Allis-Chalmers Energy Announces Closing of Tender Offers for Senior Notes

HOUSTON--(Business Wire)--
Allis-Chalmers Energy Inc. (NYSE:ALY) today announced that pursuant to its
previously announced tender offers, it has accepted for purchase an aggregate of
$74,762,000 in principal amount of its senior notes, comprised of $30,562,000
aggregate principal amount of its 9.0% Senior Notes due 2014 (CUSIP Number
019645 AC 4) (the "9.0% Notes") and $44,200,000 aggregate principal amount of
its 8.5% Senior Notes due 2017 (CUSIP Number 019645 AE 0) (the "8.5% Notes," and
together with the 9.0% Notes, the "Notes"). The purchased Notes represented
approximately 12.0% and 17.7% of the aggregate principal amounts of the 9.0%
Notes and the 8.5% Notes, respectively, outstanding immediately prior to today`s
tender offer settlement.

The tender offers expired at 5:00 p.m., Eastern Time, on June 26, 2009. Pursuant
to the terms of the tender offers, holders of 9.0% Notes that were accepted for
purchase received total consideration of $650 per $1,000 principal amount and
holders of 8.5% Notes that were accepted for purchase received total
consideration of $600 per $1,000 principal amount. In the aggregate, holders of
purchased Notes received a total of $46,385,300 plus accrued and unpaid interest
on the Notes to, but not including, June 29, 2009.

As previously announced, Allis-Chalmers obtained the funds necessary for its
purchase of Notes and other planned debt retirement from its recently completed
backstopped rights offering and private placement of convertible preferred
stock, pursuant to which it received aggregate gross proceeds of approximately
$125.6 million. In addition to the purchase of the Notes, Allis-Chalmers will
also apply $35.0 million of such proceeds to the repayment of all outstanding
borrowings under its $90.0 million revolving credit facility, and it expects in
the near future to prepay an additional $8.0 to $10.0 million of other debt.

Micki Hidayatallah, Allis-Chalmers` Chairman and CEO stated, "We are very
grateful for the commitment that our shareholders have made to the company with
their substantial support of the rights offering. We look forward to working
with Lime Rock Partners. In addition to their financial commitment, they bring
tremendous experience from their previous investments in the oilfield services
sector. We believe the new equity and the decrease in our debt will reposition
our company financially. We will have reduced our debt by close to $120.0
million and reduced interest expense by approximately $9.0 million per year.
Additionally, we estimate we will have cash on hand of approximately $41.0
million and a fully available $90.0 million revolving line of credit."

RBC Capital Markets Corporation acted as the dealer manager for the tender
offers, and Global Bondholder Services Corporation served as the information
agent and depositary.

About Allis-Chalmers

Allis-Chalmers Energy Inc. is a Houston-based multi-faceted oilfield services
company. Allis-Chalmers provides services and equipment to oil and natural gas
exploration and production companies, domestically primarily in Texas,
Louisiana, New Mexico, Oklahoma, Arkansas, offshore in the Gulf of Mexico, and
internationally primarily in Argentina, Brazil and Mexico. Allis-Chalmers
provides directional drilling services, casing and tubing services,
underbalanced drilling, production and workover services with coiled tubing
units, rental of drill pipe and blow-out prevention equipment, and international
drilling and workover services.

Forward-Looking Statements

This press release contains forward-looking statements (within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934) regarding Allis-Chalmers` business, financial condition,
results of operations and prospects. Words such as expects, anticipates,
intends, plans, believes, seeks, estimates and similar expressions or variations
of such words are intended to identify forward-looking statements, but are not
the exclusive means of identifying forward-looking statements in this press
release.

Although forward-looking statements in this press release reflect the good faith
judgment of Allis-Chalmers` management, such statements can only be based on
facts and factors that its management currently knows. Consequently,
forward-looking statements are inherently subject to risks and uncertainties,
and actual results and outcomes may differ materially from the results and
outcomes discussed in the forward-looking statements. Factors that could cause
or contribute to such differences in results and outcomes include, but are not
limited to, demand for oil and natural gas drilling services in the areas and
markets in which Allis-Chalmers operates, competition, obsolescence of products
and services, the ability to obtain financing to support operations,
environmental and other casualty risks, and the effect of government regulation.

Further information about the risks and uncertainties that may affect
Allis-Chalmers` business are set forