluding
acquisition expenditures, for the nine months ended September 30, 1996 and 1995
were approximately $14,600,000 and $2,900,000, respectively. Capital
expenditures related to domestic land-based operations for the nine months ended
September 30, 1996 and 1995 were approximately $5,000,000 and $15,200,000,
respectively, including acquisition expenditures of approximately $1,800,000 and
$10,800,000, respectively.

CURRENCY FLUCTUATIONS

Deterioration in economic conditions in Venezuela resulted in significant
devaluation of the country's currency during the first half of 1994, which
resulted in currency translation losses for Pride. These losses resulted
principally from the translation of the net Venezuelan monetary assets
(primarily, accounts receivable in excess of trade payables) at devaluing
exchange rates from month to month.

In the latter part of June 1994, the Venezuelan government imposed exchange
control policies and established an official fixed exchange rate of 170
Venezuelan bolivars per U.S. dollar. This official rate was maintained for the
remainder of 1994 and during the first three quarters of 1995. Accordingly, no
currency translation losses resulted in those periods. In December 1995, the
Venezuelan government devalued its currency by revising the official exchange
rate to 290 Venezuelan bolivars per U.S. dollar. The December 1995 devaluation
did not result in the recognition of any material currency translation gain or
loss by Pride in its consolidated financial statements.

In April 1996, the Venezuelan government removed exchange control
restrictions and effectively allowed the bolivar to "float" relative to the
U.S. dollar. As a result, the exchange rate for Venezuelan bolivars has declined
to approximately 450-500 bolivars per U.S. dollar. The April 1996 devaluation
did not have any material impact on Pride's consolidated results of operations.
To a large extent, Pride avoided

currency translation losses from these recent devaluations of the bolivar by
limiting the bolivar component of its Venezuelan contracts. If the market rate
of exchange for Venezuelan bolivars continues to decline relative to the U.S.
dollar, however, Pride could be susceptible to future translation losses with
respect to its Venezuelan operations. Pride continues to monitor developments in
this regard and intends to take such measures as may be practical to limit its
exposure to currency translation losses in future periods.

ACCOUNTING MATTERS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS No.
121"). SFAS No. 121, which is effective for fiscal years beginning after
December 15, 1995, requires that long-lived assets and certain identifiable
intangibles to be held and used by the entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The adoption of SFAS No. 121 did not have any
material effect on Pride's financial position or results of operations.

In October 1995, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"). SFAS No. 123, which is effective for fiscal years beginning
after December 15, 1995, encourages but does not require companies to recognize
compensation expense for grants of stock, stock options and other equity
instruments to employees based on new fair value accounting rules. Pride has
decided not to adopt this new fair value-based method of accounting for its
stock-based incentive plans.

INFORMATION ABOUT FORASOL-FORAMER

Through its operating subsidiaries and joint ventures, Forasol-Foramer
provides onshore and offshore drilling, workover and related services to oil and
gas companies worldwide. Forasol-Foramer currently provides services in more
than 20 countries, with significant operations in West Africa and South America.
Forasol-Foramer currently operates a diverse fleet of seven tender-assisted
rigs, four barge rigs, two semisubmersible rigs, three jackup rigs and 29 land
rigs. Forasol-Foramer also provides well engineering, integrated drilling
services, turnkey wells and project management to its customers. Since
commencing operations in 1953, Forasol-Foramer has expanded its operations by
responding to the specific drilling requirements of its customers around the
world. As part of its operations, Forasol-Foramer focuses on niche markets and
on developing innovative drilling solutions through research and development and
rig design in conjunction with its major customers. " -- Business Strategy"
and " -- Drilling Rig Fleet."

Forasol-Foramer has historically generated a consistent level of operating
income despite the downturns experienced in the oil and gas industry.
Forasol-Foramer has accomplished this by (i) maintaining a diverse fleet of rigs
to minimize its exposure to fluctuations in demand for any particular rig type,
(ii) developing long-term relationships with major oil and gas and national oil
companies by providing a full range of drilling expertise and technology, and
(iii) operating in remote locations and in niche markets where it can use its
engineering and project management expertise to give it a competitive advantage.
Over the last 15 years, Forasol-Foramer has been able to maintain, and in
certain areas expand, its operations exclusively through internally generated
cash flow and bank borrowings.

BUSINESS STRATEGY

Forasol-Foramer's business strategy is to enhance its operating cash flows
by further developing and expanding its position in its existing niche and
geographic markets, and in classes of rigs that offer favorable economics.
Forasol-Foramer's current strategy is to (i) acquire additional semisubmersible
rigs for offshore drilling opportunities, (ii) utilize its deepwater drilling
expertise to expand into the dynamic vessel market in Brazil and West Africa,
(iii) seek consolidation opportunities in the tender, barge and selected land
rig markets, (iv) consolidate and expand its operations in South America and (v)
expand its integrated drilling services. Consistent with this strategy,
Forasol-Foramer recently (i) acquired the remaining 85% interest in the SOUTH
SEAS DRILLER, a second generation semisubmersible, from its joint venture
partner, (ii) acquired HAPSA, a land drilling and workover company that owns and
operates 11 rigs in

Argentina, and (iii) was awarded contracts to operate four additional offshore
rigs on Lake Maracaibo, which will significantly expand its Venezuelan
operations. Forasol-Foramer believes that the strategy of offshore-onshore
diversification and selected geographic focus enables it to take advantage of
market upturns, while minimizing its exposure to sharp downturns in any
particular market sector.

DRILLING RIG FLEET

Forasol-Foramer operates a fleet of 16 offshore rigs, consisting of seven
tender-assisted rigs, four barge rigs, two semisubmersible rigs and three jackup
rigs. Forasol-Foramer owns all or a majority interest in five of the
tender-assisted rigs, three of the barge rigs, the two semisubmersible rigs and
one of the jackup rigs and is a minority owner in one of the tender assisted
rigs. Forasol-Foramer has no ownership interest in the remaining four rigs,
consisting of one tender-assisted rig, two jackup rigs and one barge rig, but
operates such rigs under management contracts. Forasol-Foramer's diverse fleet
of offshore rigs allows it to operate in many oil and natural gas regions around
the world. The following table sets forth the types of offshore equipment and
the locations and status of such equipment operated by Forasol-Foramer as of
December 31, 1996:

OFFSHORE RIGS

RATED
WATER
RIG NAME RIG TYPE LOCATION DEPTH STATUS
- ------------------------------------- --------------------------- --------- ---------- ---------
(IN FEET)

TENDERS
Alligator Self-erecting barge(1) Angola 330 Working
Barracuda Self-erecting barge(1) Angola 330 Working
Self-erecting converted
Cormorant ship Angola 300 Working
Al Baraka I Self-erecting barge(1) Cabinda 650 Working
Ile de Sein Self-erecting barge(1) Malaysia 450 Available
GP-18 Tender barge Venezuela 150 Working
Ile de la Martinique Converted ship Shanjah 400 Stacked
SEMISUBMERSIBLES
South Seas Driller Aker H-3 Spain 1,000 Working
Nymphea F&G L-1033 Enhanced Cabinda 1,500 Working
Pacesetter(1)
JACKUPS
Ile du Levant Hitachi Drill Hope IC-150-T Venezuela 270 Working
GP-19 Baker Marine(1) Venezuela 150 Working
GP-20 Baker Marine(1) Venezuela 200 Working
LAKE BARGES
Rig 50 Maracaibo-type barge Venezuela 150 Working
Rig 51 Maracaibo-type barge Venezuela 150 Working
GP-10 Gusto Venezuela 120 Working
SWAMP BARGE
Bintang Kalimantan Posted Barge(1) Nigeria 7-21 Working

- ------------

(1) Equipped with top-drive drilling system.

TENDER-ASSISTED RIGS. Forasol-Foramer operates seven tender-assisted rigs,
of which four are equipped with a top-drive drilling system. Four of these rigs
are positioned offshore West Africa, with the remaining three positioned in
Malaysia, the United Arab Emirates and Venezuela. Tenders are usually non-self
propelled barges, which are moored alongside a platform and contain quarters,
mud pits, mud pumps and power generation systems. Thus, the only equipment on
the platform is the derrick equipment set consisting of the substructure,
drillfloor, derrick and drawworks. As a result, tender rigs are less hazardous
and allow smaller, less costly platforms to be used for development projects.
Self-erecting tenders carry

their own derrick equipment set and have a crane capable of erecting it on the
platform, thereby eliminating the cost associated with a separate derrick barge
and related equipment. Older tenders frequently require the assistance of a
derrick barge to erect the derrick equipment set. Four of Forasol-Foramer's
tenders are self-erecting converted barges. One of Forasol-Foramer's tenders,
the CORMORANT, is a self-erecting converted ship.

The tender market in West Africa is highly consolidated with only three
competitors and seven tenders, all of which are currently contracted;
Forasol-Foramer operates four of the seven tenders in this region. In 1992,
Forasol-Foramer made capital expenditures of approximately $14 million to
replace the derrick set and crane on the BARRACUDA and upgrade the derrick set
on the ALLIGATOR. Since that time, the ALLIGATOR and BARRACUDA have experienced
100% utilization and are contracted through the end of 1997, with two six-months
options, and mid-1997, respectively. In 1994, Forasol-Foramer completed the
construction of the self-erecting tender AL BARAKA I for $56 million, of which
Forasol-Foramer owns 12.5% through Basafojagu, a joint venture company. This
tender has been 100% utilized since its delivery and is contracted through
January 1997. In addition to its ownership interest, Forasol-Foramer also
manages the rig. Forasol-Foramer recently completed construction of a new
derrick set for the CORMORANT at a cost of approximately $5.7 million that
allows the rig to compete in the tender-assisted workover barge market offshore
West Africa. The CORMORANT is currently under contract for Elf through October
1997, with a six-month option. Southeast Asia is a more competitive market with
seven competitors operating 17 tenders. Forasol-Foramer has one tender in this
region. Forasol-Foramer operates one tender in Venezuela on Lake Maracaibo under
a management contract with Maraven through December 1997.

SEMISUBMERSIBLES. Forasol-Foramer currently operates one third-generation
and one second-generation semisubmersible rig. Semisubmersible rigs are floating
platforms which, by means of a water ballasting system, can be submerged to a
predetermined depth so that a substantial portion of the lower hulls, or
pontoons, are below the water surface during drilling operations. The rig is
"semisubmerged," remaining afloat, off bottom, in a position where the lower
hull is about 60 to 80 feet below the water line and the upper deck protrudes
well above the surface. This type of rig maintains its position over the well
through the use of an anchoring system or computer controlled thruster system.

Forasol-Foramer wholly owns one third-generation semisubmersible, the
NYMPHEA,which is currently drilling offshore West Africa for Chevron until April
1997. Upon completion of the Chevron contract, the NYMPHEA will be upgraded at a
cost of approximately $6 million, after which the rig will be mobilized to
Brazil at an increased day rate for a three-year contract with a one-year
renewal option with Petrobras to drill high-pressure, high-temperature wells.
Since 1994, Forasol-Foramer has expended approximately $5 million to upgrade the
NYMPHEA,which is equipped with a 15,000 p.s.i. blowout preventer stack.

In October 1995, Forasol-Foramer acquired its joint venture partner's 86%
interest in Forasol-Foramer's second generation semisubmersible, the SOUTH SEAS
DRILLER, for $9.4 million pursuant to a right of first refusal. Since that time,
Forasol-Foramer has expended approximately $11 million to upgrade the rig. The
SOUTH SEAS DRILLER is currently contracted with Repsol through April 1997, after
which the rig will be mobilized to South Africa where it will begin working for
Soeker pursuant to a four-well contract, excluding options.

JACKUPS. Forasol-Foramer operates three jackup rigs, all of which are
drilling in Lake Maracaibo through 1998 and 1999. Jackup rigs are mobile
self-elevating drilling platforms equipped with legs that can be lowered to the
ocean floor until a foundation is established to support the drilling platform.
The rig legs may have a lower hull or mat attached to the bottom of them to
provide a more stable foundation in soft bottom areas. Independent leg rigs are
better suited for harsher or uneven seabed conditions. Jackup rigs are generally
subject to a maximum water depth of approximately 350 feet, while some jackup
rigs may drill in water depths as shallow as ten feet. The water depth limit of
a particular rig is determined by the length of the rig's legs and the operating
environment. Moving a rig from one drill site to another involves lowering the
hull down into the water until it is afloat and then jacking up its legs with
the hull floating on the surface of the water. The hull is then towed to the new
drilling site. A cantilever jackup has a feature which allows the drilling
platform to be extended out from the hull, allowing it to perform drilling or
workover operations

over a pre-existing platform or structure. Certain cantilever jackup rigs have
"skid-off" capability, which allows the derrick equipment to be skidded onto
an adjacent platform, thereby increasing the operational capacity of the rig.
Slot type jackup rigs are configured for drilling operations to take place
through a slot in the hull. Slot type rigs are usually used for exploratory
drilling, in that their configuration makes them difficult to position over
existing platforms or structures.

All of Forasol-Foramer's jackup rigs are independent leg rigs equipped with
cantilevers and one has skid-off capability. In the fourth quarter of 1994,
Forasol-Foramer incurred approximately $2 million of capital expenditures to
modify one of its jackup rigs, the ILE DU LEVANT, to work in Lake Maracaibo. The
modifications included shortening the legs to 150 feet, the addition of a zero
discharge system to the rig and improved top-drive capabilities. Operations in
the Lake Maracaibo area are characterized by long-term contracts and full
utilization. The ILE DU LEVANT is contracted through February 1998 plus a
one-year option. The other two jackup rigs, the GP-19and GP-20, are owned by
Maraven, which awarded a contract to Forasol-Foramer to upgrade and operate
these rigs until April 1999. The GP-19and GP-20 also earn additional income on a
per well basis for providing certain additional services.

BARGE RIGS. Forasol-Foramer operates three barge rigs in Lake Maracaibo.
Rigs operating in this region are generally barges that have been modified to
work in a floating mode with a cantilever feature and a mooring system that
enables the rig to operate in waters up to 150 feet deep. In 1992,
Forasol-Foramer acquired two barges and made these modifications for a total
capital expenditure of approximately $17.3 million through a joint venture with
Falcon Drilling Company, Inc. ("Falcon") in which Forasol-Foramer owns a 62.5%
interest. These rigs are contracted through May 1997 at which time the customer
has a buyout option for nominal consideration. Forasol-Foramer operates the
other barge rig under a management contract with Maraven through February 1997.
In addition, Forasol-Foramer operates one swamp barge rig in Nigeria.

The following table sets forth certain information regarding the rigs
included in Forasol-Foramer's land-based drilling fleet as of December 31, 1996:

LAND-BASED RIGS

RATED
DRILLING
RIG NAME/DESCRIPTION RIG TYPE LOCATION DEPTH STATUS
- ------------------------------------- -------------- --------- --------- -----------
(IN FEET)

Foramatic 1(1)(2) Light/Workover France 8,000 Stacked
Foramatic 2(1)(2) Light/Workover France 8,000 Stacked
H25 Light/Workover Libya 8,000 Working
H35 Light/Workover France 8,000 Training(3)
H725 Light/Workover France 8,000 Stacked
Hapsa 14 Skytop 650 Light/Workover Argentina 8,000 Working
Hapsa 51 (Workover) Light/Workover Argentina 8,000 Working
Hapsa 52 (Workover) Light/Workover Argentina 8,000 Working
Hapsa 53 (Workover) Light/Workover Argentina 8,000 Working
Hapsa 54 (Workover) Light/Workover Argentina 8,000 Working
Hapsa 55 (Workover) Light/Workover Argentina 8,000 Working
Hapsa 56 (Workover) Light/Workover Argentina 8,000 Working
Hapsa 57 (Workover) Light/Workover Argentina 8,000 Working
Hapsa 58 (Workover) Light/Workover Argentina 8,000 Working
Foraslim (Slimhole rig)(1) Medium Romania 10,000 Working
ESH 1200 (Heli-rig) Medium Ecuador 12,000 Working
ED 900/2 Medium Italy 12,000 Stacked
Rig 31 Medium Oman 12,000 Working
Rig 32 Medium Oman 12,000 Working
Hapsa 08 (Nat. 80B) Medium Argentina 12,000 Working
National 110/2 Heavy Yemen 16,000 Available
National 110/9 Heavy Pakistan 16,000 Working
National 110/10 Heavy Syria 16,000 Working
National 110/13(1) Heavy Libya 16,000 Working
National 110/15 Heavy France 16,000 Stacked
Hapsa 09 (Nat. 110) Heavy Argentina 16,000 Working
National 1320/2(1) Ultra-Heavy Algeria 25,000 Working
National 1320/3 Ultra-Heavy Pakistan 25,000 Working
National 1625/3(1) Ultra-Heavy Argentina 25,000 Mobilizing

- ------------

(1) Equipped with top-drive drilling system.

(2) Not actively marketed; currently for sale. Major parts of the Foramatic 2
will be installed on Lagoven barge for the BHI contract.

(3) Used as a training rig in association with the French Institute for
Petroleum Research.

LIGHT/WORKOVER. Forasol-Foramer operates 14 light land-based drilling and
workover rigs and has two deparaffination units. Ten of Forasol-Foramer's light
rigs and its two deparaffination units are currently under contract. These rigs
are equiped to drill to depths between 4,000 to 8,000 feet or to carry out
workover operations.

MEDIUM. Forasol-Foramer operates six medium land-based rigs. These rigs
are equiped to drill to depths between 8,000 to 12,000 feet. Five of
Forasol-Foramer's medium rigs are currently under contract. One of
Forasol-Foramer's medium rigs, the ESH 1200, is a helicopter transportable rig
which is designed to be transported to and assembled in remote locations that
cannot be reached by traditional means of transportation. The FORASLIM is a
slimhole rig designed and constructed by Forasol-Foramer that can drill to

depths of over 10,000 feet and offers a complete drilling, waste treatment and
mud service package designed for enhanced portability, reduced operating costs
and minimized surface area at the drilling site. The slimhole rig has achieved
approximately 35% cost savings and requires approximately 15% of the surface
area at the drilling site as compared to conventional drilling rigs. In October
1995, Forasol-Foramer was awarded a contract by Shell Romania to drill and
complete three slimhole wells in the Transylvania concession in Romania on a
fully integrated services basis. The FORASLIM rig offers significant advantages
over a standard conventional rig, even in non-sensitive regions that do not have
heli-transport or other site-access restrictions. Management believes that Shell
Romania's primary reasons for employing the FORASLIM included simplified
transportation and mobilization, reduced wellsite and environmental impact,
coring capabilities and substantially reduced operator well costs.

HEAVY. Forasol-Foramer operates six heavy land-based rigs. These rigs are
equipped to drill to depths between 12,000 to 16,000 feet, one of which is
equipped with a top drive unit to drill horizontal wells. Four of
Forasol-Foramer's heavy rigs are currently under contract.

ULTRA-HEAVY. Forasol-Foramer operates three ultra-heavy land-based
drilling rigs, two of which are equipped with top drive systems. These rigs are
equipped to drill to depths between 16,000 to 25,000 feet. Two of
Forasol-Foramer's ultra-heavy rigs are currently under contract, while the third
is currently mobilizing to Argentina to begin a one-year contract in April 1997.

JOINT VENTURES; ASSOCIATIONS; MANAGEMENT CONTRACTS

Since its inception, Forasol-Foramer has entered new markets through joint
ventures and is presently conducting drilling operations through six joint
venture companies. Due to Forasol-Foramer's technical expertise and marketing
capabilities, Forasol-Foramer's joint ventures are generally structured such
that Forasol-Foramer earns management fees in addition to its pro rata share of
operational cash flow. Additionally, Forasol-Foramer is engaged in management
contracts for four third-party owned rigs and one third-party owned platform.
Forasol-Foramer's joint ventures and management contracts are discussed below.

AL JAZIRAH FORASOL DRILLING CORPORATION ("AJFDC"). AJFDC is a corporate
joint venture owned by Al Jazirah Holdings Ltd. (51%) and Forasol-Foramer (49%).
This corporation was organized to own and operate two land rigs. Forasol-Foramer
receives a management fee for managing these rigs and is entitled to a portion
of the cash flow generated from operations. Forasol-Foramer accounts for its
ownership of AJFDC as an equity affiliate.

BASAFOJAGU (H.S.) LTD. ("BASAFOJAGU"). Basafojagu is a joint venture
company owned by Forasol-Foramer (12.5%) and by a group of Saudi Arabian and
Malaysian investors (87.5%). The joint venture company was organized to build
the self-erecting tender, AL BARAKA I, which initiated operations in November
1994. Basafojagu entered into a long-term management agreement with
Forasol-Foramer to manage and operate the rig from the delivery date. The owners
share the economics on a pro rata basis and Forasol-Foramer also receives a
management fee for managing the rig. In addition, Forasol-Foramer has a right of
first refusal to purchase the rig in the event of a future sale. This entity is
accounted for at cost.

FORWEST DE VENEZUELA ("FDV"). FDV is owned 62.5% by Forasol-Foramer. The
joint venture was instituted to build and operate two Lake Maracaibo barges on a
five-year contract beginning May 1992 for Maraven. In May 1997, the contract
will terminate and Maraven has an option to purchase the barges at that time for
nominal consideration. FDV is consolidated in the financial statements of
Forasol-Foramer.

HORWELL. Forasol-Foramer owns a 50.8% interest in Horwell ("Horwell") in
association with IFP and Geoservices S.A., a geological and drilling
surveillance corporation. Horwell has more than 10 years of experience in the
field of horizontal drilling technology, reservoir and drilling engineering and
project management. Horwell maintains an in-house engineering staff and provides
other services through its associated companies. Horwell is consolidated in the
financial statements of Forasol-Foramer.

NDSC. NDSC is a joint venture company owned by Forasol-Foramer (30%) and a
group of Omani and Indian investors (70%). The joint venture company was set up
to operate two highly mobile desert land

rigs in Oman. All management decisions require unanimous voting by NDSC's
shareholders, and the owners share the economics based upon share ownership.
Forasol-Foramer accounts for its ownership of NDSC as an equity affiliate.

FORADEL SDN BHD ("FORADEL"). Foradel is a joint venture company that was
organized for the sole purpose of allowing Forasol-Foramer to operate in
Malaysia. Foradel is registered for drilling and related activities in Malaysia.
Forasol-Foramer accounts for its ownership of Foradel as an equity affiliate.

MARAVEN. Forasol-Foramer has been awarded a management contract from
Maraven, a wholly owned subsidiary of PDVSA, to upgrade and operate two jackup
rigs in Lake Maracaibo. In addition, Forasol-Foramer has entered into management
contracts with Maraven to operate a tender-assisted rig and a lake barge rig in
Lake Maracaibo.

ALWYN. Forasol-Foramer has been engaged by Total Oil Marine to manage the
operations of the Alwyn platform in the U.K. sector of the North Sea. In
accordance with the terms of the contract, Forasol-Foramer provides equipment
maintenance, performs drilling and workover services and supplies personnel.

GEOGRAPHIC REVENUE BREAKDOWN

Operations of Forasol-Foramer in Africa, the Middle East, the Far East,
France, Europe (excluding France), and North and South America accounted for
approximately 52%, 8%, 4%, 2%, 10% and 24%, respectively, of Forasol-Foramer's
total revenues in 1995; 59%, 10%, 18%, 0%, 3% and 10%, respectively, in 1994;
and 52%, 17%, 13%, 6%, 4% and 8%, respectively, in 1993. See Note 15 to
Forasol-Foramer's Consolidated Financial Statements.

ENGINEERING

Forasol-Foramer's management believes that its engineering and design
expertise have been important factors in the growth and success of the business
and will continue to remain so in the future. As a result, Forasol-Foramer
employs a technical staff dedicated to industry research and development and to
designing specialized drilling equipment to fill specific customer requirements.
Forasol-Foramer's engineering staff designed and managed the fabrication of six
of the rigs in Forasol-Foramer's current offshore rig fleet and a majority of
Forasol-Foramer's land rigs. While few new rigs have been built in the offshore
industry over the last five years, Forasol-Foramer has supervised the
construction of one new tender and designed and managed the construction of two
Lake Maracaibo barges, in addition to making modifications to eight of its
offshore rigs with its in-house engineering staff. Onshore, Forasol-Foramer
completed in 1994 the design and fabrication of the slimhole rig, which offers a
complete drilling, waste treatment and mud service package designed for enhanced
portability, reduced operating costs and minimized surface area at the drilling
site. The slimhole rig has achieved 35% savings in overall well costs and
requires only 15% of the surface area at the drilling site compared to standard
drilling rigs. In addition, the engineering staff is a strong complement to
Forasol-Foramer's turnkey and project management effort. Forasol-Foramer also
operates a subsidiary that is dedicated to reservoir drainage analysis, well
engineering and project management for smaller oil fields, which enhances
Forasol-Foramer's contract drilling services. In addition to standard contract
drilling, Forasol-Foramer has significant project management experience having
assumed primary responsibility for the drilling of 130 horizontal wells, 223
turnkey wells, 179 footage wells and 239 integrated services wells.

Forasol-Foramer's policy concerning research and development consists of
three primary objectives, including (i) rig automation to increase safety and
efficiency and reduce operating costs, (ii) optimization of penetration rates by
monitoring drilling parameters, and (iii) development of slimhole technology.
For the years ended December 31, 1995, 1994 and 1993, Forasol-Foramer incurred
approximately $0.8 million, $2.9 million and $0.2 million, respectively, of
research and development expenditures. Forasol-Foramer received grants from
French and European public institutions relating to such research and
development activities to finance these expenditures of $0.7 million, $1.2
million and $0.2 million in 1995, 1994 and 1993, respectively. A minor portion
of these grants are repayable if the research and development efforts result in
a successfully marketed product or service.

DRILLING CONTRACTS, MARKETING AND CUSTOMERS

Forasol-Foramer's drilling contracts are individually negotiated and vary
in form and substance. In Forasol-Foramer's experience, offshore services in
recent years have been provided primarily on long-term contracts while onshore
contracts generally have a term for less than 12 months. Contracts for the
employment of rigs are most often awarded based on competitive bidding; however,
some contracts are the result of direct negotiations between the drilling
contractor and the customer. Forasol-Foramer's drilling contracts generally
provide for payment in U.S. dollars.

Forasol-Foramer's contracts typically provide for compensation on a
"dayrate" basis, under which Forasol-Foramer receives a fixed amount per day
when the rig is operating under contract. The dayrate is generally reduced or
eliminated when the rig is moving to or from the drill site (other than in field
moves) or when operations are suspended because of weather or mechanical
problems. Depending on market conditions then prevailing, the contracts may
permit Forasol-Foramer to recover some or all of the mobilization and
demobilization costs associated with moving a rig between locations. Under
dayrate contracts, Forasol-Foramer pays operating expenses of the rig, including
wages, rig insurance and the cost of incidental supplies. Forasol-Foramer may
also be paid on a "turnkey" basis, under which the drilling contractor agrees
to drill a well to a specified depth for a fixed price, which is comprised of
operating expenses, re-drilling insurance and a sufficient risk premium. Turnkey
contracts offer the possibility of greater profits than conventional dayrate
contracts, but also entail more financial risk. The risks associated with a
turnkey contract depend upon the performance of the drilling unit, drilling
conditions and other factors.

The duration of drilling contracts is generally determined by two factors:
market demand and the management strategies of the offshore drilling contractors
and their customers. In periods of rising demand for offshore rigs, contractors
typically prefer well-to-well contracts that give contractors the flexibility to
profit from increasing dayrates. In contrast, customers with reasonably definite
drilling programs typically prefer long-term contracts to maintain drilling
prices at the lowest level possible. Conversely, in periods of decreasing demand
for rigs, contractors generally prefer long-term contracts to preserve dayrates
at existing levels and the customers prefer well-to-well contracts to allow them
to obtain the benefit of lower dayrates. In general, Forasol-Foramer seeks to
have a reasonable balance of short-term and long-term contracts to minimize the
downside impact of a decline in the market, while still participating in the
benefit of increasing dayrates in a rising market.

Since the commencement of its operations in 1953, Forasol-Foramer has
performed drilling operations for many of the leading international oil and gas
companies, as well as for many government controlled and independent oil
companies. As is typical in the industry, Forasol-Foramer operates for a
relatively small number of these customers at any given time. During the year
ended December 31, 1995, Elf, Total, YPF, Maraven, Shell, and Chevron accounted
for approximately 30%, 9%, 9%, 8%, 7% and 4%, respectively, of Forasol-Foramer's
total revenues. During the year ended December 31, 1994, Elf, Total, Maraven,
Shell and Chevron accounted for approximately 36%, 9%, 9%, 7% and 7%,
respectively, of Forasol-Foramer's total revenues. During the year ended
December 31, 1993, Elf, Shell, Maraven and Total accounted for approximately
40%, 12%, 7% and 4%, respectively, of Forasol-Foramer's total revenues. In
addition, major oil companies accounted for over 65% of Forasol-Foramer's
revenues in 1995, with state-owned oil companies and independent oil companies
accounting for the remainder.

OPERATIONAL HAZARDS AND INSURANCE

Forasol-Foramer's operations are subject to the usual hazards inherent in
the drilling of oil and natural gas wells, such as blow-outs, reservoir damage,
loss of well control, cratering or fires, the occurrence of any one of which
could result in the suspension of drilling operations, damage to or destruction
of the equipment involved and injury or death to rig personnel. Damage to the
environment could also result from Forasol-Foramer's operations, particularly
through oil spillage or extensive uncontrolled fires. In addition, offshore
drilling operations are subject to perils peculiar to marine operations,
including capsizing, grounding, collision and loss or damage from severe weather
or storms.

Forasol-Foramer maintains broad insurance coverage, including insurance
against general and marine public liability. Forasol-Foramer's offshore drilling
equipment is covered by physical damage insurance policies against marine and
other perils, including losses due to capsizing, grounding, collision, fire,
lightning, hurricanes, wind, storms, actions of waves, cratering, blowouts and
explosions, and by policies against war and political risks to, and
expropriation of, its rigs located in certain foreign countries. Forasol-Foramer
also carries employer's liability and other insurance customary in the drilling
business.

Forasol-Foramer believes it is adequately insured in accordance with
industry standards against normal risks in its operations; however, such
insurance coverage may not in all situations provide sufficient funds to protect
Forasol-Foramer from all liabilities that could result from its drilling
operations. Although Forasol-Foramer's current practice is to insure its
drilling units for at least their net book value, Forasol-Foramer's insurance
may not in some instances cover the costs that would be required to replace its
units, including certain of its jackups or semisubmersibles. Moreover,
Forasol-Foramer's insurance coverage generally does not protect against loss of
revenues. Accordingly, the occurrence of a casualty or loss against which
Forasol-Foramer is not fully insured could have a material adverse effect on
Forasol-Foramer's financial position and results of operations.

Forasol-Foramer is subject to liability under various environmental laws
and regulations. See "-- Regulation." Forasol-Foramer has generally been able
to obtain some degree of contractual indemnification pursuant to which
Forasol-Foramer's customers agree to protect and indemnify Forasol-Foramer from
liability for pollution and environmental damages. However, there is no
assurance that Forasol-Foramer can obtain such indemnities in all of its
contracts or that, in the event of extensive pollution and environmental damage,
the responsible customer will have the financial capability to fulfill its
contractual obligation to Forasol-Foramer or, if challenged in court, the
indemnity will be enforceable.

INTERNATIONAL OPERATIONS

Forasol-Foramer derives substantially all of its revenues from its non-U.S.
operations and sold substantially all of the assets of its U.S. operating
subsidiary, Forwest Inc., in January 1995.

Forasol-Foramer's operations are subject to certain political and other
uncertainties not generally encountered in domestic operations in the United
States, including risks of war, expropriation of equipment, renegotiation or
modification of existing contracts, taxation policies and the general hazards
associated with foreign sovereignty over certain areas in which operations are
conducted. Forasol-Foramer is protected to a substantial extent against capital
loss (but not loss of revenues) from many of such risks through insurance,
indemnity provisions in its drilling contracts, or both. See "-- Operational
Hazards and Insurance" and "-- Regulation."

Forasol-Foramer's ability to compete in the international drilling market
may be adversely affected by foreign governmental practices which favor or
effectively require the awarding of drilling contracts to local contractors.
Forasol-Foramer expects to continue to structure certain of its operations
through joint ventures or other appropriate means in order to remain competitive
in the world market.

Other risks inherent in Forasol-Foramer's operations are the possibility of
currency exchange losses where revenues are received in currencies other than
United States dollars and the possibility of losses resulting from an inability
to collect dollar revenues because of a shortage of convertible currency
available to the foreign country. Generally, Forasol-Foramer limits these risks
by obtaining compensation in United States dollars or freely convertible foreign
currency and, to the extent possible, by limiting acceptance of blocked currency
to amounts which match its expense requirements in local currency. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Forasol-Foramer -- Foreign Currency."

REGULATION

Many aspects of Forasol-Foramer's operations are affected by international
political developments and are subject to numerous governmental laws and
regulations that may relate directly or indirectly to the drilling industry,
including laws and regulations relating to the protection of the environment and

certification, licensing and other requirements imposed by treaties, laws,
regulations and conventions in the jurisdictions in which Forasol-Foramer
operates. The energy service industry is dependent upon demand for services from
the oil and natural gas exploration industry and, accordingly, is affected by
changing taxes, price controls and other laws relating to the energy business
generally. Forasol-Foramer does not believe that governmental regulations have
had a material adverse effect on its capital expenditures, results of operations
or competitive position, and does not anticipate that any material expenditures
will be required to enable it to continue to comply with existing laws and
regulations or the adoption of new laws and regulations. However, the
modification of existing laws or regulations or the adoption of new laws or
regulations curtailing or increasing the effective cost of exploratory or
developmental drilling for oil and natural gas could have a material adverse
effect on Forasol-Foramer's operations. Forasol-Foramer cannot currently
determine the extent to which future earnings may be affected by new legislation
or regulations or compliance with new or existing regulations that may become
applicable as a result of rig relocation.

EMPLOYEES

As of December 31, 1996, Forasol-Foramer had approximately 720 permanent
and 1,780 temporary employees. The number of temporary employees varies
depending on rig utilization. Forasol-Foramer hires local employees when
required to do so by local laws and customs and to maintain its competitive
position. Management believes that its relations with its employees generally
are satisfactory.

Forasol-Foramer does not consider the possibility of a shortage of
qualified personnel currently to be a factor in its business. If demand for
oilfield services were to increase rapidly, retention of qualified people might
become more difficult without significant increases in compensation.
Forasol-Foramer maintains and negotiates collective bargaining agreements in
certain countries; however, Forasol-Foramer does not believe such collective
bargaining agreements have a material adverse impact on Forasol-Foramer.

PROPERTIES

Other than its rigs, Forasol-Foramer owns no properties that are material
to the operation of its business. Forasol-Foramer's principal offices are in
Velizy-Villacoublay, France and occupy approximately 1,681 square meters under a
lease/purchase agreement. Forasol-Foramer also leases premises comprised of
1,621 square meters under a lease agreement entered into in September 1989. In
addition, Forasol-Foramer operates from facilities located in 20 countries.
Forasol-Foramer believes that all of its leased properties are suitable and
adequate for its present activities.

COMPETITION

Forasol-Foramer's principal international onshore competitors include Sedco
Forex, Deutsche Tiefbohr A.G., Saipem S.P.A., Nabors Industries, Inc., Parker
Drilling Company and Helmerich & Payne, Inc., while Forasol-Foramer's principal
offshore competitors include Sedco Forex, Reading & Bates Corporation, Global
Marine, Noble Drilling Corporation, ENSCO International Inc. and Smedvig asa.

Drilling contracts are generally awarded on a competitive bid basis and,
while an operator may consider quality of service and equipment, intense price
competition is currently the primary factor in determining which contractor,
among those with suitable rigs, is awarded a job. Forasol-Foramer believes that
competition for land drilling contracts will continue to be intense for the
foreseeable future because of the worldwide oversupply of land drilling rigs and
the ability of operators to move rigs from areas of low utilization and dayrates
to areas of greater activity and relatively higher dayrates.

LEGAL PROCEEDINGS

Forasol-Foramer and its subsidiaries are involved in a number of lawsuits
and disputes, all of which have arisen in the ordinary course of
Forasol-Foramer's business. Forasol-Foramer does not believe that any ultimate
liability resulting from any pending litigation will have a material adverse
effect on the operations or financial position of Forasol-Foramer.

SELECTED HISTORICAL FINANCIAL DATA
OF FORASOL-FORAMER

The selected consolidated income statement data below for the years ended
December 31, 1995, 1994 and 1993 under U.S. GAAP and the consolidated balance
sheet data at December 31, 1995 and 1994 are derived from Forasol-Foramer's
consolidated financial statements included elsewhere in this Proxy
Statement/Prospectus. The data set forth below should be read in conjunction
with the Consolidated Financial Statements of Forasol-Foramer and Notes thereto
included herein. The selected statement of income data for the six-month periods
ended June 30, 1995 and 1996 have been derived from the unaudited consolidated
financial statements of Forasol-Foramer included elsewhere herein, which include
all adjustments, consisting of normal, recurring adjustments, that
Forasol-Foramer considers necessary for a fair presentation of its financial
position and results of operations for those periods. Operating results for the
six-month period are not necessarily indicative of results that may be expected
for the entire year. The selected consolidated financial information as of
December 31, 1992 and 1991 and for each of the two years ended December 31, 1992
under French GAAP have been derived from audited consolidated financial
statements of Forasol-Foramer not included herein. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations of
Forasol-Foramer."

FRENCH GAAP(1)
-------------------- U.S. GAAP
-----------------------------------------------------
YEAR ENDED DECEMBER SIX MONTHS ENDED
31, YEAR ENDED DECEMBER 31, JUNE 30,
-------------------- ------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

INCOME STATEMENT DATA:
Revenues(2).......................... $ 204,149 $ 202,415 $ 151,926 $ 148,304 $ 171,500 $ 83,333 $ 89,680
Operating costs (3).................. -- -- 105,995 104,398 127,491 58,640 72,390
Depreciation and amortization........ -- -- 19,966 20,292 20,264 10,063 10,851
Selling, general and
administrative..................... -- -- 15,330 16,216 17,660 8,556 8,484
--------- --------- --------- --------- ---------
Operating income (loss)(3)........... 5,459 9,398 10,635 7,398 6,085 6,074 (2,045)
========= ========= ========= ========= =========
Other income (expense)............... -- -- 2,909 3,959 382 484 3,473
Income tax expense(4)................ -- -- 2,073 2,580 409 829 1,411
Net income (loss).................... 5,827 (2,971) 2,947 936 (4,013) 1,129 (4,261)
========= ========= ========= ========= =========
Net income (loss) per share(4)....... $ 0.58 $ (0.30) $ 0.31 $ 0.10 $ (0.40) $ 0.11 $ (0.36)
========= ========= ========= ========= =========
Pro forma net income (loss) per
share(5)........................... -- -- -- -- (0.02) -- --
OTHER OPERATING DATA:
EBITDA............................... -- -- 30,601 27,690 26,349 16,137 8,806
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital...................... $ -- $ -- $ (7,899) $ (21,230) $ (26,219) $ 19,579
Property and equipment, net.......... -- -- 209,284 212,726 230,372 229,288
Total assets......................... 246,254 224,233 324,272 317,623 333,055 356,185
Long-term debt, net of current
portion............................ 44,968 34,898 40,258 27,928
Long-term leasees, net of current
portion............................ 39,655 30,899 44,538 33,089
Shareholders' equity................. -- -- 120,531 126,880 123,005 188,642

- ------------
(1) French GAAP income statement data was translated from French francs to U.S.
dollars using an average exchange rate for the particular period. The
balance sheet data denominated in French francs was translated at the
period-end exchange rate. The French GAAP balance sheet and income statement
amounts are presented to reflect the Forasol-Foramer structure. Certain
captions under U.S. GAAP do not correspond to those in French GAAP and
therefore, the related financial data is omitted under the French GAAP
presentation.
(2) Under U.S. GAAP, Forasol-Foramer's net operating revenues are the sum of
gross operating revenues net of value-added tax. Under French GAAP,
Forasol-Foramer's revenues include gross operating revenues net of
value-added tax, reversals of various provisions and government grants
received for purposes of research and development.
(3) As permitted under French GAAP, Forasol-Foramer has elected to treat all of
its leases as operating leases; therefore, lease payments are recorded
directly in cost of operations. Under U.S. GAAP, certain of the leases
qualify as capital leases, and the interest portion of the capital lease
payments has been included in interest and other financial expense.
(4) Forasol-Foramer is subject to taxation on its activities in each country
according to the tax laws applicable. Taxation in France is applicable to
the operations conducted in, or deemed to be conducted in, France according
to international tax treaties and is charged at a statutory rate of 36.67%.
(5) Net income (loss) per share of common stock was computed retroactively based
on the number of shares issued by Forasol-Foramer to its two shareholders in
exchange for their respective interests in Forasol S.A. on April 3, 1996.
See Notes 1 and 3 of Notes to Consolidated Financial Statements of
Forasol-Foramer.
(6) Pro forma net income (loss) per share for 1995 reflects the impact of
Forasol-Foramer's revised debt and financing structure, reduced interest
expense from application of a portion of the net proceeds to repay
indebtedness and capital lease obligations and the February 1996 agreement
to dispose of Forasol-Foramer's 20% interest in the joint venture, Pelerin
Drilling Partnership. See Note 19 of Notes to Consolidated Financial
Statements to Forasol-Foramer.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF FORASOL-FORAMER

GENERAL

The following discussion should be read in conjunction with
Forasol-Foramer's Consolidated Financial Statements (including the Notes
thereto) included elsewhere in this Proxy Statement/Prospectus.

REVENUES. Forasol-Foramer's revenues are directly related to the number of
days its fleet is utilized and the dayrates received, the completion of turnkey
drilling contracts, and the rendering of well engineering, project management
and integrated drilling services. Revenues from dayrate drilling contracts are
recognized on a daily basis. Revenues can also increase or decrease as a result
of the acquisition or disposition of rigs. In order to improve utilization or
realize higher dayrates, Forasol-Foramer may mobilize its rigs from one market
to another. When mobilization or enhancement is required for a contract,
Forasol-Foramer may receive a lump-sum payment to offset a portion of the cost
of such requirements. During periods of mobilization, however, revenues are
generally adversely affected. Mobilization revenues less costs incurred to
mobilize a rig from one market to another are recognized over the related term
of the mobilization. Generally, revenues received by Forasol-Foramer from rig
deployments and mobilizations do not vary significantly from year to year.
Turnkey drilling contract revenues are recognized when all terms and conditions
of the contract are fulfilled. No material turnkey contracts were completed by
Forasol-Foramer in the three years ended December 31, 1995. Two such turnkey
contracts, one an onshore drilling contract and the other a drilling management
contract, were, however, completed by Forasol-Foramer during the six months
ended June 30, 1996. The results from these two contracts are discussed below.
As a response to changes in demand, Forasol-Foramer may withdraw a rig from the
market by stacking it or may reactivate a rig which was previously stacked,
which may decrease or increase revenues, respectively.

OPERATING INCOME. Operating income is primarily affected by changes in
revenue, but is also a function of varying levels of operating expenses.
Operating expenses are not generally affected by changes in dayrates, but are
generally influenced by fluctuations in utilization. For instance, if a rig is
to be idle for an extended period of time, Forasol-Foramer may reduce the size
of the rig's crew and take steps to "cold stack" the rig, which reduces
expenses and partially offsets the impact on operating income associated with
loss of revenues. Forasol-Foramer recognizes as an operating expense maintenance
activities such as painting, inspections and routine overhauls that maintain
rather than upgrade the rigs. These expenses vary from period to period. Costs
of rig enhancements are capitalized and depreciated over the expected useful
lives of the enhancements. Additionally, Forasol-Foramer incurs base costs in
each of the countries in which it operates. When a rig moves to a new country,
the previous base is closed with minimal associated costs. Forasol-Foramer's
selling, general and administrative costs are related to the head office in
Velizy, France and three commercial bases. Depreciation expense decreases
operating income in periods subsequent to capital upgrades.

INCOME TAX EXPENSE. Forasol-Foramer is subject to taxation on its
activities in each country according to the tax laws applicable. Taxation in
France is applicable to the operations conducted in, or deemed to be conducted
in, France according to international tax treaties and is charged at a statutory
rate of 36.67%. Forasol-Foramer's income tax expense is greater than the amounts
calculated under the statutory rate primarily due to taxes based on revenue in
certain foreign jurisdictions being in excess of the taxes based on the
statutory income tax rate and operating losses of a subsidiary of
Forasol-Foramer located in a tax-free jurisdiction that cannot be offset against
other taxable income. Due to the projected inability to fully utilize tax loss
carryforwards related to Forasol-Foramer's operations against Forasol-Foramer's
forecasted future statutory earnings in certain jurisdictions, Forasol-Foramer
recorded a valuation allowance against such tax loss carryforwards of $15.7
million and $13.8 million at December 31, 1995 and 1994, respectively.

SEGMENT INFORMATION. For a detail of Forasol-Foramer's geographic segment
information, see Note 15 to Forasol-Foramer's Consolidated Financial Statements.
Geographic segment operating income is primarily dependent upon the number and
type of rigs deployed in the particular region. Forasol-Foramer, therefore,
believes that an analysis of contract dayrates and utilization of the equipment
provides a more meaningful presentation of Forasol-Foramer's operations. As a
result, management's discussion and

analysis of financial condition and results of operations has been presented by
rig class type to follow the fluctuations of dayrates and utilizations by such
rig class types.

SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995

GENERAL. Forasol-Foramer reported a net loss of $4.3 million for the six
months ended June 30, 1996 as compared to net income of $1.1 million for the
first six months of 1995. Net income in the period ended June 30, 1996 was
adversely affected by losses of $1.7 million after income taxes related to two
turnkey contracts and by $0.9 million of losses incurred by Forasol-Foramer's
Argentinean subsidiary, Hispano Americana De Petroleos S.A. ("HAPSA"). Also
affecting the results for the current period were increases in depreciation and
amortization and in net interest expense. These effects were partly offset by a
$1.8 million gain on the disposal of Forasol-Foramer's interest in the drillship
Pelerin and by foreign exchange gains of $1.7 million. Net income for the six
months ended June 30, 1995 benefited from the receipt of an $8.2 million early
termination fee (of which $6.5 million was recognized in the first six months
and $1.7 million in the second six months of 1995) related to the National
1625/3 rig which was under contract in Kazakhstan. Net income for the first six
months of 1995 was adversely affected by net foreign exchange losses of $1.0
million.

Comparative data relating to Forasol-Foramer's revenues and operating
expenses by rig class for the periods presented are as follows:

SIX MONTHS ENDED
JUNE 30,
---------------------- INCREASE
1996 1995 (DECREASE)
---------- ---------- ----------
(IN THOUSANDS)
REVENUES
Tenders/Barges.................. $ 27,622 $ 24,934 $ 2,688
Semisubmersibles/Drillship...... 13,319 12,713 606
Jackups......................... 6,779 3,681 3,098
Land............................ 34,992 31,605 3,387
Engineering and Management
Services...................... 6,945 10,165 (3,220)
Equity in Net Income of
Affiliates.................... 23 235 (212)
---------- ---------- ----------
Total Revenues........ $ 89,680 $ 83,333 $ 6,347
========== ========== ==========
COST OF OPERATIONS
Tenders/Barges.................. $ 14,561 $ 13,034 $ 1,527
Semisubmersibles/Drillship...... 8,228 11,184 (2,956)
Jackups......................... 4,713 2,355 2,358
Land............................ 31,004 20,079 10,925
Engineering and Management
Services...................... 7,368 8,687 (1,319)
Bases........................... 6,516 3,301 3,215
---------- ---------- ----------
Total Cost of
Operations......... $ 72,390 $ 58,640 $ 13,750
========== ========== ==========
OPERATING INCOME (LOSS)
Tenders/Barges.................. $ 13,061 $ 11,900 $ 1,161
Semisubmersibles/Drillship...... 5,091 1,529 3,562
Jackups......................... 2,066 1,326 740
Land............................ 3,988 11,526 (7,538)
Engineering and Management
Services...................... (423) 1,478 (1,901)
Equity in Net Income of
Affiliates.................... 23 235 (212)
Bases........................... (6,516) (3,301) (3,215)
Selling, General and
Administrative Expense........ (8,484) (8,556) 72
Depreciation and Amortization
Expense....................... (10,851) (10,063) (788)
---------- ---------- ----------
Total Operating Income
(Loss)............. $ (2,045) $ 6,074 $ (8,119)
========== ========== ==========

REVENUES. The $2.7 million increase in Forasol-Foramer's tender/barge
revenues, from $24.9 million for the six months ended June 30, 1995 to $27.6
million for the six months ended June 30, 1996, was principally due to full
utilization in 1996 of the swamp barge, BINTANG KALIMANTAN, in Nigeria compared
to a lower utilization in 1995 and to new management contracts with two barges,
GP 18 and GP 10, for Maraven in Venezuela. This increase was partly offset by a
reduction in revenues from the CORMORANT tender barge which did not work during
the current period, but which was used as a barge hotel in the first half of
1995. Neither the ILE DE SEIN nor the ILE DE LA MARTINIQUE were used in either
period.

The $606,000 increase in semisubmersible/drillship revenues for the first
six months of 1996 as compared to the same period in 1995 was due to increased
utilization of the NYMPHEA and of the PELER in and to a $1.9 million termination
fee received in respect of the management contract following completion of the
sale of the PELERIN in May 1996. This increase was partially offset by reduced
revenues from the ACTINIA, which was operated under a management contract
through February 1996 compared to a full six months of revenues in 1995. The
SOUTH SEAS DRILLER, which was stacked and did not work during the six months
ended June 30, 1995, was being upgraded and refurbished during the six months
ended June 30, 1996 and is to start work with Repsol offshore Spain at the start
of the fourth quarter of 1996.

Revenues from Forasol-Foramer's jackup rigs increased by $3.1 million, from
$3.7 million for the six months ended June 30, 1995 to $6.8 million for the six
months ended June 30, 1996. This increase was due principally to the full
utilization of the ILE DU LEVANT in Venezuela in 1996 and the commencement of
integrated services contracts for Maraven in Venezuela utilizing jackup rigs GP
19 and GP 20 in April and May 1996, respectively. The TOURMALINES was stacked
and not used during either period.

Land rig revenues for the first six months of 1996 were $35 million, an
increase of $3.4 million over the corresponding period of 1995. This increase
was due principally to inclusion of a full six months contribution from HAPSA,
which was acquired in May 1995, in the current period as compared to only two
months activity in the six months ended June 30, 1995, and to revenues from the
turnkey contract for the NATIONAL 1320/2 rig in Algeria in the first six months
of 1996. These effects were partially offset by the recognition in the first six
months of 1995 of $6.5 million in respect of the nonrecurring termination fee
discussed above and as a result of the Foraslim rig being fully utilized in the
first six months of 1995, as compared to 1996 when it was in the mobilization
phase. Furthermore, three rigs, the NATIONAL 110/9, the NATIONAL 110/10 and the
NATIONAL 110/2, were on standby in the first six months of 1996 but were under
contract in Pakistan, Syria and Yemen, respectively, in the corresponding period
of 1995.

Engineering revenues decreased by $3.2 million, from $10.1 million for the
first six months of 1995 to $6.9 million for 1996, principally due to a
reduction in services provided under the labor services contract with the Ghana
National Petroleum Company.

COST OF OPERATIONS. The $1.5 million increase in tender/barge cost of
operations was due to full utilization of the BINTANG KALIMANTAN in the first
six months of 1996 as compared to partial utilization in the same period of 1995
and to the commencement of the new management contracts with the GP 18 and GP 10
barges for Maraven in Venezuela.

The $3.0 million decrease in semisubmersible/drillship cost of operations
in the first six months of 1996 as compared to the corresponding period of 1995
was principally due to the completion of the ACTINIAmanagement contract in
February 1996 and to the reduction of costs of operations in respect of the
South Seas Driller, which was stacked in 1995 but which was being refurbished
and upgraded in the first six months of 1996.

Jackup rig costs of operations increased $2.4 million in the first six
months of 1996 as compared with the same period in 1995. This increase was
principally due to the commencement of the integrated services contracts for the
two Maraven-owned jackup rigs, the GP 19 and GP 20.

The $10.9 million increase in the cost of operations of the land rigs,
between the first six months of 1995 and 1996, was principally due to the
inclusion of HAPSA in 1996 and to the completion of the turnkey well in Algeria.
This increase was partially offset by reduced costs of the National 110/9,
National 110/10 and National 110/2 rigs, which were on standby during the first
six months of 1996 but which were under contract during the corresponding period
of 1995.

The $1.3 million decrease of engineering costs between the first six months
of 1995 and the first six months of 1996 was due principally to the reduction of
work under the labor services contract with the Ghana National Petroleum
Company. This decrease was partly offset by costs and losses associated with a
turnkey drilling management contract in Venezuela.

The increase in base costs, from $3.3 million for the first six months of
1995 to $6.5 million in the first six months of 1996, was principally due to the
inclusion of the operations of HAPSA and to an increase in activity and related
base costs onshore Venezuela.

SELLING, GENERAL AND ADMINISTRATIVE. The slight reduction in selling,
general and administrative expenses between the first six months of 1995 and
1996 was due to a significant portion of Forasol-Foramer's administrative costs
being denominated in French francs and to the higher average value of the U.S.
dollar relative to the French franc in the first six months of 1996 as compared
to the same period in 1995.

DEPLETION AND AMORTIZATION. Depreciation and amortization costs were $10.9
million for the first six months of 1996 as compared to $10.1 million for the
first six months of 1995. Approximately $0.4 million of this increase was due to
the inclusion of a full six months activity from HAPSA in 1996. The remaining
increase was explained by an increase in the average utilization rate for
Forasol-Foramer's rigs in 1996 as compared to 1995.

NET INTEREST AND OTHER FINANCIAL EXPENSE. The increase of $0.8 million in
net interest and other financial expense for the first six months of 1996 as
compared to the same period in 1995 was principally due to the inclusion in 1996
of $0.3 million of net interest charges for HAPSA and to an increase in the
average level of debt between the periods. The increase in the average level of
debt was due to the significantly higher level of debt in the first five months
of 1996 as compared to the same period in 1995. This increase was partially
offset by the lower level of debt in June 1996 as compared to June 1995,
following receipt of the proceeds from the initial public offering and the
retirement of $50.2 million of debt at the end of May 1996.

NET FOREIGN EXCHANGE GAIN. Net foreign exchange gains amounted to $1.8
million for the first six months of 1996 as compared to net foreign exchange
losses of $1.0 million for the corresponding period in 1995. The net gain for
the first six months of 1996 was mainly realized and arose when French franc
denominated debt was repaid at the end of May at a time when the U.S. dollar was
approximately 6% stronger as compared to the French franc than at December 31,
1995. The net foreign exchange loss for the first six months of 1995 was mainly
unrealized and was due to the effect of a weakening of the U.S. dollar compared
to the French franc between December 31, 1994 and June 30, 1995.

OTHER INCOME. Other income increased to $1.7 million for the six months
ended June 30, 1996 from $0.5 million for the same period in 1995, principally
due to increased gains realized on disposal of assets.

INCOME TAXES. Income taxes increased by $0.6 million to $1.4 million for
the first six months of 1996 from $0.8 million for the same period of 1995, due
principally to an increase in taxes based on revenues rather than profits in
Algeria and other foreign tax jurisdictions.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Comparative data relating to Forasol-Foramer's revenues and operating
expenses by rig class are as follows:

YEAR ENDED
DECEMBER 31,
---------------------- INCREASE
1995 1994 (DECREASE)
---------- ---------- ----------
(IN THOUSANDS)
REVENUES
Tenders/Barges.................. $ 52,296 $ 57,698 $ (5,402)
Semisubmersibles/Drillship...... 28,495 24,508 3,987
Jackups......................... 8,219 8,581 (362)
Land............................ 67,383 38,672 28,711
Engineering and Management
Services...................... 14,942 18,889 (3,947)
Equity in Net Income of
Affiliates.................... 165 (44) 209
---------- ---------- ----------
Total Revenues............. $ 171,500 $ 148,304 $ 23,196
========== ========== ==========
COST OF OPERATIONS
Tenders/Barges.................. $ 29,703 $ 27,912 $ 1,791
Semisubmersibles/Drillship...... 22,560 19,703 2,857
Jackups......................... 4,921 7,405 (2,484)
Land............................ 48,224 28,561 19,663
Engineering and Management
Services...................... 12,880 15,415 (2,535)
Bases........................... 9,203 5,402 3,801
---------- ---------- ----------
Total Cost of Operations... $ 127,491 $ 104,398 $ 23,093
========== ========== ==========
OPERATING INCOME (LOSS)
Tenders/Barges $ 22,593 $ 29,786 $ (7,193)
Semisubmersibles/Drillship...... 5,935 4,805 1,130
Jackups......................... 3,298 1,176 2,122
Land............................ 19,159 10,111 9,048
Engineering and Management
Services...................... 2,062 3,474 (1,412)
Equity in Net Income of
Affiliates.................... 165 (44) 209
Bases........................... (9,203) (5,402) (3,801)
Selling, General and
Administrative Expense........ (17,660) (16,216) (1,444)
Depreciation and Amortization
Expense....................... (20,264) (20,292) 28
---------- ---------- ----------
Total Operating Income..... $ 6,085 $ 7,398 $ (1,313)
========== ========== ==========

REVENUES. The $5.4 million decrease in tender/barge revenues for the year
ended December 31, 1995 compared to 1994 was due to the completion of 10 years
of continuous activity for the ILE DE SEIN in Malaysia in January 1995 and the
completion of the CORMORANT contract in October 1995. This decrease was
partially offset by the activity of the AL BARAKA I, which was delivered in
November 1994 and was fully utilized in 1995, and the increased utilization of
the BINTANG KALIMANTAN, which commenced a long-term contract in Nigeria in March
1995. While the ILE DE LA MARTINIQUE was not utilized in either period, Forasol-
Foramer's other tenders/barges were all fully utilized during 1995 and 1994 and
experienced no significant increases or decreases in dayrates.

The $4.0 million increase in semisubmersible/drillship revenues for 1995 as
compared to 1994 was due to the full utilization and improved dayrate of the
PELERIN compared to a lower utilization of the drillship in 1994, the full
utilization of the ACTINIA in 1995 and increased revenues from the NYMPHEA in
Angola. Forasol-Foramer operated the ACTINIA under a management contract through
February 1996. The SOUTH SEAS DRILLER was stacked and did not work in 1995,
which partially offset this increase.

Jackup revenues remained relatively unchanged for 1995 as compared to 1994.
During both periods, the TOURMALINES was stacked and the ILE DU LEVANT worked at
almost full utilization. The ILE DU LEVANT is currently under a long-term
incentive contract in Venezuela.

The $28.7 million increase in land rig revenues for 1995 as compared to
1994 was due primarily to the increased revenues of approximately $13.3 million
resulting from the HAPSA acquisition in May 1995, an $8.2 million cancellation
and demobilization fee relating to the Kazakhstan contract for the NATIONAL
1625/3 and a $1.6 million mobilization fee for the rig to Romania. In addition,
Forasol-Foramer achieved favorable revenues from a new two-rig contract in
Libya, a new contract for the FORASLIM in Gabon and a new contract for a rig in
Italy. These revenue increases were partially offset by reduced utilization of
the Heli-rig and the completion of contracts for one rig in each of France,
Syria, Yemen and Pakistan.

The $4.0 million decrease in engineering and management services revenue
for 1995 as compared to 1994 was due to the completion of the Mosel Bay labor
contract offshore South Africa during the second half of 1994. This decrease was
partially offset by a slight increase in revenues from the ALWYN platform in the
North Sea. Forasol-Foramer maintained a consistent level of revenues from its
labor contract for Ghana National Petroleum Company.

COST OF OPERATIONS. The $1.8 million increase in tender/barge cost of
operations was due to the full utilization of the AL BARAKA I in 1995, the
increased utilization of the BINTANG KALIMANTAN and increased costs associated
with the ALLIGATOR, the BARRACUDA and the CORMORANT. This increase was partially
offset by the completion of activity for the ILE DE SEIN in Malaysia in January
1995 and a decrease in operating costs for RIG 50and RIG 51 in Venezuela.

The $2.9 million increase in semisubmersible/drillship cost of operations
for 1995 as compared to 1994 was due to the full utilization of the PELERIN
compared to a lower utilization of the drillship in 1994 and the costs
associated with the commencement of the contract for the NYMPHEA in Angola. This
increase was partially offset by the reduced operating costs of the SOUTH SEAS
DRILLER which was stacked during 1995 as opposed to operating at near full
utilization during 1994.

Jackup rig cost of operations declined by $2.5 million in 1995 as compared
to 1994. During both periods, the TOURMALINES was stacked and the ILE DU LEVANT
worked at almost full utilization; however, Forasol-Foramer incurred
mobilization costs in late 1994 to move the rig to Venezuela where the ILE DU
LEVANT is currently working under a long-term contract.

The $19.7 million increase in land rig cost of operations for 1995 as
compared to 1994 was due primarily to the increased activity in South America
resulting from the HAPSA acquisition in May 1995, the demobilization of the
NATIONAL 1625/3 in Kazakhstan and the subsequent mobilization of the rig to
Romania. In addition, in 1995 Forasol-Foramer mobilized its Heli-rig to Ecuador
and one rig in Italy and had 97% utilization for two rigs in Libya and the
FORASLIM in Gabon. These increases in cost of operations were partially offset
by reduced utilization of the Heli-rig, the termination of activity in France
and the reduction of activity in Syria, Yemen and Pakistan.

The $2.5 million decrease in engineering and management services cost of
operations for 1995 as compared to 1994 was due to the completion of the Mosel
Bay labor contract offshore South Africa during the second half of 1994. This
decrease was partially offset by a slight increase in cost of operations for the
Alwyn platform in the North Sea.

The $3.8 million increase in base costs for 1995 compared to 1994 was due
primarily to the HAPSA acquisition in May 1995. This increase was offset
slightly by the reduced base costs in Malaysia due to the stacking of the ILE DE
SEIN in January 1995.

SELLING, GENERAL AND ADMINISTRATIVE. The $1.4 million increase in selling,
general and administrative expense for 1995 as compared to 1994 was due in part
to a significant portion of Forasol-Foramer's administrative costs being
denominated in French francs coupled with a declining value of the U.S. dollar
relative to the French franc.

NET INTEREST EXPENSE. Net interest expense for 1995 increased to $8.8
million from $7.3 million for 1994 due to increased levels of borrowings and a
slightly higher weighted average interest rate on bank debt.

OTHER INCOME/(EXPENSE). Other income was $0.4 million for 1995 as compared
to $4.0 million for 1994. The decrease in other income of $3.6 million was
principally due to foreign exchange hedging activities and an unrealized foreign
exchange loss on French franc denominated debt.

INCOME TAX EXPENSE. Income tax expense decreased by $2.2 million from $2.6
million in 1994 to $0.4 million in 1995 as a result of reduced taxable income, a
tax refund of approximately $0.5 million from the Indian government, a deferred
tax credit due to the realization of deferred tax liabilities in respect of
leased assets and an increase in overseas tax loss carryforwards.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

Comparative data relating to Forasol-Foramer's revenues and operating
expenses by rig class are as follows:

YEAR ENDED
DECEMBER 31,
---------------------- INCREASE
1994 1993 (DECREASE)
---------- ---------- ----------
(IN THOUSANDS)
REVENUES
Tenders/Barges.................. $ 57,698 $ 56,108 $ 1,590
Semisubmersibles/Drillship...... 24,508 27,765 (3,257)
Jackups......................... 8,581 6,321 2,260
Land............................ 38,672 36,190 2,482
Engineering and Management
Services...................... 18,889 23,068 (4,179)
Equity in Net Income of
Affiliates.................... (44) 2,474 (2,518)
---------- ---------- ----------
Total Revenues............. $ 148,304 $ 151,926 $ (3,622)
========== ========== ==========
COST OF OPERATIONS
Tenders/Barges.................. $ 27,912 $ 28,756 $ (844)
Semisubmersibles/Drillship...... 19,703 21,409 (1,706)
Jackups......................... 7,405 6,204 1,201
Land............................ 28,561 24,773 3,788
Engineering and Management
Services...................... 15,415 19,067 (3,652)
Bases........................... 5,402 5,786 (384)
---------- ---------- ----------
Total Cost of Operations... $ 104,398 $ 105,995 $ (1,597)
========== ========== ==========
OPERATING INCOME (LOSS)
Tenders/Barges.................. $ 29,786 $ 27,352 $ 2,434
Semisubmersibles/Drillship...... 4,805 6,356 (1,551)
Jackups......................... 1,176 117 1,059
Land............................ 10,111 11,417 (1,306)
Engineering and Management
Services...................... 3,474 4,001 (527)
Equity in Net Income of
Affiliates.................... (44) 2,474 (2,518)
Bases........................... (5,402) (5,786) 384
Selling, General and
Administrative Expense........ (16,216) (15,330) (886)
Depreciation and Amortization
Expense....................... (20,292) (19,966) (326)
---------- ---------- ----------
Total Operating Income..... $ 7,398 $ 10,635 $ (3,237)
========== ========== ==========

REVENUES. The $1.6 million increase in tender/barge revenues resulted from
the mobilization and commencing of operations of the newly built AL BARAKA I,
which is currently under contract with Chevron Corp. ("Chevron") offshore West
Africa, and the full utilization of the CORMORANT compared to its low
utilization in 1993. This increase was partially offset by the completion of the
contract for the BINTANG KALIMANTAN, Forasol-Foramer's swamp barge, in January
1994 and the stacking of the rig for the remainder of the year. With the
exception of the ILE DE LA MARTINIQUE, which was stacked, the other
tender/barges maintained full utilization in both 1994 and 1993. Notwithstanding
the recent weakness in the oil price

market during these periods, tender dayrates and utilization remained stable in
all of Forasol-Foramer's operating regions for these assets.

The $3.3 million decrease in semisubmersibles/drillship revenues from 1993
to 1994 was primarily due to $6.3 million of revenues in 1993 related to a
special management contract for the repairs and upgrading of the ACTINIA and the
reduced activity of the PELERIN in 1994 while it was between contracts. This
decrease was offset partially by increased semisubmersible utilization to 92% in
1994 as compared to 76% in 1993.

The $2.3 million increase in Forasol-Foramer's jackup revenues was due to
the mobilization fee and increased utilization for the ILE DU
LEVANT.Forasol-Foramer's other jackup, the TOURMALINES, was stacked in early
1993 and all of 1994 following a four-year contract with Shell in Nigeria.

The $2.5 million increase in Forasol-Foramer's land rigs revenues was due
primarily to the full utilization of the ultra-heavy rig NATIONAL 1625/3 in 1994
in Kazakhstan at a higher than average dayrate and the award of a contract for
14 wells, with associated services, in North Africa involving the heavy land rig
NATIONAL 110/13 and the workover land rig H25. Revenues also increased due to
the delivery of the FORASLIM in April 1994. The increase in revenue was
partially offset by the reduction of activity in France and Pakistan and the
discontinuing of operations in Yemen, Syria and Niger.

The $4.2 million decrease in engineering and management services revenues
resulted from the completion of a management contract for Soeker in the middle
of 1993. This decrease was offset slightly by the new contract for the
management of a drillship for Ghana National Petroleum Company in 1994.
Forasol-Foramer retained its management contract with Total Oil Marine for its
production platform ALWYN in the North Sea during 1993 and 1994.

The $2.5 million decrease in equity in net income of affiliates was due to
the completion of a turnkey contract by National Drilling and Services Co. LLC
("NDSC") in August 1993 which was renewed as a four-year dayrate contract,
plus a one-year option period, earning significantly lower margins.

COST OF OPERATIONS. The $0.8 million decrease in tender/barges cost of
operations was primarily due to completion of the BINTANG KALIMANTAN contract in
January 1994. This decrease was partially offset by the full utilization of the
CORMORANT in 1994 relative to its low utilization in the prior year. In
addition, Forasol-Foramer incurred mobilization costs for the AL BARAKA I,which
was delivered to the market as a new tender in November 1994. Operating costs
for the ALLIGATOR, the BARRACUDA and the ILE DE SEIN remained stable during 1993
and 1994.

The $1.7 million decrease in semisubmersible/drillship cost of operations
was due in part to the $6.3 million cost of repairs which were incurred for the
ACTINIA in 1993 that related to a special management contract. Additionally,
Forasol-Foramer experienced a reduction in operating costs as a result of a
decrease in the utilization of the drillship PELERIN from 69% in 1993 to 50% in
1994. These decreases were partially offset by increased costs of the NYMPHEAin
1994 relating to the mobilization of the rig. In addition, costs increased in
connection with management contract awarded to Forasol-Foramer in 1994 for the
SOUTH SEAS DRILLER.

The $1.2 million increase in Forasol-Foramer's jackup cost of operations
was due to the increased utilization of the ILE DU LEVANT and mobilization costs
of the unit from Singapore to Venezuela at the end of 1994. Forasol-Foramer's
other jackup, the TOURMALINES, incurred stacking costs for all of 1994 and
nearly all of 1993.

The $3.8 million increase in operating costs from 1993 to 1994 was due to
the full utilization of the ultra heavy rig NATIONAL 1625/3 in Kazakhstan in
1994, compared to the 27% utilization in 1993, the mobilization of the heavy rig
NATIONAL 110/13 and the workover rig H25 to North Africa, and the initial
mobilization and contracts in France and Gabon for the FORASLIM which was
delivered in April 1994. These increases were partially offset by the incurrence
of demobilization costs for the Heli-rig in 1993 which did not occur in 1994, a
reduction of activity in Syria and Pakistan and the reduction of rig stacking
costs in France.

Forasol-Foramer's engineering and management services cost of operations
decreased by $3.7 million in 1994 as compared to 1993. Costs of operations
decreased primarily due to the completion in 1993 of the management contract for
Soekor. This decrease was partially offset by the costs associated with the
commencement of the Ghana National Petroleum Company contract in mid-1994.

SELLING, GENERAL AND ADMINISTRATIVE. The $0.9 million increase in selling,
general and administrative expense to $16.2 million for 1994 from $15.3 million
in 1993 was due primarily to the effect of currency fluctuations in
Forasol-Foramer's French franc denominated administrative costs coupled with a
declining value of the U.S. dollar relative to the French franc. In addition,
Forasol-Foramer incurred additional costs to expand its marketing efforts in
1994.

NET INTEREST EXPENSE. Net interest expense for 1994 declined by $1.0
million from $8.3 million in 1993 to $7.3 million for 1994 as a result of the
net repayment of $16.4 million of Forasol-Foramer's long-term debt.

OTHER INCOME/(EXPENSE). Other income increased by $1.1 million from $2.9
million in 1993 to $4.0 million in 1994. This increase was principally due to
higher gains from foreign exchange hedging activities, including a reversal of
an unrealized loss in 1993, partially offset by a lower level of gains on
disposals of equipment in 1994.

INCOME TAX EXPENSE. Income tax expense increased by $0.5 million from $2.1
million in 1993 to $2.6 million in 1994. The effective tax rate increased from
46% in 1993 to 64% in 1994 due to irrecoverable tax losses and permanent timing
differences. The effect was amplified by increases in activities in high foreign
tax threshold jurisdictions.

LIQUIDITY AND CAPITAL RESOURCES

Net cash from operating activities increased by $9.8 million to $3.4
million for the first six months of 1996 from a use of $6.4 million for the same
period of 1995, principally due to a decrease in funds used for operating assets
and liabilities. This increase was partially offset by a reduction in net income
of $5.4 million during the first six months of 1996 as compared to the six
months ended June 30, 1995.

Net cash from operating activities for the year ended December 31, 1995
decreased $24.6 million to $5.0 million as compared to $29.6 million for the
prior year. This reduction was primarily attributable to a $4.9 million
reduction in net income, a $12.5 million use of funds for working capital and
$1.9 million due to deferred income taxes. In 1994, net cash from operating
activities increased $10.2 million from $19.4 million for the prior year. This
increase was primarily attributable to $7.5 million of cash provided by working
capital in 1994 as compared to $0.4 million of cash provided by working capital
in 1993. In addition there was a $2.4 million reduction in undistributed
earnings in affiliates and a $2.6 million increase in unrealized foreign
exchange losses in 1994 as compared to 1993. These increases were partially
offset by a reduction of $2.0 million in net income in 1994 as compared to 1993.

The $12.5 million of funds used for working capital in 1995 was due
primarily to (i) the $7.5 million increase in accounts receivable, (ii) an $11.3
million decrease in other current and operating liabilities and (iii) $6.6
million of deferred income due primarily to the final settlement of rig
modification fees from Elf relating to the NATIONAL 1625/3 in Kazakhstan. These
uses of funds were offset partially by (i) a $7.0 million decrease in prepaid
expenses and (ii) a $5.9 million increase in trade accounts and notes payable.
The $7.5 million of cash provided for working capital in 1994 resulted primarily
from a $7.7 million reduction in accounts receivable and a $2.9 million increase
in other current liabilities, neither of which were related to any individual
significant transactions. These sources of funds were offset in part by the $2.0
million repayment of trade accounts and notes payable and $2.7 million of
deferred income. In 1993, working capital remained relatively unchanged.
However, there was a $5.1 million increase in trade accounts and notes payable
and the $8.7 million increase in deferred income related to the modification fee
for the NATIONAL 1625/3 rig that is being paid in 18 quarterly installments,
which commenced in November 1993. This increase in working capital was partially
offset by a $9.2 million increase in accounts receivable and a $3.2 million
increase in prepaid expenses and other current assets.

Net cash used in investing activities amounted to $5.0 million in the first
six months of 1996 as compared to $6.9 million during the same six month period
of 1995. An increase in capital expenditures, from $7.5 million in the first six
months of 1995 to $12.5 million in the first six months of 1996, was more than
offset by increased proceeds from the sale of plant and machinery of $7.5
million in 1996 as compared to $2.1 million for the six months ended June 30,
1995.

Net cash used in investing activities was $27.1 million in 1995 compared to
$14.7 million in 1994. In 1995, Forasol-Foramer made $30.1 million of capital
expenditures, which includes $9.4 million relating to the acquisition of the
remaining 85% of the SOUTH SEAS DRILLER, $8.9 million for the upgrading of
certain land rigs, $1.7 million for the upgrading of two tender-assisted units
and one jack-up rig, $2.5 million for the refurbishment and installation of a
top-drive unit for the BINTANG KALIMANTAN, and approximately $7.0 million of
maintenance capital expenditures. These capital expenditures were partially
offset by $3.0 million of proceeds from sales of plant and equipment. In 1994,
Forasol-Foramer made $20.7 million of capital expenditures of which $5.7 million
related to the building of the FORASLIM land rig and approximately $8.8 million
was related to specific contract related upgrades for three offshore rigs and
two land rigs. In addition, Forasol-Foramer incurred approximately $6.2 million
of maintenance capital expenditures. In 1993, Forasol-Foramer made $22.9 million
of capital expenditures, of which $11.0 million was used for the upgrading and
winterization of the NATIONAL 1625/3 and $3.1 million was used for the building
of the FORASLIM which was completed in 1994. In addition, in 1993
Forasol-Foramer invested approximately $4.5 million for specific
contract-related capital expenditures for two offshore rigs and four land rigs
and made approximately $4.2 million of maintenance capital expenditures.

Cash flows from financing activities increased to $26.3 million in the
first six months of 1996 from $0.3 million in the corresponding period in 1995.
Forasol-Foramer completed its initial public offering of 6,640,290 common shares
in May 1996 and received net proceeds of approximately $70 million after
deducting underwriting fees and expenses of the offering. Approximately $50.2
million of the net proceeds was used to retire debt and $4.6 million was used
during the period to finance the refurbishment and upgrade of the SOUTH SEAS
DRILLER. Proceeds from long-term debt in the six months ended June 30, 1996
comprised a $6.5 million advance in respect of the contract with Elf for the
CORMORANT to finance the construction of a new workover derrick set.
Forasol-Foramer generated $19.7 million of net cash from financing activities in
1995 compared to a net use of cash of $22.3 million in 1994. In 1995, Forasol-
Foramer had $25.9 million of proceeds from loans, including a $10 million
facility used to finance the acquisition of the SOUTH SEAS DRILLER,$8.1 million
in interim financing from affiliated parties for working capital purposes, and
$5.4 million of long-term indebtedness relating to the HAPSA acquisition, which
was partially offset by $18.5 million of principal repayments on long-term debt
and capital lease obligations. In addition, Forasol-Foramer incurred $8.7
million of short-term indebtedness under its credit facility. In 1994,
Forasol-Foramer made $23.0 million of long-term debt repayments as compared to
$19.4 million of long-term debt repayments in 1993. In addition, Forasol-Foramer
made net principal repayments of $5.8 million under its short-term credit
facility.

As of June 30, 1996, Forasol-Foramer had $88.2 million of outstanding
short-term and long-term indebtedness, or 32% of short-term debt and total
capitalization, which was composed of capital leases, commercial facilities and
working capital facilities with maturities ranging from one to thirteen years
and annual interest rates ranging from 6% to 10%.

In February 1996, Forasol-Foramer's management contract with respect to the
ACTINIA, a third-generation semisubmersible rig owned by Actinia Shipping
Corporation, terminated. Net cash flow from this management contract in 1995 was
$750,000.

In February 1996, Forasol-Foramer and Pelerin Shipping Ltd. entered into an
agreement to sell the PELERIN to a third party. The sale of the PELERIN was
completed on May 22, 1996 and resulted in Forasol-Foramer receiving net proceeds
of $5.6 million, plus a $1.9 million cancellation fee in respect of the
management contract. Forasol-Foramer also completed the sale of the land rig GD
3000 for net proceeds of $1.5 million, the sale of the land rig IR 1500 for net
proceeds of $1.2 million and the sale of the workover jackup rig TOURMALINES for
net proceeds of $1.4 million.

In connection with the contract with Elf for the CORMORANT that began
October 1996, Forasol-Foramer received a prepayment of $6.5 million in April
1996, which was used to fund the building of a new workover derrick set,
additional refurbishment and mobilization costs for the rig.

Forasol-Foramer has an outstanding credit facility secured by
Forasol-Foramer's third-generation semisubmersible rig NYMPHEA, which bears
interest at a rate of six months LIBOR plus a margin ranging from 1.25% to 2.5%
dependent upon the contract dayrate of the NYMPHEA (1.25% as of June 30, 1996),
and

is payable in equal semiannual installments with final maturity in August 2002.
As of June 30, 1996, a total of $18.9 million was outstanding under this
facility. Forasol-Foramer has a second credit facility secured by
Forasol-Foramer's tender-assisted rigs, the ALLIGATOR, BARRACUDA and ILE DE
SEIN. This facility is payable in equal semiannual installments and carries a
fixed rate of interest of 7.67%. Final payment under this facility is due in
October 2002. As of June 30, 1996, a total of $37.8 million was outstanding
under this facility.

In December 1996, Forasol-Foramer signed a credit facility for $30 million,
secured by its semisubmersible SOUTH SEAS DRILLER, which bears interest at a
rate of six-month LIBOR plus a margin ranging from 1% to 2%, depending on the
dayrate earned by the SOUTH SEAS DRILLER and the amount outstanding under the
facility as it relates to the asset market value of the rig. There is a
commitment fee of 0.25% on the undrawn balance of the facility.

In the normal course of business, Forasol-Foramer employs a variety of
off-balance sheet financial instruments, including interest rate swap agreements
and interest rate cap agreements, to manage its exposure to fluctuations in
interest rates. Forasol-Foramer designates interest rate instruments as hedges
of debt and capital lease obligations, and accrues the differential to be paid
or received under the agreements as interest rates change over the lives of the
contracts.

Forasol-Foramer expects to fund its planned capital expenditures and any
future acquisitions primarily through a combination of cash flow from
operations, borrowings under debt facilities and issuances of additional equity.
Although the Tender Capital Lease contains certain limitations on the incurrence
of additional indebtedness including the limitation that indebtedness may not
exceed tangible net worth, Forasol-Foramer will be permitted to assume, among
other things, indebtedness of acquired businesses, subject to compliance with
the other financial covenants of the Tender Capital Lease.

FOREIGN CURRENCY

Forasol-Foramer records its transactions and prepares its financial
statements in U.S. dollars. Fluctuations in the value of the currencies in which
Forasol-Foramer conducts its business relative to the U.S. dollar have caused,
and will continue to cause, translated amounts to change in comparison with
previous periods. Forasol-Foramer has historically incurred a majority of its
administrative expenses in French francs, with the substantial majority of its
revenues and debt denominated in U.S. dollars. Any appreciation in the French
franc relative to the U.S. dollar would, absent any effects associated with
hedging or currency trading transactions, detrimentally affect Forasol-Foramer's
financial performance. Forasol-Foramer attempts to limit its exposure to French
franc currency fluctuations compared to the U.S. dollar by entering into various
financial instruments, including forward exchange contracts with regard to its
major drilling contracts, to offset its French franc denominated expenses with
associated U.S. dollar denominated revenues if, in the opinion of
Forasol-Foramer, to do so would mitigate foreign exchange losses. Forasol-
Foramer, however, does not systematically enter into these financial
instruments, nor does it attempt to mitigate its exposure to currency
fluctuations related to its balance sheet assets and liabilities. The forward
exchange contracts Forasol-Foramer has entered into are marked to market, with
any gains or losses and associated costs recognized in the income statement.
Forasol-Foramer cannot predict the effect of exchange rate fluctuations upon
future operating results.

PRINCIPAL SHAREHOLDERS OF PRIDE AND FORASOL-FORAMER

The following tables set forth information with respect to the beneficial
ownership of Pride Common Stock and FFNV Common Shares as of December 31, 1996
by (1) each person known by Pride or Forasol-Foramer, as applicable, to be the
beneficial owner of more than 5% of such capital stock, (2) each director of
Pride, (3) certain executive officers of Pride, including the Chief Executive
Officer and the four most highly compensated officers other than the Chief
Executive Officer who were serving as officers at December 31, 1996 and (4) all
executive officers and directors of Pride and of Forasol-Foramer as a group.
Except as otherwise indicated below, each of the entities and persons named in
the tables has sole voting and investment power with respect to all shares of
capital stock beneficially owned. Unless otherwise indicated, the address for
each of the individuals or entities named in the tables below is the principal
executive offices of Pride or Forasol-Foramer, as applicable.

PRIDE

% BEFORE THE PRIDE SHARES % AFTER THE
NAME BUSINESS COMBINATION BENEFICIALLY OWNED BUSINESS COMBINATION
- ------------------------------------- -------------------- --------------------- --------------------

Ray H. Tolson, Chairman of the 3.1% 901,866 2.2%
Board, President and Chief
Executive Officer
Paul A. Bragg, Vice President and 1.4% 411,000 1.0%
Chief Financial Officer
James W. Allen, Senior Vice 1.3% 365,000 *
President -- Operations
Robert W. Randall, Vice President, * 126,667 *
General Counsel and Secretary
James J. Byerlotzer, Vice * 107,700 *
President -- Domestic Operations
James B. Clement, Director * 14,500 *
Jorge E. Estrada M., Director * 173,388(2) *
Ralph D. McBride, Director * 5,000 *
Thomas H. Roberts, Jr., Director 1.2% 339,313 *
James T. Sneed, Director * 17,500 *
All current directors and executive 8.1% 2,461,934 6.2%
officers as a group (10 persons)
Christian J. Boon Falleur, N/A 40,000(4) *
Director(3)
Remi Dorval, Director(3) N/A 70,000(4) *
Husic Capital Management(5) 5.2% 1,486,000 3.8%
555 California Street
Suite 2900
San Francisco, California 94104
Neuberger & Berman(5)(6) 6.6% 1,874,400 4.7%
605 Third Avenue
New York, New York 10158-3698

- ------------

* Less than one percent.

(1) Includes shares over which such person shares voting or disposition power
and shares in which such person has the right to acquire beneficial
ownership within 60 days, including upon exercise of a stock option or
conversion of a convertible security.

(2) Represents shares issuable upon conversion of Pride's 6 1/4% Convertible
Subordinated Debentures due 2006.

(3) To become a director following the Business Combination.

(4) Shares issuable in the Business Combination upon surrender of options to
purchase FFNV Common Shares.

(5) Such information is based upon filings made with the Commission as of
September 30, 1996.

(6) Includes shares held by Neuberger & Berman Institutional Asset Management
Division, Neuberger & Berman and Neuberger & Berman Management Incorporated.

FORASOL-FORAMER

FFNV COMMON PRIDE COMMON STOCK
SHARES BEFORE THE AFTER THE BUSINESS
NAME BUSINESS COMBINATION COMBINATION(1)
- ------------------------------------- -------------------- PERCENTAGE ------------------ PERCENTAGE
---------- ----------

Soletanche Group(1) 5,005,000 30.1% 3,303,300 8.4%
6, rue de Watford
92000 Nanterre
France
Ackermans & van Haaren Group(2) 5,005,000 30.1% 3,303,300 8.4%
Begijnenvest 113
B-2000 Antwerpen
Belgium
All directors and officers as a 24,000 * 15,840 *
group (15 persons).................

- ------------

* Less than one percent.

(1) Gialos B.V. and Compagnie Financiere de Services Petroliers S.A., both
wholly owned subsidiaries of Soletanche, own 3,511,419 FFNV Common Shares
(21.1%) and 1,493,581 FFNV Common Shares (9.0%), respectively. The
Soletanche Group is a privately held French company the majority of which is
owned by IGEBE, a privately held French company with over 20 individual
beneficial owners, and the remainder of which is owned by a subsidiary of
GTM Entrepose S.A., a publicly traded company listed on the Paris Stock
Exchange.

(2) Sertofin B.V., an indirect wholly owned subsidiary of Ackermans, owns the
shares indicated. Ackermans is a publicly traded company listed on the
Brussels Stock Exchange.

COMPARISON OF THE CAPITAL SHARES OF PRIDE AND FORASOL-FORAMER

PRIDE COMMON STOCK

GENERAL. Pride is currently authorized to issue 40,000,000 shares of Pride
Common Stock, and will be authorized to issue 100,000,000 shares upon approval
of the Pride Proposal at the Pride Meeting and completion of the Business
Combination. As of January 21, 1997, 28,527,656 shares were issued and
outstanding, and 9,468,579 were reserved for issuance upon conversion of Pride's
outstanding convertible subordinated debentures and under various employee
benefit plans of Pride. Pride Common Stock is traded on the Nasdaq National
Market under the symbol "PRDE."

VOTING AND OTHER RIGHTS. Holders of Pride Common Stock are entitled to one
vote per share, and, in general, a majority of votes cast with respect to a
matter is sufficient to authorize action. Dividends may be paid to the holders
of Pride Common Stock when, as and if declared by the Board of Directors out of
funds legally available for such purpose. Holders of Pride Common Stock have no
conversion, redemption, cumulative voting or preemptive rights. In the event of
any liquidation, dissolution or winding up of Pride, after payment or provision
for payment of the debts and other liabilities of Pride and payment or provision
for payment of all amounts to which holders of any other series or class of
Pride's stock that ranks senior as to liquidation rights to the Pride Common
Stock are entitled, the holders of Pride Common Stock will be entitled to share
ratably in any remaining assets of Pride. All outstanding shares of Pride Common
Stock are, and the shares of Pride Common Stock to be issued by Pride hereby
will be, duly and validly issued, fully paid and nonassessable.

The transfer agent and registrar for the Pride Common Stock is American
Stock Transfer & Trust Company, 40 Wall Street, New York, New York 10005.

PRIDE PREFERRED STOCK

Pride is authorized to issue 5,000,000 shares of preferred stock, no par
value ("Pride Preferred Stock"). To date, no series of Pride Preferred Stock
has been designated or issued. When and if issued, however, shares of each
series of Pride Preferred Stock will have such rights and preferences as are
fixed by the Board of Directors in the resolution or resolutions authorizing the
issuance of that particular series. In

designating any series of Pride Preferred Stock, the Board of Directors has the
authority, without further action of the holders of Pride Common Stock, to fix
the number of shares constituting that series and to fix the preferences,
limitations and relative rights of the series, including the dividend rights,
dividend rate, terms and prices of redemption, liquidation preferences, sinking
fund rights, conversion rights and voting rights. It is expected that the
holders of any series of Pride Preferred Stock, when and if issued, will have
priority with respect to dividends and any distributions upon liquidation of
Pride, and may have other preferences over the holders of Pride Common Stock,
including the preferential right to elect directors in the event dividends on
Pride Preferred Stock are not paid for a specified period. Although Pride has no
present intent to issue shares of Pride Preferred Stock, the issuance of Pride
Preferred Stock could be used to discourage an unsolicited acquisition proposal
or otherwise have an antitakeover effect.

FFNV COMMON SHARES

GENERAL. The authorized share capital of Forasol-Foramer is NLG 500,000,
consisting of 50,000,000 FFNV Common Shares, each with a par value of NLG.01.
There currently are 16,650,290 FFNV Common Shares issued and outstanding, and
462,000 are reserved for issuance upon exercise of Forasol-Foramer stock
options. FFNV Common Shares are traded on the Nasdaq National Market under the
symbol "FSOLF."

VOTING AND OTHER RIGHTS. Forasol-Foramer shareholders are entitled to one
vote for each FFNV Common Share held on every matter submitted to a vote of
shareholders, and, in general, an absolute majority of votes cast is sufficient
to authorize action on such matters. In the event of the liquidation,
dissolution or winding up of Forasol-Foramer, holders of FFNV Common Shares are
entitled to receive, on a pro rata basis, all assets of Forasol-Foramer
remaining available for distribution. The Forasol-Foramer Articles of
Association (the "Forasol-Foramer Articles") make no provision for cumulative
voting.

The Forasol-Foramer Articles have delegated to Forasol-Foramer's Board of
Supervisory Directors the power to issue new shares up to the level of the
authorized capital. Under the laws of The Netherlands, such authorization can
only be granted for a five-year period and will expire in April 2001, subject to
future extension. The Forasol-Foramer Articles also provide that
Forasol-Foramer's Board of Supervisory Directors may limit or exclude preemptive
rights.

The transfer agent and registrar for the FFNV Common Shares is American
Stock Transfer & Trust Company, 40 Wall Street, New York, New York 10005.

COMPARISON OF VOTING AND OTHER RIGHTS

Pride is a Louisiana corporation subject to the provisions of Louisiana
law. Forasol-Foramer is a Dutch limited liability company subject to the
provisions of the laws of The Netherlands. Shareholders of Forasol-Foramer,
whose rights are governed by the Forasol-Foramer Articles and the laws of The
Netherlands, will become shareholders of Pride upon consummation of the Business
Combination. As shareholders of Pride, their rights will then be governed by the
Restated Articles of Incorporation of Pride, as amended (the "Pride
Articles"), the bylaws of Pride (the "Pride Bylaws") and the provisions of
Louisiana law. Set forth below is a summary of the material differences between
the rights of Forasol-Foramer shareholders under the Forasol-Foramer Articles
and the laws of The Netherlands, on the one hand, and the rights of Pride
shareholders under the Pride Articles, the Pride Bylaws and Louisiana law, on
the other hand.

MEETINGS OF SHAREHOLDERS. The Pride Articles and the Pride Bylaws provide
that special meetings of shareholders may be called by any shareholder or group
of shareholders holding in the aggregate at least 80% of the total voting power,
or by the Chairman of the Board, the President or the Board of Directors of
Pride. A quorum for a meeting of Pride shareholders is a majority of the
outstanding shares of Pride Common Stock entitled to vote. Unless the question
brought before the meeting is one for which, by express provision of law or the
Pride Articles, a different vote is required, a majority of the votes cast
decides the question. Unless otherwise required by law or the Pride Bylaws,
meetings of Pride shareholders may be held at any place within or without
Louisiana, as designated by the Board of Directors of Pride.

Extraordinary general meetings of Forasol-Foramer shareholders may be held
as often as the Board of Managing Directors, its Chairman or its Chief Operating
Officer, its Board of Supervisory Directors or its Chairman deems necessary, or
as otherwise provided under the laws of The Netherlands. General meetings of
Forasol-Foramer shareholders are held in The Netherlands. Unless otherwise
required by the Forasol-Foramer Articles or the laws of The Netherlands,
resolutions of general meetings of Forasol-Foramer shareholders require the vote
of a majority of the votes cast. Resolutions of general meetings of shareholders
occurring outside The Netherlands require the entire issued share capital being
present or represented.

DISTRIBUTIONS. Dividends may be paid to the holders of Pride Common Stock
when, as and if declared by the Board of Directors out of funds legally
available for such purpose. The Pride Board of Directors may declare dividends
at any regular or special meeting.

The Forasol-Foramer shareholders, acting at a general meeting, may
distribute that portion of Forasol-Foramer's annual profits that remains after
the Board of Supervisory Directors establishes reserves. The general meeting of
shareholders may also declare distributions, upon the approval of the Board of
Managing Directors, out of Forasol-Foramer's share premium reserve and other
reserves available for shareholder distributions under the laws of The
Netherlands. Upon proposal of the Board of Managing Directors, distributions to
shareholders resolved by the general meeting of shareholders may be fully or
partially made in the form of shares of capital of Forasol-Foramer. The Board of
Supervisory Directors may, subject to certain statutory provisions, distribute
one or more interim dividends before the accounts for any year have been
approved and adopted at a general meeting of shareholders. Rights to cash
dividends and distributions that have not been collected within five years after
the date on which they became due and payable shall revert to the Company.

BOARD OF DIRECTORS. The Pride Articles provide that the members of the
Board of Directors of Pride will be elected for terms of five years and until
their successors are elected and qualified. The Pride Articles further provide
that the number of directors will be as designated in the Pride Bylaws, although
no amend-ment to the Pride Bylaws to decrease the number of directors shall
shorten the term of any incumbent director. The Pride Bylaws currently provide
for six directors (to be increased to eight upon completion of the Business
Combination) and, in addition, provide that the Pride Bylaws may be amended by
shareholders only upon the affirmative vote of at least 80% of the voting power.
Moreover, the Pride Articles provide that any vacancy on the Board of Directors
may be filled by a vote of at least two-thirds of the directors then in office,
and a director elected to fill a vacancy shall serve until the next
shareholders' meeting held for the election of directors generally. The
shareholders, however, have the right at a special meeting, if called for such
purpose prior to such action by the Board of Directors, to fill a vacancy. The
Pride Articles also provide that directors may be removed only for cause and
only by the affirmative vote of not less than 80% of the voting power, provided
that the removal may be effected only at a meeting of shareholders called for
that purpose.

Forasol-Foramer has a Board of Managing Directors and a Board of
Supervisory Directors, each of which has one or more members. The Board of
Managing Directors is entrusted with the management of Forasol-Foramer, and the
Board of Supervisory Directors supervises the policy of the Board of Managing
Directors. Vacancies are filled by a vote of shareholders at the first general
meeting after such vacancy occurs or is created. Supervisory Directors and
Managing Directors serve until the expiration of their respective terms of
office or until their resignation, death or removal, with or without cause, by
the shareholders or, in the case of Supervisory Directors, upon reaching the
mandatory retirement age of 72. The existing Board of Supervisory Directors
members serve staggered three-year terms; the members of the Board of Managing
Directors serve indefinite terms.

SHAREHOLDER NOMINATIONS OF DIRECTORS. The Pride Articles provide that only
persons who are nominated by, or at the direction of, the Board of Directors of
Pride or by a shareholder who has given timely notice to the Secretary of Pride
prior to the meeting at which directors are to be elected will be eligible for
election as directors. To be timely, notice must be received by Pride at its
principal executive offices not less than 45 days nor more than 90 days prior to
the meeting (or, if less than 55 days' notice or prior public disclosure of the
meeting date is given or made to shareholders, not later than the tenth day

following the day on which such notice was mailed or such prior public
disclosure was made). Notice to Pride from a shareholder who proposes to
nominate a person at a meeting for election as a director must contain certain
specified information about that person.

The Forasol-Foramer Articles do not provide for shareholder nominations of
directors. Instead, the Supervisory Directors and the Management Directors are
elected from nominations made by the Board of Supervisory Directors. At least
two persons must be nominated for each vacancy. Under the laws of The
Netherlands and the Forasol-Foramer Articles, the shareholders may deprive the
nominations of their binding effect by a resolution passed by two-thirds of the
votes cast, so long as such vote represents more than one-half of the issued
share capital.

APPROVAL OF ANNUAL ACCOUNTS AND DISCHARGE OF MANAGEMENT LIABILITY. Each
year, Forasol-Foramer's Board of Managing Directors is responsible for the
preparation and submission of annual accounts to a general meeting of
shareholders for approval within five months after the end of Forasol-Foramer's
financial year, unless the general meeting of shareholders has extended this
period by a maximum of six months due to special circumstances. Adoption of
Forasol-Foramer's annual accounts by the general meeting of shareholders
discharges the members of the Board of Managing Directors and the members of the
Board of Supervisory Directors from liability for the exercise of their duties
during the financial year concerned, unless an explicit reservation is made by
the general meeting of shareholders and without prejudice to the provisions of
the laws of The Netherlands relating to liability of members of boards of
supervisory directors and boards of managing directors upon bankruptcy of a
company pursuant to Articles 138 and 149 of Book 2 of the Civil Code of The
Netherlands. Under the laws of The Netherlands, this discharge does not extend
to matters not disclosed to Forasol-Foramer's shareholders.

There are no similar provisions under the Pride Articles or Louisiana law.

ANTITAKEOVER PROVISIONS. The Pride Articles provide that certain business
combinations are prohibited unless approved by 80% of the total voting power
(excluding such securities and obligations owned by an acquiring entity) and
unless certain substantive conditions are satisfied. These requirements will not
apply to a business combination that (i) is approved by a majority of directors
unaffiliated with the acquiring entity who were directors prior to an acquiring
entity's becoming such (or certain successors) (the "Continuing Directors"),
if there are at least three Continuing Directors or (ii) involves solely either
(A) transfer of assets of Pride to a subsidiary wholly owned by Pride or (B) a
merger or consolidation with or into a successor corporation, as long as the
percentages of shareholder ownership remain the same and the successor
corporation's articles of incorporation contain the same provisions as the Pride
Articles.

Louisiana law requires that certain transactions, such as mergers,
consolidations or share exchanges, with a shareholder beneficially owning 10% or
more of the voting power of the corporation (an "Interested Shareholder") or
its affiliates be recommended by the board of directors and approved by the
affirmative vote of (i) 80% of the votes entitled to be cast by outstanding
shares of the corporation's voting stock and (ii) two-thirds of the votes
entitled to be cast by holders of voting stock other than the Interested
Shareholder and its affiliates. These voting requirements do not apply to such
transactions if the transaction (i) does not alter the contract rights of the
stock or change or convert, in whole or in part, the outstanding shares of the
corporation or (ii) satisfies certain requirements with regard to the
consideration to be received by shareholders and certain procedural
requirements.

The Pride Articles and Louisiana law provide that the Board of Directors of
Pride, when evaluating a tender offer or an offer to make a tender or exchange
offer or to effect a Business Combination, may, in exercising its judgment in
determining what is in the best interests of Pride and its shareholders,
consider the following factors and any other factors that it deems relevant: (i)
not only the consideration being offered in the proposed transaction, in
relation to the then-current market price for the outstanding capital stock of
Pride, but also (A) the market price for the capital stock of Pride over a
period of years, (B) the estimated price that might be achieved in a negotiated
sale of Pride as a whole or in part or through orderly liquidation, (C) the
premiums over market price for the securities of other corporations in similar
transactions, (D) current political, economic and other factors bearing on
securities prices and (E) Pride's financial condition and future prospects; (ii)
the social and economic effects of such transaction on Pride, its

subsidiaries or their employees, customers, creditors and the communities in
which Pride and its subsidiaries do business; (iii) the business and financial
condition and earnings prospects of the acquiring party or parties, including,
but not limited to, debt service and other existing or likely financial
obligations of the acquiring party or parties, and the possible effect of such
conditions upon Pride and its subsidiaries and the communities in which Pride
and its subsidiaries do business; and (iv) the competence, experience and
integrity of the acquiring party or parties and its or their management.

There are no similar provisions under Dutch law or the Forasol-Foramer
Articles.

REPURCHASE OF COMMON SHARES AND CAPITAL REDUCTIONS. Subject to certain
restrictions contained in the laws of The Netherlands and the Forasol-Foramer
Articles, Forasol-Foramer's shareholders may authorize the Board of Managing
Directors to cause Forasol-Foramer to acquire its own fully paid shares in an
amount not to exceed 10% of the outstanding shares at any time in open market
purchases. Such authorization may not be granted for more than 18 months. No
such authorization will be required if Forasol-Foramer acquires shares of its
own capital for the purpose of transferring the same to employees of
Forasol-Foramer or of a group company under a scheme applicable to such
employees, provided that such shares are officially listed on an exchange. Upon
a proposal by the Board of Supervisory Directors of Forasol-Foramer, the general
meeting of shareholders may reduce the issued share capital by cancellation of
FFNV Common Shares held by Forasol-Foramer or by reducing the par value of FFNV
Common Shares, subject to certain statutory provisions.

AMENDMENT OF CERTAIN PROVISIONS OF THE ARTICLES. The Pride Articles
provide, with certain exceptions, that the holders of a majority of the total
voting power present at a shareholders' meeting are required to amend certain
provisions of the Pride Articles. The exceptions relate generally to the
authority of the Board to issue Pride preferred stock, the anti-takeover
provisions and limitations on director liability, in which instances an
amendment requires approval of holders of 80% of the total voting power. The
Pride Bylaws provide that they may be amended or repealed only by (i) a majority
of the entire Board of Directors at any time when there is no acquiring entity,
(ii) both a majority of the entire Board of Directors and a majority of the
Continuing Directors at any time when there is an acquiring entity or (iii) the
affirmative vote of the holders of at least 80% of the total voting power.

The Forasol-Foramer Articles may be amended at a general meeting of
shareholders if amendments are proposed by the Board of Supervisory Directors.
No such amendment shall become effective, however, until the Ministry of Justice
of The Netherlands has issued a statement of no objection and a deed of
amendment has been executed by a Dutch civil law notary.

LEGAL MATTERS

Certain legal matters in connection with the Pride Common Stock to be
issued and distributed in the Business Combination will be passed upon by
McGlinchey Stafford Lang, a professional limited liability company, New Orleans,
Louisiana.

INDEPENDENT PUBLIC ACCOUNTANTS

The consolidated balance sheet of the Company as of December 31, 1995 and
1994, and the related consolidated statements of operations, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1995, and the related schedules, included and incorporated by
reference in this Proxy Statement/Prospectus, have been included and
incorporated by reference herein in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in auditing and accounting. With respect to the unaudited interim financial
information for the periods ended September 30, 1996 and 1995, included or
incorporated by reference in this Proxy Statement/Prospectus, Coopers & Lybrand
L.L.P. has reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
report related to the interim financial information included and incorporated by
reference herein states that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of

the review procedures applied. Coopers & Lybrand L.L.P. is not subject to the
liability provisions of Section 11 of the Securities Act for their report on the
unaudited interim financial information because that report is not a "report"
or a "part" of the registration statement prepared or certified by the
accountants within the meaning of Sections 7 and 11 of the Securities Act.

The consolidated financial statements of Quitral-Co S.A.I.C. at June 30,
1995 and 1994, and for each of the three years in the period ended June 30,
1995, included and incorporated by reference in this Proxy Statement Prospectus
have been audited by Pistrelli, Diaz y Asociados, member firm of Arthur
Andersen, independent public accountants, as indicated in their report with
respect thereto, and included and incorporated by reference in this Proxy
Statement Prospectus in reliance upon the authority of said firm as experts in
giving said reports.

The consolidated U.S. GAAP balance sheets of Forasol-Foramer at December
31, 1995 and 1994, and the related consolidated statements of income, of cash
flows and of changes in stockholders' equity for each of the three years in the
period ended December 31, 1995, included in this Proxy Statement/Prospectus,
except as they relate to National Drilling and Services Co. LLC, have been
audited by Price Waterhouse, Paris, France, independent accountants, and,
insofar as they relate to National Drilling and Services Co. LLC, by SABA &
Company, an affiliate of Deloitte & Touche LLP, independent accountants, whose
reports thereon appear herein. Such financial statements have been so included
in reliance on the reports of such independent accountants given on the
authority of such firms as experts in auditing and accounting.

On July 1, 1996, the Supervisory Board of Forasol-Foramer, upon
recommendation from the Audit Committee, approved Ernst & Young as
Forasol-Foramer's independent accountants effective for fiscal 1996. Prior to
fiscal 1996, Price Waterhouse served as Forasol-Foramer's independent
accountants. During the two most recent fiscal years and any subsequent interim
period preceding the change in independent accountants, there were no
disagreements with Price Waterhouse on any matter of accounting principles or
practices, financial statement disclosures, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of Price Waterhouse
would have caused them to make reference thereto in their report on the
financial statements for such years. None of the audit reports of Price
Waterhouse for any period, including the fiscal years ended December 31, 1995
and 1994, contained an adverse opinion or a disclaimer of opinion, or was
qualified or modified as to uncertainty, audit scope or accounting principles.

INDEX TO FINANCIAL STATEMENTS

PAGE
-----
Pride Petroleum Services, Inc.
Annual Financial Statements
Report of Independent
Accountants................ F-3
Consolidated Balance Sheet
as of December 31, 1995 and
1994....................... F-4
Consolidated Statement of
Operations for the Years
Ended December 31, 1995,
1994 and 1993........... F-5
Consolidated Statement of
Changes in Shareholders'
Equity for the Years Ended
December 31, 1995, 1994 and
1993....................... F-6
Consolidated Statement of
Cash Flows for the Years
Ended December 31, 1995,
1994 and 1993........... F-7
Notes to Consolidated
Financial Statements....... F-8
Interim Financial Statements
(unaudited)
Report of Independent
Accountants on Review of
Interim Financial
Information................ F-22
Consolidated Balance Sheet
as of September 30, 1996
and December 31, 1995...... F-23
Consolidated Statement of
Operations for the Nine
Months Ended Sepember 30,
1996 and 1995.............. F-24
Consolidated Statement of
Cash Flows for the Nine
Months Ended September 30,
1996 and 1995.............. F-25
Notes to Unaudited
Consolidated Financial
Statements................. F-26
Quitral-Co S.A.I.C. and Subsidiary
Annual Financial Statements
Report of Independent
Public Accountants......... F-32
Consolidated Balance Sheets
as of June 30, 1995 and
1994....................... F-33
Consolidated Statements of
Income for the Years Ended
June 30, 1995, 1994 and
1993....................... F-34
Consolidated Statements of
Changes in Shareholders'
Equity for the Years Ended
June 30, 1995, 1994 and
1993....................... F-35
Consolidated Statements of
Cash Flows for the Years
Ended June 30, 1995, 1994
and 1993................... F-36
Notes to Consolidated
Financial Statements....... F-37
Interim Financial Statements
(unaudited)
Consolidated Balance Sheets
as of March 31, 1996 and
1995....................... F-59
Consolidated Statements of
Income for the Nine Months
Ended March 31, 1996 and
1995....................... F-60
Consolidated Statements of
Changes in Shareholders'
Equity for the Nine Months
Ended March 31, 1996 and
1995....................... F-61
Consolidated Statements of
Cash Flows for the Nine
Months Ended March 31, 1996
and 1995................... F-62
Notes to Unaudited Interim
Consolidated Financial
Statements................. F-63

F-1

PAGE
-----
Forasol-Foramer N.V.
Annual Financial Statements
Report of Independent
Accountants................ F-69
Consolidated Balance Sheets
as of December 31, 1995 and
1994....................... F-70
Consolidated Statements of
Income for the Years Ended
December 31, 1995, 1994 and
1993....................... F-71
Consolidated Statements of
Cash Flows for the Years
Ended December 31, 1995,
1994 and 1993.............. F-72
Consolidated Statements of
Stockholders' Equity for
the Years Ended December
31, 1995, 1994 and 1993.... F-73
Notes to the Consolidated
Financial Statements....... F-74
Interim Financial Statements
(unaudited)
Consolidated Condensed
Balance Sheets as of June
30, 1996 and December 31,
1995....................... F-94
Consolidated Condensed
Statements of Income for
the Six Months Ended June
30, 1996 and 1995.......... F-95
Consolidated Condensed
Statements of Cash Flows
for the Six Months Ended
June 30, 1996 and 1995..... F-96
Notes to Unaudited
Consolidated Condensed
Financial Statements....... F-97
Consolidated Condensed
Balance Sheets as of
September 30, 1996 and
December 31, 1995....... F-98
Consolidated Condensed
Statement of Income for the
Nine Months Ended
September 30, 1996...... F-99
Consolidated Condensed
Statement of Cash Flows for
the Nine Months Ended
September 30, 1996......... F-100
Notes to Unaudited
Consolidated Condensed
Financial Statements....... F-101
Audited Financial Statements of
National Drilling and Services
Co. LLC
Auditor's Report........... F-102
Balance Sheet as of
December 31, 1995 and
1994....................... F-103
Statement of Profit and
Loss for the Year Ended
December 31, 1995 and for
the Period from April 1,
1994 to December 31,
1994....................... F-104
Statement of Cash Flows for
the Year Ended December 31,
1995 and for the
Period from April 1,
1994 to December 31,
1994....................... F-105
Notes to Financial
Statements................. F-106
Auditor's Report........... F-115
Balance Sheet as of
December 31, 1994 and March
31, 1994................... F-116
Statement of Profit and
Loss for the Period from
April 1, 1994 to December
31, 1994 and for the Year
ended March 31, 1994....... F-117
Statement of Cash Flows for
the Period from April 1,
1994 to December 31, 1994
and for the Year Ended
March 31, 1994............. F-118
Notes to Financial
Statements................. F-119

F-2

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of Pride Petroleum Services, Inc.:

We have audited the consolidated balance sheet of Pride Petroleum Services,
Inc. and Subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1995. 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 audits in accordance with generally accepted auditing
standards. 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 consolidated financial position of Pride Petroleum
Services, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.

As discussed in Note 6 to the financial statements, the Company changed its
method of accounting for income taxes in 1993.

COOPERS & LYBRAND L.L.P.

Houston, Texas
February 26, 1996

F-3

PRIDE PETROLEUM SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

DECEMBER 31,
------------------------
1995 1994
----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents....... $ 9,295 $ 5,970
Short-term investments.......... 2,612 3,001
Trade receivables, net of
allowance for doubtful accounts
of
$426 and $394, respectively... 43,767 38,334
Parts and supplies.............. 9,473 4,468
Deferred income taxes........... 1,518 2,388
Other current assets............ 6,488 6,128
----------- -----------
Total current assets....... 73,153 60,289
----------- -----------
PROPERTY AND EQUIPMENT, AT COST...... 296,939 246,365
ACCUMULATED DEPRECIATION............. (118,451) (106,466)
----------- -----------
Net property and
equipment............... 178,488 139,899
----------- -----------
GOODWILL AND OTHER INTANGIBLES,
net................................ 3,699 3,580
OTHER ASSETS......................... 2,265 1,425
----------- -----------
$ 257,605 $ 205,193
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................ $ 15,010 $ 14,715
Accrued expenses................ 16,550 15,332
Current portion of long-term
debt........................... 10,291 3,602
----------- -----------
Total current
liabilities............. 41,851 33,649
----------- -----------
OTHER LONG-TERM LIABILITIES.......... 4,127 5,327
LONG-TERM DEBT, net of current
portion............................ 61,136 42,096
DEFERRED INCOME TAXES................ 19,252 12,736
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value;
40,000,000 shares authorized;
24,863,072 and 24,081,872
shares issued and 24,808,852
and 24,027,652 shares
outstanding, respectively...... 1 1
Paid-in capital................. 95,751 91,256
Treasury stock, at cost......... (191) (191)
Retained earnings............... 35,678 20,319
----------- -----------
Total shareholders'
equity.................. 131,239 111,385
----------- -----------
$ 257,605 $ 205,193
=========== ===========

The accompanying notes are an integral part of the consolidated financial
statements.

F-4

PRIDE PETROLEUM SERVICES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------

REVENUES................................................................. $ 263,599 $ 182,336 $ 127,099
---------- ---------- ----------
COSTS AND EXPENSES
Operating costs..................................................... 188,252 139,653 100,305
Depreciation and amortization....................................... 16,657 9,550 6,407
Selling, general and administrative................................. 32,418 25,105 17,572
---------- ---------- ----------
Total costs and expenses....................................... 237,327 174,308 124,284
---------- ---------- ----------
Earnings from operations.................................. 26,272 8,028 2,815
OTHER INCOME (EXPENSE)
Other income (expense).............................................. 1,687 (305) (135)
Interest income..................................................... 740 618 649
Interest expense.................................................... (6,276) (207) (10)
---------- ---------- ----------
Total other income (expense), net......................... (3,849) 106 504
---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME TAXES............................................ 22,423 8,134 3,319
INCOME TAX PROVISION..................................................... 7,064 1,920 1,214
---------- ---------- ----------
NET EARNINGS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING FOR INCOME TAXES.................................. 15,359 6,214 2,105
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING FOR INCOME TAXES......................................... -- -- 3,835
---------- ---------- ----------
NET EARNINGS............................................................. $ 15,359 $ 6,214 $ 5,940
========== ========== ==========
NET EARNINGS PER SHARE
Before cumulative effect of change
in accounting for income taxes.................................... $ .60 $ .30 $ .13
Cumulative effect of change in
accounting for income taxes....................................... -- -- .23
---------- ---------- ----------
EARNINGS PER SHARE....................................................... $ .60 $ .30 $ .36
========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING................................... 25,465 20,795 16,487
========== ========== ==========

The accompanying notes are an integral part of the consolidated financial
statements.

F-5

PRIDE PETROLEUM SERVICES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)

COMMON STOCK TREASURY TOTAL
----------------- PAID-IN STOCK RETAINED SHAREHOLDERS'
SHARES AMOUNT CAPITAL AT COST EARNINGS EQUITY
--------- ------ --------- -------- --------- --------------

BALANCE -- DECEMBER 31, 1992......... 16,034 $ 1 $ 53,915 $ (307) $ 8,165 $ 61,774
Net earnings.................... -- -- -- -- 5,940 5,940
Issuance of common stock in
connection with acquisition... 270 -- 1,099 116 -- 1,215
Exercise of stock options....... 17 -- 129 -- -- 129
Tax benefit of non-qualified
stock options................. -- -- 68 -- -- 68
--------- ------ --------- -------- --------- --------------
BALANCE -- DECEMBER 31, 1993......... 16,321 1 55,211 (191) 14,105 69,126
Net earnings.................... -- -- -- -- 6,214 6,214
Issuance of common stock in
public offering............... 6,918 -- 32,108 -- -- 32,108
Issuance of common stock in
connection with acquisition... 785 -- 3,925 -- -- 3,925
Exercise of stock options....... 4 -- 8 -- -- 8
Tax benefit of non-qualified
stock options................. -- -- 4 -- -- 4
--------- ------ --------- -------- --------- --------------
BALANCE -- DECEMBER 31, 1994......... 24,028 1 91,256 (191) 20,319 111,385
Net earnings.................... -- -- -- -- 15,359 15,359
Issuance of common stock in
connection with
acquisitions.................. 525 -- 3,279 -- -- 3,279
Exercise of stock options....... 256 -- 739 -- -- 739
Tax benefit of non-qualified
stock options................. -- -- 477 -- -- 477
--------- ------ --------- -------- --------- --------------
BALANCE -- DECEMBER 31, 1995......... 24,809 $ 1 $ 95,751 $ (191) $ 35,678 $131,239
========= ====== ========= ======== ========= ==============

The accompanying notes are an integral part of the consolidated financial
statements.

F-6

PRIDE PETROLEUM SERVICES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
OPERATING ACTIVITIES
Net earnings....................... $ 15,359 $ 6,214 $ 5,940
Adjustments to reconcile net
earnings to net cash provided by
operating activities --
Depreciation and
amortization............... 16,657 9,550 6,407
Gain on sale of assets........ (1,544) (475) (241)
Effect of exchange rates...... (142) 362 167
Deferred tax provision
(benefit).................. 4,602 1,120 (103)
Effect of change in accounting
for income taxes........... -- -- (3,835)
Changes in assets and
liabilities, net of effects
of acquisitions --
Trade receivables....... (4,493) (10,106) (830)
Parts and supplies...... (2,866) (1,128) (313)
Other current assets.... (1,914) (31) (395)
Accounts payable........ (358) 1,534 2,778
Accrued expenses and
other................. 1,391 1,331 (343)
---------- ---------- ----------
Net cash provided
by operating
activities...... 26,692 8,371 9,232
---------- ---------- ----------
INVESTING ACTIVITIES
Purchase of net assets of acquired
entities, including
acquisition costs, less cash
acquired........................ (8,144) (22,217) (9,752)
Purchases of property and
equipment....................... (40,636) (59,171) (12,123)
Proceeds from sale of short-term
investments..................... 1,250 1,004 2,852
Proceeds from sale of property and
equipment....................... 6,862 908 285
Purchase of short-term
investments..................... (360) -- (2,000)
Other.............................. (485) (6) 45
---------- ---------- ----------
Net cash used in
investing
activities...... (41,513) (79,482) (20,693)
---------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from issuance of common
stock........................... 1,216 32,116 129
Proceeds from debt borrowings...... 27,535 39,358 400
Reduction of debt.................. (10,410) (740) (1,797)
Other.............................. (195) (1,162) --
---------- ---------- ----------
Net cash provided
(used) by
financing
activities...... 18,146 69,572 (1,268)
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................... 3,325 (1,539) (12,729)
CASH AND CASH EQUIVALENTS, beginning
of period.......................... 5,970 7,509 20,238
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of
period............................. $ 9,295 $ 5,970 $ 7,509
========== ========== ==========

The accompanying notes are an integral part of the consolidated financial
statements.

F-7

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

Pride Petroleum Services, Inc. (the "Company") is a Louisiana corporation
which was organized in 1988 as the successor to a company originally
incorporated in 1968. The accompanying consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated. Certain
reclassifications have been made to prior year amounts to conform with the
current year presentation.

CASH EQUIVALENTS

For purposes of the consolidated balance sheet and consolidated statement
of cash flows, the Company considers highly liquid debt instruments having
maturities of three months or less at the date of purchase to be cash
equivalents.

SHORT-TERM INVESTMENTS

Short-term investments include marketable securities, which in the case of
debt instruments have maturities in excess of three months but less than one
year at the date of purchase, and are carried at the lower of cost or market
value. There were no material differences between cost and fair market value at
December 31, 1995.

PARTS AND SUPPLIES

Parts and supplies consist of spare rig parts and supplies held for use in
operations and are valued at the lower of weighted average cost or market value.

PROPERTY AND EQUIPMENT

Property and equipment are carried at original cost or adjusted net
realizable value, as applicable. Major renewals and improvements are capitalized
and depreciated over the respective asset's useful life. Maintenance and repair
costs are charged to expense as incurred. During the years ended December 31,
1995, 1994 and 1993, maintenance and repair costs included in operating costs
were $20,776,000, $16,290,000 and $12,541,000, respectively. When assets are
sold or retired, the remaining costs and related accumulated depreciation are
removed from the accounts and any resulting gain or loss is included in income.

For financial reporting purposes, depreciation of property and equipment is
provided using primarily the straight line method based upon expected useful
lives of each class of assets. Estimated useful lives of the assets for
financial reporting purposes are as follows:

YEARS
-------
Rigs and rig equipment............... 5 - 17
Transportation equipment............. 3 - 7
Buildings and improvements........... 10 - 20
Furniture and fixtures............... 5

The Company capitalizes interest applicable to the construction of
significant additions to property and equipment. In 1995 and 1994, total
interest incurred was $6,526,000 and $665,000, respectively, of which $250,000
and $458,000, respectively, was capitalized. No interest was capitalized in
1993.

GOODWILL AND OTHER INTANGIBLES

Goodwill, totalling $2,650,000 and $2,846,000 at December 31, 1995 and
1994, respectively, represents the cost in excess of fair value of the net
assets of companies acquired and is being amortized over 15 years. Other
intangible assets, totalling $1,049,000 and $734,000 at December 31, 1995 and
1994,

F-8

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
respectively, represent costs allocated to service contracts, employment
contracts, covenants not to compete and client lists acquired in business
acquisitions. Other intangible assets are being amortized over their estimated
useful lives, which range from three to ten years. Total amortization of
goodwill and other intangible assets for the years ended December 31, 1995, 1994
and 1993 amounted to $543,000, $475,000 and $453,000, respectively.

REVENUE RECOGNITION

The Company recognizes revenue from domestic land well servicing operations
as services are performed based upon actual rig hours worked. Revenues from
international and offshore well servicing and daywork drilling operations are
recognized as services are performed based upon contracted day rates and the
number of operating days during the period. Revenues from related operations are
recognized in the period in which such services are performed.

INCOME TAXES

Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"). SFAS 109 requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the asset is recovered or the liability is settled.

FOREIGN CURRENCY TRANSLATION

The Company accounts for translation of foreign currency in accordance with
Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation". The Company's Venezuelan operations are in a "highly
inflationary" economy resulting in the use of the U.S. dollar as the functional
currency. Therefore, certain assets of this operation are translated at
historical exchange rates and all translation gains or losses are reflected in
the period's results of operations. In Argentina and Colombia, the local
currency is considered the functional currency. Translation of Argentine and
Colombian assets and liabilities is made at the prevailing exchange rate as of
the balance sheet date. Revenues and expenses are translated at the average rate
of exchange during the period. The resulting translation adjustments are
recorded as a component of shareholders' equity. In Russia, contracts to date
have called for payment and expenses to be in U.S. dollars; therefore, no
exchange gain or loss has been applicable.

EARNINGS (LOSS) PER SHARE

Earnings (loss) per share has been computed based on the weighted average
number of common shares outstanding during the applicable period. Common share
equivalents have been included in periods in which their effect is dilutive.
Common share equivalents include the number of shares issuable upon exercise of
warrants and stock options, less the number of shares that could have been
repurchased with the exercise proceeds, using the treasury stock method. Fully
diluted earnings per share have not been presented as the results are not
materially different.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and trade receivables. The Company places its temporary cash investments in U.S.
Government securities and in other high quality financial instruments. By
policy, the Company limits the amount of credit exposure to any one financial
institution or issuer. The Company's customer base consists primarily of major
integrated and government-owned international oil companies as well as smaller
independent oil and gas producers. Management believes the credit quality of its
customers

F-9

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
is generally high. The Company has in place insurance to cover certain exposure
in its foreign operations and provides allowances for potential credit losses
when necessary.

MANAGEMENT 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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. While it is believed that such estimates are reasonable,
actual results could differ from those estimates.

CONDITIONS AFFECTING ONGOING OPERATIONS

Increases and decreases in domestic well servicing activity historically
have had a significant correlation with changes in oil and natural gas prices.
International well servicing activity is also affected by fluctuations in oil
and natural gas prices, but historically to a lesser extent than domestic
activity. International well servicing contracts are typically for terms of one
year or more, while domestic contracts are typically entered into for one or
multiple wells. Accordingly, international well servicing activities generally
are not as sensitive to short-term changes in oil and gas prices as domestic
operations.

2. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1995 and 1994 consists of the
following:

DECEMBER 31,
----------------------
1995 1994
---------- ----------
(IN THOUSANDS)
Land................................. $ 2,458 $ 2,340
Equipment............................ 274,378 191,248
Buildings............................ 6,492 5,495
Other................................ 471 251
Construction-in-progress............. 13,140 47,031
---------- ----------
296,939 246,365
Accumulated depreciation............. (118,451) (106,466)
---------- ----------
$ 178,488 $ 139,899
========== ==========

Construction-in-progress as of December 31, 1995 included approximately
$5,700,000 of costs related to the acquisition, refurbishment, equipping and
deploying to international markets of seven land-based workover and four
land-based drilling rigs and approximately $2,500,000 of costs related to the
construction of an offshore platform workover rig. At December 31, 1994,
construction-in-progress included approximately $36,533,000 of costs related to
the construction of the two drilling/workover barge rigs which were placed in
service in January 1995, approximately $4,355,000 of costs related to
improvements to three offshore platform rigs, and $3,701,000 related to the
refurbishment, upgrading and deployment of four additional rigs to Argentina.

3. ACQUISITIONS

In March 1995, the Company acquired all of the outstanding capital stock of
X-Pert Enterprises, Inc. ("X-Pert") for aggregate consideration of
approximately $10,000,000, consisting of $3,000,000 cash, a note payable to the
selling shareholders in the amount of $5,964,000, and 200,000 shares of the
Company's common stock.

F-10

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. ACQUISITIONS (CONTINUED)

The assets acquired and liabilities assumed in the X-Pert acquisition were
as follows:

ASSETS (LIABILITIES)
---------------------
(IN THOUSANDS)
Cash and cash equivalents............ $ 1,719
Trade receivables.................... 2,254
Other current assets................. 80
Property and equipment............... 10,000
Other assets......................... 725
Accounts payable..................... (648)
Accrued expenses..................... (761)
Long-term debt....................... (569)
Deferred income taxes................ (2,800)
---------------------
$10,000
=====================

Unaudited pro forma results of operations assuming the acquisition of
X-Pert had occurred on January 1, 1994, are as follows:

YEAR ENDED DECEMBER
31,
----------------------
1995 1994
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Revenues....................................... $ 265,592 $ 197,154
Net Earnings................................... $ 15,488 $ 7,112
Earnings per share............................. $ .61 $ .34

The pro forma results of operations presented above do not purport to be
indicative of the results of operations of the Company that might have occurred
nor are they indicative of future results.

Also in March 1995, the Company acquired substantially all of the assets of
a fluids hauling business for total consideration of $400,000, consisting of
$350,000 cash and a note payable to the sellers in the amount of $50,000.

In October 1995, the Company purchased all of the outstanding capital stock
of Marlin Colombia Drilling Co., Inc. ("Marlin") for cash consideration of
approximately $6,000,000.

In June 1994, the Company acquired substantially all of the assets of
Offshore Rigs, L.L.C. ("Offshore Rigs") for consideration of $31,213,000,
consisting of $20,608,000 in cash, the issuance of 785,000 shares of the
Company's common stock with a market value of $3,925,000, and the assumption of
existing bank indebtedness of $6,680,000.

In February 1994, the Company acquired all of the outstanding capital stock
of Hydrodrill, S.A. ("Hydrodrill"). The principal assets of Hydrodrill were
four land-based workover rigs located in southern Argentina.

Each of the acquisitions discussed above was recorded using the purchase
method of accounting. The operating results of each acquisition have been
included in consolidated results of operations from the date of acquisition.

F-11

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. DEBT

LONG-TERM DEBT

Long-term debt at December 31, 1995 and 1994 consists of the following:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Limited-recourse collateralized term
loans................................ $ 42,320 $ 33,311
Secured term loans................... 8,200 8,860
Secured revolver..................... 8,850 --
Notes payable........................ 6,225 202
Acquisition note payable............. 5,070 --
Revolving line of credit............. 762 3,325
--------- ---------
71,427 45,698
Less current portion................. 10,291 3,602
--------- ---------
$ 61,136 $ 42,096
========= =========

During 1994, the Company entered into long-term financing arrangements with
two Japanese trading companies in connection with the construction and operation
of two drilling/workover barge rigs. The term loans are collateralized by the
barge rigs and related charter contracts. The aggregate amount of the
collateralized term loans was initially $42,000,000. During 1994 and 1995, an
aggregate of $2,503,000 of accrued interest was added to the principal amount of
the loans. Pursuant to the terms of the loan agreements, interest, which accrues
at a rate of 9.61% per annum, was added to the principal amount of the loans
prior to the first scheduled payment in July 1995. The loans are being repaid
from the proceeds of the related charter contracts in equal monthly installments
of principal and interest through July 2004. In addition, a portion of the
contract proceeds is being held in trust to assure timely payment of future debt
service obligations. At December 31, 1995, $2,435,000 of such contract proceeds
are being held in trust for the benefit of the lenders, and are not presently
available for use by the Company. The terms of the financing agreements limit
the lenders' recourse essentially to the barge rigs, contract proceeds and the
assets of the Company's Venezuelan subsidiary. The Company also provided the
lenders a limited guaranty with respect to certain political risks. The Company
has obtained political risks insurance policies from the Overseas Private
Investment Corporation to protect against political risks that could potentially
result in payments under the terms of the Company's guaranty.

In connection with the acquisition of the assets of Offshore Rigs in June
1994, the Company's new wholly-owned subsidiary, Pride Offshore, Inc. ("Pride
Offshore"), entered into a $14,400,000 credit facility with a financial
institution. The credit facility included $5,400,000 of secured term loans, a
$4,000,000 secured revolver that was scheduled to convert to a term loan in
January 1995 and a $5,000,000 revolving line of credit. The secured term loan
initially bore interest at a rate of 8% per annum, while the secured revolver
and the revolving line of credit each bore interest at a variable rate of prime
plus 1/2% per annum. At December 31, 1994, the Company had $4,860,000 of
borrowings outstanding under the secured term loans, $4,000,000 outstanding
under the secured revolver and $3,325,000 outstanding under the revolving line
of credit.

In February 1995, the credit facility was amended to, among other things,
increase the aggregate borrowing availability under the facility to $30,000,000,
reschedule maturities of the loans and to revise the interest rates on a portion
of the borrowings. Pursuant to the amended credit facility, the amount of the
secured term loan was increased to $10,000,000, with two tranches. Tranche A had
an initial principal amount of $4,680,000, is repayable in 28 equal monthly
principal payments of $90,000 plus interest and one

F-12

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. DEBT (CONTINUED)
final principal payment of $2,160,000 in June 1997, and bears interest, payable
monthly, at a rate of 8% per annum. Tranche B had an initial principal amount of
$5,320,000, is repayable in 60 equal monthly principal payments of $88,667 plus
interest and bears interest, payable monthly, at a rate of 9.25% per annum.

The proceeds of Tranche B of the amended secured term loan were used to
repay the outstanding balance of the original secured revolver and a portion of
the outstanding balance of the revolving line of credit. The secured term loan
is collateralized by certain of the Company's offshore property and equipment.

Pursuant to the amended loan agreements, the amount of borrowing
availability under the secured revolver is $15,000,000. The secured revolver is
to convert in July 1996 to a term loan which is repayable in 60 equal monthly
principal payments plus interest. The secured revolver is collateralized by
certain of the Company's property and equipment and bears interest, payable
monthly, at a variable rate of prime plus 1/2% per annum (totalling 9% at
December 31, 1995).

The $5,000,000 revolving line of credit was amended to extend the maturity
of such loan to April 30, 1996. The revolving line of credit bears interest,
payable monthly, at a variable rate of prime plus 1/2% per annum (totalling 9%
at December 31, 1995) and is collateralized by substantially all of the accounts
receivable of Pride Offshore.

The Company has unconditionally guaranteed the obligations of Pride
Offshore under each of the amended secured term loans, the secured revolver and
the revolving line of credit.

Notes payable include four notes payable to lending institutions totaling
an aggregate $6,175,000 which are collateralized by selected property and
equipment and a note payable in the amount of $50,000 issued to the sellers of
certain assets acquired by the Company during the first quarter of 1995.

In March 1995, the Company entered into a note payable to two individuals
in the amount of $5,964,000 as partial consideration for a business acquisition.
The note bears interest at the rate of 8.5% per annum and is repayable in
quarterly installments through March 2000. The acquistion note is collateralized
by certain of the property and equipment of the acquired business.

Future maturities of long-term debt are as follows:

AMOUNT
--------------
(IN THOUSANDS)
1996................................. $ 10,291
1997................................. 12,158
1998................................. 9,675
1999................................. 9,583
2000................................. 7,195
Thereafter........................... 22,525

The Company has obtained bank commitments which provide for guidance lines
of credit of $18,000,000. As of December 31, 1995, letters of credit totaling
$11,397,000 were outstanding thereunder. Cash and cash equivalents and a portion
of accounts receivable have been pledged as collateral pursuant to these credit
facilities.

Based on rates currently available to the Company for debt with similar
terms and remaining maturities, the Company believes that the recorded value of
long-term debt approximates fair market value at December 31, 1995.

F-13

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. DEBT (CONTINUED)

CONVERTIBLE SUBORDINATED DEBENTURES

In January 1996, the Company completed the public sale of $80,500,000
principal amount of 6 1/4% convertible subordinated debentures. The debentures,
which are due February 15, 2006, are convertible into common stock of the
Company at a price of $12.25 per share. The debentures are redeemable at the
option of the Company, in whole or in part, at any time on or after March 1,
1999, at an initial redemption price of 103.125% of the principal amount and
declining to 100% of the principal amount by February 15, 2002. Interest is
payable semi-annually on February 15 and August 15 of each year, commencing
August 15, 1996.

5. LEASES

In September 1995, the Company entered into an agreement with a financial
institution for the sale and leaseback of up to $10,000,000 of equipment to be
used in the Company's business. As of December 31, 1995, the Company had
received proceeds of $5,500,000 pursuant to this facility attributable to a new
platform workover rig which was placed in service in September 1995. The Company
has purchase and lease renewal options at projected future fair market values
under the agreement. The lease has been classified as an operating lease for
financial statement purposes. Rentals relating to the initial transaction are
$1,167,000 annually. The net book value of the equipment has been removed from
the balance sheet and the excess of funding over such net book value of $483,000
has been deferred and is being amortized as a reduction of lease expense over
the maximum lease term of five years.

6. INCOME TAXES

Effective January 1, 1993, the Company adopted SFAS 109. During the first
quarter of 1993, the Company recorded a gain in the amount of $3,835,000, or
$.23 per share, which represents the reduction of the deferred tax liability as
of January 1, 1993. The gain has been recorded in the consolidated statement of
operations as "cumulative effect of change in accounting for income taxes".

The components of the provision for income taxes were as follows:

YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
United States Federal:
Current......................... $ 1,650 $ 410 $ 832
Deferred........................ 3,616 1,526 (14)
--------- --------- ---------
5,266 1,936 818
--------- --------- ---------
State:
Current......................... 89 24 85
Deferred........................ 201 90 (89)
--------- --------- ---------
290 114 (4)
--------- --------- ---------
Foreign:
Current......................... 723 366 400
Deferred........................ 785 (496) --
--------- --------- ---------
1,508 (130) 400
--------- --------- ---------
Total income tax
provision............... $ 7,064 $ 1,920 $ 1,214
========= ========= =========

F-14

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES (CONTINUED)

The difference between the effective federal income tax rate reflected in
the income tax provision and the amounts which would be determined by applying
the statutory federal tax rate to earnings before income taxes is summarized as
follows:

YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
U.S. statutory rate.................. 34.0% 34.0% 34.0%
Foreign.............................. (7.1) (14.0) (1.1)
State and local taxes................ 1.3 1.4 (0.1)
Other................................ 3.3 2.2 3.8
--------- --------- ---------
Effective tax rate................... 31.5% 23.6% 36.6%
========= ========= =========

The Company's consolidated effective federal income tax rate for the year
ended December 31, 1995 increased to approximately 32% from approximately 24%
for the corresponding period in 1994, primarily as a result of the recognition
in 1994 of current tax benefits from the utilization of approximately $3,000,000
of foreign net operating loss carryforwards. The Company had recognized a
valuation allowance for the tax benefits of such foreign net operating loss
carryforwards at the date the related foreign enterprise was acquired, due to
uncertainties then existing regarding the Company's ability to utilize such tax
benefits.

The domestic and foreign components of earnings before income taxes and
cumulative effect of change in accounting for income taxes were as follows:

YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
Domestic........................... $ 13,302 $ 5,178 $ 1,933
Foreign............................ 9,121 2,956 1,386
--------- --------- ---------
$ 22,423 $ 8,134 $ 3,319
========= ========= =========

The tax effects of temporary differences that give rise to significant
portions of the deferred tax liabilities and deferred tax assets as of December
31, 1995 and 1994 were as follows:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Deferred tax liabilities:
Depreciation.................................... $ 19,850 $ 13,949
Other........................................... 1,133 983
--------- ---------
Total deferred tax liabilities............. 20,983 14,932
--------- ---------
Deferred tax assets:
Foreign net operating loss carryforwards........ (1,462) --
Insurance claims................................ (2,236) (3,814)
Bad debts....................................... (153) (142)
Other........................................... (1,220) (628)
--------- ---------
Total deferred tax assets.................. (5,071) (4,584)
Valuation allowance for deferred tax assets..... 1,822 --
--------- ---------
Net deferred tax assets.................... (3,249) (4,584)
--------- ---------
Net deferred tax liability...................... $ 17,734 $ 10,348
========= =========

F-15

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES (CONTINUED)

Applicable U.S. income taxes have not been provided on approximately
$10,300,000 of undistributed earnings of the Company's foreign subsidiaries. The
Company considers such earnings to be permanently invested outside the U.S.
These earnings could be subject to U.S. income tax if distributed to the Company
as dividends or otherwise. The Company anticipates that foreign tax credits
would substantially reduce the amount of U.S. income tax that would be payable
if these earnings were to be repatriated.

7. EMPLOYEE BENEFITS

The Company has a salary deferral plan covering its employees whereby
employees may elect to contribute up to 15% of their annual compensation. The
Company may at its discretion make matching contributions with respect to an
employee's salary contribution of up to $1,000 or 6% of compensation, whichever
is less. The Company made matching contributions to the plan for the years ended
December 31, 1995, 1994 and 1993 totaling $229,000, $150,000 and $105,000,
respectively.

In 1993, the Company established a deferred compensation plan providing
officers and key employees with the opportunity to participate in an unfunded
deferred compensation program titled the "401(k) Restoration Plan". The 401(k)
Restoration Plan is a non-qualified plan which allows certain employees to defer
up to 100% of base compensation and bonuses earned.

8. SHAREHOLDERS' EQUITY

COMMON STOCK

In April 1995, the Company issued 87,000 shares of common stock pursuant to
the contractual earnout provisions of an acquisition agreement to an individual
who became a director of the Company in connection with such acquisition. The
value of such shares, estimated to be $435,000, has been allocated to the
acquired assets and is being amortized over the remaining useful lives of such
assets. In June 1995, the Company entered into an agreement with the director
pursuant to which it issued 203,000 additional shares of common stock in
exchange for the director's remaining contingent right to receive up to 73,000
common shares and the exercise of warrants to acquire an additional 500,000
shares of common stock on a net value basis. The value of the additional shares
issued, estimated to be $1,624,000, was also allocated to the acquired assets.

Also in April 1995, the Company issued 35,200 shares of common stock,
having an estimated aggregate value of $220,000, to a related party as
consideration for the purchase of support assets.

In June 1994, the Company completed the sale of 6,918,000 shares of common
stock. The public offering resulted in net cash proceeds to the Company of
approximately $32,000,000. The Company utilized $20,608,000 of the proceeds from
the public offering toward the purchase of the assets of Offshore Rigs.

LONG-TERM INCENTIVE PLAN

The Company has a Long-Term Incentive Plan which provides for the granting
or awarding of stock options, restricted stock, stock appreciation rights and
stock indemnification rights to officers and other key employees. The number of
shares authorized and reserved for issuance under the Long-Term Incentive Plan
is limited to 13% of total issued and outstanding shares, currently 2,775,550,
subject to adjustment in the event of certain changes in the Company's corporate
structure or capital stock. Stock options may be exercised in whole or in part
beginning six months from the date of grant and expire ten years from the date
of grant. The stock options also expire 60 days after termination of employment
or one year after retirement, total disability or death of an employee.

F-16

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. SHAREHOLDERS' EQUITY (CONTINUED)

Transactions in stock options pursuant to the Long-Term Incentive Plan for
the last three years are summarized as follows:

NUMBER
OF SHARES
-----------
Outstanding at December 31, 1992..... 833,350
Granted ($4.50 to $5.50 per
share)......................... 325,500
Exercised ($2.25 per share)..... (2,000)
Forfeited ($2.25 per share)..... (2,000)
-----------
Outstanding at December 31, 1993..... 1,154,850
Granted ($5.25 per share)....... 775,000
Exercised ($2.25 per share)..... (3,500)
Forfeited....................... --
-----------
Outstanding at December 31, 1994..... 1,926,350
Granted ($6.875 per share)...... 483,000
Exercised ($2.25 - $6.875 per
share).......................... (256,000)
Forfeited....................... --
-----------
Outstanding at December 31, 1995..... 2,153,350
===========
Exercisable at December 31,
1995............................ 2,153,350
===========

DIRECTORS' STOCK OPTION PLAN

In 1993, the shareholders of the Company approved and ratified the 1993
Directors' Stock Option Plan. The purpose of the plan is to afford the Company's
directors who are not full-time employees of the Company or any subsidiary of
the Company an opportunity to acquire a greater proprietary interest in the
Company. A maximum of 200,000 shares of the Company's common stock are to be
available for purchase upon the exercise of options granted pursuant to the 1993
Directors' Stock Option Plan. The exercise price of options is the fair market
value per share on the date the option is granted. Directors' stock options vest
over two years at the rate of 50% per year and expire ten years from the date of
grant.

Transactions in the 1993 Directors' Stock Option Plan since inception are
summarized as follows:

NUMBER
OF SHARES
---------
Outstanding at December 31, 1992..... --
Granted ($4.25 to $6.75 per
share)......................... 50,000
Exercised....................... --
Forfeited ($4.25 per share)..... (10,000)
---------
Outstanding at December 31, 1993..... 40,000
Granted ($5.00 per share)....... 12,000
Exercised....................... --
Forfeited ($4.25 to $5.00 per
share).......................... (13,000)
---------
Outstanding at December 31, 1994..... 39,000
Granted ($8.375 - $9.125 per
share).......................... 19,000
Exercised....................... --
Forfeited....................... --
---------
Outstanding at December 31, 1995..... 58,000
=========
Exercisable at December 31, 1995..... 34,500
=========

F-17

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. COMMITMENTS AND CONTINGENCIES

The Company is routinely involved in litigation incidental to its business,
which often involves claims for significant monetary amounts, some of which
would not be covered by insurance. In the opinion of management, none of the
existing litigation will have any material adverse effect on the Company's
financial position or results of operations.

The Company is self-insured with respect to physical damage or loss to its
domestic vehicles, land rigs, and equipment (except for thirteen of its largest
domestic rigs). Thirteen of the Company's largest domestic land rigs and all of
the Company's international land rigs are insured, with deductibles of generally
$25,000 per occurrence. The Company's offshore platform rigs and barge rigs are
insured with deductibles of $50,000 and $150,000, respectively. Presently, the
Company has insurance deductibles of $250,000 per occurrence for domestic
workers' compensation claims, $100,000 per occurrence for domestic automobile
liability claims, and $100,000 for general liability claims. The Company further
limits its exposure by maintaining an accident and health insurance policy with
respect to its domestic employees with a deductible of $10,000 per occurrence.
Coverages with respect to foreign operations for workers' compensation and
automobile claims are subject to deductibles of $40,000 to $100,000 per
occurrence.

In July 1995, one of the Company's domestic land rigs was destroyed in an
explosion and fire. The damaged rig was covered by insurance and the Company
received net insurance proceeds, after repurchasing the salvage, of $1,094,000.
The Company recognized a gain from the insurance recovery of $1,049,000 which is
included in other income in the accompanying consolidated statement of
operations.

As of December 31, 1995 and 1994, the Company had accrued approximately
$7,249,000 and $11,111,000, respectively for estimated claims liabilities, of
which $3,940,000 and $6,047,000, respectively, was included in current
liabilities and $3,309,000 and $5,064,000, respectively, was reflected as other
long-term liabilities in the accompanying balance sheet.

As of December 31, 1995, the Company had letters of credit outstanding
totaling $11,397,000. These letters of credit guarantee principally the funding
of the Company's share of insured claims. Cash and cash equivalents and a
portion of accounts receivable have been pledged as security for these letters
of credit. The credit facility provides flexibility to reduce the pledge of cash
and cash equivalents by pledging additional accounts receivable.

Rental expense for equipment, vehicles and various facilities of the
Company for the years ended December 31, 1995, 1994 and 1993 was $9,503,000,
$7,987,000 and $4,505,000, respectively. As of December 31, 1995, future minimum
lease payments for operating leases having initial or remaining noncancelable
lease terms longer than one year are as follows: $218,000 in 1996; $218,000 in
1997; $74,000 in 1998; and none thereafter. The Company leases vehicles used in
its domestic operations under a revolving master lease. Although any single
lease is cancelable by the Company with 60 days notice, the Company expects to
incur this lease expense in increasing amounts for the foreseeable future.
Vehicle lease expense included in the above rental expense for the years ended
December 31, 1995, 1994 and 1993 was $2,218,000, $2,134,000 and $1,809,000,
respectively.

F-18

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

Summarized quarterly financial data for 1995 and 1994 are as follows:

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
1995 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues............................ $ 62,512 $ 68,856 $ 67,144 $ 65,087
Earnings from operations............ 5,721 7,081 6,637 6,833
Net earnings........................ 3,012 3,582 4,633 4,132
Earnings per share.................. .12 .14 .18 .16
Weighted average common shares and
equivalents outstanding........... 24,675 25,496 25,708 25,893
1994
Revenues............................ $ 36,805 $ 40,257 $ 50,974 $ 54,300
Earnings from operations............ 1,264 1,991 1,770 3,003
Net earnings........................ 929 979 1,928 2,378
Earnings per share.................. .06 .06 .08 .10
Weighted average common shares and
equivalents outstanding........... 16,727 17,537 24,418 24,381

11. SUPPLEMENTAL FINANCIAL INFORMATION

OTHER CURRENT ASSETS

Other current assets at December 31, 1995 and 1994 consists of the
following:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Pre-funded construction costs........ $ -- $ 1,692
Other receivables.................... 1,937 1,382
Prepaid expenses..................... 4,551 3,054
--------- ---------
$ 6,488 $ 6,128
========= =========

ACCRUED EXPENSES

Accrued expenses at December 31, 1995 and 1994 consists of the following:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Insurance (excluding the long-term
portion of $3,309 and $5,064,
respectively)...................... $ 3,940 $ 6,047
Payroll.............................. 6,318 4,149
Taxes, other than income............. 4,186 4,193
Other................................ 2,106 943
--------- ---------
$ 16,550 $ 15,332
========= =========

F-19

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED)

CASH FLOW INFORMATION

Cash paid for interest and income taxes during the years ended December 31,
1995, 1994 and 1993 was as follows:

YEAR ENDED DECEMBER 31,
------------------------------
1995 1994 1993
--------- --------- -----
(IN THOUSANDS)
Cash paid during the year for:
Interest........................ $ 4,316 $ 623 $ 10
Income taxes -- U.S............. 500 1,893 2
Income taxes -- foreign......... 16 28 871

12. FINANCIAL DATA OF DOMESTIC AND INTERNATIONAL OPERATIONS

The following table sets forth certain consolidated information with
respect to the Company and its subsidiaries by operating segment:

DOMESTIC DOMESTIC
LAND OFFSHORE INTERNATIONAL TOTAL
---------- ---------- ------------- ----------
(IN THOUSANDS)

1995
Revenues............................. $ 113,115 $ 49,595 $ 100,889 $ 263,599
Earnings from operations............. 6,857 6,785 12,630 26,272
Identifiable assets.................. 77,243 50,978 129,384 257,605
Capital expenditures, including
acquisitions......................... 14,502 15,066 28,940 58,508
Depreciation and amortization........ 5,578 3,091 7,988 16,657
1994
Revenues............................. $ 95,860 $ 23,441 $ 63,035 $ 182,336
Earnings from operations............. 1,184 3,304 3,540 8,028
Identifiable assets.................. 64,740 46,693 93,760 205,193
Capital expenditures, including
acquisitions......................... 3,062 34,617 48,987 86,666
Depreciation and amortization........ 5,085 1,056 3,409 9,550
1993
Revenues............................. $ 105,865 $ -- $ 21,234 $ 127,099
Earnings from operations............. 1,307 -- 1,508 2,815
Identifiable assets.................. 78,607 -- 31,374 109,981
Capital expenditures, including
acquisitions......................... 2,435 -- 21,408 23,843
Depreciation and amortization........ 5,241 -- 1,166 6,407

F-20

PRIDE PETROLEUM SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. FINANCIAL DATA OF DOMESTIC AND INTERNATIONAL OPERATIONS (CONTINUED)

The following table sets forth certain information with respect to the
Company and its subsidiaries by geographic area:

RUSSIA
NORTH SOUTH AND
AMERICA AMERICA OTHER TOTAL
---------- --------- --------- ----------
(IN THOUSANDS)
1995
Revenues......................... $ 162,710 $ 98,382 $ 2,507 $ 263,599
Earnings from operations......... 13,642 12,448 182 26,272
Identifiable assets.............. 128,221 125,939 3,445 257,605
Capital expenditures............. 29,568 28,940 -- 58,508
Depreciation and amortization.... 8,669 7,611 377 16,657
1994
Revenues......................... $ 119,301 $ 62,430 $ 605 $ 182,336
Earnings (loss) from operations.. 4,488 4,712 (1,172) 8,028
Identifiable assets.............. 111,433 90,195 3,565 205,193
Capital expenditures............. 37,679 48,922 65 86,666
Depreciation and amortization.... 6,141 3,216 193 9,550
1993
Revenues......................... $ 105,865 $ 18,625 $ 2,609 $ 127,099
Earnings from operations......... 1,307 1,046 462 2,815
Identifiable assets.............. 78,607 28,461 2,913 109,981
Capital expenditures............. 2,435 20,953 455 23,843
Depreciation and amortization.... 5,241 927 239 6,407

One customer accounted for approximately 17% and 18% of consolidated
revenues during 1995 and 1994, respectively, representing 69% and 67%,
respectively, of revenues from operations in Argentina during those years.
Another customer accounted for approximately 54% and 40%, respectively, of
revenues from domestic offshore operations during such periods. Revenues from
such customer and its affiliates from both land-based and offshore operations
accounted for approximately 13% and 18% of consolidated revenues during 1995 and
1994, respectively. During 1993, no customer accounted for more than 10% of
consolidated revenues.

F-21

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of Pride Petroleum Services, Inc.:

We have reviewed the accompanying consolidated balance sheet of Pride
Petroleum Services, Inc. as of September 30, 1996, and the related consolidated
statements of operations and cash flows for the nine-month periods ended
September 30, 1996 and 1995. These financial statements are the responsibility
of the Company's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of operations, changes in shareholders' equity,
and cash flows for the year then ended (not presented herein); and in our report
dated February 26, 1996, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of December 31, 1995 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.

COOPERS & LYBRAND L.L.P.

Houston, Texas
November 14, 1996

F-22

PRIDE PETROLEUM SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents....... $ 26,515 $ 9,295
Short-term investments.......... 401 2,612
Trade receivables, net of
allowance for doubtful accounts
of $528 and $426, respectively. 87,268 43,767
Parts and supplies.............. 24,065 9,473
Deferred income taxes........... 2,480 1,518
Other current assets............ 15,390 6,488
------------- ------------
Total current assets....... 156,119 73,153
------------- ------------
PROPERTY AND EQUIPMENT, at cost...... 496,735 296,939
ACCUMULATED DEPRECIATION............. (134,976) (118,451)
------------- ------------
Net property and
equipment.................... 361,759 178,488
------------- ------------
GOODWILL AND OTHER INTANGIBLES,
net................................ 3,254 3,699
OTHER ASSETS......................... 8,472 2,265
------------- ------------
$ 529,604 $257,605
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................ $ 32,513 $ 15,010
Accrued expenses................ 31,204 16,550
Current portion of long-term
debt........................... 32,671 10,291
------------- ------------
Total current
liabilities.................. 96,388 41,851
------------- ------------
OTHER LONG-TERM LIABILITIES.......... 13,313 4,127
LONG-TERM DEBT, net of current
portion.............................. 97,947 61,136
CONVERTIBLE SUBORDINATED
DEBENTURES........................... 80,500 --
DEFERRED INCOME TAXES................ 48,787 19,252
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value;
40,000,000 shares authorized;
28,564,376 and 24,863,072
shares issued and 28,510,156
and 24,808,852 shares outstanding,
respectively................... 1 1
Paid-in capital................. 142,727 95,751
Treasury stock, at cost......... (191) (191)
Retained earnings 50,132 35,678
------------- ------------
Total shareholders'
equity....................... 192,669 131,239
------------- ------------
$ 529,604 $257,605
============= ============

The accompanying notes are an integral part of the consolidated financial
statements.

F-23

PRIDE PETROLEUM SERVICES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1996 1995
---------- ----------
REVENUES............................. $ 283,593 $ 198,512
---------- ----------
COSTS AND EXPENSES
Operating costs................. 202,796 143,376
Depreciation and amortization... 19,987 12,077
Selling, general and
administrative................. 34,120 23,620
---------- ----------
Total costs and expenses... 256,903 179,073
---------- ----------
Earnings from
operations......... 26,690 19,439
OTHER INCOME (EXPENSE)
Other income.................... 475 1,640
Interest income................. 2,044 577
Interest expense................ (9,856) (4,689)
---------- ----------
Total other expense, net... (7,337) (2,472)
---------- ----------
EARNINGS BEFORE INCOME TAXES......... 19,353 16,967
INCOME TAX PROVISION................. 4,899 5,740
---------- ----------
NET EARNINGS......................... $ 14,454 $ 11,227
========== ==========
NET EARNINGS PER SHARE:
Primary......................... $ .52 $ .44
Fully diluted................... $ .50 $ .44
WEIGHTED AVERAGE COMMON SHARES AND
COMMON SHARE EQUIVALENTS
OUTSTANDING:
Primary......................... 27,539 25,280
Fully diluted................... 33,518 25,720

The accompanying notes are an integral part of the consolidated financial
statements.

F-24

PRIDE PETROLEUM SERVICES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1996 1995
------------ ----------
OPERATING ACTIVITIES
Net earnings....................... $ 14,454 $ 11,227
Adjustments to reconcile net
earnings to net cash provided by
operating activities --
Depreciation and
amortization................. 19,987 12,077
Deferred interest............. -- 1,947
Gain on sale of assets........ (412) (1,597)
Effect of exchange rates...... 126 7
Deferred tax provision........ 3,223 1,001
Changes in assets and
liabilities, net of effects
of acquisitions --
Trade receivables....... (8,311) (5,122)
Parts and supplies...... (1,056) (2,475)
Other current assets.... (4,797) (4,759)
Accounts payable........ (2,322) 2,988
Accrued expenses and
other................. (1,449) 1,141
------------ ----------
Net cash provided
by operating
activities..... 19,443 16,435
------------ ----------
INVESTING ACTIVITIES
Purchase of net assets of acquired
entities, including acquisition
costs,
less cash acquired.............. (106,286) (1,999)
Purchases of property and
equipment....................... (47,177) (34,426)
Proceeds from sales of property and
equipment....................... 7,021 6,603
Proceeds from sales of short-term
investments..................... 5,619 1,009
Purchases of short-term
investments..................... (557) --
Other.............................. (80) (473)
------------ ----------
Net cash used in
investing
activities..... (141,460) (29,286)
------------ ----------
FINANCING ACTIVITIES
Proceeds from issuance of common
stock........................... 46,976 655
Proceeds from issuance of
convertible subordinated
debentures...................... 77,585 --
Proceeds from debt borrowings...... 62,962 22,682
Reduction of debt.................. (47,706) (5,410)
Other.............................. (580) 93
------------ ----------
Net cash provided
by financing
activities..... 139,237 18,020
------------ ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS........................ 17,220 5,169
CASH AND CASH EQUIVALENTS, beginning
of period.......................... 9,295 5,970
------------ ----------
CASH AND CASH EQUIVALENTS, end of
period............................. $ 26,515 $ 11,139
============ ==========

The accompanying notes are an integral part of the consolidated financial
statements.

F-25

PRIDE PETROLEUM SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

The unaudited consolidated financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to such rules and
regulations. These unaudited consolidated financial statements should be read in
conjunction with Pride Petroleum Services, Inc.'s (the "Company's") audited
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995. Certain
reclassifications have been made to prior year amounts to conform with the
current year presentation.

The unaudited consolidated financial information included herein reflects
all adjustments, consisting only of normal recurring adjustments, which are
necessary, in the opinion of management, for a fair presentation of the
Company's financial position, results of operations and cash flows for the
interim periods presented. The results of operations for the interim periods
presented herein are not necessarily indicative of the results to be expected
for full years.

2. COMMITMENTS AND CONTINGENCIES

The Company is self-insured with respect to physical damage or loss to its
domestic vehicles, land rigs (except for thirteen of its largest domestic land
rigs), and other equipment. Thirteen of the Company's largest domestic land rigs
and all of the Company's international land rigs are insured, with deductibles
of generally $25,000 per occurrence. Nineteen of the Company's 23 offshore
platform rigs and all of its barge rigs are insured with deductibles of $50,000
and $150,000, respectively. Presently, the Company has insurance deductibles of
$250,000 per occurrence for domestic workers' compensation claims, $100,000 per
occurrence for domestic automobile liability claims, and $100,000 for general
liability claims. The Company further limits its exposure by maintaining an
accident and health insurance policy with respect to its domestic employees with
a deductible of $10,000 per occurrence. Coverages with respect to foreign
operations for workers' compensation and automobile claims are subject to
deductibles of generally $40,000 to $100,000 per occurrence.

As of September 30, 1996 and December 31, 1995, the Company had accrued
approximately $6,761,000 and $7,249,000, respectively, for estimated claims
liabilities, of which $4,349,000 and $3,940,000, respectively, was included in
current liabilities and $2,412,000 and $3,309,000, respectively, was included in
other long-term liabilities in the accompanying unaudited consolidated balance
sheet. As of September 30, 1996, the Company had letters of credit outstanding
totaling $8,652,000. These letters of credit guarantee principally the funding
of the Company's share of insured claims.

F-26

PRIDE PETROLEUM SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. ACQUISITIONS

In April 1996, the Company acquired all of the outstanding capital stock of
Quitral-Co S.A.I.C. ("Quitral-Co") for an aggregate purchase price of
$140,000,000, consisting of $110,000,000 in cash and a $30,000,000 installment
note payable to the selling shareholders.

The assets acquired and liabilities assumed in the Quitral-Co acquisition,
based on the Company's preliminary purchase price allocation, were as follows:

ASSETS (LIABILITIES)
--------------------
(IN THOUSANDS)
Cash and cash equivalents............ $ 5,564
Short-term investments............... 2,851
Trade receivables.................... 35,189
Parts and supplies................... 15,618
Deferred income taxes................ 1,300
Other current assets................. 3,814
Property and equipment............... 161,420
Other assets......................... 2
Accounts payable..................... (21,710)
Accrued expenses..................... (23,462)
Long-term debt....................... (13,936)
Deferred income taxes................ (26,650)
--------------------
$140,000
====================

Unaudited pro forma results of operations assuming the acquisition of
Quitral-Co had occurred on January 1, 1995, as follows:

NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1996 1995
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
Revenues............................. $ 346,803 $ 344,435
Net earnings......................... 17,167 13,042
Earnings per share
Primary......................... .62 .52
Fully diluted................... .58 .48

The pro forma results of operations presented above do not purport to be
indicative of the results of the operations of the Company that might have
occurred nor are they indicative of future results.

In February 1996, the Company acquired substantially all of the assets of
another operator in Freer, Texas for aggregate consideration of approximately
$1,879,000, consisting of $1,850,000 cash and 4,200 restricted shares of common
stock. The assets acquired included seven workover rigs, hauling and anchor
trucks and other support assets.

Each of the acquisitions discussed above was recorded using the purchase
method of accounting. The operating results of each acquisition have been
included in the Company's consolidated results of operations from the date of
acquisition.

F-27

PRIDE PETROLEUM SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. DEBT

LONG-TERM DEBT

Long-term debt at September 30, 1996 and December 31, 1995 consists of the
following:

SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- ------------
(IN THOUSANDS)
Collateralized term loans............ $ 41,736 $ 5,696
Limited-recourse collateralized term
loans.............................. 39,812 42,320
Note payable to sellers.............. 26,000 --
Eximbank notes payable............... 9,878 --
Notes payable........................ 6,047 529
Acquisition note payable............. 4,175 5,070
Secured term loans................... 2,970 8,200
Secured revolver..................... -- 8,850
Revolving line of credit............. -- 762
-------------- ------------
130,618 71,427
Less: current portion................ 32,671 10,291
-------------- ------------
$ 97,947 $ 61,136
============== ============

In April 1996, the Company completed two separate financing arrangements
with lending institutions pursuant to which it borrowed an aggregate amount of
$40,000,000, net of repayment of $5,000,000 of borrowings to one of the lenders.
The collateralized term loans bear interest initially at a floating rate of
prime plus 1/2% and are repayable in monthly installments of principal and
interest over a period of five to six years. The Company may elect to convert
the interest payable to a fixed rate basis at any time during the term of the
loans. The loans are collateralized by substantially all of the Company's
domestic land-based rig fleet and ancillary equipment. Proceeds from the loans
were used to fund a portion of the cash consideration for the acquisition of
Quitral-Co, discussed above.

In connection with the acquisition of Quitral-Co in April 1996, the Company
issued a note payable to the sellers for $30,000,000. The note bears interest at
LIBOR plus 2% payable quarterly, and principal is expected to be repaid in
thirty monthly installments.

Prior to being acquired by the Company, Quitral-Co had entered into two
loan agreements with a lending institution to finance the purchase and import of
goods manufactured in the United States. Loans made pursuant to the loan
agreements bear interest at rates ranging from LIBOR plus 1.40% to LIBOR plus
1.80% per annum, and are repayable in semi-annual installments through October
2000. Borrowings pursuant to these two loan agreements have been guaranteed
against certain political risks in Argentina and Venezuela by the Export-Import
Bank of the United States ("Eximbank").

F-28

PRIDE PETROLEUM SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. DEBT (CONTINUED)

Notes payable at September 30, 1996 includes financed insurance premiums
and other short-term borrowings with the acquisition of Quitral-Co.

CONVERTIBLE SUBORDINATED DEBENTURES

5. LEASES

In April 1996, the Company increased the amount of its equipment leasing
facility to $10,800,000, and $5,300,000 of proceeds were received by the Company
in connection with the sale and leaseback of a newly-constructed offshore
platform rig. Rentals on the April 1996 transaction are $1,083,000 annually.

6. COMMON STOCK OFFERING

In July 1996, the Company completed the public sale of 3,450,000 shares of
common stock, which resulted in net proceeds to the Company of approximately
$45,641,000. Approximately $20,200,000 of such net proceeds was used to repay
outstanding indebtedness, approximately $12,000,000 was used to finance the
construction of two platform rigs for the Company's offshore fleet and
approximately $7,000,000 is being used to fund various capital projects for
Quitral-Co, including rig upgrades and expansion of its rig transportation
fleet. The balance of the net proceeds is available for general corporate
purposes.

7. INCOME TAXES

During the first nine months of 1996, the Company recognized the current
tax benefits from the utilization of approximately $5,279,000 of certain foreign
net operating loss carryforwards. The Company had previously provided a
valuation allowance for the tax benefits of such foreign net operating loss
carryforwards.

8. NET EARNINGS PER SHARE

Primary net earnings per share has been computed based on the weighted
average number of common shares outstanding during the applicable period. Common
share equivalents have been included in periods in which their effect is
dilutive. Common share equivalents include the number of shares issuable upon
the exercise of stock options and warrants, less the number of shares that could
have been repurchased with the exercise proceeds, using the treasury stock
method. Fully diluted net earnings per share has been computed based on the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period, as if the convertible subordinated debentures
were converted into common stock on the date of sale, after giving retroactive
effect to the elimination of interest expense, net of income tax effect,
applicable to the convertible subordinated debentures.

F-29

PRIDE PETROLEUM SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. NET EARNINGS PER SHARE (CONTINUED)

The following table presents information necessary to calculate fully
diluted net earnings per share:

NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS,
EXCEPT
PER SHARE AMOUNTS)
Net earnings......................... $ 14,454 $ 11,227
Interest on convertible subordinated
debentures......................... 3,624 --
Income tax effect.................... (1,304) --
--------- ---------
Net earnings applicable to
common stock............ $ 16,774 $ 11,227
========= =========
Weighted average number of common
shares outstanding................. 26,116 24,465
Additional shares assuming conversion
of:
Convertible subordinated
debentures.................... 5,950 --
Stock options and warrants...... 1,452 1,255
--------- ---------
Weighted average common
shares and common share
equivalents
outstanding............. 33,518 25,720
========= =========
Fully diluted net earnings
per share............... $ .50 $ .44
========= =========

9. SEGMENT INFORMATION

The following table sets forth certain consolidated information with
respect to the Company and its subsidiaries by operating segment:

DOMESTIC DOMESTIC
LAND OFFSHORE INTERNATIONAL TOTAL
---------- --------- -------------- ----------
(IN THOUSANDS)

NINE MONTHS ENDED SEPTEMBER 30, 1996
Revenues............................. $ 87,290 $ 41,677 $154,626 $ 283,593
Earnings from operations............. 4,260 4,891 17,539 26,690
Identifiable assets.................. 104,221(1) 64,223 361,160 529,604
Capital expenditures, including
acquisitions....................... 4,975 15,120 189,375 209,470
Depreciation and amortization........ 4,264 2,705 13,018 19,987
NINE MONTHS ENDED SEPTEMBER 30, 1995
Revenues............................. $ 85,990 $ 37,564 $ 74,958 $ 198,512
Earnings from operations............. 4,574 5,074 9,791 19,439
Identifiable assets.................. 78,514(1) 55,521 122,783 256,818
Capital expenditures, including
acquisitions....................... 15,202 12,852 20,349 48,403
Depreciation and amortization........ 4,155 2,274 5,648 12,077

- ------------

(1) Includes corporate working capital.

10. SUBSEQUENT EVENTS

In October 1996, the Company acquired all of the outstanding capital stock
of Ingeser de Colombia, S.A. ("Ingeser") for aggregate consideration of
$5,500,000, consisting of $4,000,000 cash and a contingent note payable to the
sellers for $1,500,000. Based on the debt assumed and the working capital
position of Ingeser, the transaction was valued at approximately $12,000,000.
Ingeser operates seven drilling rigs and six workover rigs in the Republic of
Colombia. During the twelve month period ended June 30, 1996,

F-30

PRIDE PETROLEUM SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. SUBSEQUENT EVENTS (CONTINUED)
Ingeser generated revenues of approximately $16,000,000. The acquisition of
Ingeser will be accounted for as a purchase. Accordingly, the results of
operations of Ingeser will be included in the Company's consolidated results of
operations from October 30, 1996, the date of the acquisition.

Also in October 1996, the Company entered into a letter agreement providing
for the acquisition of Forasol-Foramer N.V. ("Forasol") for aggregate
consideration of approximately $281,000,000. Pursuant to the agreement, the
Company will issue .66 common shares and $6.80 cash for each share of Forasol.
Based on the debt and working capital of Forasol, the entire transaction value
is estimated to be approximately $320,000,000. Forasol is a significant drilling
contractor which operates marine and land-based equipment, including
semi-submersible, jackup, tender, barge, offshore platform and land-based rigs.
During the twelve month period ended June 30, 1996, Forasol generated revenues
of approximately $178,000,000. Completion of the transaction is subject to
normal conditions, including completion of satisfactory due diligence reviews,
negotiation of definitive purchase agreements and necessary shareholder
approvals. The letter agreement provides for break-up fees of up to $20,000,000.
Management believes that the acquisition will be completed during the first
quarter of 1997.

In November 1996, the Company acquired three land-based drilling rigs and
other support assets from another operator in Argentina for $8,200,000 cash.

F-31

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
QUITRAL-CO S.A.I.C.

We have audited the accompanying consolidated balance sheets of QUITRAL-CO
S.A.I.C. (an Argentine Corporation) and its subsidiary as of June 30, 1995 and
1994, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the years ended June 30, 1995, 1994 and
1993, all expressed in thousands of constant Argentine pesos as of June 30, 1995
(Note 2). These financial statements are the responsibility of Quitral-Co's
management. Our responsibility is to express an opinion on those financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in Argentina, which are in substantial agreement with those 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
statements 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 consolidated financial position of QUITRAL-CO
S.A.I.C. and its subsidiary as of June 30, 1995 and 1994 and the consolidated
results of its operations and its cash flows for the years ended June 30, 1995,
1994 and 1993, in conformity with generally accepted accounting principles
applicable to consolidated financial statements in Argentina, applied on a
consistent basis after giving retroactive effect to the change, with which we
concur, in valuation of property, plant and equipment in an affiliate company
carried at equity method as discussed in Note 4.a).

Accounting practices used by Quitral-Co in preparing the accompanying
consolidated financial statements conform with generally accepted accounting
principles used in Argentina for consolidated financial statements, but do not
conform with generally accepted accounting principles in the United States of
America. A description of the significant differences and the approximate effect
of those differences on the reconciliation of shareholders' equity and net
income as of and for the years ended June 30, 1995 and 1994, respectively, are
set forth in Note 12 to the consolidated financial statements.

PISTRELLI, DIAZ Y ASOCIADOS
C.P.C.E.C.F. VOL. 1-F8
ENRIQUE C. GROTZ
Partner
Certified Public Accountant UBA
C.P.C.E.C.F. Vol. 136-F149

Buenos Aires, Argentina
May 20, 1996

F-32

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1995 AND 1994
(STATED IN THOUSANDS OF CONSTANT ARGENTINE PESOS AS OF JUNE 30, 1995 -- NOTE 2)

1995 1994
--------- ---------
CURRENT ASSETS
Cash.................................. 2,346 1,326
Investments (Note 5.a)................ 1,566 272
Trade receivables (Note 5.b).......... 35,452 27,060
Other receivables (Note 5.c).......... 6,137 3,525
Parts and supplies (Note 5.d)......... 14,623 12,847
Discontinued operations (Note 7)...... 2,522 2,362
--------- ---------
Total current assets............... 62,646 47,392
--------- ---------
NONCURRENT ASSETS
Other receivables (Note 5.c).......... 678 325
Parts and supplies (Note 5.d)......... 5,392 7,122
Investments (Note 5.a)................ 230 6,532
Property and equipment (Note 11.a).... 68,371 56,474
Discontinued operations (Note 7)...... 43,873 47,152
--------- ---------
Total noncurrent assets............ 118,544 117,605
--------- ---------
Total assets....................... 181,190 164,997
========= =========
CURRENT LIABILITIES
Accounts payable (Note 5.e)........... 13,893 10,673
Loans (Note 5.f)...................... 19,269 18,482
Payroll and social security taxes..... 4,846 4,112
Taxes payable......................... 4,649 3,059
Other liabilities (Note 5.g).......... 1,640 1,859
Discontinued operations (Note 7)...... 1,320 1,280
--------- ---------
Total current liabilities.......... 45,617 39,465
--------- ---------
NONCURRENT LIABILITIES
Loans (Note 5.f)...................... 7,363 2,541
Other liabilities (Note 5.g).......... 3,778 3,792
Reserves (Note 11.b).................. 2,318 1,837
--------- ---------
Total noncurrent liabilities....... 13,459 8,170
--------- ---------
Total liabilities.................. 59,076 47,635
MINORITY INTEREST IN SUBSIDIARY......... 475 2,186
SHAREHOLDERS' EQUITY (per corresponding
statement)............................ 121,639 115,176
--------- ---------
Total liabilities and shareholders'
equity............................ 181,190 164,997
========= =========

The accompanying notes are an integral part of these financial statements.

F-33

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
(STATED IN THOUSANDS OF CONSTANT ARGENTINE PESOS AS OF JUNE 30, 1995 -- NOTE 2)

1995 1994 1993
---------- ---------- ---------
NET SALES............................ 175,313 143,178 106,763
COST OF SALES (Note 11.c)............ (158,767) (126,516) (89,387)
---------- ---------- ---------
Gross income.................... 16,546 16,662 17,376
OPERATING EXPENSES (Note 11.e)....... (11,624) (7,875) (6,146)
OTHER (EXPENSES) INCOME, net (Note
5.h)................................. (620) (800) (1,985)
FINANCIAL INCOME (EXPENSE) AND
HOLDING GAINS (LOSSES), net (Note
5.i)............................... (3,709) (271) (112)
---------- ---------- ---------
Income from continuing
operations before income tax
and minority interest......... 593 7,716 9,133
INCOME TAX........................... (4,044) (2,528) (1,164)
---------- ---------- ---------
(Loss) Income from continuing
operations.................... (3,451) 5,188 7,969
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS (Note 7), plus tax
carryforward of 349, 639 and 193,
respectively....................... 12,385 (108) (1,197)
MINORITY INTEREST IN SUBSIDIARY...... 1,770 224 --
---------- ---------- ---------
Net income...................... 10,704 5,304 6,772
========== ========== =========

The accompanying notes are an integral part of these financial statements.

F-34

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
(STATED IN THOUSANDS OF CONSTANT ARGENTINE PESOS AS OF JUNE 30, 1995 -- NOTE 2)

STOCK
----------------------------------- APPRAISAL
ADJUSTMENT ADDITIONAL REVALUATION UNAPPROPRIATED
CAPITAL TO CAPITAL PAID IN RESERVE-EQUITY LEGAL RETAINED
STOCK STOCK CAPITAL INVESTMENTS RESERVE EARNINGS
------- ---------- ---------- --------------- -------- --------------

Balances as of June 30, 1992......... 12,138 8,586 28,638 9,537 1,142 48,781
Reversal of Petroqumica Cuyo's
appraisal revaluation reserve (Note
4a)................................ -- -- -- (9,537) -- --
------- ---------- ---------- --------------- -------- --------------
Modified balances as of beginning of
year............................... 12,138 8,586 28,638 -- 1,142 48,781
Appropriation to Legal reserve....... -- -- -- -- 334 (334)
Capital increase..................... 914 88 -- -- -- --
Additional paid in capital........... -- -- 6,496 -- -- --
Other................................ -- -- -- -- -- (99)
Net income........................... -- -- -- -- -- 6,772
------- ---------- ---------- --------------- -------- --------------
Balances as of June 30, 1993......... 13,052 8,674 35,134 -- 1,476 55,120
Appropriation to Legal reserve....... -- -- -- -- 341 (341)
Cash dividends (Ps. 0.25 per
share)............................. -- -- -- -- -- (3,262)
Other................................ -- -- -- -- -- (322)
Net income........................... -- -- -- -- -- 5,304
------- ---------- ---------- --------------- -------- --------------
Balances as of June 30, 1994......... 13,052 8,674 35,134 -- 1,817 56,499
Appropriation to Legal reserve....... -- -- -- -- 260 (260)
Cash dividends (Ps. 0.32 per
share)............................. -- -- -- -- -- (4,241)
Net income........................... -- -- -- -- -- 10,704
------- ---------- ---------- --------------- -------- --------------
Balances June 30, 1995............... 13,052 8,674 35,134 -- 2,077 62,702
======= ========== ========== =============== ======== ==============

TOTAL
SHAREHOLDERS'
EQUITY
--------------
Balances as of June 30, 1992......... 108,822
Reversal of Petroqumica Cuyo's
appraisal revaluation reserve (Note
4a)................................ (9,537)
--------------
Modified balances as of beginning of
year............................... 99,285
Appropriation to Legal reserve....... --
Capital increase..................... 1,002
Additional paid in capital........... 6,496
Other................................ (99)
Net income........................... 6,772
--------------
Balances as of June 30, 1993......... 113,456
Appropriation to Legal reserve....... --
Cash dividends (Ps. 0.25 per
share)............................. (3,262)
Other................................ (322)
Net income........................... 5,304
--------------
Balances as of June 30, 1994......... 115,176
Appropriation to Legal reserve....... --
Cash dividends (Ps. 0.32 per
share)............................. (4,241)
Net income........................... 10,704
--------------
Balances June 30, 1995............... 121,639
==============

The accompanying notes are an integral part of these financial statements.

F-35

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1995, 1994, AND 1993
(STATED IN THOUSANDS OF CONSTANT ARGENTINE PESOS AS OF JUNE 30, 1995 -- NOTE 2)

1995 1994 1993
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income...................... 10,704 5,304 6,772
Adjustments to reconcile net income
to cash provided by operating
activities:
Minority interest in profits.... (1,770) (224) --
Depreciation of property and
equipment..................... 10,504 8,175 8,694
Gain (loss) on sale of property
and equipment................. (226) (310) (584)
Increase (decrease) in
allowances/reserves........... 481 (101) 316
Increase in allowance for
obsolescence of parts and
supplies...................... 1,730 -- 1,417
Discontinued operations......... 2,369 5,335 3,783
Income on the sale of
discontinued operations of
joint venture interests....... (5,743) -- --
Income from discontinued
operations of equity
investments................... (9,679) (419) 2,207
Changes in assets and liabilities:
Trade receivables............... (4,655) (8,186) 1,668
Other receivables............... (2,965) (261) 676
Parts and supplies.............. (8,063) (8,833) (6,723)
Accounts payable................ 5,614 2,666 (2,804)
Payroll and social security
taxes......................... 734 1,291 (505)
Taxes payable................... 1,077 1,361 (512)
Other liabilities............... 1,070 4,038 (1,626)
Discontinued operations......... 3,321 (5,798) (1,059)
Other........................... 261 759 (690)
--------- --------- ---------
Cash flows provided by
operating activities.... 4,764 4,797 11,030
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans to related companies...... 1,670 -- --
Short-term investments.......... 135 124 149
Acquisition of property and
equipment..................... (18,791) (13,746) (1,350)
Sales of property and
equipment..................... 510 624 1,170
Sale of temporary investments... 492 -- --
Proceeds from sale of
discontinued operations....... 16,170 -- --
Discontinued operations......... (2,744) (5,147) --
--------- --------- ---------
Cash flows used in
investing activities.... (2,558) (18,145) (31)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term loans, net........... (461) 18,947 (9,168)
Long-term loans................. 4,822 2,541 --
Dividends....................... (4,242) (7,196) (1,753)
--------- --------- ---------
Cash flows provided by
(used in) financing
activities.............. 119 14,292 (10,921)
--------- --------- ---------
Net increase in cash and cash
equivalents................... 2,325 944 78
Cash and cash equivalents at the
beginning of year............. 1,587 643 565
--------- --------- ---------
Cash and cash equivalents at the
end of year................... 3,912 1,587 643
========= ========= =========

The accompanying notes are an integral part of these financial statements.

F-36

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1995, 1994 AND 1993
(STATED IN THOUSANDS OF CONSTANT ARGENTINE PESOS AS OF JUNE 30, 1995 -- NOTE 2)

1. MAIN COMPANY BUSINESS AND REORGANIZATION

Quitral-Co S.A.I.C. ("Quitral-Co") was formed in Argentina in 1960.
Quitral-Co and its subsidiary Perforaciones Quitral-Co de Venezuela S.A.
("Quitral-Co de Venezuela" or the "Subsidiary") provide oil and gas well
drilling, completion, repair, and workover services, which are predominantly
rendered in Argentina and Venezuela. Each of these countries forms an activity
center and provides services in their respective countries with their own
machinery, materials warehouses, and administrative facilities. Quitral-Co is
headquartered in Buenos Aires.

Pursuing its strategic aim of concentrating business in the area of oil
field services, during the year ended June 30, 1995, Quitral-Co sold its working
interests in oil producing joint ventures in Argentina. Additionally, in
September 1995, Quitral-Co de Venezuela divested its 10% interest in the
Oritupano-Leona oil producing area (see Note 7). The assets, liabilities and
results related to the interests in those joint ventures, are presented as
discontinued operations for all the years presented.

Events subsequent to the year ended June 30, 1995:

-- During September 1995, Quitral-Co acquired the remaining 30% of the
capital stock of Quitral-Co de Venezuela, thus becoming the sole
owner of the aforementioned Company's shares (see Note 7).

-- At the General Shareholders' Meeting of April 29, 1996, the
shareholders approved the distribution of all of its equity
interests in Petroqumica Cuyo S.A.I.C., Packingplast S.A., and
Jojoba S.A. as a dividend distribution in kind at their book value.
The assets, liabilities and results related to these investments are
presented as discontinued operations for all the years presented
(see Note 7). In addition, at this General Shareholders' Meeting,
the shareholders approved distribution of 32,600 in cash dividends.

-- On April 29, 1996, Pride Petroleum Services, Inc. ("Pride"), a US
based company, extended a non-current loan of 32,600 to Quitral-Co
to increase its working capital. On April 30, 1996, Pride acquired
100% of Quitral-Co's shares, thus gaining control of Quitral-Co.

-- In April 1996, far-reaching changes were made to Venezuela's
economic policy. The exchange market was freed causing the Bolivar
to be devalued by about 80%.

-- In addition, on May 2, 1996, by decision of the shareholders at the
General Shareholders' Meeting held on that date, a new Board of
Directors was elected. The new management is undertaking an analysis
of Quitral-Co's organizational structure to define and implement
short-term strategies and actions intended to position the business
for future success. This analysis may include several dismissals for
estimated termination costs of approximately 4,000.

Quitral-Co is organized under the laws of Argentina and its operations are
conducted in Argentina and Venezuela through its subsidiary; it is therefore
subject to certain investment considerations not typically associated with
investments in equity securities of United States companies. These factors
mainly include: dependence on oil and gas industry conditions, the Argentine and
Venezuelan economy and corporate governance in Argentina and the regulatory
environment Quitral-Co operates within. Quitral-Co is subject also to various
environmental and labor laws and regulations that are different from those which
would apply to a company in the United States of America. For further
information, see "Risk Factors" in the accompanying Prospectus which
information is incorporated herein.

F-37

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. BASIS OF PRESENTATION

The consolidated financial statements of Quitral-Co have been prepared in
accordance with generally accepted accounting principles in Argentina
("Argentine GAAP"), and regulations of the Inspeccion General de
Justicia -- "IGJ" (governmental regulatory agency for nonpublic companies),
which differ in certain respects from generally accepted accounting principles
in the United States of America (U.S. GAAP). A description of the significant
differences between Argentine and U.S. GAAP, and the approximate effect of
differences on Quitral-Co's consolidated net income and shareholders' equity are
set forth in Note 12 to the consolidated financial statements.

PURPOSE OF THE FINANCIAL STATEMENTS

These consolidated financial statements have been prepared with the
purposes of being included in the Form S-3 to be filed by Pride with the
Securities and Exchange Commission of the United States of America (the
"SEC"). The consolidated financial statements also include certain
reclassifications and additional disclosures necessary to conform more closely
with the form and content required by the SEC.

RESTATEMENT OF FINANCIAL STATEMENTS IN CONSTANT ARGENTINE PESOS

In accordance with the method of restatement established in Technical
Resolution No. 6 of the Argentine Federation of Professional Councils in
Economic Sciences (FACPCE) and current legislation, the financial statements of
Quitral-Co were stated in constant Argentine pesos as of the end of each year.
In addition, all amounts have been restated in constant Argentine pesos as of
June 30, 1995. This restatement does not change the valuation of the assets and
liabilities in the financial statements, except for the adjustment required to
state the reported amounts in constant pesos as of June 30, 1995. In accordance
with these requirements, translation factors derived from the general level
wholesale price index issued by the National Institute of Statistics and Census
have been used to arrive at the constant Argentine pesos financial statements.

The conversion factors used to restate the financial statements in constant
Argentine pesos were 1.0, 1.081, and 1.0836 as of June 30, 1995, 1994, and 1993,
respectively.

Resolution No. 8/95 of IGJ dated September 12, 1995, requires companies to
discontinue, beginning September 1, 1995, the restatement of financial
statements for the effect of inflation. On March 29, 1996, the FACPCE approved
Resolution No. 140/96 which determined an annual variation of up to 8% in the
index provided by Resolution No. 6 allowing as an alternative criterion, the
historical currency as reporting currency for preparing financial statements.

ARGENTINE LEGAL REQUIREMENTS

In accordance with Argentine GAAP and current Argentine legislation, the
presentation of the parent company's individual financial statements is
required. Consolidated financial statements need only be included as
supplementary information. For the purpose of this filing, individual financial
statements have been omitted since they are not required for SEC reporting
purposes.

Additionally, certain disclosures related to formal legal requirements for
reporting in Argentina have been omitted for purposes of these financial
statements since they are not required for SEC reporting purposes.

TRANSLATION OF FOREIGN OPERATIONS

The financial statements of Quitral-Co de Venezuela have been translated
into constant Argentine pesos, using that currency as the functional currency.
Thus, monetary assets and liabilities were translated at the exchange rate
prevailing as of year-end, while nonmonetary items were translated at historical
exchange rates and subsequently restated in constant Argentine pesos. Income
statement accounts were converted at the average exchange rate for each month
and restated as indicated above, except for depreciation and other

F-38

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. BASIS OF PRESENTATION (CONTINUED)
consumption of nonmonetary assets, which were valued in terms of the converted
amounts of those assets. Translation gains or losses related to the effect of
devaluation or revaluation of monetary assets and liabilities were charged or
credited to income under Financial income (expense) and holding gains (losses).

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the rules and regulations established by Technical
Resolution No. 4 of the FACPCE, Quitral-Co (the controlling company) has made a
line by line consolidation of its balance sheets as of June 30, 1995 and 1994,
and the related statements of income and cash flows for the years then ended
with the financial statements of Quitral-Co de Venezuela from the date it was
purchased in December 1993.

The table below presents the ownership and voting interest in Quitral-Co de
Venezuela:

% OWNERSHIP AND
VOTING INTEREST
------------------
AS OF AS OF
COMPANY 6/30/95 6/30/94 YEAR END REGISTERED OFFICE
- ---------------------------------------- ------- ------- ------------ ----------------------

Quitral-Co de Venezuela................. 70% 70% December 31 Caracas FD, Venezuela

In order to comply with Argentine GAAP and properly apply the consolidation
method, the Subsidiary prepared special financial statements as of June 30, 1995
and 1994. The financial statements of the Subsidiary have been prepared to
conform the accounting policies to those applied by Quitral-Co in preparing its
financial statements. All significant intercompany transactions and balances
have been eliminated in consolidation. The participation of minority
shareholders in the Subsidiary has been presented in the consolidated statements
under minority interest.

USE OF ESTIMATES

The preparation of financial statements in conformity with Argentine GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Subsequent resolution of
some matters could differ from those estimates.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, Quitral-Co considers all highly
liquid investments with original maturity of three months or less as cash
equivalents.

The table below presents the amount of interest and taxes paid for the
years ended June 30, 1995, 1994 and 1993:

1995 1994 1993
--------- --------- ---------
Interest paid........................ 969 577 483
Income taxes paid.................... 4,840 1,565 910

F-39

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In the consolidated statements of cash flows for the years ended June 30,
1995, 1994 and 1993, cash and cash equivalents are comprised of:

1995 1994 1993
--------- --------- ---------
Cash................................. 2,346 1,326 87
Foreign currency certificates of
deposit............................ 13 116 77
Government securities................ 6 -- --
Financial investment with
subsidiaries and affiliates........ 1,547 145 479
--------- --------- ---------
3,912 1,587 643
========= ========= =========

VALUATION CRITERIA

The main valuation criteria used by Quitral-Co for the preparation of the
consolidated financial statements are as follows:

a) CASH, RECEIVABLES AND PAYABLES:

-- In local currency: at nominal value including, if applicable, interest
accrued through each year-end according to the specific clauses of the
transaction.

-- In foreign currency: converted at the exchange rates in effect at each
year-end for the settlement of these transactions including, if
applicable, interest accrued through each year-end according to the
specific clauses of the transaction. Any exchange differences have been
charged or credited to income of each year. The respective detail is
set forth in Note 11.d).

b) SHORT-TERM INVESTMENTS:

-- Foreign-currency deposit certificates: at the rate of exchange
prevailing on each year-end plus any interest accrued as of then.

-- Government securities: at market value current as of each year-end.

-- Financial investments with related companies: at nominal value
including, if applicable, interest accrued through each year-end
according to the specific clauses of the transaction.

c) PARTS AND SUPPLIES:

-- Materials and spares: with high turnover at replacement cost;
slow-moving and minor items at latest purchase price restated in
constant pesos at each year-end.

-- Materials in transit: at the specific cost of each import shipment plus
expenses accrued as of each year-end; amounts were translated from
foreign currency at exchange rates prevailing on those dates for
settlement of the relevant transaction.

Inventories include, when applicable, an allowance for reduction of their
value to their estimated recoverable value.

d) NONCURRENT INVESTMENTS:

-- Financial investments with related companies: at nominal value
including, if applicable, interest accrued through each year-end
according to the specific clauses of the transaction.

e) PROPERTY AND EQUIPMENT:

Property and equipment are carried at acquisition cost restated in constant
Argentine pesos as of each year-end less related accumulated depreciation. Major
renewals and improvements are capitalized and

F-40

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
depreciated over the respective asset's useful life. Maintenance and repair
costs are charged to expense as incurred. When assets are sold or retired, the
remaining costs and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is included in income. Depreciation of
property and equipment is calculated by the straight line method based upon
expected useful lives of each class of assets (see Note 11.a).

The book value of property and equipment, considered as a whole, does not
exceed its recoverable value.

f) DISCONTINUED OPERATIONS:

Parts and supplies and property and equipment related to discontinued
operations of joint venture interests (see Note 7) were valued at acquisition
cost restated in constant Argentine pesos as of each year-end, less related
accumulated depreciation which does not exceed its realizable value, and
discontinued operations of noncurrent investments were valued at equity method
as of each year-end. Liabilities have been recorded to meet the obligations
arising from discontinued operations.

g) INCOME TAX:

Quitral-Co and its subsidiary calculate income tax on a separate-company
basis at the current rate of 30% in Argentina and 34% in Venezuela,
respectively, without taking in consideration the effect of any temporary
differences between book and taxable income.

As of June 30, 1995, Quitral-Co de Venezuela has an accumulated net
operating loss carryforward of about 7,568, which calculated at the current tax
rate represents a contingent asset of about 2,573, which may be used to offset
future income taxes in that subsidiary.

h) ALLOWANCES AND RESERVES:

-- Deducted from assets:

o Allowance for obsolescence: assessed on the basis of an individual
analysis of items considered technically obsolete.

-- Included in liabilities:

o Reserves for contingencies: established to provide for
contingencies that might involve Quitral-Co in losses whose final
outcome depends on one or more future events. Contingent
liabilities are evaluated by management and Quitral-Co's legal
counsel based on available facts.

The contingencies include outstanding lawsuits or claims for possible
damage to third parties arising from Quitral-Co's business, as well as
third-party claims stemming from issues of interpreting current legislation.

The activity in the allowance and reserve accounts is presented in Note
11.b).

i) SHAREHOLDERS' EQUITY ACCOUNTS:

The shareholders' equity accounts are restated in year-end constant
Argentine pesos, with the exception of the "Capital stock" account, which has
been maintained at its original value. The adjustment resulting from restatement
thereof in year-end constant Argentine pesos is included in the "Adjustment to
capital stock" account.

F-41

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

j) INCOME STATEMENT ACCOUNTS:

All accounts have been restated in constant Argentine pesos as of each
year-end by applying the respective conversion factors for the month of accrual
to the historical amounts, with the exception of charges for nonmonetary assets
consumed, which were determined based on the inflation-adjusted amount of the
assets involved.

-- The caption "Financial income (expense) and holding gains (losses)"
includes:

o Nominal financial income and expense generated on assets and
liabilities, restated in constant Argentine pesos.

o The effects of general inflation on monetary assets and
liabilities, not included in the preceding paragraph.

o Holding gains or losses resulting from the revaluation of
inventories carried at current value.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND
CONCENTRATION OF CREDIT RISK

Quitral-Co has not used financial instruments to manage its exposure to
fluctuations in foreign currencies or interest rates, and accordingly, has not
entered into transactions that would create off-balance sheet risk associated
with such instruments.

Quitral-Co's cash equivalents and current investments are deposit
certificates and securities placed with financial and commercial institutions.
This investment policy limits Quitral-Co's exposure to concentration of credit
risk. Quitral-Co's customer base consists primarily of major integrated and
international oil companies as well as smaller independent oil and gas
producers. Management believes the credit quality of its customers is generally
high. Revenues from YPF S.A. and Perez Companc S.A. represent 28.3% and 24.6%
for the year ended June 30, 1995; 18.6% and 28.9% for the year ended June 30,
1994 and 21.0% and 39.9% for the year ended June 30, 1993, respectively.

4. CHANGES IN FINANCIAL STATEMENT PRESENTATION

a) Reversal of Petroqumica Cuyo's appraisal revaluation reserve

Quitral-Co adjusted its equity investment in Petroquimica Cuyo
(presented as a discontinued operation) eliminating the property, plant
and equipment appraisal revaluation carried out by this affiliate and
the appraisal revaluation reserve included in net worth. This change in
accounting principle was applied retroactively to these financial
statements for the years ended June 30, 1995, 1994 and 1993 and had no
effect in the consolidated statements of income.

b) Presentation of the statements of cash flows

Beginning with the financial statements for the interim period ended
September 30, 1994, Quitral-Co prepares its statements of cash flows in
accordance with the indirect method, starting with the year's net
income and adding to or subtracting from it, as applicable, those items
comprised in its determination that did not affect the operating cash
flows, and disclosing separately any changes in assets and liabilities,
as well as the cash provided by or used in investing and financing
activities.

c) Assets and liabilities of discontinued operations

For the purpose of these financial statements, assets and liabilities
from the operations conducted in Al Norte de la Dorsal, Aguada
Villanueva, Piedras Coloradas, Cacheuta, Canadon Amarillo and
Altiplanicie del Payun oil fields, as well as those from the indirect
interest held by Quitral-Co in the Oritupano-Leona oil area, and the
equity investments in Petroquimica Cuyo S.A., Packingplast

F-42

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. CHANGES IN FINANCIAL STATEMENT PRESENTATION (CONTINUED)

S.A. and Jojoba S.A. as of June 30, 1995 and 1994 and the results of
operations and cash flows for the years ended June 30, 1995, 1994 and
1993, are shown in the account "Discontinued operations" (see Note 7).

For the purpose of these financial statements and in accordance with
Argentine GAAP, the balances as of June 30, 1994 and 1993, which are presented
for comparative purposes, have been prepared after giving effect to the changes
described above.

Additionally, certain reclassifications were made to the amounts presented
as of June 30, 1994 and 1993 to conform their presentation to the
classifications made as of June 30, 1995.

5. BREAKDOWN OF SIGNIFICANT ACCOUNTS

The significant balance sheet and income statement accounts are detailed as
follows:

1995 1994
--------- ---------
a) INVESTMENTS:
SHORT-TERM:
Foreign currency certificates of
deposit............................ 13 116
Government securities.............. 6 11
Financial investment with related
companies (Note 10)................ 1,547 145
--------- ---------
1,566 272
========= =========
NONCURRENT:
Financial investment with related
companies (Note 10)................ 230 6,107
Other.............................. -- 425
--------- ---------
230 6,532
========= =========
b) TRADE RECEIVABLES:
Trade accounts receivables......... 26,407 18,388
Related companies (Note 10)........ 9,032 8,672
Notes receivable................... 13 --
--------- ---------
35,452 27,060
========= =========

c) OTHER RECEIVABLES:
CURRENT:
Tax credits........................ 1,017 801
Prepaid expenses................... 424 60
Advances to vendors................ 2,823 570
Advances to personnel.............. 927 960
Insurance claims................... 32 323
Other.............................. 914 811
--------- ---------
6,137 3,525
========= =========
NONCURRENT:
Guarantee deposits................. 314 8
Other.............................. 364 317
--------- ---------
678 325
========= =========

F-43

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. BREAKDOWN OF SIGNIFICANT ACCOUNTS (CONTINUED)
d) PARTS AND SUPPLIES:
CURRENT:
Materials and spares............... 13,289 12,058
Materials in transit............... 1,883 1,338
Allowance for obsolescence of
materials and spares (Note
11.b)........................... (549) (549)
--------- ---------
14,623 12,847
========= =========
NONCURRENT:
Materials and spares............... 7,122 7,122
Allowance for obsolescence of
materials and spares (Note
11.b)........................... (1,730) --
--------- ---------
5,392 7,122
========= =========

1995 1994
--------- ---------
e) ACCOUNTS PAYABLE:
Vendors............................ 13,336 10,117
Related companies (Note 10)........ 557 556
--------- ---------
13,893 10,673
========= =========
f) LOANS:
CURRENT:
Foreign currency loans:
Related companies (Note 10)........ 7,000 --
Bank loans:
-- Lloyds Bank.................... -- 1,620
-- Supervielle Societe Generale... -- 2,160
-- Frances........................ -- 1,485
-- J. P. Morgan................... -- 2,160
-- Credit Lyonnais Argentina
S.A............................. -- 1,074
-- Provincial S.A.I.C.A.
(Venezuela)..................... 3,206 6,328
-- Mercantil C.A.S.A.C.A.
(Venezuela)..................... 2,054 --
-- Citibank (Venezuela)........... 2,936 --
-- Bank of Boston (Venezuela)
(Note 6)........................ 1,928 3,352
-- Other.......................... 1,641 303
--------- ---------
18,765 18,482
Local currency loans:
Overdrafts......................... 504 --
--------- ---------
19,269 18,482
========= =========
NONCURRENT:
Foreign currency loans:
Banks (Note 6)..................... 7,363(1) 2,541
========= =========

- ------------

(1) Includes a 4,543 loan of Quitral-Co de Venezuela at a cost of LIBOR plus
1.80% per annum and payable in 10 semi-annual installments and a 2,820 loan
of Quitral-Co (Note 6).

F-44

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. BREAKDOWN OF SIGNIFICANT ACCOUNTS (CONTINUED)

1995 1994
--------- ---------
g) OTHER LIABILITIES:
CURRENT:
International Finance
Corporation..................... 1,133 --
Directors' fees payable............ 47 50
Other.............................. 460 1,809
--------- ---------
1,640 1,859
========= =========
NONCURRENT:
International Finance
Corporation..................... 1,688 3,039
Other.............................. 2,090(2) 753(2)
--------- ---------
3,778 3,792
========= =========
- ------------

(2) Non-interest bearing liabilities arising under the Collective Labor
Agreement with the Oil Industry Workers Union and employment legislation in
force in Venezuela.

1995 1994 1993
--------- --------- ---------
h) OTHER (EXPENSES) INCOME, NET:
Gain on sale of property and
equipment -- net................... 226 310 584
Tax and social security
amnesties.......................... (416) -- --
Other non-operating losses......... (600) (491) (187)
Other -- net....................... 170 (619) (2,382)
--------- --------- ---------
(620) (800) (1,985)
========= ========= =========

i) FINANCIAL INCOME (EXPENSE) AND
HOLDING GAINS
(LOSSES) -- NET:
Exchange rate differences.......... (306) 14 150
Interest........................... (4,046) 61 (383)
Income (loss) on exposure to
inflation, and gains
(losses) on holding and
translation of financial
statements...................... 1,065 (42) 294
Other financial expenses, net...... (422) (304) (173)
--------- --------- ---------
(3,709) (271) (112)
========= ========= =========

6. LOANS

Quitral-Co has provided a guarantee on a credit line negotiated by
Quitral-Co de Venezuela with The First National Bank of Boston, to be used for
the purchase and importation of equipment manufactured in the United States. The
facility extended to Quitral-Co de Venezuela is for US$6.5 million, at a cost of
LIBOR plus 1.80% per annum. The entire loan had been drawn as of June 30, 1995.

Under the major restrictive covenants of this loan renegotiated during the
current year, Quitral-Co (guarantor) is required to maintain certain ratios, as
follows: liquidity ratio (total current assets to total current liabilities)
equal to or above 0.85 through June 30, 1995, 1.00 from July 1, 1995 through
June 30, 1996 and 1.15 from July 1, 1996 through June 30, 1999; and a debt to
equity ratio equal to or not less than 1.10, both ratios to be calculated on the
basis of consolidated financial statements. Quitral-Co further agreed not to
collateralize or otherwise encumber its assets existing as of the date of the
loan agreement.

F-45

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LOANS (CONTINUED)

The First National Bank of Boston may declare the entire outstanding
principal plus interest and relevant charges immediately due and payable upon
any event of nonperformance of the above covenants.

On June 30, 1995, Quitral-Co provided a guarantee for a total US$7.5
million to banks in the Republic of Venezuela, to secure performance under
certain credit lines extended to Quitral-Co de Venezuela. About US$6.1 million
of those credit lines had been drawn as of June 30, 1995.

In addition to the guarantee and other security interests described above,
as of June 30, 1995 Quitral-Co de Venezuela had an open letter of credit for the
benefit of Corpoven S.A., for about US$7.4 million. The letter of credit was
opened to secure performance of the Minimum Work Program committed in respect of
its interest in Oritupano-Leona oilfield.

During the year ended June 30, 1995, Quitral-Co executed a US$5 million
loan agreement with the First National Bank of Boston to finance the purchase
and import of goods manufactured in the United States. The loan accrues interest
at LIBOR plus 1.40% per annum and should be repaid in not more than 10
half-yearly installments. The U.S. Eximbank provided political risks insurance
on this loan.

Under the terms of the loan agreement, Quitral-Co agreed to be bound by
similar restrictive covenants and defaults to those described above, in default
whereof all outstanding moneys under the loan can be declared immediately due
and payable.

The first disbursements under the loan, for an approximate US$3.6 million,
had been received as of June 30, 1995, of which 2,820 was classified as
noncurrent.

The maturities of the noncurrent loans as of June 30, 1995 are as follows:

FROM 1 FROM 2 FROM 3 OVER
TO 2 YEARS TO 3 YEARS TO 4 YEARS 5 YEARS TOTAL
----------- ----------- ----------- -------- ---------

Loans................................ 2,209 1,718 1,718 1,718 7,363
=========== =========== =========== ======== =========

7. DISCONTINUED OPERATIONS

Pursuing the strategic aim of concentrating business in the area of
oilfield services, in November and December, 1994, Quitral-Co sold its working
interests in oil producing joint ventures.

In November, 1994, Quitral-Co and Perez Companc S.A., owners of a 43.75%
and a 56.25% interest, respectively, in the Al Norte de la Dorsal and Aguada
Villanueva oil fields, executed an agreement to assign to Chauvco Resources
(Argentina) S.A. all of their rights and obligations with respect to oil and gas
production and the possibility to explore other oil and/or gas deposits in those
areas, including in the assignment the capital goods and inventories owned by
the joint ventures in question. The sales price related to Quitral-Co's interest
was approximately US$12.6 million.

Furthermore, in December 1994, Quitral-Co assigned to Perez Companc S.A.
its 5% interests in the Piedras Coloradas and Cacheuta blocks and its 20%
interests in Canadon Amarillo and Altiplanicie del Payun. The sales price was
US$2.8 million, and included the assignment of all of Quitral-Co's rights and
obligations with respect to oil and gas production and the possibility to
explore other oil and/or gas deposits in the areas, further including in the
assignment the equipments and inventories owned by Quitral-Co in the above
areas.

These sales generated a gain, net of income tax of 5,743, and was credited
to income during the year ended June 30, 1995 under "Discontinued operations".

F-46

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. DISCONTINUED OPERATIONS (CONTINUED)

On the other hand, the subsidiary, Quitral-Co de Venezuela has carried out
the following transactions during September 1995, effective January 1, 1995:

a) Quitral-Co de Venezuela sold to Perez Companc S.A. all its
recorded assets and liabilities related to production covering 10% of the
area Oritupano-Leona and settled the US$4.6 million payable to Perez
Companc S.A.

b) Quitral-Co acquired from Perez Companc S.A. the remaining 30% of
the capital stock of Quitral-Co de Venezuela, thus becoming the sole owner
of the aforesaid company's shares.

In the light of the situation described in a) and b) above, all service
income generated from January 1, 1995 was recognized as accruing to Quitral-Co,
while all income generated by the Oritupano-Leona oilfield was excluded.

The transaction described in b) generated an income from discontinued
operations in the quarter ended as of September 30, 1995, of 2,699.

At the Quitral-Co's General Shareholders' Meeting of April 29, 1996, the
shareholders approved the distribution of all of its equity interests in
Petroqumica Cuyo S.A.I.C., Packingplast S.A. and Jojoba S.A.; these equity
investments and their results as of June 30, 1995, 1994 and 1993, have been
presented retroactively as "Discontinued operations".

Below are the assets and liabilities of the operations discontinued by the
above joint ventures and Quitral-Co's indirect interest in the Oritupano-Leona
area and the equity investments dividended in April, 1996, that were presented
in the financial statements as discontinued operations:

1995 1994
----------------------- -----------------------
JOINT EQUITY JOINT EQUITY
VENTURES INVESTMENTS VENTURES INVESTMENTS
-------- ----------- -------- -----------

CURRENT ASSETS:
Cash and cash equivalents.......... 597 3 194 6
Trade receivables.................. 577 -- 627 --
Other receivables.................. 407 323 576 353
Parts and supplies................. 606 9 595 11
-------- ----------- -------- -----------
Total current assets from
discontinued operations....... 2,187 335 1,992 370
======== =========== ======== ===========
NONCURRENT ASSETS:
Other receivables.................. 91 -- 1,925 --
Property and equipment............. 3,548 4,067 15,726 3,025
Investments........................ -- 36,167 -- 26,476
-------- ----------- -------- -----------
Total noncurrent assets from
discontinued operations....... 3,639 40,234 17,651 29,501
======== =========== ======== ===========
CURRENT LIABILITIES:
Accounts payable................... 949 12 673 1
Loans.............................. -- 18 -- --
Payroll and social security
taxes.............................. 40 15 55 106
Taxes payable...................... 24 -- 74 --
Other liabilities.................. 262 -- 371 --
-------- ----------- -------- -----------
Total current liabilities from
discontinued operations....... 1,275 45 1,173 107
======== =========== ======== ===========

F-47

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. DISCONTINUED OPERATIONS (CONTINUED)

The detail of income (losses) on operations and sale of these interests,
for the years ended June 30, 1995, 1994 and 1993 is as follows:

1995 1994 1993
--------- --------- ---------
(Losses) income on discontinued
operations of joint ventures and
Oritupano-Leona oilfield........... (3,037) (527) 1,010
Income on the sale of joint
venture............................ 5,743 -- --
--------- --------- ---------
Income (losses) from discontinued
operations of joint ventures....... 2,706 (527) 1,010
Income (losses) from discontinued
operations of equity investments... 9,679 419 (2,207)
--------- --------- ---------
12,385 (108) (1,197)
========= ========= =========

8. CAPITAL STOCK

As of June 30, 1995, Quitral-Co's issued, subscribed for, paid in, and
registered capital stock was 13,052. Movements in capital stock during the year
are presented in the consolidated statements of changes in shareholders' equity.

9. RESTRICTION ON UNAPPROPRIATED EARNINGS

The legal reserve of Quitral-Co represents earnings restricted from the
payments of dividends in accordance with Argentine law. The law dictates that
with respect to income in any one year, an amount equal to 5% of the net income
of Quitral-Co after offsetting prior years' losses, must be set aside until the
cumulative legal reserve equals 20% of capital stock.

F-48

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. TRANSACTIONS AND BALANCES WITH RELATED COMPANIES

The outstanding balances as of June 30, 1995 and 1994 from transactions
with related companies are as follows:

RELATED COMPANY 1995 1994
- ---------------------------------------- --------- ---------
INVESTMENTS:
SHORT TERM:
Perez Companc S.A..................... 1,412 --
Other................................. 135 145
--------- ---------
1,547 145
========= =========
NONCURRENT:
Perez Companc S.A..................... -- 5,733
Other................................. 230 374
--------- ---------
230 6,107
========= =========
TRADE RECEIVABLES:
Perez Companc S.A..................... 7,027 7,352
Petrolera Perez Companc S.A........... 1,225 1,043
Servicios Especiales San Antonio
S.A................................ 769 235
Other................................. 11 42
--------- ---------
9,032 8,672
========= =========
ACCOUNTS PAYABLE:
CURRENT:
Perez Companc S.A..................... 159 305
Servicios Especiales San Antonio
S.A................................ 160 133
Sade Ingeniera y Construcciones
S.A................................ 238 118
--------- ---------
557 556
========= =========
LOANS:
CURRENT:
Perez Companc S.A..................... 7,000 --
========= =========

F-49

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. TRANSACTIONS AND BALANCES WITH RELATED COMPANIES (CONTINUED)

The significant transactions made during the year ended June 30, 1995,
include:

NET INTEREST
RELATED COMPANY NET SALES INCOME PURCHASES
- ------------------------------------- --------- ------------- ---------
Perez Companc S.A.................... 43,201 218 578
Petrolera Perez Companc S.A.......... 4,508 -- --
Servicios Especiales San Antonio
S.A................................ 7,881 -- 1,482
Sade Ingeniera y Construcciones
S.A................................ -- -- 1,388
Other................................ 104 44 --
--------- ------------- ---------
55,694 262 3,448
========= ============= =========

The significant transactions made during the year ended June 30, 1994,
include:

NET INTEREST
RELATED COMPANY NET SALES (LOSS) INCOME PURCHASES
- ------------------------------------- --------- ------------- ---------
Perez Companc S.A.................... 41,367 313 325
Maipu Inversora S.A.................. -- (173) --
Petrolera Perez Companc S.A.......... 4,505 -- --
Servicios Especiales San Antonio
S.A................................ 1,819 -- 1,649
Sade Ingeniera y Construcciones
S.A................................ -- -- 1,319
Other................................ 14 28 2
--------- ------------- ---------
47,705 168 3,295
========= ============= =========

The significant transactions made during the year ended June 30, 1993,
include:

NET INTEREST
RELATED COMPANY NET SALES (LOSS) INCOME PURCHASES
- ------------------------------------- --------- ------------- ---------
Perez Companc S.A.................... 42,636 (73) 610
Petrolera Perez Companc S.A.......... 7,061 -- --
Servicios Especiales San Antonio
S.A................................ 257 -- 2,524
Sade Ingeniera y Construcciones
S.A................................ -- -- 2,421
Other................................ -- 27 795
--------- ------------- ---------
49,954 (46) 6,350
========= ============= =========

F-50

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. OTHER FINANCIAL STATEMENT INFORMATION

The following tables present additional financial statement disclosures
required under Argentine GAAP; this information is not a required part of the
basic financial statements under U.S. GAAP:

a) Property and equipment

b) Allowances and reserves

c) Cost of sales

d) Foreign currency assets and liabilities

e) Expenses incurred

A) PROPERTY AND EQUIPMENT

1995
------------------------------------------------------------------------------------------
ACCUMULATED DEPRECIATION
---------------------------------------------
FOR THE YEAR
COST ---------------------------------
------------------------------------------
AT DECREASE AT INCREASE
BEGINNING AND AT END BEGINNING ----------------------
MAIN ACCOUNTS OF YEAR INCREASE TRANSFERS OF YEAR OF YEAR RATE % AMOUNT DECREASE
- ---------------------------------------- --------- -------- -------- -------- --------- ------------- ------ --------

Real property........................... 5,317 121 (238) 5,200 585 10 and 3 181 --
Furniture and facilities................ 2,311 3,898 (2,582) 3,627 1,370 20 and 10 343 (3)
Rigs, tools, and equipment.............. 88,446 17,309 (503) 105,252 43,534 10, 33 and 50 8,524 (84)
Transportation equipment................ 8,277 1,415 (779) 8,913 5,651 10 and 33 1,129 (449)
Base camps and offices.................. 3,784 189 -- 3,973 1,555 10 327 --
Construction projects in
process............................... 1,016 4,217 (2,784) 2,449 -- -- -- --
Advances to vendors..................... 18 1,620 (18) 1,620 -- -- -- --
--------- -------- -------- -------- --------- ------ --------
Total 1995.......................... 109,169 28,769 (6,904) 131,034 52,695 10,504 (536)
========= ======== ======== ======== ========= ====== ========
Total 1994.......................... 95,027 16,147 (2,005) 109,169 45,224 8,175 (704)
========= ======== ======== ======== ========= ====== ========

1994
--------
AT END NET BOOK NET BOOK
MAIN ACCOUNTS OF YEAR VALUE VALUE
- ---------------------------------------- ------- -------- --------
Real property........................... 766 4,434 4,732
Furniture and facilities................ 1,710 1,917 941
Rigs, tools, and equipment.............. 51,974 53,278 44,912
Transportation equipment................ 6,331 2,582 2,626
Base camps and offices.................. 1,882 2,091 2,229
Construction projects in
process............................... -- 2,449 1,016
Advances to vendors..................... -- 1,620 18
------- -------- --------
Total 1995.......................... 62,663 68,371
======= ========
Total 1994.......................... 52,695 56,474
======= ========

F-51

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. OTHER FINANCIAL STATEMENT INFORMATION (CONTINUED)

B) ALLOWANCES AND RESERVES

DEDUCTED FROM ASSETS INCLUDED IN LIABILITIES
--------------------- -----------------------
OBSOLESCENCE CONTINGENCIES
--------------------- -----------------------
CURRENT NONCURRENT NONCURRENT
------- ---------- -----------------------

Balance at beginning of year............ 549 -- 1,837
Net increase............................ -- 1,730 481
------- ---------- ------
Balance as of June 30, 1995............. 549 1,730 2,318
======= ========== ======
Balance as of June 30, 1994............. 549 -- 1,837
======= ========== ======

C) COST OF SALES

1995 1994 1993
--------- --------- ---------
Parts and supplies -- balances at
beginning of year..................... 19,969 15,654 13,731
Purchases for the year.................. 42,621 32,659 17,724
Cost as per Note 11.e).................. 131,906 105,362 76,907
Consumption included under property and
equipment............................. (15,744) (6,676) (3,392)
Holding gains (losses)(1)............... 30 (514) 71
Parts and supplies -- balances at end of
year.................................. (20,015) (19,969) (15,654)
--------- --------- ---------
158,767 126,516 89,387
========= ========= =========

- ------------

(1) Presented in the income statement under "Financial income (expense) and
holding gains (losses)".

F-52

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. OTHER FINANCIAL STATEMENT INFORMATION (CONTINUED)

D) FOREIGN CURRENCY ASSETS AND LIABILITIES

1994 1995
--------------- ----------------------------------------
BOOK IN
FOREIGN CURRENCY AND EXCHANGE THOUSANDS
ACCOUNTS AMOUNT (IN THOUSANDS) RATE(1) OF PESOS
- ------------------------------------- --------------------------------- -------- ----------
CURRENT ASSETS

Cash................................. US$ 193 US$ 522 1.00(1) 522
BVS 21,213 BVS 62,390 170(1) 367
Investments.......................... US$ 188 US$ 149 1.00(1) 149
BVS 9,829 BVS 680 170(1) 4
Trade receivables.................... US$ 24,114 US$ 31,063 1.00(1) 31,063
BVS 212,071 BVS 687,650 170(1) 4,045
Other receivables.................... US$ 446 US$ 2,745 1.00(1) 2,745
BVS 175,322 BVS 242,760 170(1) 1,428
----------
40,323
----------
NONCURRENT ASSETS
Investments.......................... US$ 346 US$ 230 1.00(1) 230
Other receivables.................... US$ 223 US$ 271 1.00(1) 271
BVS 87,737 BVS 6,630 170(1) 39
Advances to vendors.................. US$ -- US$ 1,405 1.00(1) 1,405
----------
1,945
----------
42,268
==========
CURRENT LIABILITIES
Accounts payable..................... US$ 1,990 US$ 2,359 1.00(1) 2,359
BVS 340,977 BVS 452,030 170(1) 2,659
Loans................................ US$ 18,113 US$ 12,898 1.00(1) 12,898
BVS 327,302 BVS 965,260 170(1) 5,678
Payroll and social security taxes.... US$ -- US$ 1,327 1.00(1) 1,327
BVS 175,818 BVS 206,040 170(1) 1,212
Taxes payable........................ BVS 92,004 BVS 166,090 170(1) 977
----------
27,110
NONCURRENT LIABILITIES
Loans................................ US$ -- US$ 7,363 1.00(1) 7,363
Other liabilities.................... US$ 2,814 US$ 1,688 1.00(1) 1,688
----------
9,051
----------
36,161
==========

- ------------

US$ United States dollars.

BVS Bolvares

(1) Buying and selling exchange rates as of June 30, 1995.

F-53

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. OTHER FINANCIAL STATEMENT INFORMATION (CONTINUED)

E) EXPENSES INCURRED

1995
----------------------------------- 1994 1993
OPERATING COST OF --------- ---------
DESCRIPTION EXPENSES SERVICES TOTAL TOTAL TOTAL
- ------------------------------------- ---------- --------- --------- --------- ---------

Payroll.............................. 2,361 34,090 36,451 31,481 25,067
Social security taxes................ 3,031 29,738 32,769 24,729 20,038
Director's compensation.............. 371 -- 371 449 638
Fees and compensation for services... 641 219 860 596 588
Supplies and other services.......... 2,893 46,283 49,176 38,319 22,774
Maintenance and repairs.............. 13 8,723 8,736 4,989 3,514
Taxes, rates and assessments......... 992 170 1,162 960 648
Depreciation of property and
equipment............................ 243 10,261 10,504 8,175 8,694
Insurance............................ 127 881 1,008 933 736
Other operating costs................ 952 907 1,859 1,881 356
Accrual for contingencies............ -- 634 634 725 --
---------- --------- --------- --------- ---------
Total for the year ended June 30,
1995................................. 11,624 131,906 143,530
========== ========= =========
Total for the year ended June 30,
1994................................. 7,875 105,362 113,237
========== ========= =========
Total for the year ended June 30,
1993................................. 6,146 76,907 83,053
========== ========= =========

12. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
FOLLOWED BY QUITRAL-CO AND U.S. GAAP

The accompanying financial statements have been prepared in accordance with
Argentine GAAP which differs in certain respects from U.S. GAAP. The approximate
significant differences on the shareholders' equity and net income as of and for
the years ended June 30, 1995 and 1994, are reflected in the summary provided
below and principally relate to the items discussed in the following paragraphs.
Similar differences would exist for the period ended June 30, 1993, but they
were not quantified as allowed pursuant to SEC rules for foreign businesses
acquired.

As discussed in Note 2, in accordance with Argentine GAAP and current
Argentine legislation, the presentation of parent Company's individual financial
statements is required. Consolidated financial statements need only be included
as supplementary information. For the purposes of this filing, parent financial
statements have been omitted since they are not required for SEC reporting
purposes.

A) RESTATEMENT OF FINANCIAL STATEMENTS FOR GENERAL PRICE-LEVEL CHANGES

As explained in Note 2, Argentine GAAP requires the restatement of all
financial statements to constant Argentine pesos as of the date of the most
recent financial statements presented. This restatement only updates the
financial statements amounts to constant Argentine pesos as of the date of the
most recent financial statements presented and does not change prior period
financial statements in any other way. All nonmonetary assets and income
statement amounts have been restated to reflect changes in the Argentine general
wholesale price index, from the date the assets were acquired or the transaction
took place, to the year-end. The gain (loss) on exposure to inflation included
in income (loss) reflects the effect of Argentine inflation on the monetary
liabilities of Quitral-Co during the year, net of the loss resulting from the
effect of inflation on monetary assets held.

F-54

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
(CONTINUED)
accounting. Shareholders' equity and the net income as of and for the year ended
June 30, 1995 and 1994, have been converted into U.S. dollars in accordance with
U.S. GAAP. Argentina had cumulative inflation of over 100% over a three-year
period up to February 1994, therefore, up to such date amounts were remeasured
as if the functional currency were the U.S. dollar. Thus non-monetary accounts
were converted at the exchange rate when the transaction took place, and since
such date, the monetary accounts were translated at the current exchange rate.

Current exchange rates as of June 30, 1995 and 1994 are approximately Ps 1
= US$1.

Accordingly, the reconciliation to U.S. GAAP of net income and
shareholders' equity shown below reflects as a difference the elimination of the
effect of the general price level restatement and the conversion into U.S.
dollars.

B) INCOME TAXES

As discussed in Note 3.g), under Argentine GAAP income tax expense is
recognized based upon the estimate of the current income taxes payable. When
income and expense recognition for income tax purposes does not occur in the
same period as for financial statements purposes, the resulting temporary
differences are not considered in the computation of income tax expense for the
year.

Under U.S. GAAP, the liability method is used to calculate the income tax
expense. Under this method, deferred taxes are recognized for temporary
differences between the financial and tax basis of assets and liabilities at the
statutory rate. The deferred tax asset generated by the tax loss carryforward of
Quitral-Co de Venezuela has been offset in full by the establishment of a
valuation allowance.

C) VALUATION OF PARTS AND SUPPLIES

As described in Note 3.c), Quitral-Co values its parts and supplies in
stock at replacement cost. Under U.S. GAAP, these inventories should be valued
at the lower of cost or realizable value. As of June 30, 1995 and 1994, there
were no significant differences in the valuation of parts and supplies under
Argentine and U.S. GAAP and thus this effect was not included in the
reconciliation to U.S. GAAP shown below.

D) VACATION ACCRUAL

Under Argentine GAAP, there are no specific requirements governing the
recognition of the accrual for vacations. The acceptable practice in Argentina
is to expense vacations when taken and to accrue only the amount of vacation in
excess of the normal remuneration. Under U.S. GAAP, vacation expense is fully
accrued in the period the employee renders service to earn such vacation.

E) ACCOUNTING FOR POSTRETIREMENT BENEFITS

During May 1991, an employee retirement plan that basically provided for
payments of pension income in addition to statutory retirement was approved.
This additional income is assessed in terms of the payee's age, years of service
to Quitral-Co, and wage upon retirement. Subsequently during 1996, this benefit
was terminated for all Company active workers. The benefit remained in force
only in respect of retired employees.

The plan is financed exclusively by Quitral-Co, which follows the
accounting practice of recording the cost of this benefit as it is paid.

F-55

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
(CONTINUED)
governed by Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirements Benefits Other than Pensions" and the U.S. GAAP
reconciliation recognizes the effect of adjusting the recorded pension cost and
liability to retirees to the amounts required under U.S. GAAP.

F) ELIMINATION OF THE INCREASED VALUE OF PROPERTY AND EQUIPMENT

In order to expand and consolidate Quitral-Co's oilfield services business,
in December 1991 Perez Companc S.A. (Quitral-Co's parent company in 1991) made
an in-kind capital contribution of property and equipment at market value. For
the purpose of adapting Quitral-Co's balances to U.S. GAAP, the net book values
of the assets contributed by Perez Companc S.A. have been written down to the
cost recorded in the latter's books, adjusting the related depreciation
accordingly.

G) INVESTMENTS DIVIDENDED TO FORMER SHAREHOLDERS

As discussed in Notes 1 and 7 to the consolidated financial statements, at
the General Shareholders' Meeting of April 29, 1996, the shareholders approved
the distribution of all its equity interests in Petroqumica Cuyo S.A.,
Packingplast S.A. and Jojoba S.A. as a dividend distribution in kind at their
book value under Argentine GAAP. Due to this distribution to former
shareholders, and for the purpose of reconciling net income and shareholders'
equity to U.S. GAAP, these investments have been excluded.

H) RECONCILIATION OF NET INCOME AND SHAREHOLDERS' EQUITY TO U.S. GAAP

The following is a summary of the approximate significant adjustments to
net income for the years ended June 30, 1995 and 1994, and to shareholders'
equity as of June 30, 1995 and 1994 which would be required if U.S. GAAP had
been applied instead of Argentine GAAP in the accompanying financial statements.

F-56

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
(CONTINUED)

Amounts are stated in thousands, except for per share amounts (see a)
above).

1995 1994
--------------- ----------------
Net income in accordance with
Argentine GAAP..................... Ps. 10,704 Ps. 5,304
Less: income of investments
dividended to former
shareholders....................... (9,679) (419)
--------- ---------
Net income in accordance with
Argentine GAAP excluding income of
investments dividended............. Ps. 1,025 Ps. 4,885
U.S. GAAP ADJUSTMENTS
Increase (decrease) due to:
Effects of eliminating the
restatement for inflation and
conversion into U.S.
dollars....................... 3,308 (1,228)
Deferred income tax............. US$ 439 US$ (38)
Benefits under employee
retirement plan............... (101) (102)
Effect on depreciation of the
increased value of property
and equipment................. 1,270 1,551
Vacation accrual................ (1,014) (975)
--------- ---------
APPROXIMATE NET INCOME IN ACCORDANCE
WITH U.S. GAAP....................... US$ 4,927 US$ 4,093
--------- ---------
Approximate net income from
discontinued operations in
accordance with U.S. GAAP.......... (2,607) (633)
Approximate net income from
continuing operations in accordance
with U.S. GAAP..................... 2,320 3,460
========= =========
NET EARNINGS PER SHARE:
Amounts based on accompanying
financial statements.......... Ps. 0.82 Ps. 0.41
Approximate amounts under U.S.
GAAP.......................... US$ 0.38 US$ 0.31
EARNINGS PER SHARE FROM CONTINUING
OPERATIONS:
Amounts based on accompanying
financial statements.......... Ps. (0.13) Ps. 0.41
Approximate amounts under U.S.
GAAP.......................... US$ 0.18 US$ 0.27

Common shares considered for the purpose of calculating income per share
were 13,051,613 shares.

1995 1994
---------------- ----------------

Shareholders' equity in accordance with Argentine GAAP........................ Ps. 121,639 Ps. 115,176
Less: noncurrent investments dividended to the former
shareholders................................................................ (41,246) (30,988)
--------- ---------
Shareholders' equity excluding noncurrent investments dividended.............. Ps. 80,393 Ps. 84,188
--------- ---------
U.S. GAAP ADJUSTMENTS
Increase (decrease) due to:
Effects of eliminating the restatement for inflation and translation into
U.S. dollars........................................................... (6,460) (10,588)
Property and equipment................................................... US$ (7,101) US$ (8,337)
Deferred income tax...................................................... 353 (86)
Benefits under employee retirement plan.................................. (2,518) (2,536)
Vacation accrual......................................................... (2,082) (983)
--------- ---------
APPROXIMATE SHAREHOLDERS' EQUITY IN ACCORDANCE WITH
U.S. GAAP................................................................... US$ 62,585 US$ 61,658
========= =========

F-57

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
(CONTINUED)

I) OTHER SIGNIFICANT U.S. GAAP DISCLOSURE REQUIREMENTS

1) The following table presents the components of Quitral-Co's deferred
income tax balances as of the end of each year:

1995 1994
--------------- ---------------

DEFERRED TAX ASSETS
Tax loss carryforwards in Quitral-Co de Venezuela.................... US$ 2,573 US$ 985
Valuation allowance.................................................. (2,573) (985)
Vacation accrual..................................................... 625 295
Benefits under employee retirement plan.............................. 714 730
Reserve for contingencies............................................ 186 --
Others, not individually significant................................. 26 --
--------- ---------
US$ 1,551 US$ 1,025
--------- ---------
DEFERRED TAX LIABILITIES
Difference between tax and accounting property and equipment
depreciation...................................................... US$ (900) US$ (997)
Others, not individually significant................................. (298) (114)
--------- ---------
(1,198) (1,111)
--------- ---------
Net deferred tax asset (liability)................................... US$ 353 US$ (86)
========= =========

The reconciliation of pre-tax income at the statutory rate, to the income
tax presented in the financial statements for the years ended June 30, 1995,
1994, computed in accordance with U.S. GAAP, is as follows:

1995 1994
---------------- ----------------
Approximate pre-tax income in accordance with U.S. GAAP.................... US$ 8,183 US$ 6,020
Statutory tax rate......................................................... 30% 30%
--------- ---------
Statutory tax rate applied to pre-tax income............................... 2,455 1,806
Permanent differences:
Assets tax............................................................ (499) (249)
Book vs. tax basis difference of Quitral-Co's investment in Quitral-Co
de Venezuela....................................................... 1,519 333
Others, not individually significant.................................. (219) 37
--------- ---------
US$ 3,256 US$ 1,927
========= =========

2) Disclosures about fair value of financial investments:

U.S. GAAP requires disclosures of the estimated fair value of Quitral-Co's
financial instruments. The carrying amounts of cash, cash equivalents,
marketable securities, current receivables, payables, bank and financial loans
having variable interest rates are considered to approximate their fair market
value.

F-58

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1996 AND 1995
(UNAUDITED)
(STATED IN THOUSANDS OF ARGENTINE PESOS -- NOTE 3)

1996 1995
--------- ---------
CURRENT ASSETS
Cash............................ 1,582 1,190
Investments..................... 6,076 3,863
Trade receivables............... 33,257 35,521
Other receivables............... 6,512 5,862
Parts and supplies.............. 14,928 14,131
Discontinued operations......... 1,789 2,628
--------- ---------
Total current assets....... 64,144 63,195
--------- ---------
NONCURRENT ASSETS
Other receivables............... 289 756
Parts and supplies.............. 4,462 6,403
Investments..................... -- 237
Property and equipment.......... 79,022 66,111
Discontinued operations......... 31,696 40,693
--------- ---------
Total noncurrent assets.... 115,469 114,200
--------- ---------
Total assets............... 179,613 177,395
========= =========
CURRENT LIABILITIES
Accounts payable................ 15,121 14,320
Loans........................... 7,548 23,143
Payroll and social security
taxes.......................... 5,329 4,446
Taxes payable................... 5,112 4,812
Other liabilities............... 2,658 1,810
Discontinued operations......... 58 1,233
--------- ---------
Total current
liabilities............. 35,826 49,764
--------- ---------
NONCURRENT LIABILITIES
Loans........................... 8,683 3,664
Other liabilities............... 3,956 3,675
Reserves........................ 2,741 2,377
--------- ---------
Total noncurrent
liabilities............. 15,380 9,716
--------- ---------
Total liabilities.......... 51,206 59,480
--------- ---------
MINORITY INTEREST IN SUBSIDIARIES.... 46 475
SHAREHOLDERS' EQUITY (per
corresponding statement)........... 128,361 117,440
--------- ---------
Total liabilities and
shareholders' equity.... 179,613 177,395
========= =========

The accompanying notes are an integral part of these financial statements.

F-59

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(STATED IN THOUSANDS OF ARGENTINE PESOS -- NOTE 3)

1996 1995
---------- ----------
NET SALES............................... 148,650 127,072
COST OF SALES........................... (132,125) (115,582)
---------- ----------
Gross income.......................... 16,525 11,490
OPERATING EXPENSES, net................. (8,569) (9,167)
OTHER INCOME, net....................... 4,437 69
FINANCIAL INCOME AND HOLDING GAINS
(LOSSES), net......................... 417 (4,031)
---------- ----------
Income (loss) from continuing
operations before income tax and
minority interest.................. 12,810 (1,639)
INCOME TAX.............................. (3,927) (3,795)
---------- ----------
Income (loss) from continuing
operations......................... 8,883 (5,434)
INCOME FROM DISCONTINUED OPERATIONS
(plus tax carryforward of 349 in
1995)................................. 2,296 9,731
MINORITY INTEREST IN SUBSIDIARIES....... 63 1,746
---------- ----------
Net income for the period............. 11,242 6,043
========== ==========

The accompanying notes are an integral part of these financial statements.

F-60

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(STATED IN THOUSANDS OF ARGENTINE PESOS -- NOTE 3)

1995
---------------------------------------------------------------------------
STOCK ACCUMULATED EARNINGS
----------------------------------- -------------------------
ADJUSTMENT ADDITIONAL UNAPPROPRIATED 1994
CAPITAL TO CAPITAL PAID IN LEGAL RETAINED -------
STOCK STOCK CAPITAL RESERVE EARNINGS TOTAL TOTAL
------- ---------- ---------- ------- -------------- ------- -------

Balances at beginning of year........... 13,052 8,759 35,273 2,085 62,950 122,119 115,759
Appropriations directed by Special
Shareholders' Meeting of September 22,
1995 and October 20, 1994
-- Legal reserve...................... -- -- -- 535 (535) -- --
-- Cash dividends (Ps. 0.38 per
share).............................. -- -- -- -- (5,000) (5,000) (4,362)
Net income for the period............... -- -- -- -- 11,242 11,242 6,043
------- ---------- ---------- ------- -------------- ------- -------
Balances as of March 31, 1996........... 13,052 8,759 35,273 2,620 68,657 128,361
======= ========== ========== ======= ============== =======
Balances as of March 31, 1995........... 13,052 8,759 35,273 2,085 58,271 117,440
======= ========== ========== ======= ============== =======

The accompanying notes are an integral part of these financial statements.

F-61

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(STATED IN THOUSANDS OF ARGENTINE PESOS -- NOTE 3)

1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income...................... 11,242 6,043
Adjustments to reconcile net income
to net cash provided by
operating activities:
Minority interest in profits.... (63) (1,746)
Depreciation of property and
equipment...................... 10,258 7,599
Dividends collected............. 8,000 --
Loss on sale of property and
equipment...................... (189) (99)
Increase in allowances.......... 786 533
Increase in allowance for
obsolescence of materials and
spares......................... (6,811) --
Income on financial
investments.................... 770 747
Income from discontinued
operations..................... 347 4,094
Income on the sale of
discontinued operations of
joint venture interests........ (2,699) (5,766)
Income from discontinued
operations of equity
investments.................... 403 (9,519)
Changes in assets and liabilities:
Trade receivables............... 1,777 (5,728)
Other receivables............... (806) (2,753)
Parts and supplies.............. (7,804) (4,544)
Accounts payable................ (870) 6,064
Payroll and social security
taxes.......................... 488 317
Taxes payable................... 444 2,833
Other liabilities............... 1,439 1,353
Discontinued operations......... 1,776 3,698
--------- ---------
Cash flows provided by
operating activities.... 18,488 3,126
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans to related companies...... -- 1,677
Noncash investments............. 231 59
Acquisition of property and
equipment...................... (12,587) (15,331)
Sales of property and
equipment...................... 325 383
Sale of temporary investments... -- 480
Discontinued operations......... (335) (2,245)
Proceeds from sale of
discontinued operations........ -- 16,245
--------- ---------
Cash flows (used in)
provided by investing
activities.............. (12,366) 1,268
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term loans, net........... 1,450 2,305
Long-term loans................. 1,159 1,124
Dividends....................... (5,000) (4,362)
--------- ---------
Cash flows used in
financing activities.... (2,391) (933)
--------- ---------
Net (decrease) increase in cash and
cash equivalents................... 3,731 3,461
Cash and cash equivalents at
beginning of year.................. 3,927 1,593
--------- ---------
Cash and cash equivalents at end of
period............................. 7,658 5,054
========= =========

The accompanying notes are an integral part of these financial statements.

F-62

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND 1995
(STATED IN THOUSANDS OF ARGENTINE PESOS -- NOTE 3)

1. BASIS OF PRESENTATION

The unaudited consolidated financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission (SEC). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles in Argentina and the U.S. have been condensed or
omitted, pursuant to such rules and regulations. These unaudited consolidated
financial statements should be read in conjunction with Quitral-Co S.A.I.C.'s
("Quitral-Co") audited consolidated financial statements and notes thereto
included in this registration statement on Form S-3 for the year ended June 30,
1995.

The unaudited consolidated financial information included herein reflects
all adjustments, consisting only of normal recurring adjustments, which are
necessary, in the opinion of management, for a fair presentation of Quitral-Co's
financial position, results of operations and cash flows for the interim period
presented. The results of operations for the interim period presented herein are
not necessarily indicative of the results to be expected for full years.

2. EVENTS SUBSEQUENT TO THE PERIOD ENDED MARCH 31, 1996:

-- At the General Shareholders' Meeting of April 29, 1996, the
shareholders approved the distribution of all of its equity interests
in Petroqumica Cuyo S.A.I.C., Pakingplast S.A., and Jojoba S.A. as a
dividend distribution in kind at their book value. The assets,
liabilities and results related to these investments are presented as
discontinued operations. In addition, at this General Shareholders'
Meeting, the shareholders approved distribution of 32,600 in cash
dividends.

-- On April 29, 1996, Pride Petroleum Services, Inc. ("Pride"), a U.S.
based company, extended a non-current loan of 32,600 to Quitral-Co to
increase its working capital. On April 30, 1996, Pride acquired 100% of
Quitral-Co's shares, thus gaining control of Quitral-Co.

-- In April 1996 far-reaching changes were made to Venezuela's economic
policy. The exchange market was freed causing the Bolivar to be
devalued by approximately 80%.

-- In addition, on May 2, 1996, by decision of the shareholders at the
General Shareholders' Meeting held on that date, a new Board of
Directors was elected. The new Management is undertaking an analysis of
Quitral-Co's organizational structure to define and implement
short-term strategies and actions intended to position the business for
future success. This analysis may include several dismissals for
estimated termination costs of approximately 4,000.

3. RESTATEMENT IN CONSTANT MONEY

Technical Resolution No. 6 of the Argentine Federation of Professional
Councils in Economic Sciences (FACPCE) requires financial statements to be
stated in constant pesos as of the respective period-end by applying conversion
factors derived from the general level wholesale price index published by the
National Institute of Statistics and Census.

On August 22, 1995, the Federal Executive Power passed Decree No. 316/95
instructing control agencies not to admit financial statements prepared in
constant pesos. Pursuant to this instruction, the Inspeccion General de Justicia
(governmental regulatory agency for nonpublic companies), required that

F-63

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. RESTATEMENT IN CONSTANT MONEY (CONTINUED)
application of the method of restatement in constant pesos be discontinued as of
September 1, 1995, while ratifying the restatement reported until such date. The
effects of this new method are:

a) The financial statements as of March 31, 1996, only include the
effect of restatement in constant money for inflation accumulated until
August 31, 1995 at a conversion factor of 1.0.

b) The financial statements as of March 31, 1995, have been restated
for comparative purposes, only until August 31, 1995 at a conversion factor
of 1.034.

On March 29, 1996, the FACPCE approved Resolution No. 140/96 by which an
annual variation up to the 8% in the index established by Technical Resolution
No. 6 authorizes to accept as an alternative method the use of the nominal
currency as unit of measurement for the preparation of the financial statements.
As of March 31, 1996, accumulated inflation from the beginning of the fiscal
year, calculated on the above mentioned index, is 1.8%.

4. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING
PRINCIPLES FOLLOWED BY QUITRAL-CO AND U.S. GAAP

The accompanying financial statements have been prepared in accordance with
Argentine GAAP which differs in certain respects from U.S. GAAP. The approximate
significant differences on the shareholders' equity and net income as of and for
the nine months ended March 31, 1996, are reflected in the summary provided
below and principally relate to the items discussed in the following paragraphs.
Similar differences would exist for the nine months ended March 31, 1995, but
they were not quantified as allowed pursuant to SEC rules for foreign businesses
acquired.

In accordance with Argentine GAAP and current Argentine legislation, the
presentation of parent company's individual financial statements is required.
Consolidated financial statements need only be included as supplementary
information. For the purposes of this filing, parent financial statements have
been omitted since they are not required for SEC reporting purposes.

A) RESTATEMENT OF FINANCIAL STATEMENTS FOR GENERAL PRICE-LEVEL CHANGES

Argentine GAAP requires the restatement of all financial statements to
constant Argentine pesos as of the date of the most recent financial statements
presented. This restatement only updates the financial statements amounts to
constant Argentine pesos as of the date of the most recent financial statements
presented and does not change prior period financial statements in any other
way. All nonmonetary assets and income statement amounts have been restated to
reflect changes in the Argentine general wholesale price index, from the date
the assets were acquired or the transaction took place, to the year-end. The
gain (loss) on exposure to inflation included in income (loss) reflects the
effect of Argentine inflation on the monetary liabilities of Quitral-Co during
the year, net of the loss resulting from the effect of inflation on monetary
assets held until August 31, 1995 (see Note 3).

Under U.S. GAAP, account balances and transactions are stated in the units
of currency of the period when the transactions originated. This accounting
model is commonly known as the historical cost basis of accounting.
Shareholders' equity and the net income as of and for the nine months ended
March 31, 1996, have been converted into U.S. dollars in accordance with U.S.
GAAP. Argentina had cumulative inflation of over 100% over a three-year period
up to February 1994, therefore, up to such date amounts were remeasured as if
the functional currency were the U.S. dollar. Thus non-monetary accounts were
converted at the exchange rate when the transaction took place, and since such
date, the monetary accounts were translated at the current exchange rate.

Current exchange rates as of March 31, 1996 are approximately Ps 1 = US$1.

F-64

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING
PRINCIPLES FOLLOWED BY QUITRAL-CO AND U.S. GAAP (CONTINUED)

B) INCOME TAXES

Under Argentine GAAP income tax expense is recognized based upon the
estimate of the current income taxes payable. When income and expense
recognition for income tax purposes does not occur in the same period as for
financial statements purposes, the resulting temporary differences are not
considered in the computation of income tax expense for the year.

C) VALUATION OF PARTS AND SUPPLIES

Quitral-Co values its parts and supplies in stock at replacement cost.
Under U.S. GAAP, these inventories should be valued at the lower of cost or
realizable value. As of March 31, 1996 , there were no significant differences
in the valuation of parts and supplies under Argentine and U.S. GAAP, and thus
this effect was not included in the reconciliation to U.S. GAAP shown below.

D) VACATION ACCRUAL

E) ACCOUNTING FOR POSTRETIREMENT BENEFITS

The plan is financed exclusively by Quitral-Co, which follows the
accounting practice of recording the cost of this benefit as it is paid.

Under Argentine GAAP, there are no strict requirements governing the
recognition of an employer's liability for retirement benefits granted to
employees. Quitral-Co follows the accounting practice of recording the cost of
the benefits under the plan as it is paid. In the U.S., the accounting for these
benefits is governed by Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirements Benefits Other Than Pensions", and
the U.S. GAAP reconciliation recognizes the effect of adjusting the recorded
pension cost and liability to retirees to the amounts required under U.S. GAAP.

F) ELIMINATION OF THE INCREASED VALUE OF PROPERTY AND EQUIPMENT

In order to expand and consolidate Quitral-Co's oilfield services business,
in December 1991, Perez Companc S.A. (Quitral-Co's parent company in 1991) made
an in-kind capital contribution of property and equipment at market value. For
the purpose of adapting Quitral-Co's balances to U.S. GAAP, the net book

F-65

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING
PRINCIPLES FOLLOWED BY QUITRAL-CO AND U.S. GAAP (CONTINUED)
values of the assets contributed by Perez Companc S.A. have been written down to
the cost recorded in the latter's books, adjusting the related depreciation
accordingly.

G) INVESTMENTS DIVIDENDED TO FORMER SHAREHOLDERS

As discussed in Notes 1 and 7 to the annual consolidated financial
statements, at the General Shareholders' Meeting of April 29, 1996, the
shareholders approved the distribution of all its equity interests in
Petroqumica Cuyo S.A., Packingplast S.A. and Jojoba S.A. as a dividend
distribution in kind at their book value under Argentine GAAP. Due to this
distribution to former shareholders, and for the purpose of reconciling net
income and shareholders' equity to U.S. GAAP, these investments have been
excluded.

H) RECONCILIATION OF NET INCOME AND SHAREHOLDERS' EQUITY TO U.S. GAAP

The following is a summary of the approximate significant adjustments to
net income for the nine months ended March 31, 1996, and to shareholders' equity
as of March 31, 1996, which would be required if U.S. GAAP had been applied
instead of Argentine GAAP in the accompanying financial statements.

Amounts are stated in thousands, except for per share amounts (see a)
above).

1996
---------------
Net income in accordance with Argentine
GAAP.................................... Ps. 11,242
Less: losses of investments dividended
to former shareholders................ 404
---------
Net income in accordance with Argentine
GAAP excluding income of investments
dividended............................ Ps. 11,646
---------
U.S. GAAP ADJUSTMENTS
Increase (decrease) due to:
Effects of eliminating the restatement
for inflation and conversion into
U.S. dollars.......................... 2,557
Deferred income tax..................... US$ (199)
Benefits under employee retirement
plan.................................. (75)
Effect on depreciation of the increased
value of property and equipment....... 990
Vacation accrual........................ (1,102)
---------
APPROXIMATE NET INCOME IN ACCORDANCE
WITH U.S. GAAP........................ US$ 13,817

Approximate net income from discontinued
operations in accordance with U.S.
GAAP.................................. (2,100)
---------
Approximate net income from continuing
operations in accordance with U.S.
GAAP.................................. US$ 11,717
=========

F-66

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING
PRINCIPLES FOLLOWED BY QUITRAL-CO AND U.S. GAAP (CONTINUED)

1996
---------------
NET EARNINGS PER SHARE:
Amounts based on accompanying financial
statements............................ Ps. 0.86
Approximate amounts under U.S. GAAP..... US$ 1.06
EARNINGS PER SHARE FROM CONTINUING
OPERATIONS:
Amounts based on accompanying financial
statements............................ Ps. 0.68
Approximate amounts under U.S. GAAP..... US$ 0.90

Common shares considered for the purpose of calculating income per share
were 13,051,613 shares.

1996
----------------
Shareholders' equity in accordance with
Argentine GAAP........................ Ps. 128,361
Less: noncurrent investments dividended
to the former shareholders............ (33,381)
---------
Shareholders' equity excluding
noncurrent investments dividended..... Ps. 94,980
U.S. GAAP ADJUSTMENTS
Increase (decrease) due to:
Effects of eliminating the
restatement for inflation and
translation into U.S. dollars..... (5,339)
Property and equipment............. US$ (6,111)
Deferred income tax................ 154
Benefits under employee retirement
plan.............................. (2,436)
Vacation accrual................... (1,846)
---------
APPROXIMATE SHAREHOLDERS' EQUITY IN
ACCORDANCE WITH U.S. GAAP............. US$ 79,402(1)
=========

- ------------
(1) Includes US$8,000 in cash dividends, collected during the period from
investments dividended to former shareholders.

I) OTHER SIGNIFICANT U.S. GAAP DISCLOSURE REQUIREMENTS
1) The following table presents the components of Quitral-Co's deferred
income tax balances as of the end of the period:

1996
----------------
DEFERRED TAX ASSETS
Tax loss carryforwards in
Quitral-Co de Venezuela........... US$ 998
Valuation allowance................ (998)
Vacation accrual................... 589
Benefits under employee retirement
plan.............................. 708
---------
1,297
---------
DEFERRED TAX LIABILITIES
Difference between tax and
accounting property and equipment
depreciation...................... (1,072)
Reserve for contingencies.......... (71)
---------
(1,143)
Net deferred tax asset............. US$ 154
=========

F-67

QUITRAL-CO S.A.I.C. AND SUBSIDIARY
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING
PRINCIPLES FOLLOWED BY QUITRAL-CO AND U.S. GAAP (CONTINUED)

The reconciliation of pre-tax income at the statutory rate, to the income
tax presented in the financial statements for the nine months ended March 31,
1996, computed in accordance with U.S. GAAP, is as follows:

1996
----------------
Approximate pre-tax income in
accordance with U.S. GAAP......... US$ 17,943
Statutory tax rate................. 30%
---------
Statutory tax rate applied to
pre-tax income.................... 5,383
Permanent differences:
Book vs. tax basis difference of
Quitral-Co's investment in
Quitral-Co de Venezuela........... US$ (2,488)
Non deductible expenses............ 1,010
Other, not individually
significant....................... 221
---------
US$ 4,126
=========

2) Disclosures about fair value of financial investments:
U.S. GAAP requires disclosures of the estimated fair value of Quitral-Co's
financial instruments. The carrying amounts of cash, cash equivalents,
marketable securities, current receivables, payables, bank and financial loans
having variable interest rates are considered to approximate their fair market
value.

F-68

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
of Forasol-Foramer N.V.

We have audited the accompanying consolidated balance sheets of
Forasol-Foramer N.V. and subsidiaries (the "Company") as of December 31, 1995
and 1994, and the related consolidated statements of income, of cash flows and
of changes in stockholders' equity for each of the three years in the period
ended December 31, 1995. 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 did not audit the financial
statements of National Drilling and Services Corp. LLC ("NDSC"), an investment
which is reflected in the accompanying financial statements using the equity
method of accounting (see Note 4). The investment in NDSC represents 1.2% of
consolidated assets at both December 31, 1995 and 1994. The equity in its net
income represents 6%, 20% and 75% of the consolidated net income (loss) for the
periods ended December 31, 1995, 1994, and 1993, respectively. Those statements
were audited by other auditors whose reports have been furnished to us and our
opinion, insofar as it relates to the amounts included for NDSC, is based solely
on the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards in the United States. 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,
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 and the report of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Forasol-Foramer N.V., as of
December 31, 1995 and 1994, and the results of operations and their cash flows
for each of the three years in the period ended December 31, 1995, in conformity
with accounting principles generally accepted in the United States.

As described in Note 18, certain amounts as they relate to the Company's
equity investment in NDSC, have been restated in the accompanying consolidated
financial statements of Forasol-Foramer N.V. from those consolidated financial
statements included in the Preliminary Prospectus dated April 22, 1996, due to
the financial statements of NDSC, which have been audited by other auditors,
being restated from those included in the Preliminary Prospectus. The restated
financial statements and accounts of NDSC are included elsewhere in this
Prospectus.

Price Waterhouse

Paris, France
April 19, 1996,
except for Note 18
which is as of May 8, 1996.

F-69

FORASOL-FORAMER N.V.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
(IN THOUSANDS)

DECEMBER 31,
----------------------
NOTES 1995 1994
----- ---------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............ $ 17,335 $ 19,490
Trade accounts receivable, net of
allowance for doubtful accounts of
$1,453 and $1,116 at December 31,
1995 and 1994, respectively........ 40,100 36,272
Prepaid expenses and other current
assets............................. 21,022 22,740
Deferred taxes....................... 10 2,467 1,503
---------- ----------
Total current
assets................. 80,924 80,005
---------- ----------
INVESTMENTS AND OTHER ASSETS:
Investments in and advances to equity
affiliates*........................ 4 9,480 11,905
Other long-term investments and
receivables........................ 5 6,518 8,138
Deferred income taxes................ 10 5,761 4,849
---------- ----------
Total investments and
other assets...... 21,759 24,892
---------- ----------
PLANT AND EQUIPMENT, NET............. 6 230,372 212,726
---------- ----------
Total assets.......... $ 333,055 $ 317,623
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts and notes payable..... $ 32,397 $ 26,472
Credit facility...................... 8 20,840 12,157
Current portion of long-term debt.... 9 18,202 15,271
Current portion of long-term lease
obligations........................ 7 8,138 14,797
Deferred income taxes................ 10 647 882
Other current liabilities............ 26,919 31,656
---------- ----------
Total current
liabilities....... 107,143 101,235
---------- ----------
LONG-TERM DEBT AND OTHER LIABILITIES:
Long-term debt....................... 9 40,258 34,898
Long-term lease obligations.......... 7 44,538 30,899
Deferred income...................... 204 6,815
Provision for major repairs.......... 3,565 3,525
Deferred income taxes................ 4,852 4,669
Other long-term liabilities.......... 6,184 6,833
---------- ----------
Total long-term debt
and other
liabilities....... 99,601 87,639
---------- ----------
Commitments and Contingencies........ 16
MINORITY INTEREST.................... 3,306 1,869
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, par value NLG .01,
50,000,000 shares authorized;
10,010,000 shares outstanding at
December 31, 1995 and 1994......... 55 55
Additional paid-in capital........... 70,685 70,685
Retained earnings*................... 52,415 56,428
Foreign currency translation
adjustment......................... (150) (288)
---------- ----------
Total stockholders'
equity............ 123,005 126,880
---------- ----------
Total liabilities and
stockholders'
equity............ $ 333,055 $ 317,623
========== ==========

The accompanying notes are an integral part of these consolidated financial
statements.
* Restated -- See Note 18

F-70

FORASOL-FORAMER N.V.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
------------ ----------- -----------
NET OPERATING REVENUES............... $ 171,335 $ 148,348 $ 149,452
Equity in net income of
affiliates*........................ 165 (44) 2,474
------------ ----------- -----------
TOTAL REVENUES*...................... 171,500 148,304 151,926
Cost of operations................... (127,491) (104,398) (105,995)
Depreciation and amortization........ (20,264) (20,292) (19,966)
Selling, general and administrative
expenses........................... (17,660) (16,216) (15,330)
------------ ----------- -----------
OPERATING INCOME*.................... 6,085 7,398 10,635
Gain on disposals of equipment....... 57 673 1,444
Interest and other financial
income............................. 555 1,111 645
Interest and other financial
expense............................ (9,338) (8,416) (8,982)
Net foreign exchange gain (loss)..... (166) 3,690 1,261
Other income (expense), net.......... 491 (404) 204
------------ ----------- -----------
INCOME (LOSS) BEFORE MINORITY
INTEREST AND INCOME TAXES*......... (2,316) 4,052 5,207
Minority interest.................... (1,288) (536) (187)
Income taxes......................... (409) (2,580) (2,073)
------------ ----------- -----------
NET INCOME (LOSS)*................... $ (4,013) $ 936 $ 2,947
============ =========== ===========
NET INCOME (LOSS) PER SHARE*......... $ (0.40) $ 0.10 $ 0.31
============ =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING........................ 10,010,000 9,465,987 9,461,681
============ =========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.
* Restated -- See Note 18

F-71

FORASOL-FORAMER N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS)

YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)*................... $ (4,013) $ 936 $ 2,947
Depreciation and amortization........ 20,264 20,292 19,966
Gain on disposals of equipment....... (57) (673) (1,444)
Undistributed earnings in equity
affiliates*........................ (165) 44 (2,474)
Deferred income taxes................ (1,928) (862) 473
Minority interest.................... 1,437 550 202
Unrealized foreign exchange (gains)
losses............................. 1,317 1,861 (683)
Asset valuation allowances........... 640 -- --
Increase (decrease) from changes in:
Trade accounts receivable....... (7,528) 7,660 (9,233)
Prepaid expenses and other
current assets................ 7,042 1,602 (3,229)
Trade accounts and notes
payable....................... 5,925 (2,028) 5,134
Other current and operating
liabilities................... (11,312) 2,942 (957)
Deferred income................. (6,611) (2,700) 8,703
---------- ---------- ----------
Net cash provided by
operating activities.... 5,011 29,624 19,405
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment..... (30,083) (20,703) (22,909)
Proceeds from sales of plant and
equipment.......................... 2,962 7,347 9,937
Net advances made to affiliates...... 301 (520) (5,288)
Dividends from equity affiliates..... 207 83 --
Acquisitions of other long-term
investments and additions to
long-term receivables and
advances........................... (127) (1,135) (2,872)
Disposals of other long-term
investments and collections of
long-term receivables.............. 777 245 2,010
Consideration for HAPSA acquisition,
net of cash acquired............... (1,116) -- --
---------- ---------- ----------
Net cash used in investing
activities.............. (27,079) (14,683) (19,122)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Credit facility (net)................ 8,683 (5,839) 7,352
Proceeds from loans.................. 25,864 6,635 17,602
Principal payments on long-term debt
and capital lease obligations...... (18,505) (23,049) (19,388)
Proceeds from exercise of stock
options............................ 3,700 -- --
---------- ---------- ----------
Net cash used in financing
activities.............. 19,742 (22,253) 5,566
---------- ---------- ----------
EFFECTS OF EXCHANGE RATE CHANGES ON
CASH............................... 171 148 (175)
---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents................... (2,155) (7,164) 5,674
Cash and cash equivalents at
beginning of year.................. 19,490 26,654 20,980
Cash and cash equivalents at end of
year............................... $ 17,335 $ 19,490 $ 26,654
========== ========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid........................ $ 10,120 $ 7,274 $ 8,505
========== ========== ==========
Income taxes paid.................... $ 1,097 $ 1,232 $ 1,875
========== ========== ==========
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Capital lease restructuring (see Note
7)................................. $ 40,000
Long-term debt refinancing (see Note
9(a)).............................. $ 20,000

The accompanying notes are an integral part of these consolidated financial
statements.
*Restated -- See Note 18

F-72

FORASOL-FORAMER N.V.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS)

NUMBER OF ADDITIONAL FOREIGN TOTAL
SHARES COMMON PAID-IN RETAINED CURRENCY STOCKHOLDERS'
ISSUED STOCK CAPITAL EARNINGS TRANSLATION EQUITY
---------- ------ ---------- -------- ----------- -------------

January 1, 1993...................... 9,461,681 $ 52 $ 65,614 $ 52,545* $ $ 118,211*
Net income........................... 2,947* 2,947*
Translation adjustment............... (627) (627)
---------- ------ ---------- -------- ----------- -------------
December 31, 1993.................... 9,461,681 $ 52 $ 65,614 $ 55,492* $ (627) $ 120,531*
Exercise of stock options............ 548,319 3 5,071 5,074
Net income........................... 936* 936*
Translation adjustment............... 339 339
---------- ------ ---------- -------- ----------- -------------
December 31, 1994.................... 10,010,000 $ 55 $ 70,685 $ 56,428* $ (288) $ 126,880*
Net loss............................. (4,013)* (4,013)*
Translation adjustment............... 138 138
---------- ------ ---------- -------- ----------- -------------
December 31, 1995.................... 10,010,000 $ 55 $ 70,685 $ 52,415* $ (150) $ 123,005*

The accompanying notes are an integral part of these consolidated financial
statements.
* Restated -- See Note 18

F-73

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

1. PRINCIPLES OF CONSOLIDATION

At December 31, 1995, Forasol S.A. and its subsidiaries ("Forasol") and
Forinter Ltd. and its subsidiaries ("Forinter") were beneficially owned
equally by Soletanche S.A., a French company ("Soletanche"), and Ackermans &
van Haaren, N.V., a Belgian company ("Ackermans"). On September 21, 1995, the
two shareholders established Forasol-Foramer N.V. (the "Company"), a Dutch
holding company. On April 3, 1996, the two shareholders exchanged their
respective shares in Forasol for an equivalent interest in the Company. For
purposes of financial statement presentation, Forasol and Forinter have been
retroactively consolidated at December 31, 1995, 1994 and 1993 within the
financial statements of the Company.

The Company's subsidiaries are primarily engaged in international oil and
gas contract drilling and workover operations for major and independent oil and
gas companies, as well as providing well engineering, integrated drilling
services, turnkey wells and project management to customers on a worldwide
basis.

The financial statements of the Company include the accounts of Forasol,
Forinter and all of their wholly owned and majority owned subsidiaries. The
financial statements have been presented in accordance with accounting
principles generally accepted in the United States of America ("U.S. GAAP").
Investments in which the Company's ownership interest ranges from 20% to 50% and
where the Company exercises significant influence over operating and financial
policies are accounted for using the equity method. Less than 20% owned
companies are accounted for at cost. Investments in non-corporate joint ventures
in which the Company owns an undivided interest are accounted for by the
proportionate line-by-line consolidation method. All intercompany accounts and
transactions have been eliminated.

2. ACQUISITIONS

On January 1, 1995, the Company acquired a 36.5% interest in Hispano
Americana de Petroleos ("HAPSA"), an Argentina contract drilling company, for
$1.02 million in cash. Subsequently, on May 1, 1995, the Company acquired an
additional 58.5% of HAPSA's shares in exchange for consideration of $1.3 million
in cash and notes payable and the contribution of the Company's 21% interest in
two Spanish equity investees, Sondeos Petroliferos SA and Bellegarde Investments
SA. This acquisition was recorded using the purchase method of accounting and,
accordingly, the purchase price has been allocated to the assets purchased and
the liabilities assumed based upon the fair values at the date of acquisition.
The excess of the purchase price over the fair values of the net assets acquired
resulted in $1.09 million of goodwill which is being amortized on a
straight-line basis over five years.

The net purchase price was allocated as follows (in thousands):

Working capital, other than cash..... $ (6,958)
Plant and equipment.................. 9,219
Other assets......................... 746
Goodwill............................. 1,091
Other liabilities.................... (213)
---------
Purchase price, net of cash
received............................. $ 3,885
=========

For the period January 1, 1995 to April 30, 1995, the Company's 36.5%
interest was recorded under the equity method. Results of operations after May
1, 1995 have been consolidated. The

F-74

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

2. ACQUISITIONS (CONTINUED)

following pro forma unaudited information has been prepared assuming the
acquisition had taken place at the beginning of the respective periods:

(IN THOUSANDS, EXCEPT PER SHARE DATA) 1995 1994
---------- ----------
(UNAUDITED)
Net operating revenues............... $ 178,539 $ 160,220
Net income (loss).................... $ (3,814) $ 156
Earnings per share................... $ (0.38) $ 0.02

These pro forma results have been prepared for comparative purposes only
and include certain adjustments such as additional depreciation expense as a
result of a step-up in basis of plant and equipment, additional amortization
expense as a result of goodwill and increased interest expense on acquisition
debt. The information does not purport to be indicative of the results of
operations which actually would have resulted had the combination been in effect
on January 1, 1995 and 1994 or of future results of operations of the
consolidated entities.

On December 29, 1994, the Company acquired the remaining 50% interest in
Forafels, Inc., which owns and operates the swamp barge BINTANG KALIMANTAN. The
purchase price is contingent upon future utilization of Forafels' primary asset,
the swamp barge, during the five years subsequent to the purchase. The Company's
50% interest in Forafels, Inc. during the two years ended December 31, 1994 was
recorded under the equity method (see Note 4).

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

TRANSLATION OF FINANCIAL STATEMENTS

The Company's financial results have been reported in U.S. dollars, as the
Company primarily conducts its multinational operations in U.S. dollars. When
translating local currency based financial statements to U.S. dollars, assets
and liabilities are translated at the year-end rate, while income and expenses
are translated using the average rate for the year. Translation differences are
included as a component of stockholders' equity.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of short-term investments with original maturities
of less than three months when acquired.

FINANCIAL INSTRUMENTS

In the normal course of business, the Company employs a variety of
off-balance sheet financial instruments to manage its exposure to fluctuations
in interest and foreign currency exchange rates, including interest rate swap
agreements, interest rate cap agreements and currency forward exchange
contracts. The Company designates interest rate instruments as hedges of debt
and capital lease obligations, and accrues the differential to be paid or
received under the agreements as interest rates change over the lives of the
contracts. The Company's use of currency forward exchange contracts does not
meet the necessary criteria to apply hedge accounting and, accordingly, such
contracts have been marked to market at December 31, 1995, 1994 and 1993 with
any gains or losses recognized in income.

The Company continually monitors its positions with, and the credit quality
of, the financial institutions which are counterparties to its off-balance sheet
financial instruments and does not anticipate non-performance by the
counterparties.

F-75

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost. The Company provides for
the depreciation of drilling rigs on the modified units of production ("MUOP")
method over a period of 16 to 25 years, depending on the class of drilling rig.
Under the MUOP method, depreciation is computed based upon the utilization of
the drilling rigs. To provide for any deterioration that may occur while rigs
are idle for periods of less than one fiscal year, a minimum depreciation charge
is provided at a reduced rate of 25% of the fully utilized rate. If a drilling
rig is idle for the whole fiscal year, full depreciation is provided in order to
limit the maximum useful life of the asset regardless of utilization.

The Company provides for the depreciation of all other fixed assets on the
straight-line method of depreciation after providing for a salvage value.
Buildings are depreciated based on a 20-year useful life, and furniture,
fixtures and vehicles are depreciated over useful lives between five and ten
years.

The estimated useful lives of property, plant and equipment are as follows:

Rigs and equipment................... 16 to 25 years
Buildings............................ 20 years
Furniture, fixtures and vehicles..... 5 to 10 years

The costs of routine maintenance are expensed as incurred. At periodic
intervals, the Company conducts significant overhauls of rigs and equipment to
perform necessary repairs and replacement. Associated costs are accrued prior to
overhaul in order to match costs against revenues earned during rig utilization.

The Company periodically reviews the carrying value of its rigs and
equipment using available information, such as market surveys and broker
quotations of similar rigs and equipment. The review of the carrying values of
principal equipment is performed on a rig by rig basis, and impairment losses
are recognized by a charge to income when the carrying value exceeds market.
Betterments expected to extend the useful lives of assets are capitalized. The
costs of assets sold, retired or otherwise disposed are removed from the
accounts at the time of disposition with gains or losses reflected in income.

In March 1995, Statement of Financial Accounting Standards 121 ("FAS
121"), ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF, was issued. This statement requires that long-lived
assets held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Implementation of this statement is required in 1996 and
management does not anticipate that this implementation will have a material
impact on the financial position or results of operations of the Company.

REVENUE RECOGNITION

The Company recognizes revenue for drilling contracts based on the number
of days worked at the contractual day rate. Revenues from turnkey contracts are
recognized using the completed contract method; however, no material turnkey
contracts were completed in 1995, 1994 or 1993. Management fees which arise
principally from services provided to affiliated entities are recognized as
earned. Revenues related to mobilization and demobilization of rigs are
recognized during the period of mobilization and demobilization. Advance
billings are deferred and amortized over the duration of the contract.

F-76

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred. Certain government
research grants, which are repayable in the event that the related research
project proves to be successful, are recognized in income when the research
project has been determined to be unsuccessful and all other conditions for
their receipt have been met. Grants received for research projects whose outcome
has yet to be determined are included in other long-term liabilities.

RETIREMENT PLANS

French employees participate in pension plans in accordance with French
laws and regulations. Employees of non-French subsidiaries participate in
government based pension plans as prescribed by local laws. Contributions to the
French government with respect to the maintenance of these plans are made
annually based on gross wages and are expensed as incurred. The Company has no
future commitments with respect to any of these plans.

A lump sum payment is made to certain employees of the Company who retire
or are terminated by the Company without cause after such employees complete a
defined number of service years. Such payment is an amount not to exceed 12
months gross wages and is calculated based upon years of service, employment
status and gross wages during the year before retirement. The Company is fully
insured for this liability and has no future commitments with respect to these
payments.

INCOME TAXES

The Company provides for deferred taxes on temporary differences between
financial and tax reporting and employs the liability method under which
deferred taxes are calculated applying legislated tax rates in effect when the
temporary differences are expected to reverse.

CONCENTRATION OF CREDIT RISK

The market for the Company's services and products is the oil and gas
industry, and the Company's customers consist primarily of major integrated
international oil companies and independent oil and gas producers. The Company
performs ongoing credit evaluations of its customers and generally does not
require material collateral. The Company maintains reserves for potential
losses, and such losses have been within management's expectations.

At December 31, 1995 and 1994, the Company had cash deposits at a number of
major French banks and believes that the credit risk related to such
institutions is minimal.

NET INCOME (LOSS) PER SHARE

Net income (loss) per share of common stock was computed retroactively
based on the number of shares issued by the Company to its two shareholders in
exchange for their respective interests in Forasol S.A. on April 3, 1996. In
addition, shares contingently issuable from the exercise of stock options, using
the treasury stock method, are included in those periods in which they have a
dilutive impact. For the three years ended December 31, 1995, contingently
issuable shares did not impact earnings per share.

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 and
disclosures of contingent assets and liabilities as of the date of the
consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

F-77

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

4. INVESTMENTS IN AND ADVANCES TO EQUITY AFFILIATES

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Investments.......................... $ 3,992 $ 5,640
Advances............................. 5,488 6,265
--------- ---------
Investments in and advances to equity
affiliates......................... $ 9,480 $ 11,905
========= =========

During the three years ended December 31, 1995, the Company's significant
equity investees consisted of National Drilling and Services Co. ("NDSC"), Al
Jazirah Forasol Drilling Corporation ("AJFDC"), Forafels, Inc. and Sondeos
Petroliferos SA.

NDSC is a 30% owned joint venture that operates mobile desert rigs in Oman.
NDSC changed its financial year end from March 31 to December 31 in 1994. The
Company has recorded $235,000, $187,000 and $2.2 million for its share of NDSC's
earnings for each of the three years ending December 31, 1995, 1994 and 1993,
respectively, using the equity method.

AJFDC is a joint venture organized to own and operate two land rigs. The
Company owns 49% of AJFDC and is also contracted to manage the two rigs. The
Company provided AJFDC, on a pro rata basis with the other shareholders, a
non-interest bearing advance of $5.5 million to purchase the two drilling rigs.
The advance will be repaid from the future profits of the venture on a pro rata
basis.

A 50% interest in Forafels, Inc., a company which owns and operates the
swamp barge BINTANG KALIMANTAN, was acquired in 1983. On December 29, 1994, the
Company acquired the remaining 50% interest. This investment has been accounted
for under the equity method for the years ending December 31, 1994 and 1993 and,
as a result, $13,000 and $13,000, respectively, has been recorded to recognize
the Company's share of Forafels' earnings during those years. As of January 1,
1995, Forafels became a consolidated subsidiary (see Note 3).

Until the Company's disposition as part of the purchase consideration of
HAPSA (see note 2), the Company owned a 21% interest in Sondeos Petroliferos SA,
a Spanish holding Company ("Sonpetrol"). The Company recorded $177,000 and
$18,000 for its share of Sonpetrol's losses for each of the two years ended
December 31, 1994 under the equity method. A $107,000 loss was recorded in 1995
up until the disposition date.

The summarized financial information below represents an aggregation of the
Company's investments in equity affiliates:

YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
Earnings data:
Revenue......................... $ 13,477 $ 17,255 $ 35,922
Operating income................ 588 9,415 16,018
Net income...................... 555 (292) 7,586
Company's equity in net
earnings................... 165 (44) 2,474

F-78

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

4. INVESTMENTS IN AND ADVANCES TO EQUITY AFFILIATES (CONTINUED)

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Balance sheet data:
Current assets.................. $ 11,821 $ 19,728
Noncurrent assets............... 33,980 47,158
Current liabilities............. (9,297) (16,640)
Noncurrent liabilities.......... (15,238) (19,231)
--------- ---------
Net assets...................... $ 21,266 $ 31,015
========= =========
Company's equity in net
assets.................. $ 3,992 $ 5,640
========= =========

The Company's share of undistributed earnings of investments in equity
affiliates included in consolidated retained earnings was $2.4 million, $4.2
million and $5.5 million at December 31, 1995, 1994 and 1993, respectively.
Dividends from equity affiliates were $207,000, $83,000 and $0 in 1995, 1994 and
1993, respectively.

5. OTHER LONG-TERM INVESTMENTS AND RECEIVABLES

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Investments recorded at cost, net of
valuation allowance................ $ 3,336 $ 3,652
Receivables from affiliated entities
and related parties................ 4,391 5,920
Debt security deposits............... 1,875 1,241
Other................................ 911 833
--------- ---------
$ 10,513 $ 11,646
Less: Valuation allowance............ (3,995) (3,508)
--------- ---------
Total other long-term investments and
receivables.......................... $ 6,518 $ 8,138
========= =========

Investments recorded at cost represent primarily investments in entities
involved in the oil and gas drilling sector. Included in these investments at
December 31, 1995 and 1994, is the $2.8 million cost of the Company's 12.5%
interest in a group of entities which operate a self-erecting tender barge under
capital lease, the AL BARAKA I. Quoted market values for these investments are
not readily available and, accordingly, the Company has evaluated the carrying
value of each investment based upon the financial position and future prospects
of each investee.

6. PLANT AND EQUIPMENT

DECEMBER 31,
----------------------
1995 1994
---------- ----------
(IN THOUSANDS)
Rigs and equipment................... $ 438,246 $ 431,279
Buildings, furniture, fixtures and
vehicles........................... 3,226 3,480
---------- ----------
441,472 434,759
Less: accumulated depreciation....... (211,100) (222,033)
---------- ----------
Plant and equipment, net............. $ 230,372 $ 212,726
========== ==========

F-79

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

6. PLANT AND EQUIPMENT (CONTINUED)

At December 31, 1995 and 1994, rigs and equipment with a carrying value of
$50.8 million and $55.5 million were held in non-operating status pending
redeployment. Rigs with a cost of $24 million are being depreciated over the
term of a five-year drilling contract which includes a bargain purchase option
in favor of the customer arising in May 1997. Depreciation charged in relation
to these rigs is $4.8 million in both 1995 and 1994. Assets with a book value of
$165 million and $152 million as of December 31, 1995 and 1994, respectively,
are pledged as security under the Company's debt agreements and leases.

At December 31, 1995, rigs and equipment with a net book value of $3.5
million are held for sale.

7. LEASES

Included in property, plant and equipment in the accompanying consolidated
balance sheets are the following rigs and equipment under capital leases:

DECEMBER 31,
----------------------
1995 1994
---------- ----------
(IN THOUSANDS)
Rigs and equipment at cost........... $ 150,830 $ 212,851
Accumulated depreciation............. (70,315) (101,835)
---------- ----------
Assets under capital leases, net..... $ 80,515 $ 111,016
========== ==========

In October 1995, the Company exercised options to purchase five tender
barges and five land rigs which were under capital lease for a total amount of
$19.9 million. The terminated lease contracts had remaining unexpired terms
ranging up to four years and their payments were based upon interest rates
ranging from 6.0% to 9.0% after considering interest rate swap agreements.
Simultaneously, the Company entered into a new seven year sale leaseback
contract for three of these tender barges with a financing company. The new sale
leaseback agreement results in a capital lease obligation of $40 million payable
in semi-annual installments. Interest is calculated at a stated rate of
six-month LIBOR plus 1.25% (6.75% at December 31, 1995) for $35 million of the
obligation and at a fixed rate of 7.67% for the remaining $5 million. In
conjunction with this lease, the Company entered into an interest rate swap
agreement which fixes the payment on this lease at 7.67% on $35 million of the
outstanding obligation over the entire term of the contract.

The Company has also entered other contracts for the lease of land rigs and
various equipment which represent capital lease obligations of $12.6 million and
$6.6 million at December 31, 1995 and 1994, respectively. These contracts have
unexpired terms ranging from three to four years and lease payments based upon
interest rates ranging from 6.4% to 9.0% after consideration of interest rate
swap agreements.

Under the terms of these lease contracts, the Company is required to comply
with applicable laws and regulations, maintain the rigs and equipment and obtain
a specified level of insurance coverage. The depreciation expense related to
assets under capital leases was $5.5 million, $8.0 million and $7.6 million in
1995, 1994 and 1993, respectively.

F-80

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

7. LEASES (CONTINUED)

Capital lease obligations are summarized below:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Total capital lease obligations...... $ 52,676 $ 45,696
Less current installments............ (8,138) (14,797)
--------- ---------
Long-term obligations under capital
leases............................. $ 44,538 $ 30,899
========= =========

The Company also leases premises under operating leases which expire in the
year 2009. Rental expense for operating leases amounted to $320,250, $276,000
and $230,000 in 1995, 1994 and 1993, respectively.

Minimum lease payments under leases expiring subsequent to December 31,
1995 follow:

CAPITAL OPERATING
YEAR ENDED DECEMBER 31, LEASES LEASES
- ------------------------------------- -------- ---------
(IN THOUSANDS)
1996................................. $ 12,089 $ 691
1997................................. 12,067 657
1998................................. 12,125 566
1999................................. 8,400 411
2000................................. 7,492 255
2001 and thereafter.................. 15,025 1,407
-------- ---------
Total................. $ 67,198 $ 3,987
=========
Less interest........................ (14,522)
--------
Minimum lease payments............... $ 52,676
========

The new sale leaseback agreement contains certain limitations on the
incurrence of additional indebtedness, including the limitation that
indebtedness may not exceed tangible net worth. The Company will, however, be
permitted to assume, among other things, indebtedness of acquired businesses,
subject to compliance with the other financial covenants contained on the sale
leaseback agreement.

8. SHORT-TERM CREDIT FACILITIES

The Company has agreements with several banks for short-term lines of
credit in both U.S. dollars and French francs. These facilities are renewable
annually and bear interest at three-month LIBOR plus 1% (6% at December 31,
1995) for U.S. dollar denominated facilities and three-month PIBOR plus 1% (6%
at December 31, 1995) for French franc denominated facilities.

F-81

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

8. SHORT-TERM CREDIT FACILITIES (CONTINUED)

The Company had the following balances outstanding under these short-term
credit facilities:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Unsecured............................ $ 10,171 $ 7,219
Secured by trade receivables......... 10,669 4,938
--------- ---------
Total................. $ 20,840 $ 12,157
========= =========

As of December 31, 1995, the Company had $2.6 million of unused commitments
for unsecured credit lines and unused commitments for secured credit lines of
$10.4 million.

9. LONG-TERM DEBT

DECEMBER 31,
----------------------
1995 1994
---------- ----------
(IN THOUSANDS)
Bank debt(a)......................... $ 41,867 $ 18,488
Loan obligations to customers(b)..... 8,692 26,476
Other loan obligations(c)............ 7,901 3,628
Shareholder and related party(d)..... -- 1,577
---------- ----------
Total debt............ $ 58,460 $ 50,169
Less current portion................. (18,202) (15,271)
---------- ----------
Total long-term
debt............... $ 40,258 $ 34,898
========== ==========

(A) BANK DEBT

The Company has entered into borrowing arrangements with various banks for
loans denominated in U.S. dollars and French francs ("FF").

U.S. dollar denominated debt as of December 31, 1995 and 1994 amounted to
$33.5 million and $7.1 million, respectively. On August 1, 1995, the Company
refinanced loan obligations with new bank debt in the amount of $20 million
payable in semi-annual installments beginning February 1996 and continuing
through 2002. The loan bears interest at a stated rate of six month LIBOR plus a
margin ranging from 1.25% to 2.5% (6.75% at December 31, 1995). In conjunction
with this loan, the Company simultaneously entered into an interest rate swap
agreement which fixed the rate of interest on this loan at 7.55% over the term
of the debt agreement. The semisubmersible rig NYMPHEA is pledged as security
for this loan.

In September 1995, the Company entered into a new $10 million credit line.
This facility bears interest at six-month LIBOR plus 1.0% and is repayable in
monthly installments of $350,000 through January 1998. The outstanding balance
as of December 31, 1995 was $9.0 million. The cash flows associated with the
Shell Venezuela drilling contract are pledged as security for this loan.

In 1992, the Company entered into an agreement for a loan in the amount of
$14.3 million to finance the purchase and upgrading of two lake barges, RIG 50
and RIG 51. As of December 31, 1995 and 1994, $4.3 million and $7.1 million,
respectively, were outstanding under this loan. The loan is repayable in semi-
annual installments through April 1997 and bears interest at six-month LIBOR
plus 1.7% (7.2% at

F-82

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

9. LONG-TERM DEBT (CONTINUED)

December 31, 1995). Management has entered into an interest rate swap contract
for the duration of the term of this loan which fixes the interest rate at 8.4%.
The loan is secured by Rigs 50 and 51.

French franc denominated debt translated into U.S. dollar amounts at year
end rates was $8.2 million (FF 40.3 million) and $11.3 million (FF 60.3 million)
as of December 31, 1995 and 1994, respectively. These borrowings are repayable
in quarterly installments through 1998 and bear interest at variable rates which
range from three-month PIBOR (which was 5.0% at December 31, 1995) plus 1% to
PIBOR plus 1.25%. The fixed assets of Petrosamsol SARL and Samarine SARL, two
wholly-owned subsidiaries, are pledged as security for these loans.

(B) LOAN OBLIGATIONS TO CUSTOMERS

The Company has entered into borrowing arrangements denominated in both
U.S. dollars and French francs with certain significant customers. U.S. dollar
loan obligations to customers as of December 31, 1995 and 1994 amounted to $5.3
million and $23.2 million, respectively. In August 1995, the Company refinanced
an $18.1 million loan obligation to a customer bearing interest at 10.71% with
proceeds from new bank debt.

The $5.3 million loan obligation outstanding as of December 31, 1995
consists of two loans in the amounts of $4.1 million ($5.1 million at December
31, 1994) and $1.2 million ($0 at December 31, 1994). The loan in the amount of
$4.1 million is payable in semi-annual installments through 1999, is secured by
the assets of the jack-up rig ILE DU LEVANT and bears interest at LIBOR.
Management has entered into an interest rate swap agreement for the duration of
the term of this loan which fixed the interest rate at 8.625%. The loan in the
amount of $1.2 million is unsecured, bears interest at LIBOR plus 1% and is
repayable in monthly installments through 1997.

French franc denominated loan obligations to customers translated into U.S.
dollar amounts at year end rates as of December 31, 1995 and 1994 were $3.4
million (FF 16.5 million) and $3.1 million (FF 16.5 million), respectively. The
repayment schedules for these loans are variable and are based upon the Company
achieving certain operating performance criteria. The loans bear interest at
variable rates ranging from a minimum of 0% to a maximum of 15% also depending
on certain operating performance criteria. The weighted average rate paid on
these loans for the year ended December 31, 1995 was 7.57%.

In conjunction with the Company's 1995 purchase of a 95% interest in HAPSA,
the Company acquired or incurred $5.4 million of additional long-term debt
obligations. These obligations include a 10% unsecured, fixed rate loan in the
amount of $3.2 million repayable in semi-annual installments beginning January
1996 and continuing through 1999. The remaining $2.2 million indebtedness is
repayable in semi-annual installments beginning March 1996 and continuing
through 1998 and accrues interest at a fixed rate of 8%.

(D) SHAREHOLDER AND RELATED PARTY

In July 1995, the Company entered into loan agreements with Soletanche and
a subsidiary of Ackermans, the beneficial owners of Forasol, to obtain a total
of $8.1 million of interim financing during the negotiation period with the
banks and financing companies to restructure the Company's debt and capital
leases. These loans were repaid in full with 7% interest in October 1995.

F-83

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

9. LONG-TERM DEBT (CONTINUED)

In December 1994, the Company entered into a $1.6 million loan agreement
bearing interest at 5.5% with a company jointly owned by Soletanche and
Ackermans, the beneficial owners of Forasol. During 1995, $1.6 million was
outstanding. During 1995, an additional $3.1 million was borrowed under the
agreement; however, this additional borrowing accrued interest at 5.5%. In
October 1995, this loan was repaid in full.

The weighted average interest on bank debt in 1995 was 7.525% (7.023% in
1994).

Scheduled principal payments subsequent to December 31, 1995 are as
follows:

YEAR ENDED DECEMBER 31, (IN THOUSANDS)
- ------------------------------------- --------------
1996................................. $ 18,202
1997................................. 15,459
1998................................. 7,328
1999................................. 4,774
2000................................. 3,910
2001 and thereafter.................. 8,787
--------------
$ 58,460
==============

10. INCOME TAXES

The Company follows Statement of Financial ACCOUNTING STANDARDS NO. 109
("SFAS 109"), Accounting for Income Taxes. Under SFAS 109, the tax provision
is determined under the liability method. Under this method, deferred tax assets
and liabilities are recognized based on differences between the financial
statement and tax bases of assets and liabilities using presently enacted tax
rates. SFAS 109 provides, in part, that a deferred tax asset shall be evaluated
for realization based on a more likely than not criteria using a valuation
allowance.

The Company operates internationally and tax rates are subject to
applicable tax legislation in the countries in which it operates. The tax rates
in many of these countries are based on deemed profit as a percentage of
revenue. The domestic and foreign components of pre-tax income after equity in
net income of affiliates follow:

YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN THOUSANDS)
Domestic............................. $ (21,925) $ (24,456) $ (21,273)
Foreign.............................. 19,609 28,508 26,480
---------- ---------- ----------
Total................. $ (2,316) $ 4,052 $ 5,207
========== ========== ==========

F-84

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

10. INCOME TAXES (CONTINUED)

A reconciliation of the differences between income taxes computed at the
French statutory rate of 33.0% in 1995, 1994 and 1993 and the Company's reported
provision for income taxes follows:

YEAR ENDED DECEMBER 31,
------------------------
1995 1994 1993
---- ---- ----
Statutory income tax rate............ (33)% 33% 33%
Non-utilizable tax losses in
Forinter........................... 21% 14% 6%
Taxation rebates..................... (9)% (4)% --
Tax audit............................ -- -- 6%
Foreign taxes in overseas
jurisdictions...................... 42% 21% 1%
---- ---- ----
Effective income tax rate............ 21% 64% 46%
==== ==== ====

The effective tax rate is different from the French statutory rate
primarily due to revenues being earned in foreign tax jurisdictions with
different tax bases and rates. Additionally, taxable losses in the group company
Forinter Ltd., an entity based in a tax free jurisdiction are unavailable for
offset against taxable income.

As of December 31, 1995 and 1994, the components of deferred tax assets and
liabilities were as follows:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
Deferred Tax Assets:
Tax loss carryforwards.......... $ 23,203 $ 19,829
Other........................... 702 344
--------- ---------
Total deferred tax
assets............. 23,905 20,173
Valuation allowance............. (15,677) (13,821)
--------- ---------
Net deferred tax
asset.............. $ 8,228 $ 6,352
========= =========
Deferred Tax Liabilities:
Depreciation.................... $ 4,852 $ 4,669
Capital leases.................. 647 882
--------- ---------
Total deferred tax
liabilities................... $ 5,499 $ 5,551
========= =========

Due to the projected inability to fully utilize tax loss carryforwards
related to the Company's operations against the Company's forecasted future
taxable earnings in various jurisdictions, the Company has recorded a valuation
allowance against such tax loss carryforwards of $15.7 million and $13.8 million
at December 31, 1995 and 1994, respectively.

As of December 31, 1995, unused net tax loss carryforwards were $60.1
million. Of these net tax loss carryforwards, $56.6 million are not subject to
an expiration date. The remaining tax loss carryforwards expire between 1998 and
2002.

F-85

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

10. INCOME TAXES (CONTINUED)

The provision for income taxes consists of:

YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
Current income tax expense:
Domestic........................ $ 69 $ 18 $ 13
Foreign......................... 1,839 1,715 1,688
--------- --------- ---------
1,908 1,733 1,701
--------- --------- ---------
Deferred income tax expense:
Domestic........................ $ (1,031) $ 370 $ (64)
Foreign......................... (468) 477 436
--------- --------- ---------
(1,499) 847 372
--------- --------- ---------
Total................. $ 409 $ 2,580 $ 2,073
========= ========= =========

11. STOCKHOLDERS' EQUITY

At December 31, 1995, the Company's retained earnings includes legal and
other reserves of $24.8 million, which are not distributable to shareholders.

12. STOCK OPTIONS

In June 1989, the shareholders of Forasol approved the implementation of a
stock option plan (the "Option Plan") authorizing the issuance to employees of
stock options to purchase up to 222,156 common shares of Forasol.

On December 27, 1989, Forasol granted options to purchase up to 222,156
common shares of Forasol to nine executive officers at an exercise price of FF
133.69 per share under the Option Plan. In addition, each plan participant
received a stock repurchase agreement which provided that an affiliate of
Soletanche Group and Ackermans & van Haaren Group, the beneficial owners of
Forasol, would purchase the shares issued upon the exercise of the options for a
price calculated using a formula based primarily on the book value of the
Company.

Under the Option Plan, the options were valid for five years and became
exercisable on the date of grant (December 29, 1989 through December 29, 1994).
Upon termination of employment, unexercised options were canceled. All options
with respect to the Option Plan were granted and subsequently canceled or
exercised.

F-86

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

12. STOCK OPTIONS (CONTINUED)

A summary of Forasol's stock option activity is as follows:

OPTIONS
EXERCISABLE
AND EXERCISE
OUTSTANDING PRICE
------------ ---------
Outstanding at December 31, 1992..... 181,764 FF 133.69
Options Granted...................... -0-
Options Exercised.................... -0-
Options Canceled/Expired............. (33,660)
------------
Outstanding at December 31, 1993..... 148,104 FF 133.69
Options Granted...................... -0-
Options Exercised.................... (148,104) FF 133.69
Options Canceled/Expired............. -0-
------------
Outstanding at December 31, 1994..... -0-
Outstanding at December 31, 1995..... -0-

Total compensation expense recorded under the Option Plan was $1.7 million,
of which $1.4 million was recognized in 1989. Included in this total is
compensation expense of $0, $295,000 and $117,000 which was recognized in 1995,
1994 and 1993, respectively.

In December 1994, six executive officers of the Company exercised the
remaining outstanding stock options for a total exercise price of $3.7 million
and received 148,104 common shares of Forasol. The equivalent number of shares
exercised based on the exchange ratio relating to the two shareholders'
interests in Forasol for an equivalent interest in the Company on April 3, 1996
was 548,319.

13. INTEREST RATE RISK MANAGEMENT TRANSACTIONS

The Company uses interest rate swaps and other instruments to manage its
exposure to changes in interest rates and to lower its overall borrowing costs.

The following interest rate contracts were outstanding at December 31,
1995:

o Interest rate swaps that convert specific bank debt and capital lease
obligations from variable rate borrowings to fixed rate borrowings and
are scheduled to mature between July 1996 and October 2002. Under
these contracts, the Company receives interest at six-month LIBOR
(5.51% at December 31, 1995) and pays interest at a weighted average
fixed rate of 7.3% in 1995.

o An interest rate cap that limits the maximum rate of interest on
six-month LIBOR based rates to 6%. At December 31, 1995, this contract
had a notional amount of $4.1 million and a maturity date of October
15, 1997.

The interest rate differential resulting from these contracts increased
interest and other financial expenses by $737,000, $1.9 million and $2.9 million
for 1995, 1994 and 1993, respectively. The fair market value of these contracts
is estimated to be the same as the cost or gain to the Company to terminate its
interest rate hedging instruments. At December 31, 1995 and 1994, taking into
account the prevailing interest rate environment and creditworthiness of counter
parties, this amount is a loss of $2.6 million and $0.6 million, respectively.

Management believes that no significant concentration of credit risk exists
with respect to the Company's financial instruments. At December 31, 1995 and
1994, neither the Company nor the counterparties were required to collateralize
their respective obligations under these hedging instruments.

F-87

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

13. INTEREST RATE RISK MANAGEMENT TRANSACTIONS (CONTINUED)

The following table summarizes by notional amounts the activity for each
major category of interest rate contract:

INTEREST CAP
RATE SWAPS CONTRACT
---------- --------
(IN THOUSANDS)
Balance at December 31, 1993......... $ 56,209 $9,600
Additions/Adjustments........... -- --
Maturities...................... (14,410) (2,590)
Terminations.................... -- --
---------- --------
Balance at December 31, 1994......... 41,799 7,010
Additions/Adjustments........... 55,000 --
Maturities...................... (14,017) (2,930)
Terminations.................... -- --
---------- --------
Balance at December 31, 1995......... $ 82,782 $4,080
========== ========

After giving effect to the interest rate hedging instruments outstanding, a
1% increase in interest rates would have resulted in a $195,000, $186,000 and
$190,000 increase in financial expenses for 1995, 1994 and 1993, respectively.

14. FOREIGN CURRENCY FORWARD CONTRACTS

The Company's risk management program attempts to minimize, to the extent
practical, the effects of fluctuations in the foreign exchange markets. The
Company's revenues are primarily U.S. dollar denominated, while the majority of
the Company's administrative expenditures are denominated in French francs. In
addition, the Company has long-term debt denominated in French francs. The table
below summarizes by major currency the contractual amounts of the Company's
forward exchange contracts in U.S. dollars. Foreign currency amounts are
translated at rates current at the reporting date. The "buy" amounts represent
the U.S. dollar equivalent of commitments to purchase foreign currencies, and
the "sell" amounts represent the U.S. dollar equivalent of commitments to sell
foreign currencies.

DECEMBER 31,
------------------------------------------
1995 1994
-------------------- --------------------
BUY SELL BUY SELL
--------- --------- --------- ---------
(IN THOUSANDS)
French franc..................... $ 9,700 $ -- $ 1,018 $ --
Deutsche mark.................... -- 915 -- --
U.S. dollar...................... -- 8,500 -- 1,000
--------- --------- --------- ---------
$ 9,700 $ 9,415 $ 1,018 $ 1,000
========= ========= ========= =========

The estimated cost to terminate exchange contracts outstanding at December
31, 1995, 1994 and 1993 was $240,000, $0 and $1.2 million, respectively. Such
costs were recorded as a gain (loss) on foreign exchange contracts in the
Consolidated Statements of Income at December 31, 1995, 1994 and 1993,
respectively. Under terms of the contracts, neither the Company nor the
counterparties were required to collateralize their respective obligations.

F-88

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

14. FOREIGN CURRENCY FORWARD CONTRACTS (CONTINUED)

The average fair market value of these contracts calculated on a quarterly
basis was:

YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
--------- --------- ----
(IN THOUSANDS)
Average during the period (calculated
on a quarterly basis)
Assets.......................... $ 130 $ 864 $ 89
Liabilities..................... 22 129 46

The net gain arising from these contracts was $144,000, $2.6 million and
$522,000 for each of the three years ending December 31, 1995, 1994 and 1993,
respectively.

15. GEOGRAPHICAL INFORMATION

The Company operates only in the contract oil and gas drilling industry
segment.

The following tables present net operating revenues, operating income and
identifiable assets by geographic area.

Operating income represents net operating revenues less operating costs and
expenses of the geographic area concerned. Identifiable assets are those used in
the operations of each geographic area. Corporate assets consist primarily of
cash and cash equivalents and deferred tax assets.

MIDDLE REST OF
1995 EAST AFRICA FAR EAST FRANCE EUROPE AMERICAS TOTAL
- ------------------------------------- --------- --------- --------- --------- --------- -------- ---------
(IN THOUSANDS)

Revenues............................. $ 12,464 $ 90,060 $ 7,070 $ 3,595 $ 17,971 $40,340 $ 171,500
========= ========= ========= ========= ========= ======== =========
Operating income (loss).............. $ 8,868 $ 16,928 $ 314 $ (21,734) $ 150 $ 1,559 $ 6,085
========= ========= ========= ========= ========= ======== =========
Identifiable assets.................. $ 20,258 $ 140,255 $ 29,077 $ 24,307 $ 40,915 $52,680 $ 307,492
========= ========= ========= ========= ========= ========
Corporate assets..................... 25,563
---------
Total assets......................... $ 333,055
=========

MIDDLE REST OF
1994 EAST AFRICA FAR EAST FRANCE EUROPE AMERICAS TOTAL
- ------------------------------------- --------- --------- --------- --------- --------- -------- ---------
(IN THOUSANDS)
Revenues............................. $ 15,002 $ 87,738 $ 26,141 $ 71 $ 4,238 $15,114 $ 148,304
========= ========= ========= ========= ========= ======== =========
Operating income (loss).............. $ 4,706 $ 16,233 $ 10,431 $ (25,521) $ (266) $ 1,815 $ 7,398
========= ========= ========= ========= ========= ======== =========
Identifiable assets.................. $ 21,160 $ 171,711 $ 26,605 $ 36,009 $ 13,809 $22,487 $ 291,781
========= ========= ========= ========= ========= ========
Corporate assets..................... 25,842
---------
Total assets......................... $ 317,623
=========

F-89

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

15. GEOGRAPHICAL INFORMATION (CONTINUED)

MIDDLE REST OF
1993 EAST AFRICA FAR EAST FRANCE EUROPE AMERICAS TOTAL
- ------------------------------------- --------- --------- --------- --------- --------- -------- ---------
(IN THOUSANDS)

Revenues............................. $ 25,452 $ 78,469 $ 20,138 $ 8,742 $ 6,811 $12,314 $ 151,926
========= ========= ========= ========= ========= ======== =========
Operating income (loss).............. $ 6,063 $ 22,705 $ 4,530 $ (19,573) $ (3,587) $ 497 $ 10,635
========= ========= ========= ========= ========= ======== =========
Identifiable assets.................. $ 17,157 $ 159,835 $ 41,359 $ 23,729 $ 20,050 $28,864 $ 290,994
========= ========= ========= ========= ========= ========
Corporate assets..................... 33,278
---------
Total assets......................... $ 324,272
=========

The Company derived 30%, 36% and 40% of its consolidated revenues during
1995, 1994 and 1993, respectively, from Elf Aquitaine Group. In the year ended
December 31, 1993, an additional 12% of consolidated revenues were derived from
Royal Dutch Shell PLC.

16. COMMITMENTS, CONTINGENCIES AND UNCERTAINTIES

The Company's business and operations are substantially dependent upon the
conditions of the oil and natural gas industry and, specifically, the
exploration and production expenditures of oil and natural gas companies, which
are largely dependent upon prevailing prices for oil and natural gas. The
Company's rigs are primarily based in countries outside the U.S. While demand
for drilling rigs outside the U.S. has been less volatile, demand remains
dependent on various factors outside the Company's control. The Company cannot
predict the timing or extent of any improvement in the industry or the future
level of demand for the Company's drilling services.

INSURANCE COVERAGE

The Company maintains broad insurance coverage, including general and
marine public liability. No insurance is generally carried against loss of
revenues. The Company believes that it is adequately insured in accordance with
industry standards against normal risks of its operations. Notwithstanding such
coverage, the occurrence of a casualty or loss against which the Company is not
fully insured could have a material adverse effect on the Company's financial
position and results of operations.

ENVIRONMENTAL REGULATION

The Company is subject to numerous domestic and foreign governmental
regulations that relate directly or indirectly to its operations. The Company
does not believe that environmental regulations have to date had a material
adverse effect on its results of operations and does not anticipate that any
material expenditures will be required to enable it to comply with existing laws
and regulations.

LEGAL PROCEEDINGS

The Company is a defendant in a number of legal proceedings and has various
unresolved asserted and unasserted claims arising in the ordinary course of
business. The outcome of these lawsuits and claims is not known at this time.
The Company believes that the resulting uninsured liability, if any, will not
have a material adverse effect on its consolidated results of operations or
financial position.

F-90

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

17. RELATED PARTY TRANSACTIONS

For the years ended December 31, 1995, 1994 and 1993, an aggregate of
$484,000, $450,000 and $400,000, respectively, in management fees was paid to
Soletanche S.A. and Ackermans and van Haaren N.V., the beneficial owners of the
Company.

Under the terms of joint venture and other agreements, the Company provides
contract labor and other management services to certain of its affiliates. The
table on the following page summarizes revenues regarding affiliates for the
years ended December 31, 1995, 1994 and 1993 and receivables from affiliates as
of December 31, 1995, 1994 and 1993:

YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
Revenues:
National Drilling and Services
Co. LLC....................... $ 171 $ 409 $ 1,410
Al Jazirah Forasol Drilling
Corporation................... 980 1,588 362
Foradel, Inc.................... 882 10,157 10,164
--------- --------- ---------
Total...................... $ 2,033 $ 12,154 $ 11,936
========= ========= =========

DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
Accounts receivable:
National Drilling and Services
Co. LLC....................... $ 21 $ 47 $ 288
Al Jazirah Forasol Drilling
Corporation................... 183 146 669
Foradel, Inc.................... 79 1,769 1,968
--------- --------- ---------
Total...................... $ 283 $ 1,962 $ 2,925
========= ========= =========

18. RESTATEMENTS

Certain amounts as they relate to the Company's equity investment in NDSC,
have been restated in the accompanying consolidated financial statements of
Forasol-Foramer N.V. from those consolidated financial statements included in
the Preliminary Prospectus dated April 22, 1996, due to the financial statements
of NDSC which have been audited by other auditors, being restated from those
included in the related prospectus. As a result of these changes, certain
previously reported amounts in the Company's financial statements have been
restated as follows:

DECEMBER 31,
--------------------
CONSOLIDATED BALANCE SHEETS 1995 1994
- ------------------------------------- --------- ---------
(IN THOUSANDS)
INVESTMENT IN AND ADVANCES TO EQUITY
AFFILIATES:
As previously reported.......... $ 9,705 $ 12,035
As restated..................... 9,480 11,905

F-91

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

18. RESTATEMENTS (CONTINUED)

YEAR ENDED DECEMBER 31,
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME 1995 1994 1993
- ------------------------------------- --------- --------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
EQUITY IN NET INCOME OF AFFILIATES:
As previously reported.......... $ 260 $ 249 $ 2,672
As restated..................... 165 (44) 2,474
OPERATING INCOME:
As previously reported.......... 6,180 7,691 10,833
As restated..................... 6,085 7,398 10,635
NET INCOME (LOSS):
As previously reported.......... (3,918) 1,229 3,145
As restated..................... (4,013) 936 2,947
NET INCOME (LOSS) PER SHARE:
As previously reported.......... (0.39) 0.13 0.33
As restated..................... (0.40) 0.10 0.31

YEAR ENDED DECEMBER 31,
-------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS 1995 1994 1993
- ------------------------------------- --------- --------- ---------
(IN THOUSANDS)
NET INCOME (LOSS)
As previously stated............ $ (3,918) $ 1,229 $ 3,145
As restated..................... (4,013) 936 2,947
UNDISTRIBUTED EARNINGS IN EQUITY
AFFILIATES
As previously stated............ 260 249 2,672
As restated..................... 165 (44) 2,474

YEAR ENDED DECEMBER 31,
CONSOLIDATED STATEMENTS OF -------------------------------
STOCKHOLDERS' EQUITY 1995 1994 1993
- ------------------------------------- --------- --------- ---------
(IN THOUSANDS)
RETAINED EARNINGS
As previously stated............ $ 52,640 $ 56,558 $ 55,329
As restated..................... 52,415 56,428 55,492
TOTAL STOCKHOLDERS' EQUITY
As previously stated............ 123,230 127,010 120,368
As restated..................... 123,005 126,880 120,531

19. SUBSEQUENT EVENTS

As described in Note 1, on April 3, 1996, the respective shares of Forasol
and Forinter were exchanged by the owners for a jointly-owned interest in
Forasol-Foramer N.V., a Dutch holding company. Subsequent to the exchange,
Forasol and Forinter were wholly owned subsidiaries of Forasol-Foramer N.V.

The Company is currently in negotiations to issue 6,000,000 Common Shares
for an aggregate purchase price of approximately $72 million through an initial
public offering in the United States. The Company anticipates that the offering
will be consummated in May 1996. Of the net proceeds of approximately $66.2
million, the Company anticipates repaying existing debt, upgrading certain
assets and funding international operations. The joint beneficial ownership
interest of Soletanche and Ackermans in the Company is expected to be
approximately 62.5% after the offering.

F-92

FORASOL-FORAMER N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

19. SUBSEQUENT EVENTS (CONTINUED)

In February 1996, the Company and Pelerin Shipping Ltd., its 80% joint
venture partner, entered into an agreement to sell the PELERIN to a third party.
The Company will receive net proceeds of approximately $7.7 million for its 20%
interest in the rig and an early termination of the management agreement
currently in place with respect to the rig. In conjunction with the sales
agreement, the Company has entered into a management contract with the new owner
of the PELERIN. The contract will run from the date of delivery of the PELERIN
to the new owner (estimated to be in May 1996) until the earlier of December 31,
1996 or the completion of the second well for Shell Angola, which is scheduled
to be completed in December 1996. Billings under the current management contract
during 1995 were approximately $6.6 million before direct contract expenses.

Pursuant to a contract for a well the Company is drilling for Maraven S.A.
that has certain turnkey attributes, the Company has incurred excess costs of
approximately $500,000. The Company intends to seek compensation for such costs
from the customer.

F-93

FORASOL-FORAMER N.V.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....... $ 42,089 $ 17,335
Trade accounts receivable,
net............................. 43,719 40,100
Prepaid expenses and other
current assets.................. 16,505 21,022
Deferred income taxes........... 1,970 2,467
------------ ------------
Total current assets................. 104,283 80,924
------------ ------------
INVESTMENTS AND OTHER ASSETS
Investments in and advances to
equity affiliates.............. 9,255 9,480
Other long-term investments and
receivables.................... 6,518 6,518
Deferred income taxes........... 6,841 5,761
------------ ------------
Total investments and other assets... 22,614 21,759
------------ ------------
PLANT AND EQUIPMENT
Rigs and equipment.............. 429,274 438,246
Buildings, furniture, fixtures
and vehicles................... 5,334 3,226
------------ ------------
434,608 441,472
Less: accumulated
depreciation.................... (205,320) (211,100)
------------ ------------
Plant and equipment, net............. 229,288 230,372
------------ ------------
Total Assets......................... $ 356,185 $ 333,055
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts and notes
payable......................... $ 24,731 $ 32,397
Short-term borrowings........... 3,873 20,840
Current portion of long-term
debt........................... 13,931 18,202
Current portion of long-term
lease obligations.............. 9,406 8,138
Deferred income taxes........... 647 647
Other current liabilities....... 32,116 26,919
------------ ------------
Total current liabilities............ 84,704 107,143
------------ ------------
LONG-TERM DEBT AND OTHER LIABILITIES
Long-term debt.................. 27,928 40,258
Long-term lease obligations..... 33,089 44,538
Deferred income................. 3,192 204
Provision for major repairs..... 3,191 3,565
Deferred income taxes........... 5,276 4,852
Other long-term liabilities..... 6,785 6,184
------------ ------------
Total long-term debt and other
liabilities........................ 79,461 99,601
------------ ------------
MINORITY INTEREST.................... 3,378 3,306
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, par value NLG .01,
50,000,000 shares authorized;
16,650,290 and 10,010,000
shares outstanding at June 30,
1996 and December 31, 1995,
respectively................... 94 55
Additional paid-in capital...... 140,688 70,685
Retained earnings............... 48,154 52,415
Foreign currency translation
adjustment...................... (294) (150)
------------ ------------
Total stockholders' equity........... 188,642 123,005
------------ ------------
Total liabilities and stockholders'
equity............................. $ 356,185 $ 333,055
============ ============

The accompanying notes are an integral part of these interim financial
statements.

F-94

FORASOL-FORAMER N.V.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
------------ ------------
REVENUES
Net operating revenues............. $ 89,657 $ 83,098
Equity in net income of
affiliates........................ 23 235
------------ ------------
89,680 83,333
------------ ------------
OPERATING COSTS AND EXPENSES
Cost of operations................. (72,390) (58,640)
Depreciation and amortization...... (10,851) (10,063)
Selling, general and administrative
expenses.......................... (8,484) (8,556)
------------ ------------
(91,725) (77,259)
------------ ------------

OPERATING INCOME (LOSS)................. (2,045) 6,074
------------ ------------

OTHER INCOME AND EXPENSES
Net Interest and other financial
income (expense).................. (4,140) (3,334)
Net foreign exchange gain (loss)... 1,755 (1,012)
Other income....................... 1,718 528
------------ ------------
(667) (3,818)
------------ ------------
INCOME (LOSS) BEFORE MINORITY INTEREST
AND INCOME TAXES...................... (2,712) 2,256
Minority Interest.................. (138) (298)
Income taxes....................... (1,411) (829)
------------ ------------

NET INCOME (LOSS)....................... $ (4,261) $ 1,129
============ ============

NET INCOME (LOSS) PER SHARE (Note 2).... $ (0.36) $ 0.11
============ ============

WEIGHTED AVERAGE SHARES OUTSTANDING..... 11,725,000 10,010,000

The accompanying notes are an integral part of these interim consolidated
condensed financial statements.

F-95

FORASOL-FORAMER N.V.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
--------------------
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................. $ (4,261) $ 1,129
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation.................... 10,851 10,063
Provision for major repairs..... (374) (148)
Gain on disposables of plant and
equipment...................... (2,352) (50)
Undistributed earnings in
affiliates..................... 255 (28)
Deferred income taxes........... (160) 711
Minority interest............... 71 298
Other, net...................... (2,576) 265
Increase (decrease) from changes
in:
Trade accounts receivable..... (3,626) (7,306)
Prepaid expenses and other
current assets................. 4,494 1,870
Trade accounts and notes
payable........................ (7,740) (642)
Other current liabilities..... 5,217 (1,264)
Deferred income............... 2,988 (6,337)
Other long-term liabilities... 601 (4,990)
--------- ---------
Net cash provided by
operating activities.... 3,388 (6,429)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment... (12,495) (7,541)
Proceeds from sale of plant and
equipment....................... 7,531 2,138
Net advances repaid by
affiliates...................... 777
Acquisitions of other long-term
investments and additions to
long-term receivables........... (398) (2,288)
Disposals of other long-term
investments and collections of
long-term receivables........... 327 29
--------- ---------
Net cash used in investing
activities.............. (5,035 (6,885)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net......... (16,967) 11,308
Repayment of long-term debt and
lease obligations............... (33,232) (19,702)
Proceeds from long-term debt and
lease obligations............... 6,450 4,997
Issuance of common stock........... 70,042 3,700
--------- ---------
Net cash provided by
financing activities.... 26,293 303
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH............................... 108 98
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................... 24,754 (12,913)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD.......................... 17,335 19,490
--------- ---------
CASH AND CASH EQUIVALENTS, END OF
PERIOD............................. $ 42,089 $ 6,577
========= =========

The accompanying notes are an integral part of these interim financial
statements.

F-96

FORASOL-FORAMER N.V.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1 BASIS OF PRESENTATION

The unaudited consolidated financial statements included herein have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission and with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation of such financial statements have been made. The consolidated
condensed balance sheet at December 31, 1995 was derived from the audited
financial statements as at that date.

It is recommended that these statements be read in conjunction with the
Company's audited consolidated financial statements and notes thereto for the
year ended December 31, 1995.

NOTE 2 INCOME (LOSS) PER SHARE

Income (loss) per common share is based on the net income (loss) divided by
the weighted average number of common shares outstanding during the respective
periods. The effects of shares issuable upon exercise of stock options are
antidilutive and were therefore excluded from the calculation.

NOTE 3 STOCK OPTIONS

During the six months ended June 30, 1996, options under the 1996 Long Term
Incentive Plan were granted to the primary officers, managers and employees of
the Company to purchase a total of 312,000 Common Shares at an exercise price of
$12.00 per share and 150,000 Common Shares at an exercise price of $14.00 per
share. Grants become exercisable five years from the date of issuance and expire
at the end of ten years.

F-97

FORASOL-FORAMER N.V.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents....... $ 23,834 $ 17,335
Trade accounts receivable,
net............................ 45,370 40,100
Prepaid expenses and other
current assets................. 15,938 21,022
Deferred income taxes........... 1,994 2,467
------------- ------------
Total current assets................. 87,136 80,924
------------- ------------
INVESTMENTS AND OTHER ASSETS
Investments in and advances to
equity affiliates.............. 9,346 9,480
Other long-term investments and
receivables.................... 6,339 6,518
Deferred income taxes........... 8,710 5,761
------------- ------------
Total investments and other assets... 24,395 21,759
------------- ------------
PLANT AND EQUIPMENT..................
Rigs and equipment.............. 423,167 438,246
Buldings, furniture, fixtures
and vehicles................... 3,615 3,226
------------- ------------
426,782 441,472
Less: accumulated
depreciation................... (187,510) (211,100)
------------- ------------
Plant and equipment, net............. 239,272 230,372
------------- ------------
Total Assets......................... $ 350,803 $ 333,055
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts and notes
payable........................ $ 25,983 $ 32,397
Short-term borrowings........... 5,840 20,840
Current portion of long-term
debt........................... 14,547 18,202
Current portion of long-term
lease obligations.............. 4,712 8,138
Deferred income taxes........... 647
Other current liabilities....... 30,852 26,919
------------- ------------
Total current liabilities............ 81,934 107,143
------------- ------------
LONG-TERM DEBT AND OTHER LIABILITIES
Long-term debt.................. 25,783 40,258
Long-term lease obligations..... 34,597 44,538
Deferred income................. 2,058 204
Provision for major repairs..... 2,894 3,565
Deferred income taxes........... 6,354 4,852
Other long-term liabilities..... 4,827 6,184
------------- ------------
Total long-term debt and other
liabilities........................ 76,513 99,601
------------- ------------
MINORITY INTEREST.................... 2,908 3,306
------------- ------------
STOCKHOLDERS' EQUITY
Common stock, par value NLG .01,
50,000,000 shares authorized;
16,650,290 and 10,010,000
shares outstanding at September
30, 1996 and December 31, 1995,
respectively................... 94 55
Additional paid-in capital...... 140,688 70,685
Retained earnings............... 49,006 52,415
Foreign currency translation
adjustment..................... (340) (150)
------------- ------------
Total stockholders' equity........... 189,448 123,005
------------- ------------
Total liabilities and stockholders'
equity............................. $ 350,803 $ 333,055
============= ============

The accompanying notes are an integral part of these interim financial
statements.

F-98

FORASOL-FORAMER N.V.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

REVENUES
Net operating revenues.......... $ 137,494
Equity in net income of
affiliates...................... 146
--------------
137,640
--------------
OPERATING COSTS AND EXPENSES
Cost of operations.............. (108,536)
Depreciation and amortization... (16,598)
Selling, general and
administrative expenses......... (12,606)
--------------
(137,740)
--------------
OPERATING LOSS....................... (100)

OTHER INCOME AND EXPENSES
Net Interest and other financial
income (expense)................ (6,119)
Net foreign exchange gain....... 586
Other income.................... 2,474
--------------
(3,059)
--------------
LOSS BEFORE INCOME TAXES AND MINORITY
INTEREST........................... (3,159)
INCOME TAXES......................... (561)
--------------
LOSS BEFORE MINORITY INTEREST........ (3,720)
MINORITY INTEREST.................... 310
--------------
NET LOSS............................. $ (3,410)
==============
NET LOSS PER SHARE (Note 2).......... $ (0.25)
==============
WEIGHTED AVERAGE SHARES
OUTSTANDING........................ 13,379,000
==============

The accompanying notes are an integral part of these interim financial
statements.

F-99

FORASOL-FORAMER N.V.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................ $ (3,410)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation............... 16,598
Provision for major
repairs................... (671)
Gain on disposals of plant
and equipment............. (2,878)
Undistributed earnings in
affiliates................ 132
Deferred income taxes...... (1,621)
Minority interest in
undistributed earnings of
subsidiaries.............. (310)
Other, net................. (3,360)
Increase (decrease) from
changes in:
Trade accounts
receivable............ (4,984)
Prepaid expenses and
other current
assets................ 4,992
Trade accounts and
notes payable......... (6,339)
Other current
liabilities........... 3,982
Deferred income....... 1,865
Other long-term
liabilities........... (1,357)
----------
Net cash
provided by
operating
activities....... 2,639
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and
equipment...................... (29,981)
Proceeds from sale of plant and
equipment...................... 10,388
Acquisitions of other long-term
investments and additions
to long-term receivables...... (513)
Disposals of other long-term
investments and collections
of long-term receivables...... 539
----------
Net cash used in
investing
activities....... (19,567)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net...... (14,999)
Repayment of long-term debt and
lease obligations.............. (37,767)
Proceeds from long-term debt.... 6,450
Issuance of common stock........ 70,042
----------
Net cash
provided by
financing
activities....... 23,726
----------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH............................... (299)
----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................... 6,499
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD.......................... 17,335
----------
CASH AND CASH EQUIVALENTS, END OF
PERIOD............................. $ 23,834
==========

The accompanying notes are an integral part of these interim financial
statements.

F-100

FORASOL-FORAMER N.V.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

It is recommended that these statements be read in conjunction with the
Company's audited consolidated financial statements and notes thereto for the
year ended December 31, 1995 included in the Company's Prospectus dated May 10,
1996.

2. LOSS PER SHARE

Loss per common share is based on the net loss divided by the weighted
average number of common shares outstanding during the period. The effects of
shares issuable upon exercise of stock options are immaterial or antidilutive
and were therefore excluded from the calculation.

3. STOCK OPTIONS

During the nine months ended September 30, 1996, options under the 1996
Long Term Incentive Plan were granted to the primary officers, managers and
employees of the Company to purchase a total of 312,000 Common Shares at an
exercise price of $12.00 per share and 150,000 Common Shares at an exercise
price of $14.00 per share. Grants become exercisable five years from the date of
issuance and expire at the end of ten years.

4. COMMON STOCK OFFERING

The Company completed its initial public offering of 6,640,290 common
shares in May 1996 and received net proceeds of approximately $70 million after
depicting underwriting fees and expenses of the offering. Approximately $50.2
million of the net proceeds were used to retire debt and $11.5 million was used
to finance the refurbishment and upgrade of the SOUTH SEAS DRILLER.

F-101

AUDITOR'S REPORT

The Members
National Drilling and Services Co. LLC
Muscat -- Sultanate of Oman

We have audited the accompanying balance sheets of NATIONAL DRILLING AND
SERVICES CO. LLC -- Muscat, Sultanate of Oman as of December 31, 1995 and
December 31, 1994 and the related statements of profit and loss, and cash flows
for the year ended December 31, 1995 and for the period from April 1, 1994 to
December 31, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based upon our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 used 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
statements presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements present fairly, in all material
respects, the financial position of National Drilling and Services Co. LLC as of
December 31, 1995 and December 31, 1994 and the results of its operations and
its cash flows for the year ended December 31, 1995 and for the period from
April 1, 1994 to December 31, 1994 in accordance with International Accounting
Standards and accounting principles generally accepted in the United States.

As discussed in Note 16 to the financial statements, certain amounts in the
accompanying financial statements have been restated.

Muscat Saba & Co.
April 10, 1996, except for Note 16
which is as of May 6, 1996

F-102

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
BALANCE SHEET
(AMOUNTS EXPRESSED IN RIALS OMANI)

DECEMBER 31,
-------------------------
NOTE 1995 1994
----- ----------- ------------
ASSETS
CURRENT ASSETS:
Cash on hand and at banks....... 42,369 18,351
Fixed deposits.................. 3 1,935,708 3,719,168
Accounts receivable............. 350,847 335,360
Advances to suppliers........... 1,019 11,033
Unbilled contract............... 358,545 348,630
Other receivable................ 82,206 45,196
Due from employees.............. 4,534 1,229
Prepayments and deposits........ 84,010 71,973
Other assets*................... 4 27,178 87,000
----------- ------------
Total current assets....... 2,886,416 4,637,940
----------- ------------
NET FIXED ASSETS*.................... 5 4,897,056 6,063,508
----------- ------------
TOTAL ASSETS......................... 7,783,472 10,701,448
=========== ============

LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Term loan -- current portion.... 6 536,736 2,077,736
Accounts payable................ 265,190 210,731
Due to employees................ 327 301
Due to related parties.......... 7 50,352 58,218
Accrued expenses................ 8 220,480 262,785
Deferred taxation*.............. 1,071,857 954,646
Provision for staff benefits.... 126,709 123,615
----------- ------------
Total current
liabilities............. 2,271,651 3,688,032
----------- ------------
TERM LOAN -- Long term portion....... 6 300,000 836,736
----------- ------------
ADVANCE FOR DEMOBILISATION........... 9 237,977 237,977
----------- ------------
ADVANCES FROM MEMBERS................ 10 -- 1,000,000
----------- ------------
MEMBERS' EQUITY:
Capital......................... 1 1,665,000 1,665,000
Legal reserve*.................. 467,159 437,005
Retained earnings*.............. 2,841,685 2,836,698
----------- ------------
Total equity............... 4,973,844 4,938,703
----------- ------------
TOTAL LIABILITIES AND EQUITY......... 7,783,472 10,701,448
=========== ============

See notes to the financial statements
*Restated -- See Note 16

F-103

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
STATEMENT OF PROFIT AND LOSS
(AMOUNTS EXPRESSED IN RIALS OMANI)

PERIOD FROM
YEAR ENDED APRIL 1, 1994 TO
DECEMBER 31, DECEMBER 31,
NOTE 1995 1994
---- ------------ ----------------
Drilling income...................... 4,026,213 3,006,415
Operating expenses................... 11 (3,723,640) (2,733,769)
------------ ----------------
Operating profit................ 302,573 272,646
Other income......................... 12 170,084 156,632
Gain (loss) on disposal of fixed
assets*.............................. 9,546 (245,618)
Finance charges...................... (100,662) (134,353)
------------ ----------------
Profit before taxation.......... 381,541 49,307
Provision for deferred income tax*... (80,000) (4,000)
------------ ----------------
Net profit...................... 301,541 45,307
------------ ----------------
Transferred to legal reserve*........ (30,154) (4,531)
Retained earnings at the beginning of
period*.............................. 2,836,698 2,902,522
Dividends paid....................... (266,400) (106,600)
------------ ----------------
Retained earnings at December
31,*.......................... 2,841,685 2,836,698
============ ================

See notes to the financial statements
*Restated -- See Note 16

F-104

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
STATEMENT OF CASH FLOWS
(AMOUNTS EXPRESSED IN RIALS OMANI)

PERIOD FROM
YEAR ENDED APRIL 1, 1994 TO
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit*.......................... 301,541 45,307
Adjustments for:
Deferred taxes.................. 80,000 4,000
Depreciation.................... 1,234,921 977,720
Loss (gain) on disposal of fixed
assets*....................... (9,546) 245,618
Amortisation of leasehold
rights........................ 4,822 --
Interest expenses............... 100,662 134,353
Interest income................. (151,003) (132,321)
----------------- -----------------
Operating profit before working
capital changes.................... 1,561,397 1,274,677
(Increase) in trade and other
receivables................... (67,740) (63,955)
Increase/(decrease) in trade and
other payables................ 4,314 (115,294)
Increase in provision for staff
benefits...................... 3,094 4,136
----------------- -----------------
Cash generated from operations....... 1,501,065 1,099,564
Interest paid........................ (100,662) (134,353)
Interest received.................... 151,003 132,321
Income taxes paid.................... -- (3,883)
Prior year income tax refund
received........................... 37,211 --
----------------- -----------------
Net cash from
operating
activities......... 1,588,617 1,093,649
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets........ (61,863) (30,996)
Proceeds from disposal of fixed
assets........................ 57,940 26,453
Proceeds from redemption of
investments................... -- 500,000
----------------- -----------------
Net cash from (used
in) investing
activities......... (3,923) 495,457
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of share capital to
members....................... -- (1,000,000)
Repayment of term loan.......... (2,077,736) (1,038,772)
Proceeds from short term
borrowings from members....... -- 1,000,000
Dividends paid.................. (266,400) (106,600)
Repayment of advance from
members....................... (1,000,000) --
----------------- -----------------
Net cash used in
financing
activities......... (3,344,136) (1,145,372)
----------------- -----------------
Net (decrease)/increase in cash and
cash equivalents................... (1,759,442) 443,734
Cash and cash equivalents at
beginning of year (Note 13)........ 3,737,519 3,293,785
----------------- -----------------
Cash and cash equivalents at end of
year (Note 13)..................... 1,978,077 3,737,519
================= =================

See notes to the financial statements
*Restated -- See Note 16

F-105

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

1. LEGAL STATUS AND ACTIVITIES:

National Drilling and Services Co. LLC was registered as a limited
liability company in the Sultanate of Oman on April 15, 1990. The members and
their share of profits, losses and capital of the Company are as follows:

DECEMBER 31,
PERCENTAGE ------------------------
NAME OF THE MEMBERS SHAREHOLDING 1995 1994
- ------------------------------------- ------------ ----------- -----------
% RO RO
Sheikh Salim Bin Saeed Al Fannah Al
Araimi............................. 18 299,700 299,700
Mr. Mohammed Bin Rashid Al Araimi.... 21 349,650 349,650
Mr. P. Mohammed Ali.................. 19 316,350 316,350
Mr. Majid Bin Salim Al Fannah Al
Araimi............................. 10 166,500 166,500
Mr. Badar Bin Mohd. Rashid Al
Araimi............................. 2 33,300 33,300
M/s. Forasol S.A..................... 30 499,500 499,500
--- ----------- -----------
100 1,665,000 1,665,000
=== =========== ===========

The main activities of the Company are drilling and related services.

2. SIGNIFICANT ACCOUNTING POLICIES:

(a) The accounts are prepared under the historical cost convention.

(b) FIXED ASSETS:

Fixed assets are carried at cost. Depreciation is calculated using the
straight-line method based on the estimated useful life of each class of assets,
as follows:

Furniture and office equipment....... 3 years
Computer and accessories............. 5 years
Vehicles............................. 3 years
Rigs................................. 8 years

The legal reserve, which is not available for distribution is accumulated
in accordance with Article 154 of the Commercial Companies Law. The annual
appropriation shall be 10% of the net profit after taxes for each year until
such time as the reserve amounts to at least one third of the share capital.

(d) FOREIGN CURRENCY TRANSLATION:

The financial statements are expressed in Rials Omani. Assets and
liabilities denominated in foreign currencies have been translated into Rials
Omani at exchange rates prevailing on the balance sheet date. Translation gains
or losses arising therefrom together with transaction gains or losses during the
year are reflected in the statement of profit and loss.

(e) PROVISION FOR BAD AND DOUBTFUL DEBTS:

No provision is required since all the accounts receivable are considered
good and are subsequently realised.

F-106

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

(f) REVENUE RECOGNITION:

All of the drilling income reported in the financial statements is earned
under contracts with Petroleum Development of Oman and is recognized in the
period the related service is rendered. The contracts expire in March 1997.

The Company's income from drilling contracts is billable on a daily basis.
Unbilled contract income represents work done before the balance sheet date but
billed subsequently.

(g) STAFF BENEFITS:

1. Leave salary:

Provision has been made as per the contractual agreements with
employees of various categories, viz. locals, expatriate Europeans,
expatriate site staff and administration respectively.

2. Gratuity:

Gratuity has been provided as per the Labour Law of the Sultanate of
Oman, as below:

First three years of service 15 days of basic pay
After three years of service 30 days of basic pay

3. Air-passage:

Air-passage has been provided on the basis of return fare to home town
for all categories of employees to their respective destinations.

(h) INCOME TAXES:

Income tax is provided as per the provisions of "Law of Income Tax on
Companies" in Oman. The effective rates applied for computation of tax is
subject to Article 1, Clause 1 of Royal Decree No. 46/87 as follows:

(a) The first RO 30,000 of the net profit are tax free

(b) The next RO 170,000 of the net profit @ 20%

The Company applies the liability method for accounting for income taxes.

Deferred taxes arise from the tax effects of differences between
depreciation recorded in the Company's financial statements and deducted on the
Company's income tax returns, net of operating loss carryforwards. The provision
for income taxes at the Company's effective tax rate is equivalent to the
provision for income taxes at the Oman statutory rates shown above. The
Company's deferred tax liability at December 31, 1995 and 1994 has been reduced
in the Company's balance sheet by RO 30,000 and RO 321,000, respectively,
representing the tax effect of net operating loss carryforwards of RO 181,000
and RO 1,346,000, respectively. Net operating loss carryforwards at December 31,
1995 expire in 1999.

(i) FINANCIAL INSTRUMENTS:

The Company's financial instruments include cash, fixed deposits,
receivables, loans, and payables. Management estimates that the carrying values
of the Company's financial instruments approximates their fair value.

F-107

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

3. FIXED DEPOSITS:

Fixed deposits with banks mature within one year of the balance sheet date
are as follows:

DECEMBER 31,
------------------------
1995 1994
----------- -----------
RO RO
Call deposits........................ 134,789 107,767
Matures within one month............. -- 1,958,398
Matures within 3 months.............. 423,626 198,247
Matures within 4 months.............. 361,335 1,454,756
Matures within 5 months.............. 1,015,958 --
----------- -----------
1,935,708 3,719,168
=========== ===========

All fixed deposits are considered current in nature and are readily
available for withdrawal on demand before maturity date in exchange for loss of
future interest due.

4. OTHER ASSETS:

Other assets represent consideration paid for acquiring the leasehold
rights of Plot No. 48/B measuring 5006 square meters located at Ghala which is
amortised on straight-line basis over a period of 5 years with effect from April
1, 1995 instead of 15 years as previously decided.

In addition, Other Assets at December 31, 1994 includes the realizable
value of Rig III. See Note 5.

F-108

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

5. FIXED ASSETS:

FURNITURE
AND OFFICE COMPUTER AND
TOTAL EQUIPMENT ACCESSORIES VEHICLES RIG I RIG II BUILDINGS
--------- ---------- ------------ -------- --------- --------- ----------
RO RO RO RO RO RO

COST:
At January 1, 1995................... 9,808,086 84,811 20,383 153,841 4,763,201 4,766,163 --
Additions............................ 81,550 8,082 1,429 26,692 -- -- 27,637
Disposals............................ (27,719) (1,160) -- (6,872) -- -- --
--------- ---------- ------------ -------- --------- --------- ----------
At December 31, 1995................. 9,861,917 91,733 21,812 173,661 4,763,201 4,766,163 27,637
--------- ---------- ------------ -------- --------- --------- ----------
ACCUMULATED
DEPRECIATION:
At January 1, 1995................... 3,744,578 67,448 10,843 135,362 1,773,788 1,757,137 --
Charge for the year.................. 1,228,315 12,308 4,089 16,584 595,400 595,770 4,164
Disposals............................ (8,032) (1,160) -- (6,872) -- -- --
--------- ---------- ------------ -------- --------- --------- ----------
At December 31, 1995................. 4,964,861 78,596 14,932 145,074 2,369,188 2,352,907 4,164
--------- ---------- ------------ -------- --------- --------- ----------
NET BOOK VALUE:
At December 31, 1995................. 4,897,056 13,137 6,880 28,587 2,394,013 2,413,256 23,473
========= ========== ============ ======== ========= ========= ==========
At December 31, 1994................. 6,063,508 17,363 9,540 18,479 2,989,413 3,009,026 --
========= ========== ============ ======== ========= ========= ==========

CAPITAL
WORK-IN
PROGRESS
--------
RO
COST:
At January 1, 1995................... 19,687
Additions............................ 17,710
Disposals............................ (19,687)
--------
At December 31, 1995................. 17,710
--------
ACCUMULATED
DEPRECIATION:
At January 1, 1995................... --
Charge for the year.................. --
Disposals............................ --
--------
At December 31, 1995................. --
--------
NET BOOK VALUE:
At December 31, 1995................. 17,710
========
At December 31, 1994................. 19,687
========

During 1994, the Company disposed of various equipment included as part of
Rig III and, subsequent to December 31, 1994, finalized an agreement to dispose
of the remainder of Rig III equipment to a third party. Included in other
current assets is RO 55,000 at December 31, 1994 representing the realizable
value of Rig III, which was sold for this amount in March, 1995. The Company
wrote down the carrying value of this rig by RO 245,000 in 1994 in anticipation
of its sale.

One of the motor vehicles is registered in the personal name of the General
Manager of the Company.

Capital work-in-progress represents the cost of air compressor, in transit.

6. TERM LOAN:

DECEMBER 31,
----------------------
1995 1994
--------- -----------
RO RO
Current portion:
Oman Development Bank........... 300,000 300,000
National Bank of Oman........... 236,736 1,777,736
--------- -----------
536,736 2,077,736
========= ===========
Long term portion:
Oman Development Bank........... 300,000 600,000
National Bank of Oman........... -- 236,736
--------- -----------
300,000 836,736
========= ===========

The term loan from Oman Development Bank SAOG has been secured by first
mortgage of all assets of the Company and personal guarantees from Members. The
balance is payable in 4 equal six monthly instalments beginning from March 10,
1996 to September 10, 1997. It bears interest of 4 per cent per annum.

F-109

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

6. TERM LOAN: (CONTINUED)

The security for the loan from National Bank of Oman is by way of second
mortgage of two drilling rigs and personal guarantees from the local members to
the extent of their shares. It is payable by six monthly instalments maturing on
April 12, 1996 and bears interest at 5.8125 per cent per annum.

7. DUE TO RELATED PARTIES:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
RO RO
Forasol S.A.......................... 8,003 17,850
Galfar Engineering and Contracting
LLC.................................. 704 3,782
Al-Khalij Heavy Equipment and Eng.
LLC.................................. 39,250 16,521
Al Fahal Contracting Co. LLC......... -- 18,719
Arabian Industries LLC............... 1,746 711
Al Dastoor Contracting and Trading
LLC.................................. -- 615
Sur Centre........................... 34 --
Oman Filling Station & Services
LLC.................................. 590 13
Jalan House.......................... 25 7
--------- ---------
50,352 58,218
========= =========

The balances are on account of purchase of fixed assets, technical
know-how, sub-contract works and other services rendered. These transactions
were conducted in the ordinary course of business and at arms length.

Total transactions were RO 67,883 and RO 99,977 for the year ended December
31, 1995 and the period ended December 31, 1994, respectively.

8. ACCRUED EXPENSES:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
RO RO
Well bonus unpaid.................... 3,995 10,532
Social security payable.............. 3,788 1,213
Salaries unpaid...................... 53,081 58,089
Labour tax payable................... 51,723 44,799
Expense bills accrued................ 10,583 23,176
Wages arrears........................ 86,582 87,244
Interest payable on loan............. 10,630 37,645
Accrued inter-company expenses....... 98 87
--------- ---------
220,480 262,785
========= =========

9. ADVANCE FOR DEMOBILISATION:

The advance represents amount received from Petroleum Development of Oman
to meet demobilisation expenses of equipments and personnel.

F-110

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

10. ADVANCES FROM MEMBERS:

DECEMBER 31,
----------------------
1995 1994
--------- -----------
RO RO
Sh. Salim Bin Saeed Hamed Al Fannah
Al Araimi............................ -- 180,000
Mr. Majid Bin Salim Al Fannah Al
Araimi............................... -- 100,000
Mr. Mohammed Bin Rashid Al Araimi.... -- 210,000
Mr. P. Mohammed Ali.................. -- 190,000
M/s. Forasol S.A..................... -- 300,000
Mr. Badar Mohammed Rashid Al
Araimi............................... -- 20,000
--------- -----------
-- 1,000,000
========= ===========

Advances from members at December 31, 1994 represent amounts transferred
from capital due to the capital reduction during the year and carry no interest.

F-111

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

11. OPERATING EXPENSES:

PERIOD FROM
YEAR ENDED APRIL 1, 1994 TO
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
RO RO
Materials costs:
Spares -- Surface maintenance... 201,017 156,721
Spares -- Down hole
maintenance................... 11,608 9,163
Consumables..................... 84,434 58,797
Repairs costs................... 131,298 --
Fuel, lubricants and paints..... 47,307 37,186
----------------- -----------------
475,664 261,867
----------------- -----------------
Manpower costs:
Manpower costs -- expatriates... 750,065 571,936
Manpower costs -- Nationals..... 556,978 378,265
Government taxes and levy....... 41,195 34,065
Recruitment and transit
expenses...................... 16,257 13,173
----------------- -----------------
1,364,495 997,439
----------------- -----------------
Other costs:
Depreciation.................... 1,234,922 977,718
Rig support, hiring and
inspection.................... 207,487 160,755
Travel.......................... 116,429 86,672
Catering, medical and
training...................... 86,965 58,468
Insurance and registration...... 70,509 65,585
Transportation.................. 62,255 41,046
Rental, electricity and water... 52,976 42,542
Communication................... 13,607 8,929
Amortisation of leasehold
rights........................ 4,822 --
Other miscellaneous costs....... 33,509 32,748
----------------- -----------------
1,883,481 1,474,463
----------------- -----------------
3,723,640 2,733,769
================= =================

12. OTHER INCOME:

PERIOD FROM
YEAR ENDED APRIL 1, 1994 TO
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
RO RO
Interest received.................... 151,003 132,321
Exchange gain........................ 10,767 3,541
Sponsorship fee received............. 3,905 4,372
Miscellaneous (rental, sale of scrap,
etc.).............................. 4,409 16,398
----------------- -----------------
170,084 156,632
================= =================

F-112

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

13. CASH AND CASH EQUIVALENTS:

Cash and cash equivalents consist of cash on hand, balances with banks and
fixed deposits with banks. Cash and cash equivalents included in the cash flows
statement comprise the following balance sheet amounts:

DECEMBER 31,
------------------------
1995 1994
----------- -----------
RO RO
Cash on hand and at banks............ 42,369 18,351
Fixed deposits....................... 1,935,708 3,719,168
----------- -----------
1,978,077 3,737,519
=========== ===========

Fixed deposits have original maturities ranging from one month to five
months. However, each deposit is available for withdrawal on demand at its
carrying amount before maturity without penalty.

14. COMMITMENTS AND CONTINGENCIES:

DECEMBER 31,
--------------------
1995 1994
--------- ---------
RO RO
Performance guarantee given for major
customer........................... 385,000 385,000
Guarantees given for suppliers....... 10,000 11,000

15. COMPARATIVE FIGURES:

Certain previous year figures have been regrouped to be consistent with the
current year's presentation format.

F-113

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

16. RESTATEMENTS:

National Drilling and Services Co. LLC has restated its previously reported
amounts in order to change its depreciation expense on drilling rigs in periods
prior to March 31, 1994 on a basis of an eight year life instead of a three year
life, and to record deferred income taxes arising from book/tax depreciation
differences. The change in useful life is being made to more accurately reflect
the drilling rigs estimated economic lives and to be more consistent with other
Oman based drilling companies. In addition, the loss on disposal of drilling Rig
III of RO 245,000 has been reflected in December 1994 instead of March 1995
since such loss was determinable at the earlier date. See Note 5. As a result of
these changes, certain previously reported amounts have been restated as
follows:

DECEMBER 31,
------------------------
1995 1994
----------- -----------
RO RO
OTHER ASSETS:
As previously reported............... 27,178 32,000
As restated.......................... 27,178 87,000
NET FIXED ASSETS:
As previously reported............... 1,067,189 2,284,602
As restated.......................... 4,897,056 6,063,508
DEFERRED TAXATION LIABILITY:
As previously reported............... -- --
As restated.......................... 1,071,857 954,646
LEGAL RESERVE:
As previously reported............... 164,491 122,212
As restated.......................... 467,159 437,005
RETAINED EARNINGS:
As previously reported............... 386,343 272,231
As restated.......................... 2,841,685 2,836,698

PERIOD FROM
YEAR ENDED APRIL 1 1994 TO
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
RO RO
GAIN/(LOSS) ON DISPOSAL OF FIXED
ASSETS:
As previously reported............... 13,585 (320)
As restated.......................... 9,546 (245,618)
PROFIT BEFORE TAXATION:
As previously reported............... 385,580 294,605
As restated.......................... 381,541 49,307
PROVISION FOR INCOME TAX:
As previously reported............... (37,211) --
As restated.......................... 80,000 4,000
NET PROFIT FOR THE YEAR/PERIOD:
As previously reported............... 422,791 294,605
As restated.......................... 301,541 45,307

The effect of the above restatements is to present the Company's financial
statements in all material respects in accordance with both International
Accounting Standards and accounting principles generally accepted in the United
States. Certain additional financial information required by generally accepted
accounting principles in the United States have also been added to the
accompanying financial statement notes.

F-114

AUDITOR'S REPORT

The Members
National Drilling and Services Co. LLC
Muscat Sultanate of Oman

We have audited the accompanying balance sheets of NATIONAL DRILLING AND
SERVICES CO. LLC -- Muscat, Sultanate of Oman as of December 31, 1994 and March
31, 1994 and the related statements of profit and loss, and cash flows from
April 1, 1994 to December 31, 1994 and for the year ended March 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based upon
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 used in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by the management, as well as evaluating the overall financial
statements presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements present fairly, in all material
respects, the financial position of National Drilling and Services Co. LLC as of
December 31, 1994 and March 31, 1994 and the results of its operations and its
cash flows for the period from April 1, 1994 to December 31, 1994 and for the
year ended March 31, 1994 in accordance with International Accounting Standards
and accounting principles generally accepted in the United States.

As discussed in Note 16 to the financial statements, certain amounts in the
accompanying financial statements have been restated.

Saba & Co.

Muscat
March 15, 1995, except for Note 16
which is as of May 5, 1996

F-115

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
BALANCE SHEET
(AMOUNTS EXPRESSED IN RIALS OMANI)

NOTE DECEMBER 31, 1994 MARCH 31, 1994
---- ----------------- --------------

ASSETS
CURRENT ASSETS:
Cash on hand and at banks.......... 18,351 47,565
Fixed deposits..................... 3 3,719,168 3,247,926
Accounts receivable................ 335,360 317,008
Advances to suppliers.............. 11,033 4,598
Unbilled contract.................. 348,630 329,223
Other receivable................... 45,196 39,872
Due from employees................. 1,229 717
Prepayments and deposits........... 71,973 58,048
Other assets*...................... 4 87,000 32,000
----------------- --------------
Total current assets.......... 4,637,940 4,076,957
----------------- --------------
INVESTMENT.............................. 5 -- 500,000
----------------- --------------
NET FIXED ASSETS*....................... 6 6,063,508 7,337,303
----------------- --------------
TOTAL ASSETS............................ 10,701,448 11,914,260
================= ==============

LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Due to bank........................ -- 1,706
Term loan -- current portion....... 7 2,077,736 1,188,772
Accounts payable................... 210,731 318,994
Due to employees................... 301 977
Due to related parties............. 8 58,218 66,511
Accrued expenses................... 9 262,785 260,847
Provision for staff benefits....... 123,615 119,479
Deferred taxation*................. 954,646 954,529
----------------- --------------
Total current liabilities..... 3,688,032 2,911,815
----------------- --------------
TERM LOAN -- Long term portion.......... 7 836,736 2,764,472
----------------- --------------
ADVANCE FOR DEMOBILISATION.............. 10 237,977 237,977
----------------- --------------
ADVANCE FROM MEMBERS.................... 11 1,000,000 --
----------------- --------------
MEMBERS' EQUITY:
Capital............................ 1 1,665,000 2,665,000
Legal reserve*..................... 437,005 432,474
Retained earnings*................. 2,836,698 2,902,522
----------------- --------------
Total equity.................. 4,938,703 5,999,996
----------------- --------------
TOTAL LIABILITIES AND EQUITY............ 10,701,448 11,914,260
================= ==============

See notes to the financial statements
*Restated -- See Note 16

F-116

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
STATEMENT OF PROFIT AND LOSS
(AMOUNTS EXPRESSED IN RIALS OMANI)

PERIOD FROM
APRIL 1, 1994
TO YEAR ENDED
NOTE DECEMBER 31, 1994 MARCH 31, 1994
---- ----------------- --------------

Drilling income...................... 3,006,415 8,088,280
Operating expenses*.................. 12 (2,733,769) (6,117,586)
----------------- --------------
Operating profit................ 272,646 1,970,694
Other income......................... 13 156,632 261,597
Loss on disposal of fixed assets*.... (245,618) (472)
Redrilling reserve written back...... -- 840,830
Finance charges...................... (134,353) (259,982)
----------------- --------------
Profit before taxation.......... 49,307 2,812,667
Provision for deferred income tax*... (4,000) (685,000)
----------------- --------------
Net profit...................... 45,307 2,127,667
Transferred to legal reserve......... (4,531) (212,767)
Retained earnings at the beginning of
period............................... 2,902,522 987,622
Dividends paid....................... (106,600) --
----------------- --------------
Retained earnings at end of
period.......................... 2,836,698 2,902,522
================= ==============

See notes to the financial statements
*Restated -- See Note 16

F-117

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT - SULTANATE OF OMAN
STATEMENT OF CASH FLOWS
(AMOUNTS EXPRESSED IN RIALS OMANI)

PERIOD FROM
APRIL 1, 1994 YEAR ENDED
TO MARCH 31,
DECEMBER 31, 1994 1994
----------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit*.......................... 45,307 2,127,667
Adjustments for:
Deferred taxes*................. 4,000 685,000
Depreciation*................... 977,720 1,235,463
Loss on disposal of fixed
assets*....................... 245,618 472
Interest expenses............... 134,353 259,982
Interest income................. (132,321) (196,635)
----------------- ----------
Operating profit before working
capital changes...................... 1,274,677 4,111,949
(Increase)/decrease in trade and
other receivables............. (63,955) 1,594,888
(Increase) in other assets...... -- (32,000)
(Decrease) in trade and other
payables...................... (115,294) (2,591,954)
Increase in provision for staff
benefits...................... 4,136 30,834
----------------- ----------
Cash generated from operations....... 1,099,564 3,113,717
Interest paid........................ (134,353) (259,982)
Interest received.................... 132,321 196,635
Income taxes paid.................... (3,883) (32,847)
----------------- ----------
Net cash from operating
activities.................... 1,093,649 3,017,523
----------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets........ (30,996) (1,410,293)
Proceeds from disposal of fixed
assets........................ 26,453 41,159
Proceeds from redemption of
investments................... 500,000 --
----------------- ----------
Net cash from/(used in)
investing activities....... 495,457 (1,369,134)
----------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of share capital to
members....................... (1,000,000) --
Repayment of term loan.......... (1,038,772) (1,197,142)
Proceeds from short term
borrowings from members....... 1,000,000 --
Dividends paid.................. (106,600) --
Repayment of advance from
members......................... -- (153,817)
----------------- ----------
Net cash used in financing
activities.............. (1,145,372) (1,350,959)
----------------- ----------
Net increase in cash and cash
equivalents.......................... 443,734 297,430
Cash and cash equivalents at
beginning of period (Note 14)...... 3,293,785 2,996,355
----------------- ----------
Cash and cash equivalents at end of
period (Note 14)................... 3,737,519 3,293,785
================= ==========

See notes to the financial statements
*Restated -- See Note 16

F-118

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994

1. LEGAL STATUS AND ACTIVITIES:

National Drilling and Services Co. LLC was registered as a limited
liability company in the Sultanate of Oman on April 15, 1990. During the period,
the paid up share capital of the Company was reduced from RO 2,665,000 to RO
1,665,000 by passing a resolution by the members on July 25, 1994. Also a new
member was admitted by acquiring shares from an existing member. The members and
their share of profits, losses and capital of the Company are as follows:

DECEMBER 31, MARCH 31,
NAME OF THE MEMBERS SHARE 1994 SHARE 1994
- ---------------------------------------- ----- ------------ ----- ---------
% RO % RO

Sheikh Salim Bin Saeed Al Fannah Al
Araimi................................ 18 299,700 18 479,700
Mr. Mohammed Bin Rashid Al Araimi....... 21 349,650 23 612,950
Mr. P. Mohammed Ali..................... 19 316,350 19 506,350
Mr. Majid Bin Salim Al Fannah Al
Araimi................................ 10 166,500 10 266,500
Mr. Badar Bin Mohd. Rashid Al Araimi.... 2 33,300 -- --
Forasol S.A............................. 30 499,500 30 799,500
----- ------------ ----- ---------
100 1,665,000 100 2,665,000
===== ============ ===== =========

The main activities of the Company are drilling and related services.

2. SIGNIFICANT ACCOUNTING POLICIES:

(a) The accounts are prepared under the historical cost convention.

(b) FIXED ASSETS:

Fixed assets are carried at cost. Depreciation is calculated using the
straight-line method based on the estimated useful life of each class of assets,
as follows:

Furniture and office equipment.......... 3 years
Computer and accessories................ 5 years
Vehicles................................ 3 years
Rigs.................................... 8 years

(d) FOREIGN CURRENCY TRANSLATION:

The financial statements are expressed in Rials Omani. Assets and
liabilities denominated in foreign currencies have been translated into Rials
Omani at exchange rates prevailing on the balance sheet date. Translation gains
or losses arising therefrom together with transaction gains or losses during the
period are reflected in the statement of profit and loss.

(e) PROVISION FOR BAD AND DOUBTFUL DEBTS:

No provision is required since all the accounts receivable are considered
good and are subsequently realised.

F-119

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

(f) REVENUE RECOGNITION:

The Company's income from drilling contracts is billable on a daily basis.
Unbilled contract income represents work done before the balance sheet date but
billed subsequently.

(g) STAFF BENEFITS:

1. Leave salary:

Provision has been made as per the contractual agreements with employees of
various categories, viz. locals, expatriate Europeans, expatriate site staff and
administration respectively.

2. Gratuity:

Gratuity has been provided as per the Labour Law of the Sultanate of Oman,
as below:

First three years of service 15 days of basic pay
After three years of service 30 days of basic pay

3. Air-passage:

Air-passage has been provided on the basis of return fare to home town for
all categories of employees to their respective destinations.

(h) INCOME TAXES:

1. The first RO 30,000 of the net profit are tax free

2. The next RO 170,000 of the net profit @ 20%

3. Above that of the net profit @ 25%

The Company applies the liability method for accounting for income taxes.

Deferred taxes arise from the tax effects of differences between
depreciation recorded in the Company's financial statements and deducted on the
Company's income tax returns, net of operating loss carryforwards. The provision
for income taxes at the Company's effective tax rate is equivalent to the
provision for income taxes at the Oman statutory rates shown above. The
Company's deferred tax liability at December 31, 1994 and March 31, 1994 has
been reduced in the Company's balance sheet by RO 321,000 and RO 80,000,
respectively, representing the tax effect of net operating loss carryforwards of
RO 1,346,000 and RO 384,000, respectively.

(i) FINANCIAL INSTRUMENTS:

The Company's financial instruments include cash, fixed deposits,
receivables, loans and payables. Management estimates that the carrying value of
the Company's financial instruments approximates their fair value.

F-120

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

3. FIXED DEPOSITS:

Fixed deposits with banks which mature within one year of the balance sheet
date are as follows:

DECEMBER 31, MARCH 31,
1994 1994
------------- ----------
RO RO
Call deposits........................ 107,767 236,306
Matures within one month............. 1,958,398 1,466,272
Matures within 3 months.............. 198,247 157,747
Matures within 4 months.............. 1,454,756 1,269,675
Matures within 6 months.............. -- 76,950
Matures within one year.............. -- 40,976
------------- ----------
3,719,168 3,247,926
============= ==========

All fixed deposits are considered current in nature and are readily
available for withdrawal on demand before the maturity date in exchange for loss
of future interest due.

4. OTHER ASSETS:

Other assets represent consideration paid for acquiring the leasehold
rights of Plot No. 48/B measuring 5,006 square meters located at Ghala and the
same will be amortised on straight-line basis over a period of 15 years with
effect from April 1, 1995 when the Company commences utilizing the land.

In addition, Other Assets at December 31, 1994 includes the realizable
value of Rig III - see
Note 6.

5. INVESTMENT:

DECEMBER 31, MARCH 31,
1994 1994
------------- ----------
RO RO
Development Bonds (6th Issue)........ -- 500,000
============= ==========

The above investment represented 50,000 Bonds issued by the Government of
Sultanate of Oman, matured on August 15, 1994, and is stated at cost.

F-121

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

6. FIXED ASSETS:

FURNITURE COMPUTER
AND OFFICE AND MOTOR
TOTAL EQUIPMENT ACCESSORIES VEHICLES RIG I RIG II RIG III
--------- ---------- ------------ --------- -------- -------- --------
RO RO RO RO RO RO RO
COST:

At April 1, 1994..................... 10,221,814 80,932 19,998 148,841 4,763,201 4,766,163 442,679
Additions............................ 30,996 5,724 585 5,000 -- -- --
Disposals............................ (444,724) (1,845) (200) -- -- -- (442,679)
--------- ---------- ------------ --------- -------- -------- --------
At December 31, 1994................. 9,808,086 84,811 20,383 153,841 4,763,201 4,766,163 --
--------- ---------- ------------ --------- -------- -------- --------
ACCUMULATED DEPRECIATION:
At April 1, 1994..................... 2,884,511 48,777 7,945 109,551 1,327,237 1,310,309 80,692
Charge for the period................ 977,720 19,807 2,994 25,811 446,551 446,828 35,729
Disposals............................ (117,653) (1,136) (96) -- -- -- (116,421)
--------- ---------- ------------ --------- -------- -------- --------
At December 31, 1994................. 3,744,578 67,448 10,843 135,362 1,773,788 1,757,137 --
--------- ---------- ------------ --------- -------- -------- --------
NET BOOK VALUE:
At December 31, 1994................. 6,063,508 17,363 9,540 18,479 2,989,413 3,009,026 --
========= ========== ============ ========= ======== ======== ========
At March 31, 1994.................... 7,337,303 32,155 12,053 39,290 3,435,964 3,455,854 361,987
========= ========== ============ ========= ======== ======== ========

CAPITAL
WORK-IN-
PROGRESS
---------
RO
COST:
At April 1, 1994..................... --
Additions............................ 19,687
Disposals............................ --
---------
At December 31, 1994................. 19,687
---------
ACCUMULATED DEPRECIATION:
At April 1, 1994..................... --
Charge for the period................ --
Disposals............................ --
---------
At December 31, 1994................. --
---------
NET BOOK VALUE:
At December 31, 1994................. 19,687
=========
At March 31, 1994.................... --
=========

One of the motor vehicles is registered in the personal name of the General
Manager of the Company.

Capital work-in-progress represents the costs incurred to construct a
warehouse building on the leasehold land, and will be depreciated over a period
of 15 years from the date of completion.

7. TERM LOAN:

DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
Current portion:
Oman Development Bank.............. 300,000 300,000
National Bank of Oman.............. 1,777,736 888,772
----------------- --------------
2,077,736 1,188,772
================= ==============
Long term portion:
Oman Development Bank.............. 600,000 750,000
National Bank of Oman.............. 236,736 2,014,472
----------------- --------------
836,736 2,764,472
================= ==============

A. The term loan from Oman Development Bank SAOG has been secured by first
mortgage of drilling rigs and personal guarantees from Members.

F-122

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

7. TERM LOAN: (CONTINUED)

B. Term loan from Oman Development Bank:

Loan amount -- RO 1,500,000 taken on March 10, 1992. Effective rate of
interest 4% per annum. Repayable half yearly commencing from March 10, 1993.
Schedule of repayment as follows:

RO
-----------
March 10, 1993.......................... 150,000
September 10, 1993...................... 150,000
March 10, 1994.......................... 150,000
September 10, 1994...................... 150,000
March 10, 1995.......................... 150,000
September 10, 1995...................... 150,000
March 10, 1996.......................... 150,000
September 10, 1996...................... 150,000
March 10, 1997.......................... 150,000
September 10, 1997...................... 150,000
-----------
Total......................... 1,500,000
===========

C. Term loan obtained from National Bank of Oman amounted to US $8,689,500
and carries an interest rate of 5.8125 percent per annum, repayable by half
yearly installments commencing from April 12, 1993. Schedule of repayment as
follows:

US$
-----------
October 12, 1993........................ 1,153,500
April 12, 1994.......................... 1,153,500
October 12, 1994........................ 1,153,500
April 12, 1995.......................... 2,307,250
October 12, 1995........................ 2,307,250
April 12, 1996.......................... 614,500
-----------
Total......................... 8,689,500
===========

- ------------

U.S. Dollar equals RO 0.385.

D. The security for the loan from National Bank of Oman is by way of
second mortgage of drilling rigs and personal guarantees from the local members
to the extent of their shares.

F-123

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

8. DUE TO RELATED PARTIES:

DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
Forasol S.A............................. 17,850 39,510
Galfar Engineering and Contracting
LLC................................... 3,782 2,552
Al-Khalij Heavy Equipment and Eng.
LLC................................... 16,521 21,277
Al Fahal Contracting Co. LLC............ 18,719 --
Arabian Industries LLC.................. 711 3,102
Al Dastoor Contracting and Trading
LLC................................... 615 --
Sur Centre.............................. -- 70
Oman Filling Station & Services LLC..... 13 --
Jalan House............................. 7 --
-------- --------------
58,218 66,511
======== ==============

The balances are on account of purchase of fixed assets, technical know
how, sub-contract works and other services rendered. These transactions were
conducted in the ordinary course of business and at arms length.

Total transactions were RO 99,997 for the period ended December 31, 1994
and RO 818,431 for the year ended March 31, 1994. The transactions during the
year ended March 31, 1994 consisted primarily of purchases from the following
related parties:

RO
---------
Forasol S.A............................. 435,698
Al-Khalij Heavy Equipment and Eng.
LLC................................... 201,862
Galfar Engineering and Contracting
LLC................................... 154,124

9. ACCRUED LIABILITIES:

DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
Well bonus unpaid....................... 10,532 7,688
Social security payable................. 1,213 2,659
Salaries unpaid......................... 58,089 33,456
Labour tax payable...................... 44,799 11,584
Expense bills accrued................... 23,176 57,877
Wages arrears........................... 87,244 100,670
Interest payable on loan................ 37,645 39,561
Accrued inter-company expenses.......... 87 7,352
----------------- --------------
262,785 260,847
================= ==============

10. ADVANCE FOR DEMOBILISATION:

The advance represents amounts received from Petroleum Development of Oman
to meet demobilisation expenses of equipments and personnel.

F-124

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

11. ADVANCES FROM MEMBERS:

DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
Sh. Salim Bin Saeed Hamed Al Fannah
Al Araimi............................ 180,000 --
Mr. Majid Bin Salim Al Fannah Al
Araimi............................... 100,000 --
Mr. Mohammed Bin Rashid Al Araimi.... 210,000 --
Mr. P. Mohammed Ali.................. 190,000 --
Forasol S.A.......................... 300,000 --
Mr. Badar Mohammed Rashid Al
Araimi............................... 20,000 --
----------------- --------------
1,000,000 --
================= ==============

Advances from members represent amounts transferred from capital due to the
capital reduction during the year and carry no interest.

12. OPERATING EXPENSES:

PERIOD FROM
APRIL 1, 1994 TO YEAR ENDED
DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
Depreciation*........................ 977,720 1,235,463
Salaries, wages and bonus............ 869,894 1,073,604
Technical and professional
assistance........................... 104,075 430,836
Transport and support services....... 43,686 110,581
Subcontract -- roads................. -- 154,124
Accommodation, catering and
medical.............................. 199,029 468,344
Well casing equipment and services... -- 180,375
Rig move and support services........ 122,715 486,314
Mud products and services............ -- 297,608
Cementing expenses................... -- 180,433
Horizontal section drilling
expenses............................. -- 553,733
Spares and consumables............... 236,034 378,539
Rock bits and drilling tools......... -- 65,008
Wireline and completion services..... -- 68,827
Insurance............................ 43,164 91,604
Inspection, gyro and deviation
expenses............................. 16,376 111,309
Fuel, lubricants and utilities....... 37,416 62,338
Travel and communications............ 32,153 61,757
Mud logging.......................... -- 42,239
Labour tax and government fees....... 35,842 23,573
Other oil related services........... -- 22,285
Sundry expenses...................... 15,665 18,692
----------------- --------------
2,733,769 6,117,586
================= ==============

*Restated -- See Note 16

F-125

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

13. OTHER INCOME:

PERIOD FROM
APRIL 1, 1994 TO YEAR ENDED
DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
Interest received....................... 132,321 196,635
Exchange gain........................... 3,541 5,327
Sponsorship fee received................ 4,372 8,083
Miscellaneous (rental, sale of scrap,
etc.)................................. 16,398 19,511
Vocational training levy no longer
required.............................. -- 32,041
----------------- --------------
156,632 261,597
================= ==============

14. CASH AND CASH EQUIVALENTS:

DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
Cash on hand and at banks............... 18,351 47,565
Fixed deposits.......................... 3,719,168 3,247,926
Current account overdrawn............... -- (1,706)
----------------- --------------
3,737,519 3,293,785
================= ==============

Fixed deposits have original maturities ranging from one month to one year.
However, each deposit is available for withdrawal on demand at its carrying
amount before maturity without penalty.

15. COMMITMENTS AND CONTINGENCIES:

DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
Performance bond for major customer..... 385,000 385,000
Guarantees for suppliers................ 11,000 28,672

Prior to April 1, 1993, the Company established a warranty liability of RO
840,830 in regard to several wells to be drilled under a turnkey drilling
contract. The warranty required the Company to redrill any wells identified
under the contract in the event the well was not successfully completed, or
failed up to six months after drilling ceased. The Company determined that the
accrual was necessary because unsuccessful completion or failure of some of the
wells was then deemed probable and the cost was estimable. During the year ended
March 31, 1994, the warranty period expired without incidence of unsuccessful
completion or failure and the warranty liability was reversed.

F-126

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

16. RESTATEMENTS:

National Drilling and Services Co. LLC has restated its previously reported
amounts in order to change its depreciation expense on drilling rigs in periods
prior to March 31, 1994 on a basis of an eight year life instead of a three year
life, and to record deferred income taxes arising from book/tax depreciation
differences. The change in useful life is being made to more accurately reflect
the drilling rigs estimated economic lives and to be more consistent with other
Oman based drilling companies. In addition, the loss on disposal of drilling Rig
III of RO 245,000 has been reflected in December 1994 instead of March 1995
since such loss was determinable at the earlier date -- See Note 5. As a result
of these changes, certain previously reported amounts have been restated as
follows:

DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
OTHER ASSETS:
As previously reported............... 32,000 32,000
As restated.......................... 87,000 32,000
NET FIXED ASSETS:
As previously reported............... 2,284,602 3,258,099
As restated.......................... 6,063,508 7,337,303
DEFERRED TAXATION LIABILITY:
As previously reported............... -- 3,883
As restated.......................... 954,646 954,529
LEGAL RESERVE:
As previously reported............... 112,212 92,752
As restated.......................... 437,005 432,474
RETAINED EARNINGS:
As previously reported............... 272,231 113,686
As restated.......................... 2,836,698 2,902,522

F-127

NATIONAL DRILLING AND SERVICES CO. LLC
MUSCAT -- SULTANATE OF OMAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

16. RESTATEMENTS: (CONTINUED)

PERIOD FROM
APRIL 1, 1994 TO YEAR ENDED
DECEMBER 31, 1994 MARCH 31, 1994
----------------- --------------
RO RO
DEPRECIATION EXPENSE:
As previously reported............... 977,720 3,158,366
As restated.......................... 977,720 1,235,463
OPERATING EXPENSES:
As previously reported............... 2,733,769 8,040,489
As restated.......................... 2,733,769 6,117,586
LOSS ON DISPOSAL OF FIXED ASSETS:
As previously reported............... 320 472
As restated.......................... 245,618 472
PROFIT BEFORE TAXATION:
As previously reported............... 294,605 840,830
As restated.......................... 49,307 2,812,667
PROVISION FOR INCOME TAX:
As previously reported............... -- 3,883
As restated.......................... 4,000 685,000
NET PROFIT FOR THE YEAR/PERIOD:
As previously reported............... 294,605 885,881
As restated.......................... 45,307 2,127,667

F-128

APPENDIX A
PURCHASE AGREEMENT
AMONG

PRIDE PETROLEUM SERVICES, INC.,
FORASOL-FORAMER N.V.

AND

THE CONTROLLING SHAREHOLDERS OF FORASOL-FORAMER N.V.
DATED AS OF DECEMBER 16, 1996

TABLE OF CONTENTS

Page

ARTICLE I

PURCHASE AND SALE....................................................A-2
1.1 Preliminary Matters; Ownership of the Forasol Companies......A-2
1.2 Transfer of Purchased Shares.................................A-2
1.3 Consideration................................................A-2
1.4 Other Payments by Pride......................................A-3
1.5 Closing......................................................A-3
1.6 Distribution of the Consideration............................A-3

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF FORASOL-FORAMER....................A-4
2.1 Organization, Standing and Power.............................A-4
2.2 Capital Structures; Ownership................................A-4
2.3 Authority; No Violations; Consents and Approvals.............A-5
2.4 SEC Documents................................................A-7
2.5 Information Supplied.........................................A-7
2.6 Unaudited Financial Statements...............................A-7
2.7 Absence of Certain Changes or Events.........................A-8
2.8 No Undisclosed Material Liabilities..........................A-8
2.9 No Default...................................................A-8
2.10 Compliance with Applicable Laws; Environmental, Health and
Safety Matters...............................................A-9
2.11 Litigation...................................................A-9
2.12 Title to Property...........................................A-10
2.13 Taxes.......................................................A-10
2.14 Pension and Benefit Plans; Other Employee Matters...........A-12
2.15 Labor Agreements............................................A-13
2.16 Intangible Property.........................................A-14
2.17 Absence of Foreign or Enemy Status; Sensitive Payments......A-15
2.18 No Material Operations in the United States.................A-15
2.19 Opinion of Financial Advisor................................A-15
2.20 Books and Records...........................................A-15
2.21 Contracts and Commitments...................................A-15
2.22 Customers and Suppliers.....................................A-16
2.23 Powers of Attorneys and Suretyships.........................A-16
2.24 Vote Required...............................................A-17
2.25 Beneficial Ownership of Pride Common Stock..................A-17
2.26 Insurance...................................................A-17
2.27 Brokers.....................................................A-17
2.28 Disclosure..................................................A-17

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE FORASOL CONTROLLING
SHAREHOLDERS........................................................A-17

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PRIDE.............................A-18
4.1 Organization, Standing and Power............................A-18
4.2 Capital Structure; Ownership................................A-18
4.3 Authority; No Violations; Consents and Approvals............A-19
4.4 SEC Documents...............................................A-20
4.5 Information Supplied........................................A-20
4.6 Absence of Certain Changes or Events........................A-21
4.7 No Undisclosed Material Liabilities.........................A-21
4.8 No Default..................................................A-21
4.9 Compliance with Applicable Laws; Environmental, Health and
Safety Matters..............................................A-21
4.10 Litigation..................................................A-22
4.11 Title to Property...........................................A-22
4.12 Taxes.......................................................A-22
4.13 Pension and Benefit Plans; Other Employee Matters...........A-23
4.14 Labor Agreements............................................A-25
4.15 Intangible Property.........................................A-25
4.16 Sensitive Payments..........................................A-26
4.17 Opinion of Financial Advisor................................A-26
4.18 Books and Records...........................................A-26
4.19 Contracts and Commitments...................................A-26
4.20 Customers and Suppliers.....................................A-27
4.21 Powers of Attorneys and Suretyships.........................A-27
4.22 Vote Required...............................................A-27
4.23 Beneficial Ownership of Forasol Common Shares...............A-27
4.24 Insurance...................................................A-27
4.25 Brokers.....................................................A-27
4.26 Financing...................................................A-28
4.27 Disclosure..................................................A-28

ARTICLE V

CONDUCT OF BUSINESSES PENDING THE CLOSING...........................A-28
5.1 Conduct of Business by Forasol-Foramer and Pride............A-28
5.2 No Solicitation.............................................A-30

ARTICLE VI ADDITIONAL AGREEMENTS.......................................A-31
6.1 S-4 Registration Statement; Special Shareholders' Meetings..A-31
6.2 Approval by Forasol Controlling Shareholders................A-32
6.3 Access to Information.......................................A-32
6.4 Legal Conditions............................................A-32
6.5 Agreements of Others; Registration Rights...................A-33
6.6 Authorization for Listing...................................A-33

6.7 Employee Matters............................................A-33
6.8 Stock Options...............................................A-34
6.9 Composition of Pride Board and Certain Related Agreements...A-35
6.10 Executive Management Committee of Pride; Certain
Executive Officers..........................................A-36
6.11 Executive Office of Forasol S.A.............................A-36
6.12 Use of Name.................................................A-36
6.13 Liquidation and Dissolution.................................A-37
6.14 Liquidation and Dissolution Expenses........................A-37
6.15 Agreement to Defend.........................................A-37
6.16 Public Announcements........................................A-37
6.17 Other Actions...............................................A-37
6.18 Advice of Changes; SEC Filings..............................A-37
6.19 Section 338 Election. .....................................A-37
6.20 Indemnification by Pride....................................A-38
6.21 Maintenance of the F-F Subsidiary...........................A-38

ARTICLE VII

CONDITIONS PRECEDENT................................................A-39
7.1 Conditions to Each Party's Obligations......................A-39
(a) Forasol Shareholder Approval............................A-39
(b) Pride Shareholder Approval..............................A-39
(c) Nasdaq National Market Listing..........................A-39
(d) Other Approvals.........................................A-39
(e) S-4.....................................................A-39
(f) No Injunctions or Restraints............................A-39
7.2 Conditions to Obligations of Pride..........................A-40
(a) Representations and Warranties..........................A-40
(b) Performance of Obligations..............................A-40
(c) Letters from Rule 145 Affiliates........................A-40
7.3 Conditions to Obligations of the Sellers....................A-40
(a) Representations and Warranties..........................A-40
(b) Performance of Obligations..............................A-40

ARTICLE VIII

TERMINATION AND AMENDMENT...........................................A-41
8.1 Termination.................................................A-41
8.2 Effect of Termination.......................................A-42
8.3 Amendment...................................................A-43
8.4 Extension; Waiver...........................................A-43

ARTICLE IX

GENERAL PROVISIONS..................................................A-43
9.1 Payment of Expenses.........................................A-43
9.2 Nonsurvival of Representations and Warranties;
Survival of Covenants.......................................A-43
9.3 Notices.....................................................A-43
9.4 Interpretation..............................................A-46
9.5 Counterparts................................................A-46

iii

9.6 Entire Agreement; No Third-Party Beneficiaries..............A-46
9.7 Governing Law...............................................A-46
9.8 Arbitration. ...............................................A-46
9.9 No Remedy in Certain Circumstances..........................A-46
9.10 Assignment..................................................A-47
9.11 Schedules...................................................A-47

EXHIBIT A Registration Rights Agreement

GLOSSARY OF DEFINED TERMS

DEFINED TERM DEFINED IN SECTION
- ------------ ------------------
Acquisition Proposal.......................................... 5.2(d)
Affiliate..................................................... 2.4
Agreement..................................................... Preamble
AVH Group..................................................... 6.9(a)
Cash Consideration............................................ 1.2
Cause......................................................... 6.8(a)
Change of Control Value....................................... 6.8(c)
Closing....................................................... 1.5
Closing Date.................................................. 1.5
Code.......................................................... 2.13(j)
Consideration................................................. 1.3
Contaminant................................................... 2.11
Corporate Transaction Taxes................................... 8.1(d)
Designating Shareholder....................................... 6.9(b)
Distribution Agent............................................ 1.3
Exchange Act.................................................. 2.3(c)
F-F Subsidiary................................................ Recitals
Forasol Benefit Plans......................................... 2.14(a)
Forasol Common Shares......................................... 1.2
Forasol Companies............................................. Recitals
Forasol-Foramer............................................... Preamble
Forasol Intangible Property................................... 2.16
Forasol Interim Financial Statements.......................... 2.6
Forasol Litigation............................................ 2.11
Forasol LTIP.................................................. 2.2
Forasol Permits............................................... 2.10
Forasol Representatives....................................... 5.2(a)
Forasol SEC Documents......................................... 2.4
Forasol Controlling Shareholders.............................. Preamble
Forasol S.A................................................... Recitals
Forasol Shareholders' Meeting................................. 6.1
Forasol Stock Option.......................................... 6.8(a)
Forasol Vote Matter........................................... 2.3(a)
Forinter Ltd.................................................. Recitals
GAAP.......................................................... 2.4
Governmental Entity........................................... 2.3(c)
Indemnified Party............................................. 6.20
Injunction.................................................... 7.1 f)
Liens......................................................... 2.2
Material Contract............................................. 2.21
Permitted Encumbrances........................................ 2.12
Pride......................................................... Preamble

DEFINED TERM DEFINED IN SECTION
- ------------ ------------------
Pride Benefit Plans........................................... 4.13(a)
Pride Common Stock............................................ 1.2
Pride Intangible Property..................................... 4.15
Pride Litigation.............................................. 4.10
Pride Permits................................................. 4.9
Pride Preferred Stock......................................... 4.2
Pride SEC Documents........................................... 4.4
Pride Shareholders' Meeting................................... 6.1
Pride Vote Matter............................................. 4.3(a)
Purchased Shares.............................................. 1.1
Returns....................................................... 2.13(a)
Rule 145 Affiliates........................................... 6.5
S-4........................................................... 2.5
SEC........................................................... 2.3(c)
Securities Act................................................ 2.4
Sellers....................................................... Preamble
Shares........................................................ Recitals
Soletanche Group.............................................. 6.9
Stock Consideration........................................... 1.2
Subsidiary.................................................... 1.3
Taxes......................................................... 2.13

PURCHASE AGREEMENT

PURCHASE AGREEMENT, dated as of December 16, 1996 (this
"Agreement"), by and among PRIDE PETROLEUM SERVICES, INC., a Louisiana
corporation ("Pride"); FORASOL-FORAMER N.V., a Dutch public limited liability
company ("Forasol-Foramer"); and THE SHAREHOLDERS OF FORASOL-FORAMER IDENTIFIED
ON THE SIGNATURE PAGE HERETO (collectively, the "Forasol Controlling
Shareholders" and, together with Forasol-Foramer, the "Sellers").

WHEREAS, Forasol-Foramer is a holding company that owns or controls
substantially all of the issued and outstanding shares of capital stock of
Forasol S.A., a French company ("Forasol S.A."), Forinter Limited, a Jersey,
Channel Islands company ("Forinter Ltd."), and International Drilling Management
B.V., a Dutch closed limited liability company (collectively, the "Forasol
Companies");

WHEREAS, the Forasol Companies, directly and through Subsidiaries
(as defined in Section 1.3) and other affiliates, are engaged in providing
drilling, workover and related services to oil and gas companies worldwide;

WHEREAS, it is Forasol-Foramer's intention to organize a new, wholly
owned subsidiary as a Dutch closed limited liability company (the "F-F
Subsidiary") and to transfer or cause to be transferred to the F-F Subsidiary
all or substantially all of its assets, including without limitation all of its
record and beneficial ownership in the outstanding capital stock of the Forasol
Companies, and to cause the F-F Subsidiary to assume all of its liabilities;

WHEREAS, the Forasol Controlling Shareholders as a group own,
beneficially and of record, approximately 60% of the outstanding Forasol Common
Shares (as defined in Section 1.3);

WHEREAS, Pride desires to purchase the F-F Subsidiary from
Forasol-Foramer after all of the assets of Forasol-Foramer have been contributed
to, and all of the liabilities of Forasol-Foramer have been assumed by, the F-F
Subsidiary and Forasol-Foramer has agreed to sell, and the Forasol Controlling
Shareholders have agreed to cause Forasol-Foramer to sell, the F-F Subsidiary to
Pride upon the terms and subject to the conditions of this Agreement;

WHEREAS, the Sellers have further agreed that, upon consummation of
the sale of the F-F Subsidiary to Pride, they will promptly cause
Forasol-Foramer to distribute to its shareholders all of the Consideration (as
defined in Section 1.3) paid by Pride for the F-F Subsidiary, subject to the
withholding of any applicable Taxes (as defined in Section 2.13);

WHEREAS, in furtherance of the foregoing, the governing board of
each of the parties to this Agreement has approved this Agreement and the
transactions contemplated hereby; and

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WHEREAS, each of the parties to this Agreement desires to make
certain representations, warranties, covenants and agreements in connection with
the transactions provided for herein and also to prescribe various conditions to
such transactions;

NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE

1.1 PRELIMINARY MATTERS; OWNERSHIP OF THE FORASOL COMPANIES. Each of
the Forasol Companies is presently a first-tier, directly owned Subsidiary of
Forasol-Foramer. Prior to the Closing (as defined in Section 1.5)
Forasol-Foramer will restructure the ownership of the Forasol Companies so that
the Forasol Companies will become directly owned by the F-F Subsidiary. Upon its
organization or as soon thereafter as permitted by applicable law, the F-F
Subsidiary shall have the corporate name "Forasub B.V." At the Closing, Pride
will purchase from Forasol-Foramer all of the issued and outstanding shares of
capital stock of the F-F Subsidiary (the "Purchased Shares"). It is agreed and
understood that at the Closing, the F-F Subsidiary and its Subsidiaries will
represent and account for substantially all of the consolidated financial
position, business and operations of Forasol-Foramer.

1.2 TRANSFER OF PURCHASED SHARES. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Forasol-Foramer will sell and
transfer to Pride the Purchased Shares by executing and delivering such
instruments of transfer and by taking such other actions as counsel to Pride
shall reasonably request, against receipt of the Consideration (as defined in
Section 1.3). The Purchased Shares transferred to Pride shall include all
corporate and financial rights pertaining thereto. If any outstanding shares of
capital stock of any of the Forasol Companies are owned, beneficially or of
record, by any person or persons other than the F-F Subsidiary, then
Forasol-Foramer shall, if requested by Pride, use all reasonable efforts to have
such shares transferred to the F-F Subsidiary or to one or more other persons
designated by Pride at no cost or expense to Pride.

1.3 CONSIDERATION. Upon the terms and subject to the conditions of
this Agreement, Pride will purchase the Purchased Shares for (a) an amount in
cash (the "Cash Consideration") equal to U.S.$6.80 multiplied by the number of
common shares, NLG .01 par value per share, of Forasol-Foramer ("Forasol Common
Shares") issued and outstanding as of the close of business on the Distribution
Record Date (as defined in Section 1.6) and (b) a number of shares of common
stock ("Pride Common Stock"), no par value, of Pride (the "Stock Consideration")
equal to 0.66 multiplied by the number of Forasol Common Shares issued and
outstanding as of the close of business on the Distribution Record Date. Pride
shall deposit or cause to be deposited with a liquidator duly appointed by
Forasol-Foramer (the "Distribution Agent") cash equal to the total aggregate
Cash Consideration and certificates representing the shares of Pride Common
Stock equal to the total aggregate Stock Consideration, which shall be
distributed by the Distribution Agent,

A-2

subject to the withholding of any applicable Taxes, pursuant to irrevocable
instructions delivered by Forasol-Foramer at or prior to the Closing. The Cash
Consideration and the Stock Consideration are collectively referred to herein as
the "Consideration". As used in this Agreement, the word "Subsidiary" means,
with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any other Subsidiary
of such party is a general partner or exercises or has the right to exercise
control or (ii) at least a majority of the securities or other interests having
by their terms ordinary voting power to vote in the election of the governing
board or others performing similar functions with respect to such corporation or
other organization that is, directly or indirectly, owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and any one or
more of its Subsidiaries. In the case of Forasol-Foramer, the term "Subsidiary"
shall be deemed to include the Forasol Companies and, as of the Closing, the F-F
Subsidiary unless the context otherwise requires.

1.4 OTHER PAYMENTS BY PRIDE. In addition to the purchase and sale of
the Purchased Shares for the Consideration, at the Closing, subject to the
provisions of Section 6.14, Pride will assume or cause the F-F Subsidiary to
assume the costs and liabilities reasonably and necessarily incurred by
Forasol-Foramer to wind up its affairs and liquidate itself and otherwise to
perform its obligations hereunder. Pride will deliver or cause to be delivered
prior to the adoption of the Forasol Vote Matter such instruments of assumption
pursuant to this Section 1.4 as shall be requested and approved by counsel to
Forasol-Foramer.

1.5 CLOSING. The closing of the purchase and sale of the Purchased
Shares and of the transactions provided for in Section 1.4 (the "Closing") shall
take place at 9:00 a.m., local time at the location of the Closing, on a date to
be specified by the parties, which shall be no later than the fifth business day
after satisfaction (or waiver in accordance with this Agreement) of the latest
to occur of the conditions set forth in Article VII (the "Closing Date"), at the
offices of the Distribution Agent and at such other locations as shall be
legally required, unless another date or place is agreed to in writing by the
parties.

1.6 DISTRIBUTION OF THE CONSIDERATION. As soon as practicable
following the Closing and in any event not later than the close of business on
the fifth business day thereafter, the Sellers will cause the Distribution Agent
to distribute the Consideration to the shareholders of Forasol-Foramer so that
such shareholders, of record as of the close of business on the date of the
Forasol Shareholders' Meeting (as defined in Section 6.1) or on such later date
which is not more than five business days prior to the Closing Date as
Forasol-Foramer shall designate in a notice to its shareholders provided in
accordance with applicable Dutch law and the rules and regulations of the Nasdaq
National Market System (the "Distribution Record Date"), will receive, subject
to the withholding of any applicable Taxes, cash in the amount of U.S. $6.80 and
0.66 shares of Pride Common Stock for each of the Forasol Common Shares held by
them as of such Distribution Record Date; provided, however, that no fractional
shares of Pride Common Stock shall be so distributable and Forasol-Foramer shall
make, and shall cause the Distribution Agent to make, such adjustments with
respect to any fractional shares of Pride Common Stock otherwise distributable
as it may deem to be fair and equitable and as otherwise may be required by
applicable law or regulations.

A-3

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF FORASOL-FORAMER

Forasol-Foramer represents and warrants to Pride as follows:

2.1 ORGANIZATION, STANDING AND POWER. Each of Forasol-Foramer and
its Subsidiaries, including without limitation the Forasol Companies and, as of
the Closing Date, the F-F Subsidiary, is a corporation, partnership, joint
venture or other business entity duly organized, validly existing and in good
standing (with all required filings and registrations with relevant authorities
having been duly made) under the laws of the jurisdiction of its incorporation
or organization, has all requisite power and authority to own, lease and operate
its properties and other assets and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the business it is conducting, or the operation, ownership
or leasing of its properties and other assets makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not materially and adversely affect the business or financial condition of
Forasol-Foramer and its Subsidiaries on a consolidated basis. All of the
Subsidiaries of Forasol-Foramer are identified on Schedule 2.1, which also
identifies the respective jurisdictions of incorporation or organization
thereof. Except as set forth on Schedule 2.1, Forasol-Foramer does not own or
control, directly or indirectly, any interest in any business entity, and no
part of the assets or business of Forasol-Foramer or any of the Subsidiaries of
Forasol-Foramer is owned or operated by or through any entity other than those
business entities identified on Schedule 2.1. Schedule 2.1 also sets forth an
accurate summary of the principal place or places of business of, and the major
assets held by, each of the Subsidiaries of Forasol-Foramer. Forasol-Foramer is
a holding company that does not conduct any business operations or own or lease
any assets or properties (other than the capital stocks of the Forasol
Companies, cash, receivables and intercompany loans, all of which will be
transferred to the F-F Subsidiary pursuant to Section 1.1) except through the
Forasol Companies and the other Subsidiaries of Forasol-Foramer. All interests
in the Subsidiaries of Forasol-Foramer, other than its interests in the Forasol
Companies, are owned by Forasol-Foramer through the Forasol Companies.

2.2 CAPITAL STRUCTURES; OWNERSHIP. The authorized capital stock of
Forasol-Foramer consists of 50,000,000 Forasol Common Shares, of which (a)
16,650,290 are issued and outstanding, (b) 462,000 are reserved for issuance
upon exercise of stock options granted pursuant to Forasol-Foramer's 1996
Long-Term Incentive Plan (the "Forasol LTIP") and (c) none are held by
Forasol-Foramer in its treasury. All outstanding Forasol Common Shares are
validly issued, fully paid and nonassessable and were not issued in violation of
any preemptive rights. On the Closing Date, all outstanding Purchased Shares
will be validly issued, fully paid and nonassessable, will not have been issued
in violation of any preemptive right, and will be owned by Forasol-Foramer, free
and clear of all Liens (as hereinafter defined). The authorized and outstanding
capital stock of each of the Forasol Companies and the names and addresses of
the record owners thereof are set forth on Schedule 2.2. Except as set forth on
Schedule 2.2, all of the shares of such capital stock outstanding are validly
issued, fully paid and nonassessable, were not issued in violation of any
preemptive rights

A-4

and are owned by Forasol-Foramer, free and clear of all Liens. All outstanding
shares of the capital stock of the other Subsidiaries of Forasol-Foramer are
validly issued, fully paid and nonassessable, were not issued in violation of
any preemptive rights, and except as set forth on Schedule 2.2, are owned by
Forasol S.A. or Forinter Ltd., or a direct or indirect wholly owned Subsidiary
of Forasol S.A. or Forinter Ltd., respectively, free and clear of all Liens. For
purposes of this Agreement, "Liens" shall mean all mortgages, deeds of trust,
liens, security interests, pledges, rights of use, encroachments, claims, rights
of first refusal, options, charges, liabilities, easements, limitations,
reservations, restrictions, rights of usufruct and other encumbrances of any
kind. Except as set forth in this Section 2.2 or on Schedule 2.2, there are
outstanding (i) no shares of capital stock, depositary receipts or other equity
securities of Forasol-Foramer or any Subsidiary of Forasol-Foramer; (ii) no
securities of Forasol-Foramer or any Subsidiary of Forasol-Foramer convertible
into or exchangeable for shares of capital stock, depository receipts or other
equity securities of Forasol-Foramer or any Subsidiary of Forasol-Foramer; and
(iii) no options, warrants, calls, rights (including preemptive rights, rights
of first refusal or other similar rights ), commitments or agreements to which
Forasol-Foramer or any Subsidiary of Forasol-Foramer is a party or by which it
is bound in any case obligating Forasol-Foramer or any Subsidiary of
Forasol-Foramer to issue, deliver, sell, purchase, redeem or acquire, or cause
to be issued, delivered, sold, purchased, redeemed or acquired, any additional
shares of capital stock, depository receipts or any other equity securities of
Forasol-Foramer or of any Subsidiary of Forasol-Foramer, or obligating
Forasol-Foramer or any Subsidiary of Forasol-Foramer to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement. Except as
provided in this Agreement, there are no shareholder agreements, voting trusts
or other agreements or understandings to which any of the Sellers is a party or
by which any of them is bound relating to the voting of any shares of the
capital stock of Forasol-Foramer that will limit in any way (i) the solicitation
of proxies by or on behalf of Forasol-Foramer from, or the casting of votes by,
the shareholders of Forasol-Foramer with respect to the Forasol Vote Matter (as
defined in Section 2.3(a)) or (ii) the validity or enforceability of the
undertakings of the Forasol Controlling Shareholders in Section 6.2. Except as
may imposed by applicable law, there are no restrictions on the ability of
Forasol-Foramer or the Forasol Companies to vote or cause to be voted the stock
of or other interest in any of their respective Subsidiaries. Schedule 2.2 sets
forth the number of Forasol Common Shares owned of record and beneficially by
each of the Forasol Controlling Shareholders and such shares, in the aggregate,
constitute not less than a majority of the issued and outstanding Forasol Common
Shares.

2.3 AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.

(a) The Boards of Supervisory Directors and the Managing Director of
Forasol-Foramer have unanimously approved this Agreement and the
transactions provided for herein and have declared this Agreement and such
transactions to be in the best interests of the shareholders of
Forasol-Foramer. Forasol-Foramer has all requisite corporate power and
authority to enter into this Agreement and, subject to approval of this
Agreement, the distribution of the Consideration pursuant to Section 1.6
and the actions to be taken pursuant to Section 6.13 (collectively, the
"Forasol Vote Matter") by the shareholders of Forasol-Foramer in
accordance with Dutch law, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation

A-5

of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Forasol-Foramer, subject only to
approval of the Forasol Vote Matter by the shareholders of Forasol-Foramer
in accordance with Dutch law. This Agreement has been duly executed and
delivered by Forasol-Foramer and, subject only to approval of the Forasol
Vote Matter by the shareholders of Forasol-Foramer in accordance with
Dutch law, constitutes a valid and binding obligation of Forasol-Foramer
enforceable in accordance with its terms (except as may be limited by
bankruptcy, insolvency or other laws of general application affecting the
enforcement of rights of creditors). This Agreement and the transactions
provided for herein have been approved by all requisite corporate action
on the part of each of the Forasol Companies and each of the other
Subsidiaries of Forasol-Foramer.

(b) Subject to the rights of Forasol-Foramer's creditors upon its
liquidation and winding up of its affairs, the execution and delivery of
this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss
of a material benefit under or prejudice, or result in the creation of any
Lien upon any of the properties or assets of Forasol-Foramer or any of its
Subsidiaries under, any provision of (i) the Articles of Association of
Forasol-Foramer or any provision of the comparable charter or
organizational documents of any of its Subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable
to Forasol-Foramer or any of its Subsidiaries or (iii) assuming the
approval of the Forasol Vote Matter by the shareholders of Forasol-Foramer
has been obtained, any judgment, order, decree, statute, law, ordinance,
rule, regulation, official consent, license or permit applicable to
Forasol-Foramer or any of its Subsidiaries or any of their respective
properties or assets. Except as set forth on Schedule 2.3(b), the
consummation of the transactions contemplated hereby will not result in
the acceleration or otherwise require the prepayment of any banking or
other indebtedness of Forasol-Foramer or of any of its Subsidiaries.

(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from (including any
renewal of or supplement to any of the foregoing) any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is
required by or with respect to Forasol-Foramer or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by
Forasol-Foramer or the consummation by Forasol-Foramer of the transactions
contemplated hereby, except for the filing with the Securities and
Exchange Commission ("SEC") of such reports under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and such other compliance
with the Exchange Act and the rules and regulations thereunder and with
applicable Dutch and French law as may be required in connection with this
Agreement and the transactions contemplated hereby.

A-6

2.4 SEC DOCUMENTS. Forasol-Foramer has delivered to Pride a true and
complete copy of each report, schedule and registration statement filed by
Forasol-Foramer with the SEC since January 1, 1996 (the "Forasol SEC
Documents"), which are all the documents that Forasol-Foramer has been required
to file with the SEC since such date. As of their respective dates, the Forasol
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Forasol SEC Documents, and none of the Forasol SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of Forasol-Foramer included in the Forasol SEC Documents
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles ("GAAP") in the United States applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with
applicable requirements of GAAP in the United States (subject, in the case of
the unaudited statements, to normal, recurring adjustments, none of which are
material) the consolidated financial position of Forasol-Foramer and its
consolidated Subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of Forasol-Foramer and its
consolidated Subsidiaries for the periods presented therein. Except as disclosed
in the Forasol SEC Documents or on Schedule 2.4, there are no material
agreements, arrangements or understandings between Forasol-Foramer and any party
who is at the date of this Agreement an Affiliate (as defined in Rule 405 under
the Securities Act) of Forasol-Foramer.

2.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Forasol-Foramer for inclusion or incorporation by reference in the
Registration Statement on Form S-4 to be filed with the SEC by Pride in
connection with the issuance of shares of Pride Common Stock pursuant to this
Agreement (the "S-4") will, at the time the S-4 becomes effective under the
Securities Act or at the Closing Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. If at any time prior
to the Closing Date any event with respect to Forasol-Foramer or any of its
Subsidiaries, or with respect to other information supplied by Forasol-Foramer
for inclusion in the S-4, shall occur which is required to be described in an
amendment of, or a supplement to, the S-4 or in the prospectus or proxy
statement included therein, such event shall be so described to Pride in writing
for inclusion in such amendment or supplement to be promptly filed by Pride with
the SEC and, as required by law, disseminated to the shareholders of
Forasol-Foramer and to the shareholders of Pride.

2.6 UNAUDITED FINANCIAL STATEMENTS. Forasol-Foramer has delivered to
Pride an unaudited consolidated balance sheet, and related unaudited
consolidated statements of income and cash flows, together with the notes
thereto, of Forasol-Foramer and its consolidated Subsidiaries as of and for the
nine-month period ended September 30, 1996 (the "Forasol Interim Financial
Statements"). The Forasol Interim Financial Statements have been prepared in
accordance with applicable requirements of GAAP in the United States and fairly
present the consolidated financial

A-7

condition of Forasol-Foramer and its consolidated Subsidiaries as of such dates
and the consolidated results of operations and cash flows for the periods then
ended, subject to normal year-end audit adjustments and any other adjustments
described therein or in the notes thereto.

2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in, or
reflected in the financial statements included in, the Forasol SEC Documents,
the Forasol Interim Financial Statements or on Schedule 2.7, or except as
contemplated by this Agreement, since September 30, 1996 there has not been (a)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of Forasol-Foramer's
capital stock; (b) any amendment of any material term of any outstanding equity
security of Forasol-Foramer or any Subsidiary of Forasol-Foramer; (c) any
repurchase, redemption or other acquisition by Forasol-Foramer or any Subsidiary
of Forasol-Foramer of any outstanding shares of capital stock or other equity
securities of, or other ownership interests in, Forasol-Foramer or any
Subsidiary of Forasol-Foramer; (d) any material change in any method of
accounting or accounting practice by Forasol-Foramer or any Subsidiary of
Forasol-Foramer; (e) any material change in the business conducted by
Forasol-Foramer or any Subsidiary of Forasol-Foramer or any change in the
financial condition, assets, liabilities, profits or business of Forasol-Foramer
or any Subsidiary of Forasol-Foramer other than changes in the ordinary course
of business; (f) any material damage to or destruction or loss of any property
or assets of Forasol-Foramer or any Subsidiary of Forasol-Foramer; (g) any
borrowing of or agreement to borrow funds by Forasol-Foramer or a Subsidiary of
Forasol-Foramer, or any termination or amendment of any evidence of
indebtedness, contract, agreement, deed, mortgage, indenture, lease, license or
other instrument, commitment or agreement to which Forasol-Foramer or any
Subsidiary of Forasol-Foramer is a party or by which Forasol-Foramer or any
Subsidiary of Forasol-Foramer or any of their respective properties are bound;
(h) any capital expenditures or series of related capital expenditures by
Forasol-Foramer and its Subsidiaries, individually and as a group, exceeding in
the aggregate U.S.$1.0 million; (i) any other transaction, commitment, dispute,
labor trouble, strike or other event or condition (financial or otherwise) of
any character (whether or not in the ordinary course of business) that are
reasonably likely to materially and adversely affect the business, operations,
assets, financial condition or results of operations of Forasol-Foramer and its
Subsidiaries on a consolidated basis, other than changes affecting the
international well servicing and contract drilling businesses generally; or (j)
any material change in the compensation paid to any director, officer or
employee of Forasol-Foramer or any of its Subsidiaries.

2.8 NO UNDISCLOSED MATERIAL LIABILITIES. Except as disclosed in the
Forasol SEC Documents, the Forasol Interim Financial Statements or on Schedule
2.8, there are no liabilities of Forasol-Foramer or any of its Subsidiaries of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, that are reasonably likely to materially and
adversely affect the business, operations, assets, financial condition or
results of operations of Forasol-Foramer and its Subsidiaries on a consolidated
basis.

2.9 NO DEFAULT. Neither Forasol-Foramer nor any of its Subsidiaries
is in default or violation (and no event has occurred that, with notice or the
lapse of time or both, would constitute a default or violation or otherwise
prejudice) of any term, condition or provision of (a)

A-8

their respective articles of incorporation or association, bylaws or equivalent
governing documents; (b) any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation to which Forasol-Foramer or any of its
Subsidiaries is a party or by which Forasol-Foramer or any of its Subsidiaries
or any of their respective properties or assets may be bound; or (c) any order,
writ, injunction, decree, statute, rule, regulation, official consent, license
or permit applicable to Forasol-Foramer or any of its Subsidiaries.

2.10 COMPLIANCE WITH APPLICABLE LAWS; ENVIRONMENTAL, HEALTH AND
SAFETY MATTERS. Forasol-Foramer and its Subsidiaries (i) hold all permits,
licenses, variances, exemptions, orders, franchises and approvals of all
Governmental Entities known by them to be necessary for the lawful conduct of
their respective businesses (the "Forasol Permits"), and (ii) are in substantial
compliance with the terms of each of the Forasol Permits. None of the Forasol
Permits will be adversely affected or amended as a result of the consummation of
the transactions provided for herein. Except as set forth on Schedule 2.10, none
of the Forasol Permits is conditional or limited in time. The businesses of
Forasol-Foramer and its Subsidiaries are being conducted in substantial
compliance with each law, ordinance and regulation of every Governmental Entity
to which they are respectively subject, except where the failure to be in
compliance would not have a material adverse effect on the business or financial
condition of Forasol-Foramer and its Subsidiaries taken as a whole.. Except as
set forth on Schedule 2.10, no investigation or review by any Governmental
Entity with respect to Forasol-Foramer or any of its Subsidiaries is pending or,
to the best knowledge of the Sellers, threatened. Without limiting the
generality of any of the foregoing and except as set forth on Schedule 2.10,
Forasol-Foramer and its Subsidiaries (a) are, and have continuously been, in
compliance with all laws, regulations and ordinances relating to environmental,
health and safety matters (including those relating to toxic and hazardous waste
and the discharge of matter into the air or water) and (b) have not caused or
permitted any Contaminant (as hereinafter defined) to be placed, held, located,
released, generated, treated, stored or disposed of except for Contaminants
stored or disposed of in substantial compliance with applicable environmental
laws as necessary for the conduct of their respective businesses. Neither
Forasol-Foramer nor any of its Subsidiaries has received any notice or claim
that any of such parties has been or may be liable to any person as a result of
any Contaminant having been generated, treated, stored, discharged, emitted,
released or transported by any of them. For purposes of this Agreement, a
"Contaminant" is any waste, pollutant, hazardous substance, toxic substance,
hazardous waste, special waste, petroleum-based substance or waste, product or
by-product or any constituent of any said substance, waste or product, whether
solid, liquid or gaseous in form.

2.11 LITIGATION. Except as disclosed in, or reflected in the
financial statements included in, the Forasol SEC Documents, the Forasol Interim
Financial Statements or on Schedule 2.11 and except for claims arising in the
ordinary course of business which are covered by insurance, there is no suit,
action, arbitration, administrative hearing, petition for bankruptcy (or
equivalent) or suspension of payments, or other proceeding pending or, to the
knowledge of the Forasol-Foramer, threatened against or affecting
Forasol-Foramer or any of its Subsidiaries, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Forasol-Foramer or any of its Subsidiaries.

A-9

2.12 TITLE TO PROPERTY. Forasol-Foramer and its Subsidiaries have
good and defensible title to all their properties and assets reflected on the
consolidated balance sheet as of September 30, 1996 included in the Forasol
Interim Financial Statements, free and clear of all Liens except (a) as
disclosed in the Forasol SEC Documents, the notes to the Forasol Interim
Financial Statements or in Schedule 2.12, (b) for sales and dispositions in the
normal course of business since September 30, 1996 and (c) for Permitted
Encumbrances. "Permitted Encumbrances" means (i) Liens for current taxes and
assessments not yet due and payable, including without limitation Liens for
nondelinquent ad valorem taxes and nondelinquent statutory Liens arising other
than by reason of any default on the part of Forasol-Foramer or any of its
Subsidiaries or Pride or any of its Subsidiaries, as the case may be, and (ii)
such Liens on assets and properties that do not materially detract from the
value thereof or interfere with the present use of the property subject thereto.

2.13 TAXES.

(a) Except as set forth on Schedule 2.13(a), each of
Forasol-Foramer, each of its Subsidiaries and any affiliated, combined or
unitary group of which Forasol-Foramer or any of its Subsidiaries is or
was a member has (i) timely filed all returns, declarations, reports,
estimates, information returns and statements ("Returns") required to be
filed or sent by or with respect to it in respect of any Taxes (as
hereinafter defined); (ii) timely paid all Taxes due and payable, whether
or not shown on any Return (except for audit adjustments not material in
the aggregate or to the extent that liability therefor is reserved for in
the Forasol Interim Financial Statements), for which Forasol-Foramer or
any of its Subsidiaries may be liable; (iii) established reserves that are
adequate for the payment of all Taxes not yet due and payable; and (iv)
complied with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes and timely withheld from employee wages
and any other payments subject to withholding and paid over to the proper
authorities all amounts required to be so withheld and paid over.

(b) Except to the extent being contested in good faith, all
deficiencies asserted as a result of any examination by any applicable
taxing authority have been paid, fully settled or adequately provided for
in the Forasol Interim Financial Statements. Except as set forth on
Schedule 2.13(b) or as adequately reserved for in the Forasol Interim
Financial Statements, no Tax audits or other administrative proceedings or
court proceedings are presently pending with regard to any Taxes for which
Forasol-Foramer or any of its Subsidiaries would be liable, and no
material deficiency for any such Taxes has been proposed, asserted or
assessed pursuant to such examination against Forasol-Foramer or any of
its Subsidiaries by any authority with respect to any period. There is no
outstanding claim by any taxing authority in any jurisdiction in which
Forasol-Foramer and its Subsidiaries do not file Returns that
Forasol-Foramer or any of its Subsidiaries is or may be subject to Taxes
imposed by that jurisdiction. There are no Liens on any assets of
Forasol-Foramer or any of its Subsidiaries that arose in connection with
any failure or alleged failure to pay any Tax.

(c) Except as disclosed on Schedule 2.13(c), neither Forasol-Foramer
nor any of its Subsidiaries has executed or entered into with any taxing
authority any agreement or other

A-10

document extending or having the effect of extending the period for
assessments or collection of any Taxes for which Forasol-Foramer or any of
its Subsidiaries would be liable.

(d) Except as set forth in the Forasol SEC Documents or as disclosed
on Schedule 2.13(d), neither Forasol-Foramer nor any of its Subsidiaries
is a party to, is bound by or has any obligation under, any Tax sharing
agreement or similar agreement or arrangement.

(e) Schedule 2.13(e) discloses all Tax elections made or availed of
by Forasol-Foramer and its Subsidiaries which are material to any of
their respective businesses. To the knowledge of Forasol-Foramer, such Tax
elections were properly and timely filed and are valid and subsisting.

(f) Except as disclosed on Schedule 2.13(f), neither Forasol-Foramer
nor any of its Subsidiaries has formed a tax group in France or, if such a
tax group exists, it may be terminated without the imposition of any Tax
on Forasol-Foramer or any of its Subsidiaries.

(g) Except as disclosed on Schedule 2.13(g), neither Forasol-Foramer
nor any of its Subsidiaries enjoys beneficial treatment in France with
respect to Taxes which could be materially and adversely modified or
terminated as a consequence of the change of control that will occur upon
consummation of the transactions provided for herein or which is subject
to conditions which could be materially and adversely affected by
consummation of the transactions provided for herein.

(h) The most recent PRECOMPTE returns (Form 2750) filed by
Forasol-Foramer or any of its Subsidiaries, copies of which have been
furnished to Pride, accurately reflect the amount of dividends payable by
Forasol-Foramer or such Subsidiary of Forasol-Foramer without any
liability, as of the date such return was filed, for PRECOMPTE Taxes.

(i) Except as disclosed on Schedule 2.13(i), consummation of the
transactions provided for or contemplated by this Agreement will not cause
any Tax to become payable by Forasol-Foramer, any of the Forasol Companies
or any other Subsidiary of Forasol-Foramer in any jurisdiction.

(j) Except as disclosed in Schedule 2.13(j), neither Forasol-Foramer
nor any of its Subsidiaries (other than a Subsidiary which is a
corporation created or organized in the United States or under the laws of
the United States or of any state of the United States) (i) has ever been
engaged in the conduct of a trade or business within the United States for
U.S. federal income tax purposes, (ii) has ever been treated as having a
permanent establishment or other office or fixed place of business in the
United States for U.S. federal income tax purposes, (iii) is entitled to
receive or has previously received any income which is treated as
effectively connected with the conduct of a trade or business within the
United States within the meaning of Section 871(b) or Section 882(b)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), (iv) owns or
has ever owned any United States real property interest within the meaning
of Section 897(c)(1) of the Code, or (v) is or ever has been a

A-11

controlled foreign corporation within the meaning of section 957 of the
Code, a passive foreign investment company within the meaning of Section
1296 of the Code, or a foreign personal holding company within the meaning
of Section 552 of the Code.

(k) Forasol-Foramer and each of the Forasol Companies has such
characteristics as to cause it to be classified as an association within
the meaning of Section 7701(a)(3) of the Code. There is no indebtedness or
any other interest in any of the Forasol Companies which Pride will not
acquire, directly or indirectly, as a result of the transactions
contemplated by this Agreement and which Pride would be required to
acquire in order to acquire an amount of stock of each of the Forasol
Companies meeting the requirements of Section 338(d)(3) and Section
1504(a)(2) of the Code.

(l) Forasol-Foramer and its Subsidiaries have adequate and
sufficient records and accounts as required for tax purposes by each of
the respective jurisdictions in which they are organized or conduct their
businesses and none of them has received any formal notice from any
Governmental Entity or taxing authority challenging or questioning the
adequacy or sufficiency of such records or accounts.

For purposes of this Agreement, "Taxes" shall mean any federal,
provincial, state, county, local or foreign taxes, including, without
limitation, all net income, gross income, corporate income, disinvestment,
sales, use, value-added, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment, payroll, social
security, fringe benefit, pension, employee severance, license, stamp duties,
custom and excise duties or withholding taxes imposed by any Governmental
Entity, and includes any interest and penalties (civil or criminal) on or
additions to any such taxes.

2.14 PENSION AND BENEFIT PLANS; OTHER EMPLOYEE MATTERS.

(a) Forasol-Foramer and its Subsidiaries have made all material
filings with Governmental Entities as required by applicable law with
respect to reports, documents and notices regarding social security,
employee benefit plans, employee pension plans, employee compensation and
benefit arrangements or payroll practices, including, without limitation,
severance pay, sick leave, vacation pay, salary continuation for
disability, consulting or other compensation agreements, retirement,
deferred compensation, bonus, long-term incentive, stock option, stock
purchase, hospitalization, medical insurance, life insurance and
scholarship programs, that are maintained by Forasol-Foramer or any of its
Subsidiaries or to which Forasol-Foramer or any of its Subsidiaries
contributed or is obligated to contribute (collectively, the "Forasol
Benefit Plans"), and have furnished such documents as are required by
applicable law to the participants or beneficiaries of the Forasol Benefit
Plans. Schedule 2.14(a) sets forth an accurate description of each of the
Forasol Benefit Plans.

(b) The Forasol Benefit Plans have been funded and maintained in
accordance with their terms and with all provisions of applicable law and
all contributions due and

A-12

payable by Forasol-Foramer and its Subsidiaries in respect of the Forasol
Benefit Plans have been duly and punctually paid.

(c) Except as disclosed on Schedule 2.14(c) or as otherwise
expressly provided for in this Agreement, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment becoming due to any
employee or group of employees of Forasol-Foramer or any of its
Subsidiaries; (ii) increase any benefits otherwise payable under any
Forasol Benefit Plan; or (iii) result in the acceleration of the time of
payment or vesting of any such benefits. Except as disclosed on Schedule
2.14(c), there are no severance, employment or service agreements between
Forasol-Foramer or any of its Subsidiaries and any employee of
Forasol-Foramer or such Subsidiary. True and correct copies of any such
severance, employment or service agreements and of any other documents
governing matters disclosed on Schedule 2.14(c) have been provided to
Pride. Neither Forasol-Foramer nor any of its Subsidiaries has any
consulting agreement or arrangement with any person involving actual or
potential compensation in excess of U.S. $10,000 per month or U.S.
$100,000 in the aggregate, except as is terminable upon one month's notice
or less.

(d) Except as disclosed on Schedule 2.14(d), no stock or other
security issued by Forasol-Foramer or any of its Subsidiaries forms or has
formed a material part of the assets of any Forasol Benefit Plan.

(e) Except as disclosed on Schedule 2.14(e), (i) the employment of
each employee of Forasol-Foramer and its Subsidiaries may be terminated at
any time at no cost to any of them other than costs imposed by the Forasol
Benefit Plans and by applicable French or other local laws, rules or
regulations, (ii) to the knowledge of Forasol-Foramer, no key officer of
Forasol-Foramer or any of its Subsidiaries and no group of employees of
Forasol-Foramer or any of its Subsidiaries intends to terminate his or her
employment at, prior or subsequent to the Closing, whether or not as a
result of the transactions contemplated herein, and (iii) neither
Forasol-Foramer nor any of its Subsidiaries has any direct or indirect
liability, accrued, contingent or otherwise, in respect of any severance
obligations.

(f) Schedule 2.14(f) sets forth a true and complete listing of the
name, responsibility, seniority, total annual compensation, total accrued
vacation and other benefits of each person employed by Forasol-Foramer or
any of its Subsidiaries presently receiving compensation aggregating in
excess of U.S. $100,000 per year.

2.15 LABOR AGREEMENTS. Except as disclosed on Schedule 2.15:

(a) other than as required by applicable law, neither
Forasol-Foramer nor any of its Subsidiaries is a party to any collective
bargaining agreement or other current labor agreement with any labor union
or organization, and there is no current union representation question
involving employees of Forasol-Foramer or any of its Subsidiaries, nor
does Forasol-Foramer know of any activity or proceeding of any labor
organization (or

A-13

representative thereof) or employee group (or representative thereof) to
organize any such employees;

(b) there is no unfair labor practice charge or grievance arising
out of a collective bargaining agreement or other grievance procedure
against Forasol-Foramer or any of its Subsidiaries pending or, to the
knowledge of Forasol-Foramer, threatened;

(c) there is no complaint, lawsuit or proceeding in any forum by or
on behalf of any present or former employee, any applicant for employment
or any classes of the foregoing or any Governmental Entity alleging breach
of any express or implied contract of employment, any law or regulation
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment
relationship against Forasol-Foramer or any of its Subsidiaries pending
or, to the knowledge of Forasol-Foramer, threatened;

(d) there is no strike, dispute, slowdown, work stoppage or lockout
pending or, to the knowledge of Forasol-Foramer, threatened against or
involving Forasol-Foramer or any of its Subsidiaries;

(e) Forasol-Foramer and each of its Subsidiaries are in substantial
compliance with all applicable laws and regulations respecting employment
and employment practices, terms and conditions of employment, wages, hours
of work, occupational safety and health, social security, pension and
unemployment benefits, and salary-related Taxes, in each case with respect
to temporary as well as permanent employees; and

(f) there is no proceeding, claim, suit, action or governmental
investigation pending or, to the knowledge of Forasol-Foramer, threatened
in respect to which any current or former director, officer, employee or
agent of Forasol-Foramer or any of its Subsidiaries is or may be entitled
to claim indemnification from Forasol-Foramer or any of its Subsidiaries
pursuant to their respective charters, bylaws or other organizational
documents, any indemnification agreement to which Forasol-Foramer or any
Subsidiary of Forasol-Foramer is a party or applicable law.

2.16 INTANGIBLE PROPERTY. Forasol-Foramer and its Subsidiaries
possess or have adequate rights to use all material trademarks, trade names,
patents, service marks, brand marks, brand names, computer programs, databases,
industrial designs, trade secrets and copyrights necessary for the operation of
the businesses of each of Forasol-Foramer and its Subsidiaries (collectively,
the "Forasol Intangible Property"). Except as set forth on Schedule 2.16, all of
the Forasol Intangible Property is owned by Forasol-Foramer or its Subsidiaries
free and clear of any and all Liens or claims, and neither Forasol-Foramer nor
any such Subsidiary has forfeited or otherwise relinquished any Forasol
Intangible Property. To the knowledge of Forasol-Foramer, the use of the Forasol
Intangible Property by Forasol-Foramer or its Subsidiaries does not conflict
with, infringe upon, violate or interfere with or constitute an appropriation of
any right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name,

A-14

patent, service mark, brand mark, brand name, computer program, database,
industrial design, trade secret, copyright or any pending application therefor
of any other person; there have been no claims made and neither Forasol-Foramer
nor any of its Subsidiaries has received any notice of any claim or otherwise
knows that any of the Forasol Intangible Property is invalid or conflicts with
the asserted rights of any other person or has not been used or enforced or has
been failed to be used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of any of the Forasol Intangible
Property.

2.17 ABSENCE OF FOREIGN OR ENEMY STATUS; SENSITIVE PAYMENTS. Neither
Forasol-Foramer nor any of its Subsidiaries is a "national" of a "designated
foreign country" within the definitions in the Foreign, Cuban or Iranian Assets
Control Regulations of the United States Department of Treasury or rulings
issued thereunder. The respective businesses of Forasol-Foramer and its
Subsidiaries and the results of their respective operations are not dependent
upon any practice or custom in any jurisdiction that, if engaged in or observed
by Pride and its Subsidiaries, would constitute a violation of the U.S. Foreign
Corrupt Practices Act or the laws of any jurisdiction governing the use of
corporate funds for contributions, gifts, entertainment or other expenses
related to political activity.

2.18 NO MATERIAL OPERATIONS IN THE UNITED STATES. Forasol-Foramer
and its Subsidiaries as a group do not have operations or assets in the United
States that would cause this Agreement or any of the transactions provided for
herein to be or become subject to any filing under the U.S. Hart-Scott-Rodino
Antitrust Improvements Act of 1976.

2.19 OPINION OF FINANCIAL ADVISOR. Forasol-Foramer has received the
opinion of Jefferies & Company, Inc. (a copy of which has been delivered to
Pride) to the effect that, as of the date on which the Board of Supervisory
Directors of Forasol-Foramer approved this Agreement, the Consideration to be
received by the holders of Forasol Common Shares pursuant to this Agreement is
fair from a financial point of view to such holders.

2.20 BOOKS AND RECORDS. The books, minute books, records and
accounts of Forasol-Foramer and its Subsidiaries are complete and correct in all
material respects and accurately and fairly reflect the transactions to which
each of Forasol-Foramer and its Subsidiaries is or has been a party.

2.21 CONTRACTS AND COMMITMENTS. Schedule 2.21 sets forth a complete
and accurate description of all Material Contracts (as hereinafter defined) to
which Forasol-Foramer and each of its Subsidiaries is a party. For purposes of
this Agreement, a "Material Contract" is (i) any contract or agreement relating
to providing or acquiring property (including intangible property), goods or
services or the borrowing or lending of money that is reasonably expected to
involve payments or receipts of U.S.$1.0 million or more; (ii) any contract or
agreement purporting to create a partnership, joint venture or other business
affiliation with an unrelated third party; (iii) any lease of real or personal
property that is reasonably expected to involve payments or receipts of
U.S.$250,000 during any twelve-month period; (iv) any sales representative,
foreign agent's agency or distribution agreement; (v) any technical services
agreement, management contract or similar

A-15

agreement having a term exceeding twelve months; and (vi) any contract or
agreement with any of the Forasol Controlling Shareholders. All of the Material
Contracts described on Schedule 2.21 are valid, binding and in full force and
effect, have not been amended or supplemented in any material respect, and upon
consummation of the transactions provided for herein, will be enforceable by the
Forasol Companies and their Subsidiaries in accordance with their respective
terms. To the knowledge of Forasol-Foramer, no party to any of the Material
Contracts described on Schedule 2.21 has defaulted in the performance of its
obligations thereunder, and no events have occurred that with the lapse of time
or action or inaction by any party thereto will result in any violations or
terminations thereof or any defaults thereunder. Except as described on Schedule
2.21, Forasol-Foramer and its Subsidiaries are not subject to any contract,
agreement or arrangement, written or oral, (i) that restricts the business
operations of Forasol-Foramer or any of its Subsidiaries geographically or
territorially, (ii) with any competitor of Forasol-Foramer or any of its
Subsidiaries or, to the knowledge of Forasol-Foramer, any competitor of Pride or
any of its Subsidiaries, (iii) that is not related to the normal business
operations of Forasol-Foramer and its Subsidiaries, (iv) the termination of
which is subject to the payment of a penalty or indemnity exceeding U.S.
$100,000 or more than 30 days' prior notice, (v) that is subject to cancellation
or termination upon consummation of the transactions provided for herein, (vi)
which imposes or purports to impose upon Forasol-Foramer or any of its
Subsidiaries joint and several liability with unaffiliated third parties, or
(vii) that to the knowledge of Forasol-Foramer, conflicts with or may conflict
with any applicable laws or regulations.

2.22 CUSTOMERS AND SUPPLIERS. Since September 30, 1996, there has
not been any adverse change in the relationship or course of dealing between
Forasol-Foramer or any of its Subsidiaries, on the one hand, and any of their
respective suppliers or customers, on the other hand; and Forasol-Foramer has no
reason to believe that (a) any supplier supplying products, materials or
services to Forasol-Foramer or any of its Subsidiaries intends to cease selling
such products, materials or services to any of Forasol-Foramer and its
Subsidiaries or to limit or reduce such sales to any of Forasol-Foramer and its
Subsidiaries or materially alter the terms or conditions of any such sales or
(b) any customer of any of Forasol-Foramer and its Subsidiaries intends to
terminate, limit or reduce its business relations with any of Forasol-Foramer
and its Subsidiaries. Except as set forth on Schedule 2.22, neither
Forasol-Foramer, any of its Subsidiaries, any of the Forasol Controlling
Shareholders, nor any of their respective officers or directors possesses,
directly or indirectly, any financial interest in, or is a director, officer or
employee of, any business organization that is a supplier, customer, lessor,
lessee or competitor or potential competitor of Forasol-Foramer or any of its
Subsidiaries. Ownership of less than 2% of a class of securities of a company
traded on a recognized securities exchange shall not be deemed to be a
"financial interest" for purposes of this Section 2.22.

2.23 POWERS OF ATTORNEYS AND SURETYSHIPS. Except as disclosed in
Schedule 2.23, neither Forasol-Foramer nor any of its Subsidiaries has
outstanding any general or special power of attorney (whether as grantor or
grantee thereof) or any obligation or liability (whether actual, accrued,
accruing, contingent or otherwise) as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any third
party.

A-16

2.24 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding Forasol Common Shares is the only vote of the
holders of any class or series of Forasol-Foramer capital stock necessary to
approve the Forasol Vote Matter.

2.25 BENEFICIAL OWNERSHIP OF PRIDE COMMON STOCK. As of the date
hereof, neither Forasol-Foramer nor any of its Subsidiaries "beneficially owns"
(as defined in Rule 13d-3 under the Exchange Act) any outstanding shares of
Pride Common Stock or, except as contemplated by this Agreement, has any option
or other right to acquire any shares of Pride Common Stock.

2.26 INSURANCE. Schedule 2.26 is a complete and accurate summary of
Forasol-Foramer's and each of its Subsidiaries' insurance coverages in effect as
of the date hereof. Forasol-Foramer and its Subsidiaries maintain all insurance
coverages required by law and all other insurance coverages reasonably adequate
for the operation of their respective businesses (taking into account the cost
and availability of such insurance), and the transactions contemplated hereby
will not adversely affect such coverage.

2.27 BROKERS. Except for the fees and expenses payable to Jefferies
& Company, Inc., as reflected in a written agreement (a true and correct copy of
which has been furnished to Pride), no broker, investment banker or other person
is entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any of the Sellers.

2.28 DISCLOSURE. Pride has been furnished with complete and correct
copies of all agreements, instruments and documents, together with any
amendments or supplements thereto, set forth on, or underlying a disclosure set
forth on, any schedule delivered by the Sellers pursuant to this Agreement. Each
of such schedules provided by the Sellers is complete and correct.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE FORASOL CONTROLLING SHAREHOLDERS

Each of the Forasol Controlling Shareholders, severally and not
jointly, represents and warrants to Pride that (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) it is the record and beneficial owner of
the number of Forasol Common Shares set forth opposite its name on Schedule 2.2,
(iii) it has all requisite power and authority, and has taken all necessary
corporate action, to authorize, execute and deliver this Agreement, (iv) it does
not own, either actually or constructively, within the meaning of Section 304(c)
of the Code, any shares of Pride Common Stock, and (v) and this Agreement has
been duly executed and delivered by such Forasol Controlling Shareholder and
constitutes a valid and binding obligation of such Forasol Controlling
Shareholder enforceable against it in accordance with its terms (except as may
be limited by bankruptcy, insolvency or other laws of general application
affecting the enforcement of rights of creditors).

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PRIDE

Pride represents and warrants to the Sellers as follows:

4.1 ORGANIZATION, STANDING AND POWER. Each of Pride and its
Subsidiaries is a corporation, partnership, joint venture or other business
entity duly organized, validly existing and in good standing (with all required
filings and registrations with relevant authorities having been duly made) under
the laws of its jurisdiction of incorporation or organization, has all requisite
power and authority to own, lease and operate its properties and other assets
and to carry on its business as now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the business it is
conducting, or the operation, ownership or leasing of its properties and other
assets makes such qualification necessary, except where the failure to be so
qualified or in good standing would not materially and adversely affect the
business or financial condition of Pride and its Subsidiaries on a consolidated
basis. The Subsidiaries of Pride are identified on Schedule 4.1, which also
identifies the respective jurisdictions of incorporation or organization
thereof. Except as set forth on Schedule 4.1, Pride does not own or control,
directly or indirectly, any interest in any business entity, and no part of the
assets or business of Pride or any of its Subsidiaries is owned or operated by
or through any entity other than those business entities identified on Schedule
4.1. Schedule 4.1 also sets forth an accurate summary of the principal place or
places of business of, and the major assets held by, each of the Subsidiaries of
Pride.

4.2 CAPITAL STRUCTURE; OWNERSHIP. As of the date hereof, the
authorized capital stock of Pride consists of 40,000,000 shares of Pride Common
Stock and 5,000,000 shares of preferred stock, no par value, of Pride (the
"Pride Preferred Stock"), of which (a) 28,517,656 shares of Pride Common Stock
are issued and outstanding and 9,478,579 shares of Pride Common Stock are
reserved for issuance upon (i) exercise of outstanding stock options granted
pursuant to Pride's Employee Stock Purchase Plan, Long-Term Incentive Plan and
1993 Directors' Stock Option Plan, (ii) exercise of outstanding warrants and
(iii) conversion of Pride's 6 1/4% Convertible Subordinated Debentures due 2006;
(c) 54,220 shares of Pride Common Stock are held by Pride in its treasury or by
its wholly owned Subsidiaries; and (d) no shares of Pride Preferred Stock are
issued and outstanding. All outstanding shares of Pride Common Stock are validly
issued, fully paid and nonassessable and are not subject to any preemptive
rights. Except as set forth on Schedule 4.2, all outstanding shares of capital
stock of the Subsidiaries of Pride are owned by Pride or a direct or indirect
wholly owned Subsidiary of Pride, free and clear of all Liens. Except as set
forth in this Section 4.2 or on Schedule 4.2, there are outstanding (i) no
shares of capital stock, depository receipts or other equity securities of
Pride; (ii) no securities of Pride or any Subsidiary of Pride convertible into
or exchangeable for shares of capital stock, depository receipts or other equity
securities of Pride or any Subsidiary of Pride; and (iii) no options, warrants,
calls, rights (including preemptive rights, rights of first refusal or other
similar rights), commitments or agreements to which Pride or any Subsidiary of
Pride is a party or by which it is bound in any case obligating Pride or any
Subsidiary of Pride to issue, deliver, sell, purchase, redeem or acquire, or
cause to be issued, delivered, sold, purchased, redeemed or acquired, any
additional shares of capital stock, depository

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receipts or any other equity securities of Pride or of any Subsidiary of Pride
or obligating Pride or any Subsidiary of Pride to grant, extend or enter into
any such option, warrant, call, right, commitment or agreement. There are no
shareholder agreements, voting trusts or other agreements or understandings to
which Pride is a party or by which it is bound relating to the voting of any
shares of the capital stock of Pride that will limit in any way the solicitation
of proxies by or on behalf of Pride from, or the casting of votes by, the
shareholders of Pride with respect to the Pride Vote Matter (as defined in
Section 4.3(a)). There are no restrictions on the ability of Pride to vote or
cause to be voted the stock of or other interest in any of its Subsidiaries.

4.3 AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.

(a) The Board of Directors of Pride has approved this Agreement and
the transactions provided for herein with no negative vote, and has
declared this Agreement and such transactions to be in the best interests
of the shareholders of Pride. Pride has all requisite corporate power and
authority to enter into this Agreement and, subject to the authorization
of the shares of Pride Common Stock issuable pursuant to this Agreement
and the transactions contemplated hereby (the "Pride Vote Matter") by the
shareholders of Pride in accordance with Louisiana law, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Pride, subject only to approval of the Pride Vote Matter by the
shareholders of Pride in accordance with Louisiana law. This Agreement has
been duly executed and delivered by Pride and, subject only to approval of
the Pride Vote Matter by the shareholders of Pride in accordance with
Louisiana law, constitutes a valid and binding obligation of Pride
enforceable in accordance with its terms (except as may be limited by
bankruptcy, insolvency or other laws of general application affecting the
enforcement of rights of creditors).

(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with
the provisions hereof will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under or prejudice, or
result in the creation of any Lien upon any of the properties or assets of
Pride or any of its Subsidiaries under, any provision of (i) the Restated
Articles of Incorporation or Bylaws of Pride or any provision of the
comparable charter or organizational documents of any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
applicable to Pride or any of its Subsidiaries or (iii) assuming the
approval of the Pride Vote Matter by the shareholders of Pride has been
obtained, any judgment, order, decree, statute, law, ordinance, rule,
regulation, official consent, license or permit applicable to Pride or any
of its Subsidiaries or any of their respective properties or assets. The
consummation of the transactions contemplated hereby will not result in
the acceleration or otherwise require the prepayment of any banking or
other indebtedness of Pride or of any of its Subsidiaries.

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(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from (including any
renewal of or supplement to any of the foregoing) any Governmental Entity
is required by or with respect to Pride or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Pride or
the consummation by Pride of the transactions contemplated hereby, except
for the filing with the SEC of the S-4 and such reports under the Exchange
Act and such other compliance with the Securities Act and the Exchange Act
and the rules and regulations thereunder as may be required in connection
with this Agreement and the transactions contemplated hereby, and the
obtaining from the SEC of such orders as may be so required.

4.4 SEC DOCUMENTS. Pride has delivered to Forasol-Foramer a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Pride with the SEC since January 1, 1996 (the "Pride
SEC Documents"), which are all the documents that Pride has been required to
file with the SEC since such date. As of their respective dates, the Pride SEC
Documents complied with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Pride SEC Documents, and none of the Pride SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of Pride included in the Pride SEC Documents, including
those constituting a part of Pride's quarterly report on Form 10-Q for the nine
months ended September 30, 1996, complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP in the United States applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Rule 10-01
of Regulation S-X of the SEC) and fairly present in accordance with applicable
requirements of GAAP in the United States (subject, in the case of the unaudited
statements, to normal, recurring adjustments, none of which are material) the
consolidated financial position of Pride and its consolidated Subsidiaries as of
their respective dates and the consolidated results of operations and the
consolidated cash flows of Pride and its consolidated Subsidiaries for the
periods presented therein. Except as disclosed in the Pride SEC Documents, there
are no agreements, arrangements or understandings between Pride and any party
who is at the date of this Agreement an Affiliate of Pride.

4.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Pride for inclusion or incorporation by reference in the S-4 will,
at the time the S-4 becomes effective under the Securities Act or at the Closing
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. If at any time prior to the Closing Date any event with
respect to Pride or any of its Subsidiaries, or with respect to other
information supplied by Pride for inclusion in the S-4, shall occur which is
required to be described in an amendment of, or a supplement to, the S-4 or in
the prospectus or proxy statement included therein, such event shall be so
described, and such amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the shareholders of Pride and to the
shareholders of Forasol-Foramer.

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4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in, or
reflected in the financial statements included in, the Pride SEC Documents or on
Schedule 4.6, or except as contemplated by this Agreement, since September 30,
1996 there has not been (a) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any of Pride's capital stock; (b) any amendment of any material term of any
outstanding equity security of Pride or any Subsidiary of Pride; (c) any
repurchase, redemption or other acquisition by Pride or any Subsidiary of Pride
of any outstanding shares of capital stock or other equity securities of, or
other ownership interests in, Pride or any Subsidiary of Pride; (d) any material
change in any method of accounting or accounting practice by Pride or any
Subsidiary of Pride; (e) any material change in the business conducted by Pride
or any Subsidiary of Pride or any change in the financial condition, assets,
liabilities, profits or business of Pride or any Subsidiary of Pride other than
changes in the ordinary course of business; (f) any material damage to or
destruction or loss of any property or assets of Pride or any Subsidiary of
Pride; (g) any borrowing of or agreement to borrow funds by Pride or a
Subsidiary of Pride, or any termination or amendment of any evidence of
indebtedness, contract, agreement, deed, mortgage, indenture, lease, license or
other instrument, commitment or agreement to which Pride or any Subsidiary of
Pride is a party or by which Pride or any Subsidiary of Pride or any of their
respective properties are bound; (h) any capital expenditures or series of
related capital expenditures by Pride and its Subsidiaries, individually and as
a group, exceeding in the aggregate U.S.$1.0 million; (i) any other transaction,
commitment, dispute, labor trouble, strike, or other event or condition
(financial or otherwise) of any character (whether or not in the ordinary course
of business) that are reasonably likely to materially and adversely affect the
business, operations, assets, financial condition or results of operations of
Pride and its Subsidiaries on a consolidated basis, other than changes affecting
the international well servicing and contract drilling businesses generally; or
(j) any material change in the compensation paid to any director, officer or
employee of Pride or any of its Subsidiaries.

4.7 NO UNDISCLOSED MATERIAL LIABILITIES. Except as disclosed in the
Pride SEC Documents or on Schedule 4.7, there are no liabilities of Pride or any
of its Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, that are reasonably likely to
affect adversely the business, operations, assets, financial condition or
results of operations of Pride and its Subsidiaries on a consolidated basis.

4.8 NO DEFAULT. Neither Pride nor any of its Subsidiaries is in
default or violation (and no event has occurred that, with notice or the lapse
of time or both, would constitute a default or violation or otherwise prejudice)
of any term, condition or provision of (a) their respective articles of
incorporation or association, bylaws or equivalent governing documents; (b) any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which Pride or any of its Subsidiaries is now a party or by which
Pride or any of its Subsidiaries or any of their respective properties or assets
may be bound; or (c) any order, writ, injunction, decree, statute, rule,
regulation, official consent, license or permit applicable to Pride or any of
its Subsidiaries.

4.9 COMPLIANCE WITH APPLICABLE LAWS; ENVIRONMENTAL, HEALTH AND
SAFETY MATTERS. Pride and its Subsidiaries (i) hold all permits, licenses,
variances, exemptions, orders, franchises and approvals of all Governmental
Entities known by them to be necessary for the lawful

A-21

conduct of their respective businesses (the "Pride Permits"), and (ii) are in
substantial compliance with the terms of each of the Pride Permits. None of the
Pride Permits will be adversely affected or amended as a result of the
consummation of the transactions provided for herein. Except as set forth on
Schedule 4.9, none of the Pride Permits is conditional or limited in time. The
businesses of Pride and its Subsidiaries are being conducted in substantial
compliance with each law, ordinance and regulation of every Governmental Entity
to which they are respectively subject, except where the failure to be in
compliance would not have a material adverse effect on the business or financial
condition of Pride and its Subsidiaries taken as a whole. Except as set forth on
Schedule 4.9, no investigation or review by any Governmental Entity with respect
to Pride or any of its Subsidiaries is pending or, to the best knowledge of
Pride, threatened. Without limiting the generality of any of the foregoing and
except as set forth on Schedule 4.9, Pride and its Subsidiaries (a) are, and
have continuously been, in compliance with all laws, regulations and ordinances
relating to environmental, health and safety matters (including those relating
to toxic and hazardous waste and the discharge of matter into the air or water)
and (b) have not caused or permitted any Contaminant to be placed, held,
located, released, generated, treated, stored or disposed of except for
Contaminants stored or disposed of in substantial compliance with applicable
environmental laws as necessary for the conduct of their respective businesses.
Neither Pride nor any of its Subsidiaries has received any notice or claim that
any of such parties has been or may be liable to any person as a result of any
Contaminant having been generated, treated, stored, discharged, emitted,
released or transported by any of them.

4.10 LITIGATION. Except as disclosed in, or reflected in the
financial statements included in, the Pride SEC Documents or on Schedule 4.10
and except for claims arising in the ordinary course of business which are
covered by insurance, there is no suit, action, arbitration, administrative
hearing, petition for bankruptcy (or equivalent) or suspension of payments, or
other proceeding pending or, to the knowledge of Pride, threatened against or
affecting Pride or any of its Subsidiaries, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Pride or any of its Subsidiaries.

4.11 TITLE TO PROPERTY. Pride and its Subsidiaries have good and
defensible title to all their properties and assets reflected on the
consolidated balance sheet as of September 30, 1996 included in the Pride SEC
Documents, free and clear of all Liens except (a) as disclosed in the Pride SEC
Documents or in Schedule 4.11, (b) for sales and dispositions in the normal
course of business since September 30, 1996 and (c) for Permitted Encumbrances.

4.12 TAXES.

(a) Except as set forth on Schedule 4.12(a), each of Pride, each of
its Subsidiaries and any affiliated, combined or unitary group of which
Pride or any of its Subsidiaries is or was a member has (i) timely filed
all Returns required to be filed or sent by or with respect to it in
respect of any Taxes; (ii) timely paid all Taxes due and payable, whether
or not shown on any Return (except for audit adjustments not material in
the aggregate or to the extent that liability therefor is reserved for in
the quarterly report on Form 10-Q for the nine months ended September 30,
1996 included in the Pride SEC Documents), for which Pride

A-22

or any of its Subsidiaries may be liable; (iii) established reserves that
are adequate for the payment of all Taxes not yet due and payable and (iv)
complied with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes and timely withheld from employee wages
and any other payments subject to withholding and paid over to the proper
authorities all amounts required to be so withheld and paid over.

(b) Except to the extent being contested in good faith, all
deficiencies asserted as a result of any examination by any applicable
taxing authority have been paid, fully settled or adequately provided for
in the quarterly report on Form 10-Q for the nine months ended September
30, 1996 included in the Pride SEC Documents. Except as set forth on
Schedule 4.12(b) or as adequately reserved for in the quarterly report on
Form 10-Q for the nine months ended September 30, 1996 included in the
Pride SEC Documents, no Tax audits or other administrative proceedings or
court proceedings are presently pending with regard to any Taxes for which
Pride or any of its Subsidiaries would be liable, and no material
deficiency for any such Taxes has been proposed, asserted or assessed
pursuant to such examination against Pride or any of its Subsidiaries by
any authority with respect to any period. There is no outstanding claim by
any taxing authority in any jurisdiction in which Pride and its
Subsidiaries do not file Returns that Pride or any of its Subsidiaries is
or may be subject to Taxes imposed by that jurisdiction. There are no
Liens on any assets of Pride or any of its Subsidiaries that arose in
connection with any failure or alleged failure to pay any Tax.

(c) Except as disclosed on Schedule 4.12(c), neither Pride nor any
of its Subsidiaries has executed or entered into with any taxing authority
any agreement or other document extending or having the effect of
extending the period for assessments or collection of any Taxes for which
Pride or any of its Subsidiaries would be liable.

(d) Except as set forth in the Pride SEC Documents or as disclosed
on Schedule 4.12(d), neither Pride nor any of its Subsidiaries is a party
to, is bound by or has any obligation under any tax sharing agreement or
similar agreement or arrangement.

4.13 PENSION AND BENEFIT PLANS; OTHER EMPLOYEE MATTERS.

(a) Pride and its Subsidiaries have made all material filings with
Governmental Entities as required by applicable law with respect to
reports, documents and notices regarding social security, employee benefit
plans, employee pension plans, employee compensation and benefit
arrangements or payroll practices, including, without limitation,
severance pay, sick leave, vacation pay, salary continuation for
disability, consulting or other compensation agreements, retirement,
deferred compensation, bonus, long-term incentive, stock option, stock
purchase, hospitalization, medical insurance, life insurance and
scholarship programs, that are maintained by Pride or any of its
Subsidiaries or to which Pride or any of its Subsidiaries contributed or
is obligated to contribute (collectively, the "Pride Benefit Plans"), and
have furnished such documents as are required by applicable law

A-23

to the participants or beneficiaries of the Pride Benefit Plans. Schedule
4.13(a) sets forth an accurate description of each of the Pride Benefit
Plans.

(b) The Pride Benefit Plans have been funded and maintained in
accordance with their terms and with all provisions of applicable law and
all contributions due and payable by Pride and its Subsidiaries in respect
of the Pride Benefit Plans have been duly and punctually paid.

(c) Except as disclosed on Schedule 4.13(c), neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment becoming due to any
employee or group of employees of Pride or any of its Subsidiaries; (ii)
increase any benefits otherwise payable under any Pride Benefit Plan; or
(iii) result in the acceleration of the time of payment or vesting of any
such benefits. Except as disclosed on Schedule 4.13(c), there are no
severance, employment or service agreements between Pride or any of its
Subsidiaries and any employee of Pride or such Subsidiary. True and
correct copies of any such severance, employment or service agreements and
of any other documents governing matters disclosed on Schedule 4.13(c)
have been provided to Forasol-Foramer. Neither Pride nor any of its
Subsidiaries has any consulting agreement or arrangement with any person
involving actual or potential compensation in excess of U.S. $10,000 per
month or U.S. $100,000 in the aggregate, except as is terminable upon one
month's notice or less.

(d) Except as disclosed on Schedule 4.13(d), no stock or other
security issued by Pride or any of its Subsidiaries forms or has formed a
material part of the assets of any Pride Benefit Plan.

(e) Except as disclosed on Schedule 4.13(e), (i) the employment of
each employee of Pride and its Subsidiaries may be terminated at any time
at no cost to any of them other than costs imposed by the Pride Benefit
Plans and by applicable local laws, rules or regulations, (ii) to the
knowledge of Pride, no key officer of Pride or any of its Subsidiaries and
no group of employees of Pride or any of its Subsidiaries intends to
terminate his or her employment at, prior or subsequent to the Closing,
whether or not as a result of the transactions contemplated herein, and
(iii) neither Pride nor any of its Subsidiaries has any direct or indirect
liability, accrued, contingent or otherwise, in respect of any severance
obligations.

(f) Schedule 4.13(f) sets forth a true and complete listing of the
names, total annual compensation, total accrued vacation and other
benefits of each person employed by Pride or any of its Subsidiaries
presently receiving compensation aggregating in excess of U.S.$100,000 per
year.

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4.14 LABOR AGREEMENTS. Except as disclosed on Schedule 4.14:

(a) other than as required by applicable law, neither Pride nor any
of its Subsidiaries is a party to any collective bargaining agreement or
other current labor agreement with any labor union or organization, and
there is no current union representation question involving employees of
Pride or any of its Subsidiaries, nor does Pride or any of its
Subsidiaries know of any activity or proceeding of any labor organization
(or representative thereof) or employee group (or representative thereof)
to organize any such employees;

(b) there is no unfair labor practice charge or grievance arising
out of a collective bargaining agreement or other grievance procedure
against Pride or any of its Subsidiaries pending or, to the knowledge of
Pride or any of its Subsidiaries, threatened;

(c) there is no complaint, lawsuit or proceeding in any forum by or
on behalf of any present or former employee, any applicant for employment
or any classes of the foregoing or any Governmental Entity alleging breach
of any express or implied contract of employment, any law or regulation
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment
relationship against Pride or any of its Subsidiaries pending or, to the
knowledge of Pride or any of its Subsidiaries, threatened;

(d) there is no strike, dispute, slowdown, work stoppage or lockout
pending or, to the knowledge of Pride or any of its Subsidiaries,
threatened against or involving Pride or any of its Subsidiaries;

(e) Pride and each of its Subsidiaries are in substantial compliance
with all applicable laws and regulations respecting employment and
employment practices, terms and conditions of employment, wages, hours of
work, occupational safety and health, social security, pension and
unemployment benefits, and salary-related Taxes, in each case with respect
to temporary as well as permanent employees; and

(f) there is no proceeding, claim, suit, action or governmental
investigation pending or, to the knowledge of Pride or any of its
Subsidiaries, threatened in respect to which any current or former
director, officer, employee or agent of Pride or any of its Subsidiaries
is or may be entitled to claim indemnification from Pride or any of its
Subsidiaries pursuant to their respective charters, bylaws or other
organizational documents, any indemnification agreement to which Pride or
any Subsidiary of Pride is a party or applicable law.

4.15 INTANGIBLE PROPERTY. Pride and its Subsidiaries possess or have
adequate rights to use all material trademarks, trade names, patents, service
marks, brand marks, brand names, computer programs, databases, industrial
designs, trade secrets and copyrights necessary for the operation of the
businesses of each of Pride and its Subsidiaries (collectively, the "Pride
Intangible Property"). Except as set forth on Schedule 4.15, all of the Pride
Intangible Property is owned by

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Pride or its Subsidiaries free and clear of any and all Liens or claims, and
neither Pride nor any such Subsidiary has forfeited or otherwise relinquished
any Pride Intangible Property. To the knowledge of Pride, the use of the Pride
Intangible Property by Pride or its Subsidiaries does not conflict with,
infringe upon, violate or interfere with or constitute an appropriation of any
right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, patent, service mark, brand
mark, brand name, computer program, database, industrial design, trade secret,
copyright or any pending application therefor of any other person; there have
been no claims made and neither Pride nor any of its Subsidiaries has received
any notice of any claim or otherwise knows that any of the Pride Intangible
Property is invalid or conflicts with the asserted rights of any other person or
has not been used or enforced or has been failed to be used or enforced in a
manner that would result in the abandonment, cancellation or unenforceability of
any of the Pride Intangible Property.

4.16 SENSITIVE PAYMENTS. The respective businesses of Pride and its
Subsidiaries and the results of their respective operations are not dependent
upon any practice or custom in any jurisdiction that constitutes a violation of
the U.S. Foreign Corrupt Practices Act or the laws of any jurisdiction governing
the use of corporate funds for contributions, gifts, entertainment or other
expenses related to political activity.

4.17 OPINION OF FINANCIAL ADVISOR. Pride has received the opinion of
Simmons & Company International (a copy of which has been delivered to
Forasol-Foramer) to the effect that, as of the date on which the Board of
Directors of Pride approved this Agreement, the Consideration for the Purchased
Shares is fair from a financial point of view to Pride's shareholders.

4.18 BOOKS AND RECORDS. The books, minute books, records and
accounts of Pride and its Subsidiaries are complete and correct in all material
respects and accurately and fairly reflect the transactions to which each of
Pride and its Subsidiaries is or has been a party.

4.19 CONTRACTS AND COMMITMENTS. Schedule 4.19 sets forth a complete
and accurate description of all Material Contracts to which Pride and each of
its Subsidiaries is a party. All of the Material Contracts described on Schedule
4.19 are valid, binding and in full force and effect, have not been amended or
supplemented in any material respect, and upon consummation of the transactions
provided for herein, will be enforceable by Pride and its Subsidiaries in
accordance with their respective terms. To the knowledge of Pride, no party to
any of the Material Contracts described on Schedule 4.19 has defaulted in the
performance of its obligations thereunder, and no events have occurred that with
the lapse of time or action or inaction by any party thereto will result in any
violations or terminations thereof or any defaults thereunder. Except as
described on Schedule 4.19, Pride and its Subsidiaries are not subject to any
contract, agreement or arrangement, written or oral, (i) that restricts the
business operations of Pride or any of its Subsidiaries geographically or
territorially, (ii) with any competitor of Pride or any of its Subsidiaries or,
to the knowledge of Pride, any competitor of Forasol-Foramer or any of its
Subsidiaries, (iii) that is not related to the normal business operations of
Pride and its Subsidiaries, (iv) the termination of which is subject to the
payment of a penalty or indemnity exceeding U.S. $100,000 or more than 30 days'
prior notice, (v) that is subject to cancellation or termination upon
consummation of the transactions

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provided for herein, (vi) which imposes or purports to impose upon Pride or any
of its Subsidiaries joint and several liability with unaffiliated third parties,
or (vii) to the knowledge of Pride, conflicts with or may conflict with any
applicable laws or regulations.

4.20 CUSTOMERS AND SUPPLIERS. Since September 30, 1996, there has
not been any adverse change in the relationship or course of dealing between
Pride or any of its Subsidiaries, on the one hand, and any of their respective
suppliers or customers, on the other hand; and Pride has no reason to believe
that (a) any supplier supplying products, materials or services to Pride or any
of its Subsidiaries intends to cease selling such products, materials or
services to any of Pride and its Subsidiaries or to limit or reduce such sales
to any of Pride and its Subsidiaries or materially alter the terms or conditions
of any such sales or (b) any customer of any of Pride and its Subsidiaries
intends to terminate, limit or reduce its business relations with any of Pride
and its Subsidiaries. Except as set forth on Schedule 4.20, neither Pride nor
any officer or director of Pride or of any of its Subsidiaries possesses,
directly or indirectly, any financial interest in, or is a director, officer or
employee of, any business organization that is a supplier, customer, lessor,
lessee or competitor or potential competitor of Pride or any of its
Subsidiaries. Ownership of less than 2% of a class of securities of a company
traded on a recognized securities exchange shall not be deemed to be a
"financial interest" for purposes of this Section 4.20.

4.21 POWERS OF ATTORNEYS AND SURETYSHIPS. Except as disclosed in
Schedule 4.21, neither Pride nor any of its Subsidiaries has outstanding any
general or special power of attorney (whether as grantor or grantee thereof) or
any obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any third party.

4.22 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Pride Common Stock represented in person
or by proxy and constituting a quorum at a duly called meeting thereof is the
only vote of the holders of any class or series of Pride capital stock necessary
to approve the Pride Vote Matter.

4.23 BENEFICIAL OWNERSHIP OF FORASOL COMMON SHARES. As of the date
hereof, neither Pride nor its Subsidiaries "beneficially owns" (as defined in
Rule 13d-3 under the Exchange Act) any of the outstanding Forasol Common Shares
or, except as contemplated by this Agreement, has any option or other right to
acquire any Forasol Common Shares.

4.24 INSURANCE. Schedule 4.24 is a complete and accurate summary of
Pride's and each of its Subsidiaries' insurance coverages in effect as of the
date hereof. Pride and its Subsidiaries maintain all insurance coverages
required by law and all other insurance coverages reasonably adequate for the
operation of their respective businesses (taking into account the cost and
availability of such insurance), and the transactions contemplated hereby will
not adversely affect such coverage.

4.25 BROKERS. No broker, investment banker or other person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions

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contemplated by this Agreement based upon arrangements made by or on behalf of
Pride. Simmons & Company International is entitled to usual and customary fees
for the opinion described in Section 4.17.

4.26 FINANCING. Pride has sufficient resources, including
commitments from financial institutions, available to it to pay the aggregate
Cash Consideration on the Closing Date.

4.27 DISCLOSURE. Forasol-Foramer has been furnished with complete
and correct copies of all agreements, instruments and documents, together with
any amendments or supplements thereto, set forth on, or underlying a disclosure
set forth on, any schedule delivered by Pride pursuant to this Agreement. Each
of such schedules provided by Pride is complete and correct.

ARTICLE V

CONDUCT OF BUSINESSES PENDING THE CLOSING

5.1 CONDUCT OF BUSINESS BY FORASOL-FORAMER AND PRIDE. During the
period from the date of this Agreement and continuing until the Closing, each of
Pride and Forasol-Foramer and their respective Subsidiaries shall carry on its
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and shall use all reasonable efforts to preserve
intact its present business organizations, keep available the services of its
current officers and employees, and endeavor to preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
its goodwill and ongoing business shall not be impaired in any material respect
at the Closing. The Sellers agree as to Forasol-Foramer and its Subsidiaries,
and Pride agrees as to itself and its Subsidiaries, that (except as expressly
contemplated or permitted by this Agreement, or except as set forth in a
Schedule hereto specifically identifying the relevant Section hereof to which
such exception relates, or to the extent that the other parties shall otherwise
consent in writing) neither Pride, Forasol-Foramer nor any of their respective
Subsidiaries shall:

(a) declare, set aside, increase or pay any dividend (including any
stock dividends), or declare or make any distribution on, or directly or
indirectly combine, redeem, reclassify, purchase or otherwise acquire, any
shares of its capital stock or authorize the creation or issuance of, or
issue, deliver or sell any additional shares of its capital stock, any
securities or obligations convertible into or exchangeable for its capital
stock, or effect any stock split or reverse stock split or other
recapitalization, except (i) for the declaration and payment of dividends
from a Subsidiary of Forasol-Foramer to Forasol-Foramer or another
Subsidiary of Forasol-Foramer; (ii) for the declaration and payment of
dividends from a Subsidiary of Pride to Pride or another Subsidiary of
Pride; (iii) for cash dividends or distributions paid on or with respect
to the capital stock or partnership interests of a Subsidiary of either
Forasol-Foramer or Pride; or (iv) as required by the terms of its
securities outstanding on the date hereof or as contemplated by its
existing employee benefit plans;

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(b) amend or propose to amend its articles of incorporation or
association, bylaws or equivalent governing documents, or adopt or amend
any resolution or agreement concerning indemnification of its directors,
officers, employees or agents;

(c) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, except such acquisitions whose aggregate purchase price is not in
excess of U.S.$10.0 million;

(d) except as described on Schedule 5.1(d) in the case of Pride,
sell, lease, encumber or otherwise dispose of, or agree to sell, lease
(whether such lease is an operating or capital lease), encumber or
otherwise dispose of, any of its assets, other than in the ordinary course
of business consistent with past practice;

(e) authorize, recommend, propose or announce an intention to adopt
a plan of complete or partial liquidation or dissolution;

(f) make any changes in its accounting methods, except as required
by law, rule, regulation or GAAP;

(g) (i) grant any increases in the compensation of or stock options
to any of its directors, officers or employees, except increases in the
ordinary course of business consistent with past practice; (ii) pay or
agree to pay any pension, retirement allowance or other employee benefit
not required or contemplated by law or by any of its existing employee
benefit plans as in effect on the date hereof to any such director,
officer or employee, whether past or present; (iii) enter into any new, or
amend any existing, employment or severance or termination agreement with
any such director, officer or key employee; or (iv) become obligated under
any new employee benefit plan that was not in existence or approved by its
governing board prior to or on the date hereof, or amend any such plan or
arrangement in existence on the date hereof if such amendment would have
the effect of materially enhancing any benefits thereunder;

(h) (i) incur any indebtedness for borrowed money (except for
working capital under its existing credit facilities and refinancings of
existing debt that permit prepayment of such debt without penalty) or
guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any of its debt securities or guarantee any
debt securities of others; (ii) except in the ordinary course of business,
enter into any lease (whether such lease is an operating or capital lease)
or create any Liens on its property in connection with any indebtedness
thereof, except for those securing purchase money indebtedness; or (iii)
commit to any capital expenditures not provided for in the capital budget,
as amended and approved by such party prior to the date hereof; PROVIDED,
HOWEVER, that this Section 5.1(h) shall not prohibit or restrict Pride or
any of its Subsidiaries from

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taking any such action as it deems appropriate to finance, raise or
provide funds for the payment of the aggregate Cash Consideration provided
for herein;

(i) enter into any agreement or arrangement with any of its
Affiliates on terms materially less favorable to it than could be
reasonably expected to have been obtained with an unaffiliated third party
on an arms'-length basis; PROVIDED, HOWEVER, that this Section 5.1(i)
shall not prohibit any agreement or arrangement between Pride and its
wholly owned Subsidiaries or between Forasol-Foramer and its wholly owned
Subsidiaries;

(j) modify, amend, terminate, renew or fail to use reasonable
business efforts to renew any material contract or agreement to which it
is a party or waive, release or assign any material rights or claims,
except in the ordinary course of business consistent with past practice;
or

(k) take or fail to take any other action that would reasonably be
expected to (i) cause any representation or warranty herein or any
statement in any Schedule hereto to be inaccurate, incomplete or
misleading or (ii) prevent or materially impede, interfere with or delay
the consummation of the transactions contemplated by this Agreement.

5.2 NO SOLICITATION.

(a) From and after the date hereof, none of the Sellers will, nor
will such parties authorize or permit any of their respective officers,
directors, employees, agents and other representatives or those of any of
their respective Subsidiaries (collectively, "Forasol Representatives")
to, directly or indirectly, solicit, initiate or encourage (including by
way of providing information) any prospective buyer or the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal (as hereinafter defined) from any person or engage in
any discussions or negotiations with respect thereto or otherwise
cooperate with or assist or participate in, or facilitate, any such
proposal; PROVIDED, HOWEVER, that, notwithstanding any other provision of
this Agreement, (i) Forasol-Foramer's Board of Supervisory Directors may
take and disclose to Forasol-Foramer's shareholders a position
contemplated by Rule 14e-2(a) under the Exchange Act and (ii) following
receipt from a third party (without any solicitation, initiation,
encouragement, discussion or negotiation, directly or indirectly, by or
with the Sellers or any Forasol Representative) of a bona fide Acquisition
Proposal that is financially superior to the Consideration provided for
herein (as determined in each case in good faith by both Forasol-
Foramer's Board of Supervisory Directors and the Forasol Controlling
Shareholders after consultation with Forasol-Foramer's financial advisors
and outside counsel), (x) the Sellers may engage in discussions or
negotiations with such third party and may furnish such third party
information concerning Forasol-Foramer and its business, properties and
assets and (y) the Board of Supervisory Directors of Forasol-Foramer may
withdraw, modify or not make its recommendation to the shareholders of
Forasol-Foramer to vote in favor of the Forasol Vote Matter or terminate
this Agreement in accordance with Section 8.1(f), but in each case
referred to in the foregoing clauses (i) and (ii) only to the extent that
the Board of

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Supervisory Directors of Forasol-Foramer and the Forasol Controlling
Shareholders shall conclude in good faith after consultation with
Forasol-Foramer's financial advisors and outside counsel that such action
is necessary for the Board of Supervisory Directors of Forasol-Foramer to
act in a manner consistent with its fiduciary obligations under applicable
law, notwithstanding (1) a binding commitment to consummate an agreement
of the nature of this Agreement entered into in the proper exercise of
their applicable fiduciary duties and (2) any concessions that may be
offered by Pride.

(b) Prior to taking any action referred to in Section 5.2(a), if the
Sellers intend to participate in any such discussions or negotiations or
provide any such information to any such third party, they shall give
reasonable prior notice to Pride of each such action. The Sellers shall
promptly notify Pride of any such requests for information or the receipt
of any Acquisition Proposal, including the identity of the person or group
engaging in such discussions or negotiations, requesting such information
or making such Acquisition Proposal, and the terms and conditions of any
Acquisition Proposal.

(c) Nothing in this Section 5.2 shall permit any of the Sellers to
enter into any agreement with respect to an Acquisition Proposal during
the term of this Agreement.

(d) As used in this Agreement, "Acquisition Proposal" means any
proposal or offer, other than a proposal or offer by Pride or any of its
Affiliates, for, or that could be reasonably expected to lead to an
acquisition, merger, take-over bid, sale of all or substantially all of
the assets of, or sale of shares of the capital stock of, Forasol-Foramer
or any of its Subsidiaries or any similar transactions involving
Forasol-Foramer or any of its Subsidiaries.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1 S-4 REGISTRATION STATEMENT; SPECIAL SHAREHOLDERS' MEETINGS.
Pride shall promptly prepare and file with the SEC the S-4, which shall include
a prospectus to be furnished to the shareholders of Forasol-Foramer and a proxy
statement to be furnished to the shareholders of Pride in connection with the
Forasol Shareholders' Meeting (as hereinafter defined) and the Pride
Shareholders' Meeting (as hereinafter defined), respectively, in each case
complying with all applicable requirements of the Securities Act and the
Exchange Act. Thereafter, Pride shall use its best efforts to have the S-4
declared effective under the Securities Act and to obtain all necessary state
securities laws or "Blue Sky" permits, approvals and registrations in connection
with the issuance of Pride Common Stock constituting the Stock Consideration.
Forasol-Foramer shall furnish all information concerning Forasol-Foramer, its
Subsidiaries, the Forasol Controlling Shareholders and the other holders of
Forasol Common Shares as may reasonably be requested by Pride for inclusion in
the S-4 and in connection with obtaining such permits, approvals and
registrations. Subject to Section 5.2 in the case of Forasol-Foramer, when the
S-4 is declared

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effective under the Securities Act, Forasol-Foramer and Pride each shall call a
special meeting of its respective shareholders (the "Forasol Shareholders'
Meeting" and the "Pride Shareholders' Meeting," respectively) to be held as soon
as practicable for the purpose of voting upon the Forasol Vote Matter in the
case of Forasol-Foramer and the Pride Vote Matter in the case of Pride. Subject
to Section 5.2 in the case of Forasol-Foramer, Forasol-Foramer, the Forasol
Controlling Shareholders and Pride will take all such steps as are required or
customary to recommend and obtain approval and adoption of the Forasol Vote
Matter in the case of Forasol-Foramer and the Pride Vote Matter in the case of
Pride by the shareholders of Forasol-Foramer and Pride, respectively.
Forasol-Foramer and Pride shall coordinate and cooperate with respect to the
timing of such meetings and shall use all reasonable methods to hold such
meetings on the same day. Pride will notify Forasol-Foramer and its counsel
promptly of the receipt of any written or oral communication from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
to the proxy statement/prospectus included in the S-4 or for additional
information and will supply Forasol-Foramer with copies of all correspondence
between Pride and the SEC or its staff with respect to such proxy
statement/prospectus.

6.2 APPROVAL BY FORASOL CONTROLLING SHAREHOLDERS. Each of the
Forasol Controlling Shareholders covenants and agrees that, subject to
termination of this Agreement pursuant to Article VIII prior to the Forasol
Shareholders' Meeting, it will vote all Forasol Common Shares held by it in
favor of the Forasol Vote Matter and, upon Pride's request, will promptly
constitute and appoint an executive officer of Pride or such other person as may
be designated by Pride to act as its agent, proxy and attorney-in-fact to cause
such shares to be voted in favor of the Forasol Vote Matter.

6.3 ACCESS TO INFORMATION. Upon reasonable notice, Forasol-Foramer
and Pride shall each (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, full access during normal business hours during
the period prior to the Closing Date, to all its properties, books, contracts,
commitments and records and, during such period, each of Forasol-Foramer and
Pride shall (and shall cause each of their respective Subsidiaries to) furnish
promptly to the other (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to SEC requirements and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. The Forasol
Controlling Shareholders shall cause Forasol-Foramer to comply with its
obligations pursuant to this Section 6.3. Each of the parties hereto agrees that
it will not, and will cause its respective representatives not to, use any
information obtained pursuant to this Section 6.3 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement.

6.4 LEGAL CONDITIONS. Each party hereto shall take all reasonable
actions necessary to comply promptly with all legal requirements that may be
imposed on such party with respect to consummation of all transactions provided
for or contemplated by this Agreement (including, without limitation, furnishing
all information in connection with approvals of or filings with any Governmental
Entity) and will promptly cooperate with and furnish information to each other
in connection with any such requirements imposed upon any of them or any of
their

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Subsidiaries. Each of Forasol-Foramer and Pride will, and will cause its
Subsidiaries to, take all actions necessary to obtain (and will cooperate with
each other in obtaining) any consent, acquiescence, authorization, order or
approval of, or any exemption or nonopposition by, any Governmental Entity or
court required to be obtained or made by Forasol-Foramer, Pride or any of their
Subsidiaries in connection with the taking of any action contemplated by this
Agreement.

6.5 AGREEMENTS OF OTHERS; REGISTRATION RIGHTS. Prior to the Closing
Date, Forasol-Foramer shall cause to be prepared and delivered to Pride a list
identifying all persons in addition to the Forasol Controlling Shareholders who,
at the time of the Forasol Shareholders' Meeting, may be deemed to be
"affiliates" of Forasol-Foramer as that term is used in paragraphs (c) and (d)
of Rule 145 under the Securities Act (the "Rule 145 Affiliates"). Each of the
Forasol Controlling Shareholders shall, and Forasol-Foramer shall use its best
efforts to cause each person who is identified as a Rule 145 Affiliate in such
list to, deliver to Pride, at or prior to the Closing Date, a written agreement
that such person will not sell, pledge, transfer or otherwise dispose of any
shares of Pride Common Stock distributed to such person pursuant hereto, except
in compliance with Rule 145 or an exemption from the registration requirements
of the Securities Act. At the Closing, Pride and the Forasol Controlling
Shareholders shall execute and deliver a Registration Rights Agreement in the
form of Exhibit A hereto.

6.6 AUTHORIZATION FOR LISTING. Prior to the Closing Date, Pride
shall take all action necessary to cause the shares of Pride Common Stock to be
distributed hereunder and the shares of Pride Common Stock to be reserved for
issuance upon exercise of Forasol Stock Options to be approved for listing on
the Nasdaq National Market, subject to official notice of issuance.

6.7 EMPLOYEE MATTERS. Following the Closing, (i) those members of
the senior management of Forasol S.A. who are employees of Forasol S.A. and who
are not retained in their present or equivalent positions for at least two years
following the Closing Date will be afforded the severance benefits described on
Schedule 6.7, which benefits and arrangements have been approved by Pride and a
majority of the Supervisory Directors of Forasol-Foramer; and (ii) the
management employees of Forasol S.A. and its Subsidiaries shall be entitled to
compensation and benefits that are at least as favorable as those currently
being provided to them by Forasol S.A. and its Subsidiaries. Such management
employees of Forasol S.A.and its Subsidiaries shall otherwise be entitled to
compensation and benefits comparable to those provided to management employees
of Pride and its other Subsidiaries holding comparable positions at comparable
employment locations (giving due regard to differences in cost of living,
competitive conditions and other similar factors), if and to the extent such
compensation and benefits of Pride and its other Subsidiaries are more favorable
than those provided by Forasol S.A. and its Subsidiaries. All other employees of
Forasol-Foramer and its Subsidiaries, so long as their employment by Pride, the
F-F Subsidiary or any of their respective Subsidiaries continues, shall be
entitled to employee benefits comparable to those that such employees were
receiving immediately prior to the Closing Date. Pride, its Subsidiaries and the
employee benefit plans maintained by Pride and its Subsidiaries in which an
employee of Forasol-Foramer or any of its Subsidiaries participates shall
recognize each such employee's years of service and level of seniority with
Forasol-Foramer and its Subsidiaries for purposes of terms of

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employment and eligibility, vesting and benefit determination under such
employee benefit plans (other than benefit accruals under any defined benefit
pension plan).

6.8 STOCK OPTIONS.

(a) Forasol-Foramer shall use reasonable commercial efforts to cause
each holder of an outstanding option to purchase Forasol Common Shares and
any stock appreciation rights related thereto that have been granted
pursuant to the Forasol LTIP ("Forasol Stock Option") to agree that as of
the Closing, such Forasol Stock Option shall become an option to purchase
1.1 shares of Pride Common Stock for each of the Forasol Common Shares
purchasable pursuant to such Forasol Stock Option (with the total shares
of Pride Common Stock covered thereby rounded up or down to the nearest
whole share), the exercise price per share shall not change and such
option shall be exercisable as to one-third of the number of shares of
Pride Common Stock covered thereby immediately following the Closing,
one-third upon the first anniversary of the original grant of the Forasol
Stock Option and the remaining one-third upon the second anniversary of
the original grant of the Forasol Stock Option; PROVIDED that if the
optionee's employment by Pride, the F-F Subsidiary or any of their
respective Subsidiaries is terminated without "cause", such option shall
become fully vested and shall be exercisable in full for a period of 90
days following the date of such termination. The term "cause" shall mean
(i) gross or continued misconduct or neglect by the employee in the
discharge of his or her duties and responsibilities of employment, (ii)
the employee's conviction of a felony criminal offense or (iii) the
employee's conviction of any other crime or misdemeanor which, in the good
faith judgment of the board of directors or other supervisory board of his
or her immediate employer, may reasonably be expected to adversely affect
such employee's ability to discharge his or her duties and
responsibilities of employment.. Each such option shall otherwise be
governed by the terms of other options granted under Pride's Long-Term
Incentive Plan. Pride agrees to assume all such Forasol Stock Options that
the holders agree to convert into options to purchase Pride Common Stock
as provided in this Section 6.8(a).

(b) Pride shall take all corporate and other action necessary to (i)
reserve for issuance a sufficient number of shares of Pride Common Stock
for delivery upon exercise of the Forasol Stock Options assumed in
accordance with Section 6.8(a), and (ii) otherwise cause the Forasol Stock
Options to be accorded the same status (including registration under the
Securities Act) as stock options granted under Pride's Long-Term Incentive
Plan.

(c) If the holder of a Forasol Stock Option does not agree to
convert his or her option as provided in Section 6.8(a), then
Forasol-Foramer shall cause said option to be (i) exercised in full prior
to the Closing Date or (ii) surrendered to Forasol-Foramer on or before
the Closing Date in exchange for a cash payment per share subject to the
option equal to the excess, if any, of the Change of Control Value (as
such term is defined in the Forasol LTIP) over the exercise price of such
option for each such share.

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6.9 COMPOSITION OF PRIDE BOARD AND CERTAIN RELATED AGREEMENTS.

(a) The Board of Directors of Pride shall take such action as may be
necessary (including the amendment of its Bylaws) to cause the number of
directors comprising the full Board of Directors of Pride immediately
after the Closing Date to be eight persons: (i) six of whom shall be
then-existing directors of Pride, (ii) one of whom shall be designated by
Sertofin B.V. and its Affiliates (collectively, the "AVH Group") and (iii)
one of whom shall be designated by Gialos B.V., Compagnie Financiere de
Services Petroliers S.A. and their Affilliates (collectively, the
"Soletanche Group"). Such persons shall serve as directors of Pride until
the next annual meeting of the shareholders of Pride. One of the two
persons so designated, as determined by agreement between the AVH Group
and the Soletanche Group, shall be elected to the office of Vice Chairman
of the Board of Directors of Pride. Until the fifth anniversary of the
Closing Date, the AVH Group on the one hand and the Soletanche Group on
the other hand and as determined by agreement between such parties, shall
each be entitled to nominate a director to the Board of Directors of
Pride, provided that the AVH Group on the one hand, and the Soletanche
Group, on the other hand, continue to own, directly or indirectly, 50% or
more of the shares of Pride Common Stock distributed to them pursuant to
this Agreement and one of such nominees, if elected and as determined by
agreement between the AVH Group and the Soletanche Group, shall serve as
Vice Chairman of the Board of Directors of Pride. Nothing in this Section
6.9 shall be construed as restricting Pride from increasing or decreasing
the number of directors comprising its Board of Directors following the
Closing Date.

(b) So long as, pursuant to paragraph (a) of this Section 6.9, the
Board of Directors of Pride or of any of its successors includes a person
designated by a Forasol Controlling Shareholder or any of its Affiliates
or a Forasol Controlling Shareholder or any of its affiliates has
participated in the designation of such person (any such Forasol
Controlling Shareholder and its Affiliates being hereinafter referred to
collectively as a "Designating Shareholder"), and for a period of not less
than 90 days after such Board of Directors ceases to include any person so
designated, such Designating Shareholder shall not, either directly or
indirectly, individually or as a member of any "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) (i) solicit proxies or consents
or become a "participant" in a "solicitation" (as such terms are defined
or used in Regulation 14A under the Exchange Act) of proxies or consents
with respect to securities of Pride or any of its successors or initiate
any shareholder proposal or "election contest" (as such term is defined or
used in Rule 14a-11 of the Exchange Act) with respect to Pride or any of
its successors or, directly or indirectly, act to encourage or induce
others to take any such action; (ii) vote any of the shares of Pride
Common Stock distributed to it pursuant to this Agreement in the election
of directors of Pride or any of its successors for any person other than
the persons nominated by the Board of Directors of Pride, including those
nominated pursuant to paragraph (a) of this Section 6.9; (iii) vote in
favor of any business combination or any other transaction with a third
party that has not been approved by at least a majority of the members of
the Board of Directors of Pride or any of its successors; (iv) acquire, or
offer or agree, attempt, seek or propose to acquire, directly or
indirectly, any voting securities of

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Pride or any of its successors (or any direct or indirect beneficial
ownership, rights, options, or interests therein) that would cause such
Designating Shareholder or any "group" of which it is a member to own or
control in the aggregate, together with all other Forasol Controlling
Shareholders and their Affiliates, more than 20% of the securities of
Pride or any of its successors having ordinary voting power in the
election of directors; or (v) enter into any discussion, negotiations,
arrangements or understandings with any third party with a view to taking,
or advising, aiding, abetting, soliciting, inducing or encouraging, any
action prohibited by any of the foregoing.

(c) Each of the Forasol Controlling Shareholders agrees and
understands that effective as of the Closing, any technical services
agreements and any other contracts or arrangements between Forasol-Foramer
and any of its Subsidiaries on the one hand and any of the Forasol
Controlling Shareholders and any of their respective Affiliates on the
other hand providing for payments or compensation in any form by
Forasol-Foramer or any of its Subsidiaries to any of the Forasol
Controlling Shareholders or any of their respective Affiliates shall be
terminated and be of no further force or effect, without any further
liability or obligation on the part of any party thereto.

6.10 EXECUTIVE MANAGEMENT COMMITTEE OF PRIDE; CERTAIN EXECUTIVE
OFFICERS. The Board of Directors of Pride shall take such action as may be
necessary to create an Executive Management Committee effective as of the
Closing Date, which committee shall have general responsibility for strategic
planning of Pride's worldwide operations. The initial members of such committee
shall include Gerard Godde, Managing Director of Forasol S.A., and John O'Leary,
Manager--Marketing and Business Development of Forasol S.A. As of the Closing
Date, Mr. Godde shall also be elected Senior Vice President of Pride and Mr.
O'Leary shall be elected Vice President of Marketing of Pride. Following the
Closing Date, Mr. Godde will serve as President and Chief Operating Officer and
Mr. O'Leary will serve as Director of Marketing for the continuing operations of
the assets and business of the Forasol Companies and their Subsidiaries. Messrs.
Godde and O'Leary shall be entitled to continue to serve in the positions
provided for in this Section 6.10 for a period of five years following the
Closing Date or until such earlier time as Mr. Godde on the one hand or Mr.
O'Leary on the other hand shall cease to be employed by Pride or its Affiliates.

6.11 EXECUTIVE OFFICE OF FORASOL S.A. After the Closing Date, the
principal office of Forasol S.A., including but not limited to its technical,
engineering and research and development functions, shall continue to be
maintained in France.

6.12 USE OF NAME. After the Closing Date, each of the Sellers
agrees, as to itself and any of its Subsidiaries or Affiliates, that neither it
nor any of its Subsidiaries or Affiliates will use the names "Forasol,"
"Foramer," "Forinter" or any other similar name in connection with its
activities. At or prior to the Closing, the Sellers shall execute and deliver to
Pride all such consents as may be reasonably requested by Pride, and will
otherwise cooperate with Pride, so as to enable the F-F Subsidiary, the Forasol
Companies or any other Subsidiary of Pride to continue to use any of such names
as its corporate name and to do business under any of such names in any
jurisdiction.

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6.13 LIQUIDATION AND DISSOLUTION. As soon as practicable following
the Closing Date, Forasol-Foramer will take all such action as may be required
to dissolve and terminate its corporate existence and to wind up its affairs
pursuant to all applicable laws.

6.14 LIQUIDATION AND DISSOLUTION EXPENSES. At the Closing, Pride
shall provide or cause the F-F Subsidiary or the Forasol Companies to provide
such undertakings and disburse such funds as Forasol-Foramer shall reasonably
require in furtherance of Pride's obligations incurred pursuant to Section 1.4;
PROVIDED that neither Pride, the F-F Subsidiary nor any of the Forasol Companies
shall be under any obligation to advance any funds or assume any obligations in
respect of any Taxes payable by or on behalf of any shareholder of
Forasol-Foramer upon consummation of the transactions provided for herein.

6.15 AGREEMENT TO DEFEND. If any claim, action, suit, investigation
or other proceeding by any Governmental Entity or other person or other legal or
administrative proceeding is commenced that questions the validity or legality
of the transactions contemplated by this Agreement or seeks damages in
connection therewith, the parties hereto agree to cooperate and use their
reasonable efforts to defend against and respond thereto.

6.16 PUBLIC ANNOUNCEMENTS. Pride and the Sellers will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange or transaction reporting system.

6.17 OTHER ACTIONS. Except as contemplated by this Agreement,
neither Pride nor any of the Sellers shall, and shall not permit any of their
respective Subsidiaries to, take, or agree or commit to take, any action that is
reasonably likely to result in any of its respective representations or
warranties hereunder being untrue in any material respect or in any of the
conditions set forth in Article VII not being satisfied.

6.18 ADVICE OF CHANGES; SEC FILINGS. Pride and the Sellers shall
confer on a regular basis with each other, report on operational matters and
promptly advise each other orally and in writing of any change or event
resulting in, or that insofar as can reasonably be foreseen, could result in, a
breach or potential breach of any of their respective representations,
warranties, covenants or agreements set forth herein or in the inability of any
of them to satisfy any of the conditions set forth in Article VII. Pride and
Forasol-Foramer shall promptly provide each other (or their respective counsel)
copies of all filings made by such party with the SEC or any other Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.

6.19 SECTION 338 ELECTION. The parties to this Agreement acknowledge
that Pride intends to make an election under Section 338 of the Code with
respect to the purchase of the F-F Subsidiary and certain of its Subsidiaries
and that the transactions contemplated by this Agreement have accordingly been
designed to constitute a qualified stock purchase within the meaning of

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Section 338(d)(3) and (h)(3) of the Code. Accordingly, if the closing price of
the Pride Common Stock on the Nasdaq National Market on the last business day
prior to the Closing Date, as reported in THE WALL STREET JOURNAL, is greater
than $39 per share, Pride may, at its election, increase the Cash Consideration,
and reduce the Stock Consideration in the same amount, by such amounts as may be
necessary to ensure that such transactions will qualify as a qualified stock
purchase.

6.20 INDEMNIFICATION BY PRIDE. Following the Closing, Pride shall,
and shall cause the F-F Subsidiary and its Subsidiaries to, indemnify defend and
hold harmless the present and former directors, supervisory directors,
management board members, officers and employees of Forasol-Foramer and its
Subsidiaries and the Forasol Controlling Shareholders (each, an "Indemnified
Party") against all losses, claims, damages, costs, expenses, liabilities or
judgments or amounts paid in settlement with the approval of Pride (which
approval shall not be unreasonably withheld) arising out of or in connection
with any claim, action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such person is or
was a director, officer or employee of Forasol-Foramer or any of its
Subsidiaries, whether pertaining to any matter existing or occurring at or prior
to the Closing Date and whether reasserted or claimed prior to, or at or after,
the Closing Date ("Indemnified Liabilities"), including without limitation all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby (including, without limitation, the liquidation of Forasol-Foramer), in
each case to the full extent Pride, Forasol-Foramer or any of its Subsidiaries
are permitted to provide indemnification under the laws of their respective
jurisdictions (and Pride will pay expenses in advance to the final disposition
of any such action or proceeding to each Indemnified Party to the full extent
permitted by law). The defense of any such claim, action, suit, proceeding or
investigation shall be conducted by Pride. If Pride has failed to conduct such
defense, the Indemnified Parties may retain counsel satisfactory to them and
Pride shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received. If Pride is
responsible for the attorney's fees of the Indemnified Parties, then the
Indemnified parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. If Pride or any of its successors or
assigns shall consolidate with or merge into any other person and shall not be a
continuing or surviving person of such consolidation or merger or shall transfer
all or substantially all of its assets to any person, then in each case, proper
provision shall be made so that the successors and assigns of Pride shall assume
the obligations set forth in Section 6.20. The provisions of this Section 6.20
are intended to be for the benefit of, and shall be enforceable by, the parties
hereto and each Indemnified Party, his heirs and his representatives.

6.21 MAINTENANCE OF THE F-F SUBSIDIARY. For a period of not less
than two years following the Closing Date, Pride will cause the F-F Subsidiary
to maintain its corporate existence and its ownership of the Forasol Companies.

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ARTICLE VII

CONDITIONS PRECEDENT

7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligation of each party to consummate the transactions provided for herein
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:

(a) FORASOL SHAREHOLDER APPROVAL. The Forasol Vote Matter shall have
been approved and adopted by the holders of the outstanding Forasol Common
Shares in accordance with Dutch law and the Articles of Association of
Forasol-Foramer.

(b) PRIDE SHAREHOLDER APPROVAL. The Pride Vote Matter shall have
been approved and adopted by the holders of the outstanding shares of
Pride Common Stock in accordance with Louisiana law and the Restated
Articles of Incorporation of Pride.

(c) NASDAQ NATIONAL MARKET LISTING. The shares of Pride Common Stock
to be distributed to shareholders of Forasol-Foramer pursuant to this
Agreement and reserved for issuance upon exercise of the Forasol Stock
Options shall have been authorized for listing on the Nasdaq National
Market upon official notice of issuance. Subject to such volume
limitations as shall be applicable to the Forasol Shareholders and Rule
145 Affiliates, such shares shall be freely tradable on the Nasdaq
National Market.

(d) OTHER APPROVALS. All consents, approvals, permits and
authorizations required to be obtained prior to the Closing from any
Governmental Entity in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
shall have been made or obtained (as the case may be), except where the
failure to obtain such consents, approvals, permits and authorizations
would not be reasonably likely to affect materially and adversely either
the ability of any party to consummate such transactions or the
consolidated financial position or results of operations of Pride
thereafter.

(e) S-4. The S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings seeking
a stop order.

(f) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions contemplated
hereby shall be in effect; PROVIDED, HOWEVER, that prior to invoking this
condition, each party shall have complied fully with its obligations under
Section 6.4 hereof and, in addition, shall use all reasonable efforts to
have any such decree, ruling, injunction or order vacated, except as
otherwise contemplated by this Agreement.

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7.2 CONDITIONS TO OBLIGATIONS OF PRIDE. The obligations of Pride to
consummate the transactions provided for herein shall be subject to the
satisfaction prior to the Closing Date of the following conditions, any or all
of which may be waived in whole or in part by Pride:

(a) REPRESENTATIONS AND WARRANTIES. Subject to Section 8.1(d), the
representations and warranties of the Sellers set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date, and Pride shall have received a certificate signed
on behalf of each of the Sellers by the chief executive officer and the
chief financial officer of each of them to such effect. Such certificate
shall identify any inaccuracies in or breaches of the representations and
warranties set forth in Article II or Article III that are deemed not to
be material.

(b) PERFORMANCE OF OBLIGATIONS. The Sellers shall have performed in
all material respects all obligations required to be performed by them
under this Agreement at or prior to the Closing Date, and Pride shall have
received a certificate signed on behalf of each of the Sellers by the
chief executive officer and the chief financial officer of each of them to
such effect. Such certificate shall identify any failure of the Sellers to
perform their obligations hereunder that are deemed not to be material.

(c) LETTERS FROM RULE 145 AFFILIATES. Pride shall have received from
the Forasol Controlling Shareholders and each Rule 145 Affiliate an
executed copy of an agreement as provided in Section 6.5.

7.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers to consummate the transactions provided for herein shall be subject to
the satisfaction prior to the Closing Date of the following conditions, any or
all of which may be waived in whole or in part by Forasol-Foramer on behalf of
all of the Sellers:

(a) REPRESENTATIONS AND WARRANTIES. Subject to Section 8.1(e), the
representations and warranties of Pride set forth in this Agreement shall
be true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date, and Forasol-Foramer shall have received a
certificate signed on behalf of Pride by its chief executive officer and
its chief financial officer to such effect. Such certificate shall
identify any inaccuracies in or breaches of the representations and
warranties set forth in Article IV that are deemed not to be material.

(b) PERFORMANCE OF OBLIGATIONS. Pride shall have performed in all
material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Forasol-Foramer shall
have received a certificate signed on behalf of Pride by its chief
executive officer and its chief financial officer to such effect. Such
certificate

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shall identify any failure of Pride to perform its obligations hereunder
that are deemed not to be material.

ARTICLE VIII

TERMINATION AND AMENDMENT

8.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the shareholders of
Forasol-Foramer and of Pride:

(a) by mutual written consent of Forasol-Foramer and Pride, or by
mutual action of their respective Boards of Directors;

(b) by either Forasol-Foramer or Pride if (i) any Governmental
Entity shall have issued any Injunction or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
consummation of the transactions provided for herein and such Injunction
or other action shall have become final and nonappealable; or (ii) any
required approval of the shareholders of the other party shall not have
been obtained by reason of the failure to obtain the required vote at a
duly held meeting of shareholders or at any adjournment thereof;

(c) by either Forasol-Foramer or Pride if the transactions provided
for herein shall not have been consummated by April 30, 1997; PROVIDED,
HOWEVER, that the right to terminate this Agreement under this Section
8.1(c) shall not be available to any party whose breach of any
representation or warranty or failure to fulfill any covenant or agreement
under this Agreement has been the cause of or resulted in the failure to
consummate such transactions on or before such date;

(d) by Pride if the conditions to Pride's obligations set forth in
Section 7.2 cannot be satisfied or it is determined that Taxes shall be
payable by Forasol-Foramer or any of its Subsidiaries as result of the
consummation of all of the transactions provided for herein whether or not
any such Taxes are disclosed on Schedule 2.13(i), in any other provisions
of this Agreement or on any other Schedule hereto (collectively,
"Corporate Transaction Taxes"); PROVIDED that, except in circumstances
involving fraud, willful misrepresentation or gross negligence on the part
of any of the Sellers, Pride shall not be entitled to terminate this
Agreement upon failure to satisfy the conditions in Section 7.2(a) or upon
the determination that Corporate Transaction Taxes shall be payable unless
the cumulative actual and potential cost thereof and loss therefrom (after
giving effect to all positive facts, changes and conditions disclosed or
discovered subsequent to the date hereof ), as reasonably determined by
Pride with the concurrence of its independent accountants, exceeds U.S.
$20 million;

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(e) by Forasol-Foramer if the conditions to the obligations of
Forasol-Foramer set forth in Section 7.3 cannot be satisfied; PROVIDED
that, except in circumstances involving fraud, willful misrepresentation
or gross negligence on the part of Pride, Forasol-Foramer shall not be
entitled to terminate this Agreement upon failure to satisfy the
conditions in Section 7.3(a) unless the cumulative actual and potential
cost thereof and loss therefrom to the shareholders of Forasol-Foramer
(after giving effect to all positive facts, changes and conditions
disclosed or discovered subsequent to the date hereof), as reasonably
determined by Forasol-Foramer with the concurrence of its independent
accountants, exceeds U.S. $20 million; or

(f) by either Forasol-Foramer or Pride if Forasol-Foramer shall
exercise the right specified in clause (ii) of Section 5.2(a); PROVIDED
that Forasol-Foramer may not effect such termination pursuant to this
Section 8.1(f) unless and until (i) Forasol-Foramer gives Pride at least
five business days' prior notice of its intention to effect such
termination pursuant to this Section 8.1(f) and (ii) at the conclusion of
such period, Pride shall have not matched the Acquisition Proposal that is
the subject of such notice.

8.2 EFFECT OF TERMINATION.

(a) If this Agreement is terminated by any party hereto as provided
in Section 8.1, this Agreement shall forthwith become void and there shall
be no liability or obligation on the part of Pride or the Sellers, except
as expressly provided in this Section 8.2.

(b) If Pride is unable to consummate the transactions provided for
herein solely as a result of its failure to obtain the requisite approval
of its shareholders and this Agreement is terminated pursuant to Section
8.1(b)(ii), Pride shall pay to Forasol-Foramer, within two business days
following the earlier of the time of such termination or the time of final
adjournment or cancellation of the Pride Shareholders' Meeting, the base
sum of U.S.$5.0 million, plus an additional payment of U.S.$15.0 million
if (i) a person or group of persons (as contemplated by Section 13(d)(3)
of the Exchange Act) shall have become the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of 10% or more of the outstanding
shares of Pride Common Stock or (ii) a proxy contest to acquire control of
Pride shall have been initiated. The parties hereto agree that the amount
of such break-up or termination fee is reasonable compensation to
Forasol-Foramer to compensate it for its undertakings herein, the
incurring of costs and expenses related hereto and the loss or potential
loss by Forasol-Foramer of other opportunities.

(c) If Forasol-Foramer or Pride terminates this Agreement pursuant
to Section 8.1(f), Forasol-Foramer shall pay to Pride (which payment is
hereby guaranteed by the Forasol Controlling Shareholders, jointly and
severally, to the extent of nonpayment by Forasol-Foramer), within two
business days following such termination, the base sum of U.S.$5.0 million
plus 40% of the excess of the total value of the Acquisition Proposal over
the total value of the Stock Consideration and the Cash Consideration (up
to a maximum aggregate payment of U.S.$20.0 million) to compensate Pride
for its undertakings herein,

A-42

the incurring of costs and expenses related hereto and the loss or
potential loss by Pride of other opportunities. The parties hereto agree
that the amount of such break-up or termination fee is reasonable under
the circumstances. For purposes of this Section 8.2(c), the total value of
the Stock Consideration shall be based on U.S. $15-1/4 per share, which
was the closing price of the Pride Common Stock on the Nasdaq National
Market on October 25, 1996.

8.3 AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the Pride Vote Matter and the Forasol Vote
Matter by the shareholders of Pride and Forasol-Foramer, respectively, but,
after any such approval, no amendment shall be made that by law requires further
approval by such shareholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.

8.4 EXTENSION; WAIVER. At any time prior to the Closing Date, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed: (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.

ARTICLE IX

GENERAL PROVISIONS

9.1 PAYMENT OF EXPENSES. Except as expressly provided herein or as
disclosed on a schedule hereto, each party hereto shall pay its own expenses
incident to preparing for entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby, whether or not such
transactions shall be consummated.

9.2 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES; SURVIVAL OF
COVENANTS. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Closing,
and any liability for breach or violation thereof shall terminate absolutely and
be of no further force and effect following the Closing. The covenants,
agreements and undertakings of the parties set forth in this Agreement shall
survive indefinitely. Statements contained in any schedule to this Agreement or
any certificate or other documents delivered pursuant to this Agreement shall be
deemed to be representations and warranties within the meaning of this Section
9.2.

9.3 NOTICES. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of

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mailing to the following address or telecopy number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder:

(a) IF TO PRIDE, TO:

Pride Petroleum Services, Inc.
1500 City West Blvd.
Suite 400
Houston, Texas 77042

Attention: Paul A. Bragg
Vice President & Chief Financial Officer

WITH COPIES TO:

Robert W. Randall
Vice President & General Counsel
Pride Petroleum Services, Inc.
1500 City West Blvd.
Suite 400
Houston, Texas 77042

AND

L. Proctor Thomas
Baker & Botts, L.L.P.
910 Louisiana
One Shell Plaza
Houston, Texas 77002

and (b) IF TO THE SELLERS, TO:

Forasol-Foramer N.V.
c/o Forasol S.A.
16 bis
rue Grange Dame Rose
BP 100-78 143
Velizy-Villacoublay Ceclex
France

Attention: Remi Dorval
Supervisory Director

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Soletanche Group
6 rue de Watford
92000 Nanterre
France

Attention: Remi Dorval
Director

Sertofin B.V.
Zeemansstraat 113
3016 CN Rotterdam
The Netherlands

Attention: C.J. Boon Falleur

WITH COPIES TO:

Jean-Marc Laveissiere
General Counsel & Secretary
Forasol S.A.
16 bis
rue Grange Dame Rose
BP 100-78 143
Velizy-Villacoublay Ceclex
France

AND

Kees ten Brink
Trenite Van Doorne
'Plaza' Weena 666
P.O. Box 190
3000 AD Rotterdam
The Netherlands

AND

T. Mark Kelly
Vinson & Elkins L.L.P.
1001 Fannin
2300 First City Tower
Houston, Texas 77002

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9.4 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents, glossary of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Unless the
context otherwise requires, "or" is disjunctive but not necessarily exclusive,
and words in the singular include the plural and in the plural include the
singular.

9.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

9.6 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereto and (b) except as provided in Sections 6.7, 6.8, 6.10 and
6.20, is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.

9.7 GOVERNING LAW. THIS AGREEMENT HAS BEEN NEGOTIATED BY OR ON
BEHALF OF THE PARTIES IN THE STATE OF TEXAS AND, EXCEPT TO THE EXTENT THAT THE
STATUTORY REQUIREMENTS FOR CONSUMMATING THE TRANSACTIONS PROVIDED FOR HEREIN ARE
GOVERNED EXCLUSIVELY BY THE LAWS OF ANOTHER JURISDICTION, THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.

9.8 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement or the breach, termination or invalidity hereof shall
be finally settled by arbitration under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce in effect on the date of
this Agreement by three arbitrators appointed in accordance with said Rules. The
arbitration shall take place in Houston, Texas and the language of the
arbitration shall be English. Judgment upon the award of the arbitrators may be
entered in any court having jurisdiction thereof. The parties acknowledge that
this agreement to arbitrate and any award rendered pursuant to this agreement
shall be governed by the 1958 United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards.

9.9 NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that,
should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action

A-46

constitutes a material breach of this Agreement or makes the Agreement
impossible to perform, in which case this Agreement shall terminate pursuant to
Article VIII hereof. Except as otherwise contemplated by this Agreement, to the
extent that a party hereto took an action inconsistent herewith or failed to
take action consistent herewith or required hereby pursuant to an order or
judgment of a court or other competent authority, such party shall not incur any
liability or obligation unless such party breached its obligations under Section
6.4 hereof or did not in good faith seek to resist or object to the imposition
or entering of such order or judgment.

9.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Pride, in its sole discretion, may
assign any or all of its rights hereunder to any wholly owned Subsidiary of
Pride. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.

9.11 SCHEDULES. For purposes of this Agreement, Schedules shall mean
the Schedules contained in the Confidential Disclosure Schedules, dated the date
hereof, delivered in connection with this Agreement and initialed by the parties
hereto. This Agreement shall have no force or effect until such schedules have
been so delivered and initialed.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.

PRIDE PETROLEUM SERVICES, INC. FORASOL-FORAMER N.V.

By: /s/ RAY H. TOLSON By: /s/ REMI DORVAL
Name: Ray H. Tolson Name: Remi Dorval
Title:President Title:Supervisory Director of
Forasol-Foramer N.V.,
Managing Director and Chief
Executive Officer of IDM B.V.

/s/ CHRISTIAN J. BOON FALLEUR
Name: Christian J. Boon Falleur
Title:Supervisory Director of Forasol-
Foramer N.V., Executive Vice
President of IDM B.V.
FORASOL CONTROLLING SHAREHOLDERS:

GIALOS B.V. SERTOFIN B.V.

By: /s/ YVES BENOIT By: /s/ LUC BERTRAND
Name: Yves Benoit Name: Luc Bertrand
Title:Managing Director Title:Director

COMPAGNIE FINANCIERE DE /s/ ALAIN DIERYCK
SERVICES PETROLIERS S.A. Name: Alain Dieryck
Title:Director

By: /s/ YVES BENOIT
Name: Yves Benoit
Title:Financial Manager

A-48

EXHIBIT A
REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement ("Agreement") is made by and
between PRIDE PETROLEUM SERVICES, INC., a Louisiana corporation ("Corporation"),
and the other parties identified on the signature page hereto (collectively, the
"Securityholders").

WHEREAS, the Securityholders have received or will receive shares of
the Corporation's Common Stock (hereinafter defined) in connection with the
liquidation of Forasol-Foramer N.V., a Dutch company ("FFNV"), the assets of
which have been acquired, and the liabilities of which have been assumed, by the
Corporation and its subsidiaries;

NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

10. CERTAIN DEFINITIONS. As used in this Agreement:

"Affiliates" has the meaning set forth in Rule 405 under the 1933
Act.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means all shares of common stock of the Corporation,
without par value, distributed to the Securityholders pursuant to that certain
Purchase Agreement dated as of December 16, 1996 by and among the Corporation,
FFNV and the Securityholders or their Affiliates.

The term "Initiating Holders" means any Securityholder requesting
registration of the Common Stock pursuant to Section 2 of this Agreement and any
other Secruityholder subsequently joining in such request.

The term "1933 Act" shall mean the Securities Act of 1933, as
amended.

2. DEMAND REGISTRATION.

(a) In the event the Corporation receives from Initiating Holders a
written request that the Corporation effect a registration (and any related
qualification under the securities laws of any state) with respect to at least
$25 million worth of the Common Stock (based on the average closing price for
such stock on the Nasdaq National Market, or such U.S. national securities
exchange to which the Common Stock shall have been admitted to trading, on the
ten trading days immediately preceding the date of such request), the
Corporation shall:

-1-

(i) within five days of receiving notice from the Initiating
Holders requesting registration, give written notice of the proposed
registration to all other Securityholders in order to provide each of them an
opportunity to become Initiating Holders; and

(ii) promptly select an underwriter or group of underwriters,
reasonably acceptable to the Initiating Holders, through which the shares of
Common Stock covered by such request shall be sold to the public.

The right of any Initiating Holder to registration pursuant to this
Section 2 will thereupon be conditioned upon such Initiating Holder's
participation in such underwriting and the inclusion of such Initiating Holder's
Common Stock in the underwriting to the extent requested by such Initiating
Holder. Nothing contained in this Section 2 shall prevent a Securityholder from
not electing to become an Initiating Holder with respect to a requested
registration pursuant to this Section 2 and electing instead to include shares
of Common Stock in such requested registration pursuant to Section 2.

(b) The Corporation will file a registration statement covering the
Common Stock so requested to be registered pursuant to this Section 2 as soon as
practicable, but in any event within sixty days, after receipt of the first
request of an Initiating Holder; provided, however, that if the Cor poration
furnishes to such Initiating Holder a certificate signed by the President of the
Corporation stating that in the good faith judgment of the Board of Directors of
the Corporation it would be seriously detrimental to the Corporation and its
shareholders for such registration statement to be filed on or before the date
filing would be required, the Corporation will have an additional period of not
more than ninety days from the date of the furnishing of such certificate within
which to file such registration statement, but the Corporation shall not utilize
this right to delay registration more than once.

(c) The Corporation (together with all Initiating Holders proposing
to sell Common Stock through such underwriting) will enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting in the manner set forth above. Each Securityholder executing
such underwriting agreement may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Corporation for the benefit of such underwriters shall also be made to and for
the benefit of such Securityholder and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement (including the delivery to such Securityholder of legal opinions and
accountants' "comfort letters" addressed to such Securityholder) be conditions
precedent to the obligations of such Securityholder. Notwithstanding the
foregoing, no Securityholder shall be required to make any representations or
warranties to or agreements with the Corporation or the underwriters other than
representations, warranties or agreements regarding such Securityholder or the
shares of Common Stock held by such Securityholder and any other
representations, warranties and agreements required by applicable law. The
Corporation will take all such actions as are necessary to comply with the terms
and obligations of such underwriting agreement. In connection with the
preparation and filing of a registration statement pursuant to this Section 2,
the Corporation

-2-

will provide the underwriters and each Securityholder participating in such
registration and each of their respective representatives and legal counsel the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission and each amendment
therefor or supplement thereto. The Corporation will furnish such underwriters
and Securityholders and their respective representatives and legal counsel with
full access to all information they reasonably request in connection with their
"due diligence" review of the Corporation and its operations. Notwithstanding
any other provision of this Section 2, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Common Stock to be included in the
registration and underwriting will be allocated among all Initiating Holders in
proportion, as nearly as practicable, to the respective amounts of Common Stock
proposed to be sold by such Initiating Holders at the time of filing the
registration statement. No Common Stock excluded from the underwriting by reason
of the underwriters' marketing limitation will be included in such registration.
If any Initiating Holder disapproves of the terms of the underwriting, it may
elect to withdraw therefrom by written notice to the Corporation, the
underwriters and the other Initiating Holders. The Common Stock so withdrawn
will also be withdrawn from registration; provided, however, that, if by the
withdrawal of such Common Stock a greater number of shares of Common Stock held
by other Initiating Holders may be included in such registration (up to the
maximum of any limitation imposed by the underwriters), then the Corporation
will offer to the Initiating Holders who have included Common Stock in the
registration the right to include additional Common Stock in proportion to the
amounts of their Common Stock so included; provided that the Corporation shall
not be obligated to proceed with the public offering initiated pursuant to this
Section 2 unless the minimum amount of Common Stock required by Section 2(a)
will be sold in such public offering.

(d) The Corporation will not be obligated to take any action
pursuant to this Section 2 for any Initiating Holder or any of its Affiliates
(as defined in Rule 405 under the 1933 Act) after the Corporation has effected
one such registration pursuant to this Section 2 for such Initiating Holder and
such registration has been declared effective by the Commission.

3. PIGGYBACK REGISTRATION.

(a) If at any time after the date hereof the Corporation proposes to
register any of its common stock under the 1933 Act (excluding common stock
issuable in exchange for or upon conversion of any other securities of the
Corporation) for sale to the public through underwriters, whether for its own
account or for the account of other security holders (including any of the
Securityholders) or both, it will then give written notice of such proposed
filing to each of the Securityholders at least ten days before the anticipated
filing date and, upon the written request of any such Securityholders given
within five days after receipt of any such notice (which request shall specify
the number of shares of Common Stock intended to be sold), the Corporation will
use its best efforts to cause such shares requested to be registered to be so
registered to the extent requisite to permit the underwritten public sale
thereof; PROVIDED, that the Corporation shall not be required to include in such
registration any Securityholder's Common Stock unless at least $5 million worth
of Common Stock, determined in accordance with the first sentence of Section
2(a), is requested to be

-3-

included. Notwithstanding the foregoing, if the underwriter or underwriters of
such offering advise the Corporation that registration of the Securityholder's
Common Stock is reasonably likely to adversely effect the success or offering
price of such offering, then the amount of securities to be included in such
registration shall be allocated as follows:

(i) first, all securities requested for inclusion in the
registration by the Corporation if the registration is initiated by the
Corporation,

(ii) second, securities requested for inclusion in the registration
by any person who has initiated the registration pursuant to a demand
registration right permitted by this Agreement, and

(iii) third, other securities requested for inclusion in the
registration which may be subject to allocation.

(b) The Corporation (together with all Securityholders proposing to
sell Common Stock pursuant to such registration) will enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting. Each Securityholder executing such underwriting agreement
may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Corporation for the
benefit of such underwriters shall also be made to and for the benefit of such
Securityholder and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement (including
the delivery to such Securityholder of legal opinions and accountants' "comfort
letters" addressed to such Securityholder) be conditions precedent to the
obligations of such Securityholder. Notwithstanding the foregoing, no
Securityholder shall be required to make any representations or warranties to or
agreements with the Corporation or the underwriters other than representations,
warranties or agreements regarding such Securityholder or the shares of Common
Stock held by such Securityholder and any other representations, warranties and
agreements required by applicable law. The Corporation will take all such
actions as are necessary to comply with the terms and conditions of such
underwriting agreement.

(c) In connection with the preparation and filing of a registration
statement pursuant to this Section 3, the Corporation will provide the
underwriters and each Securityholder participating in such registration and each
of their respective representatives and legal counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission and each amendment thereof or
supplement thereto. The Corporation will furnish such underwriters and
Securityholders and their respective representatives and legal counsel with full
access to all information they reasonably request in connection with their "due
diligence" review of the Corporation and its operation.

(d) The Corporation will not be obligated to take any action
pursuant to this Section 3 for any Securityholder after the Corporation has
provided such Securityholder an opportunity to include its Common stock in two
registrations pursuant to this Section 3 which have been declared effective by
the Commission; PROVIDED, HOWEVER, that, if the number of shares of

-4-

Common Stock initially requested to be included in a registration by such
Securityholder was reduced by 40% or more as result of the advice of
underwriters as described above, such registration shall not be counted for
purposes of this sentence.

4. EXPENSES OF REGISTRATION. All expenses incurred in connection with any
registration pursuant to this Agreement, including without limitation, all
registration, filing and qualification fees, printing expenses, and fees and
disbursements of counsel for the Corporation, will be borne by the Corporation;
provided, however, that:

(a) the Corporation will not be required to pay stock transfer taxes
or underwriters' fees, discounts or commissions relating to the Common Stock or
the fees and disbursements of counsel for any Securityholder or Initiating
Holder; and

(b) the Corporation will not be required to pay for any expenses of
any demand registration pursuant to Section 2 if the registration request is
subsequently withdrawn, unless the Initiating Holders agree to forfeit their
right to a demand registration at the Corporation's expense; PROVIDED, however,
that if at the time of the withdrawal, the Initiating Holders had learned of a
material and adverse change in the condition, business or prospects of the
Corporation from that known to the Initiating Holders at the time of their
request and such material and adverse change was known to the Corporation at the
time of the request, then the Initiating Holders shall not be required to pay
any such expenses and shall retain their demand registration rights pursuant to
Section 2.

5. INDEMNIFICATION.

(a) The Corporation will indemnify and hold harmless each
Securityholder of Common Stock with respect to which a registration statement
has been filed under the 1933 Act pursuant to this Agreement and each
underwriter of any of the Common Stock included in such registration statement
as follows:

(i) against any and all loss, liability, claim, damage and
expense whatsoever arising out of any alleged untrue statement of a material
fact contained in such registration statement (or any amendment thereto), or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arising
out of any alleged untrue statement of a material fact contained in any
preliminary prospectus or prospectus for any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein not misleading, or arising out of any violation
or alleged violation by the Corporation of the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act"), any state securities law or any rule
or regulation promulgated under the 1933 Act, the 1934 Act or any state
securities law (collectively, such untrue statements, omissions, or violations
being referred to herein as a "Violation"), unless such Violation or alleged
Violation was made in reliance upon and in conformity with written information
furnished to the Corporation by any Securityholder or underwri ter expressly for
use in such registration statement (or any amendment thereto) or such
preliminary prospectus or prospectus (or any amendment or supplement thereto);

-5-

(ii) against any and all loss, liability, claim, damage, and
expense whatsoever to the extent of the aggregate amount paid in settlement of
any litigation, commenced or threatened, or of any claim whatsoever based upon
any such alleged Violation, if such settlement is effected with the written
consent of the Corporation which consent shall not be unreasonably with held;
and

(iii) against any and all expense whatsoever reasonably
incurred in investigating, preparing or defending against or settling any
litigation, commenced or threatened, or any claim whatsoever based upon any such
alleged Violation to the extent that any such expense is not paid under (i) or
(ii) above; provided, however, that the foregoing indemnity agreement is subject
to the condition that, insofar as it relates to any such untrue statement or
omission made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement becomes effective or the amended prospectus filed with the Commission
(the "Final Prospectus"), such indemnity agreement will not inure to the benefit
of any underwriter, if a copy of the Final Prospectus was not furnished to the
person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the 1933 Act.

In no case will the Corporation be liable under the foregoing
indemnity with respect to any loss, liability, claim, damage or expense with
respect to any claim made against any Securityholder or underwriter unless the
Corporation is notified in writing of the commencement and the nature of any
action, including any governmental action, within a reasonable time after the
commencement thereof, but failure so to notify the Corporation will not relieve
the Corporation from any liability which it may have incurred otherwise than on
account of the foregoing indemnity. In case of any such notice, the Corporation
may participate at its expense in the defense, or if it so elects within a
reasonable time after receipt of such notice, to assume the defense of any such
action; but if it so elects to assume the defense, such defense will be
conducted by counsel chosen by it. In the event that the Corporation elects to
assume the defense of any such action and retain such counsel, the
Securityholder or underwriters and other defendant or defendants, if any, in the
suit, will bear the fees and expenses of any additional counsel thereafter
retained by them, provided, however, that the Corporation will pay the fees and
expenses of any additional counsel if representation by the counsel retained by
the Corporation would be inappropriate due to actual or potential differing
interests between any aforementioned persons and any other party represented by
such counsel.

(b) As a condition of the obligations of the Corporation under
Section 5(a), each selling Securityholder severally will indemnify and hold
harmless the Corporation, each officer and director of the Corporation, each
person, if any, who controls the Corporation within the meaning of Section 15 of
the 1933 Act, each underwriter of Common Stock included in any registration
statement which has been filed under the 1933 Act pursuant to this Agreement,
each person, if any, who controls such underwriter within the meaning of Section
15 of the 1933 Act, each other Securityholder, each of such other
Securityholder's officers and directors and each person controlling such other
Securityholder within the meaning of Section 15 of the 1933 Act against any and
all loss, liability, claim, damage and expense described in clauses (i) through
(iii), inclusive, of Section 5(a), but only with respect to statements or
omissions made in such registration statement (or any amendment thereto) or any
preliminary prospectus or prospectus (or any amendment or

-6-

supplement thereto) in reliance upon and in conformity with written information
furnished to the Corporation by such Securityholder expressly for use in such
registration statement (or any amendment thereto) or such preliminary prospectus
or prospectus (or any amendment or supplement thereto). In case any action is
brought against the Corporation or any person so indemnified pursuant to the
provisions of this Section 5(b) and in respect of which indemnity may be sought
against any Securityholder, the Securityholders from whom indemnity is sought
will have the rights, duties, and limitations on lia bility given to the
Corporation, and the Corporation and the other persons so indemnified will have
the rights and duties given to the persons entitled to indemnification by the
provisions of Section 5(a).

6. INFORMATION REGARDING SECURITYHOLDERS. Each Securityholder having Common
Stock included in any registration will furnish to the Corporation such
information regarding such Securityholders as the Corporation may reasonably
request in writing and as is required in connection with any registration,
qualification or compliance referred to in this Agreement.

7. DISPOSITION WITHOUT REGISTRATION. If at the time of any proposed disposition
of any Common Stock, such Common Stock has not been registered under the 1933
Act, the Corporation may require, as a condition of allowing such disposition,
that the Securityholder furnish to the Corporation (a) such information as is
necessary in order to establish that such disposition may be made without
registration under the 1933 Act, and (b) if the disposition is not made in
compliance with Rule 145(d)(1) under the 1933 Act, at the expense of the
Securityholder, an opinion of counsel reasonably satisfactory in form and
substance to the Corporation to the effect that such disposition may be made
without registration under the 1933 Act; provided that nothing contained in this
Section 7 will relieve the Corporation from complying with any request for
registration made pursuant to the other provisions of this Agreement.

8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
Securityholders the benefits of Rule 145(d)(1) under the 1933 Act and any rule
or regulation of the Commission which may permit the sale of the Common Stock to
the public without registration, the Corporation will so long as the Common
Stock is part of a class of securities registered under Section 12(b) or Section
12(g) of the Exchange Act:

(a) make and keep public information available as contemplated by
Rule 144(c) at all times until all of the Common Stock has been sold or
otherwise distributed to the public; and

(b) file with the Commission in a timely manner all reports and
other documents required of the Corporation under the 1934 Act.

9. OTHER REGISTRATION RIGHTS. The Corporation may grant to other holders of its
securities the right to request registration of such securities or to include
such securities in a registration pursuant to Section 3 hereof; however, unless
the Corporation has theretofore afforded the Securityholders the opportunity to
register Common Stock, the Corporation, without the prior written consent of the
Securityholders, will not enter into any agreement with any securityholder or
prospective secur ityholder which would allow such other securityholder to
include securities of the Corporation

-7-

owned by such securityholder in any registration filed under Section 2 hereof,
unless under the terms of such agreement, such securityholder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not diminish the amount of Common Stock which is included.

10. TERM. The obligations of the Corporation to effect any registration
hereunder shall terminate upon the third anniversary of the date hereof, subject
to earlier termination as expressly provided in Sections 2 and 3. The
obligations of all parties hereto under Section 5 shall survive indefinitely.

11 SEVERABILITY. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.

12. COUNTERPARTS. This Agreement may be executed in counterparts, any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same Agreement.

13. DESCRIPTIVE HEADINGS. The descriptive headings in this Agreement are
inserted for convenience only and shall not limit or otherwise affect the
meaning hereof.

14. GOVERNING LAW. All questions concerning the construction, validity and
interpretation of this Agreement, to the extent not governed by the 1933 Act,
1934 Act or other applicable securities law, will be governed by the internal
law, and not the law of conflicts, of the State of Texas.

15. NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when actually delivered to the
recipient by special courier or personal delivery, or mailed by certified or
registered mail, return receipt requested and postage prepaid, to the recipient
seven days after such mailing. Such notices, demands and other communications
will be sent to each of the Holders at their respective addresses on the books
of the Corporation, and to the Corporation at the address indicated below:

Pride Petroleum Services, Inc.
Attn: Corporate Secretary
1500 City West Blvd.
Suite 400
Houston, Texas 77042

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

16. BENEFIT OF AGREEMENT. No person not a party to this Agreement other than an
Affiliate of a Securityholder shall have rights under this Agreement as a third
party beneficiary or otherwise.

-8-

17. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties hereto as to the subject matter hereof and supersedes all previous
agreements among all or some of the parties hereto, whether written, oral or
otherwise.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the ___ day of _______________, 1997.

PRIDE PETROLEUM SERVICES, INC.

By:
Ray H. Tolson
President
SECURITYHOLDERS:
GIALOS B.V. SERTOFIN B.V.

By: By:
Name: Name:
Title: Title:

COMPAGNIE FINANCIERE DE
SERVICES PETROLIERS S.A.

By:
Name:
Title:

-9-

APPENDIX B

December 4, 1996

Board of Directors
Pride Petroleum Services, Inc.
1500 City West Boulevard
Suite 400
Houston, Texas 77042

Members of the Board:

Pride Petroleum Services, Inc. ("Pride") has requested the opinion of
Simmons & Company International ("Simmons") as investment bankers as to the
fairness, from a financial point of view, to the holders of the common stock, no
par value, of Pride (the "Pride Common Stock") of the Consideration (as
defined below) to be paid in the proposed acquisition of the operating
subsidiaries of Forasol-Foramer N.V. ("Forasol") by Pride, pursuant to the
Purchase Agreement (the "Agreement") to be dated as of December 16, 1996 among
Pride, Forasol and the controlling shareholders of Forasol (the "Proposed
Acquisition").

As more specifically set forth in the Agreement, in the Proposed
Acquisition the total purchase price (the "Consideration") delivered to the
holders of the common shares, NLG.01 par value per share, of Forasol ("Forasol
Common Shares") will be (i) an amount in cash equal to U.S.$6.80 multiplied by
the number of Forasol Common Shares issued and outstanding immediately prior to
the Proposed Acquisition closing and (ii) a number of shares of Pride Common
Stock equal to 0.66 multiplied by the number of Forasol Common Shares issued and
outstanding immediately prior to the Proposed Acquisition closing. Based on the
number of Forasol Common Shares represented in the Agreement to be presently
outstanding, the aggregate Consideration will consist of approximately U.S.$113
million in cash and approximately 11 million shares of Pride Common Stock
(representing approximately 27.8% of the Pride Common Stock to be outstanding
immediately after the Proposed Acquisition closing).

Simmons, as a specialized energy-related investment banking firm, is
continuously engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, private placements of debt and equity,
and the management and underwriting of sales of equity and debt to the public.
Simmons has previously rendered investment banking services to Pride in
connection with transactions for which Simmons received customary compensation.
In addition, in the ordinary course of business, Simmons may actively trade the
securities of Pride and Forasol for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.

In connection with rendering its opinion, Simmons reviewed and analyzed,
among other things, the following: (i) the draft Agreement; (ii) publicly
available financial statements and other information concerning Pride, including
(a) the Annual Reports of Pride on Form 10-K for each of the years in the three-
year period ended December 31, 1995, (b) the Registration Statements of Pride on
Form S-3, including the convertible debt and common stock prospectuses, dated
January 22, 1996 and June 26, 1996, respectively, (c) the Quarterly Reports of
Pride on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and
September 30, 1996, and (d) the Current Reports of Pride on Form 8-K filed on
March 20, 1996 and on May 15, 1996, as amended on June 4, 1996; (iii) certain
internal information, primarily financial in nature, concerning the business and
operations of Pride furnished by Pride for purposes of Simmons' analysis; (iv)
certain publicly available information concerning the trading of, and the
trading market for, Pride Common Stock; (v) publicly available financial
statements and other information concerning Forasol, including (a) the
Registration Statement of Forasol on Form F-1, including the common stock
prospectus, dated May 10, 1996, relating to the initial public offering of
Forasol Common Shares and (b) the Report of Foreign Private Issuer of Forasol on
Form 6-K for the six months ended June 30, 1996; (vi) certain internal
information, primarily financial in nature, concerning the business and
operations of Forasol furnished by Forasol at

B-1

Pride's request for purposes of Simmons' analysis; (vii) certain publicly
available information concerning the trading of, and the trading market for,
Forasol Common Shares; (viii) certain publicly available information with
respect to certain other companies that Simmons believed to be comparable to
Pride or Forasol (the "Comparable Companies") and the trading markets for
certain of Comparable Companies' securities; (ix) certain publicly available
information concerning the estimates of the future operating and financial
performance of Pride, Forasol and Comparable Companies prepared by industry
experts unaffiliated with either Pride or Forasol; and (x) certain publicly
available information concerning the nature and terms of certain other
transactions considered relevant to the inquiry. Further, Simmons made such
other analyses and examinations as deemed necessary or appropriate. Simmons also
met with certain officers and employees of Pride and Forasol to discuss the
foregoing, as well as other matters believed relevant to the inquiry.

In arriving at its opinion, Simmons assumed and relied upon the accuracy
and completeness of all of (i) the financial and other information provided by
Pride and Forasol, or publicly available, including without limitation,
information with respect to asset conditions, tax positions, liability reserves
and business contract terms, and (ii) the representations and warranties of
Forasol and Pride contained in the Agreement. Simmons did not attempt
independently to verify any of such information, representations or warranties.
Simmons did not conduct a physical inspection of any of the assets, properties
or facilities of Pride or Forasol, nor did Simmons make or obtain any
independent evaluations or appraisals of any of such assets, properties or
facilities, other than estimates contained in certain publicly available
information.

In conducting its analysis and arriving at its opinion, Simmons considered
such financial and other factors as it deemed appropriate under the
circumstances including, among others, the following: (i) the historical and
current financial position and results of operations of Pride and Forasol; (ii)
the business prospects of Pride and Forasol; (iii) the historical and current
market for the equity securities of Pride, Forasol and Comparable Companies;
(iv) the respective contributions in terms of various financial measures of
Pride and Forasol to the combined company, and the relative pro forma ownership
of Pride after the Proposed Acquisition by the current holders of Pride Common
Stock and Forasol Common Shares; (v) the estimated pro forma effect of the
Proposed Acquisition on Pride's capitalization and historical and future cash
flows, earnings per share and cash flow per share; and (vi) the nature and terms
of certain other acquisition transactions that Simmons believed to be relevant.
Simmons also took into account other financial analyses and studies which it
deemed appropriate, its assessment of general economic, market and financial
conditions and its experience in connection with similar transactions and
securities valuation generally. Simmons' opinion necessarily was based upon
conditions as they existed and could be evaluated on, and on the information
made available at, the date hereof.

Simmons is acting as a financial advisor to Pride in this transaction and
will receive a customary fee for its services.

Based upon and subject to the foregoing, Simmons is of the opinion, as
investment bankers, that the Consideration to be paid by Pride in the Proposed
Acquisition is fair, from a financial point of view, to the holders of Pride
Common Stock.

Sincerely,

SIMMONS & COMPANY INTERNATIONAL

B-2

APPENDIX C
December 16, 1996

The Board of Directors
Forasol-Foramer N.V.
16 bis, rue Grange Dame Rose
BP 100
78 143 Velizy-Villacoublay Cedex
FRANCE

Members of the Board:

You have advised us that Forasol-Foramer N.V. ("Forasol" or the
"Company") proposes to be acquired by Pride Petroleum Services, Inc.
("Pride") through a business combination (the "Combination Transaction") in
which outstanding shares of Forasol will be exchanged for or converted into a
combination of cash and shares of common stock (the "Purchase Consideration")
of Pride (the "Pride Shares"). The Combination Transaction will be effected
pursuant to an Agreement dated December 16, 1996 (which, with the exhibits
thereto, is defined herein as the "Agreement") to which each of Forasol and
Pride is a party. You have requested our opinion as to the fairness, from a
financial point of view, to the holders of Forasol Common Stock (as defined
below), of the consideration to be received by such holders pursuant to the
Combination Transaction.

As more specifically set forth in the Agreement, and subject to the terms
and conditions thereof, upon consummation of the Combination Transaction, each
outstanding share of Forasol common stock, NLG 0.01 par value ("Forasol Common
Stock"), will be exchanged for or converted into, on a per share basis,
U.S.$6.80 in cash and 0.66 Pride Shares, no par value as such shares are
currently constituted. We understand that the Combination Transaction will be
accounted for as a purchase transaction in accordance with generally accepted
accounting principles as described in Accounting Principles Board Opinion Number
16.

Jefferies & Company, Inc. ("Jefferies") has acted as financial advisor to
Forasol in connection with the Combination Transaction and will receive (i) a
retainer of $250,000 which has been paid in December 1995; (ii) a minimum cash
fee of $500,000 payable upon completion of the Combination Transaction; (iii) a
fee, payable in cash at the closing of the Combination Transaction, equal to (a)
1.5% of the Aggregate Consideration if the Combination Transaction is less than
$50 million; (b) 1.125% of the Aggregate Consideration if the Combination
Transaction is $50 million to $75 million; or (c) 0.75% of the Aggregate
Consideration if the Combination Transaction is greater than $75 million; and
(iv) a cash fee of $100,000 upon rendering of the Opinion. The fees in (i), (ii)
and (iv) shall be credited toward any fees earned pursuant to section (iii). In
addition to the fees outlined above, the Company shall pay Jefferies an
additional cash fee of 1% of the portion of the Aggregate Consideration paid or
payable (or to be received and receivable) in the form of common equity. For
purposes hereof, the term Aggregate Consideration shall mean the total amount of
cash and/or securities and the fair market value (on the date of payment to the
Company) of all other property to be received by Forasol-Foramer directly or
indirectly from Pride in connection with the Combination Transaction. Aggregate
Consideration shall also include the value of any assumed long-term liabilities
of the Company.

Jefferies has previously rendered certain investment banking and financial
advisory services to Forasol for which it has received customary compensation.
Recently, Jefferies acted as a joint underwriter for the initial public offering
of Forasol Common Stock in May 1996. In addition, in the ordinary course of
Jefferies' business, it actively trades the securities of Forasol for its own
account and for the accounts of its customers, and, accordingly, may at any time
hold a long or short position in such securities. Jefferies has not rendered any
investment banking or financial advisory services to Pride in the Combination
Transaction.

C-1

In our review and analysis and in rendering our opinion, we have assumed
and relied upon the accuracy and completeness of all the financial and other
information provided to us by Forasol's and Pride's management, or publicly
available information, and have not assumed any responsibility for the
independent verification of such information. We have not conducted a physical
inspection of any of the properties or facilities of Forasol and Pride, nor have
we made or considered any independent evaluations or appraisals of any of such
properties or facilities. The Purchase Consideration was based on negotiations
between Pride and Forasol during which Jefferies provided certain assistance to
Forasol.

In conducting our analysis and rendering our opinion as expressed herein,
we have reviewed and considered such financial and other factors as we have
deemed appropriate under the circumstances including, among others, the
following: (i) the Agreement; (ii) the historical and current financial
condition and results of operations of Forasol and Pride, including (a) the
Report on Form 6-K of Forasol for the six months ended June 30, 1996, (b) the
Annual Reports on Form 10-K of Pride for the years ended December 31, 1993, 1994
and 1995, and (c) the Quarterly Reports on Form 10-Q of Pride for the quarters
ended March 31, 1996, June 30, 1996, and September 30, 1996; (iii) certain
non-public financial and non-financial information prepared by the management of
Forasol and Pride, which data was made available to us in our role as financial
advisor to Forasol; (iv) published information regarding the financial
performance and operating characteristics of a selected group of companies which
we deemed comparable; (v) business prospects of Forasol and Pride when taking
into consideration the impact of the Combination Transaction; (vi) the
historical and current market prices for Forasol Common Stock and Pride Common
Stock and for the equity securities of certain other companies with businesses
that we consider relevant to our inquiry; (vii) publicly available information,
including research reports on companies we considered relevant to our inquiry;
and (viii) the nature and terms of other recent acquisition transactions in the
offshore drilling industry. We have met with certain officers and employees of
Forasol and Pride to discuss the foregoing as well as other matters we believed
relevant to our opinion. We have also taken into account general economic,
monetary, political, market and other conditions as well as our experience in
connection with similar transactions and securities valuation generally. Our
opinion is based upon all of such conditions as they exist currently and can be
evaluated on the date hereof. Existing conditions are subject to rapid and
unpredictable changes and such changes could impact Jefferies' opinion. Our
opinion does not constitute a recommendation of the Combination Transaction over
any alternative transactions which may be available to Forasol and does not
address Forasol's underlying business decision to effect the Combination
Transaction. Finally, we are not opining as to the market value of the
consideration to be received by Forasol or the prices at which any of the
securities of Pride may trade following the consummation of the Combination
Transaction.

Based upon and subject to the foregoing, and upon such other matters as we
consider relevant, we are of the opinion as investment bankers that the
consideration to be received by the holders of Forasol Common Stock pursuant to
the Combination Transaction is fair, from a financial point of view, to such
holders.

It is understood and agreed that this opinion is provided solely for the
use of the Board of Directors of Forasol as one element in the Board's
consideration of the Combination Transaction and may not be used for any other
purpose, or otherwise referred to, relied upon or circulated without our prior
written consent. Without limiting the foregoing, this opinion does not
constitute a recommendation to any shareholder (or any other person) as to how
such person should vote with respect to the Combination Transaction.

Very truly yours,

Jefferies & Company, Inc.

C-2

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 83 of the Business Corporation Law of the State of Louisiana gives
corporations the power to indemnify officers and directors under certain
circumstances. Article IX of Pride's Restated Articles of Incorporation and
Section 13 of Pride's Bylaws contain provisions that provide for indemnification
of certain persons (including officers and directors).

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits and financial statement schedules are filed with or
incorporated by reference in this Registration Statement:

(a) Exhibits

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------------------------ ------------------------------------------------------------------------------------------

2.1 -- Purchase Agreement among Pride Petroleum Services, Inc., Forasol-Foramer N.V. and the
Controlling Shareholders of Forasol-Foramer N.V. dated as of December 16, 1996 (included
as Appendix A to the Proxy Statement-Prospectus)
+2.2 -- Purchase Agreement between Dawson Production Services, Inc. and Pride Petroleum Services,
Inc. dated as of December 23, 1996
*4.1 -- Restated Articles of Incorporation of Pride (Form S-1, Registration No. 33-33233, Exhibit
3(a))
*4.2 -- Amendment to Restated Articles of Incorporation (Form S-3, Registration No. 33-76310,
Exhibit 4.2)
*4.3 Bylaws of Pride (Form S-1, Registration No. 33-33233, Exhibit 3(b))
+5.1 -- Opinion of McGlinchey Stafford Lang
+15.1 -- Awareness Letter of Coopers & Lybrand L.L.P.
+23.1 -- Consent of Coopers & Lybrand L.L.P.
+23.2 -- Consent of Pistrelli, Diaz y Asociados
+23.3 -- Consent of Price Waterhouse
+23.4 -- Consent of Saba & Co.
+23.5 -- Consent of McGlinchey Stafford Lang (included in Exhibit 5.1)
+23.6 -- Consent of Remi Dorval
+23.7 -- Consent of Christian J. Boon Falleur
23.8 -- Consent of Simmons & Company International (included in Appendix B to the Proxy
Statement/Prospectus)
23.9 -- Consent of Jefferies & Company, Inc. (included in Appendix C to the Proxy
Statement/Prospectus)
+24.1 -- Powers of Attorney
+99.1 -- Form of Chairman's Letter to Pride Shareholders
+99.2 -- Form of Notice of Special Meeting of Shareholders of Pride
+99.3 -- Form of Proxy for Special Meeting of Shareholders of Pride
+99.4 -- Form of Chairman's Letter to Forasol-Foramer Shareholders
+99.5 -- Form of Notice of Forasol-Foramer Extraordinary General Meeting
+99.6 -- Form of Proxy for Extraordinary General Meeting of the Shareholders of Forasol-Foramer
99.7 -- Opinion of Simmons & Company International (included as Appendix B to the Proxy
Statement/Prospectus)
99.8 -- Opinion of Jefferies & Company, Inc. (included as Appendix C to the Proxy
Statement/Prospectus)

- ------------
* Incorporated by reference as indicated.

+ Previously filed.

(b) Financial Statement Schedules

None.

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ITEM 22. UNDERTAKINGS

(a) Pride hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change in such information in the registration statement:

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by Pride pursuant to Section 13 or Section 15(d) of the Exchange that
are incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(b) Pride hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of its annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(c)(1) Pride hereby undertakes as follows: that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this Registration Statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.

(2) Pride undertakes that every prospectus (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

II-2

(d) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Pride pursuant to the provisions described under Item 20 above, or otherwise,
Pride has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Pride of expenses incurred
or paid by a director, officer or controlling person of Pride in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, Pride
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

(e) Pride hereby undertakes to respond to requests for information that is
incorporated by reference into the prospectus pursuant to items 4, 10(b), 11, or
13 of Form S-4, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.

(f) Pride hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.

II-3

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PRIDE HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS,
ON JANUARY 30, 1997.
PRIDE PETROLEUM SERVICES, INC.

By: /s/ RAY H. TOLSON
RAY H. TOLSON
CHAIRMAN OF THE BOARD, PRESIDENT
AND
CHIEF EXECUTIVE OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON JANUARY 30, 1997.

SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------

/s/RAY H. TOLSON Chairman of the Board, President and
RAY H. TOLSON Chief Executive Officer
(PRINCIPAL EXECUTIVE OFFICER)

/s/PAUL A. BRAGG Vice President, Chief Financial Officer
PAUL A. BRAGG
(PRINCIPAL FINANCIAL OFFICER)

/s/EARL W. McNIEL Chief Accounting Officer
EARL W. MCNIEL
(PRINCIPAL ACCOUNTING OFFICER)

* Director
JAMES B. CLEMENT

* Director
JORGE E. ESTRADA M.

* Director
RALPH D. MCBRIDE

* Director
THOMAS H. ROBERTS, JR.

* Director
JAMES T. SNEED

*By: /s/ RAY H. TOLSON
RAY H. TOLSON
ATTORNEY-IN-FACT

II-4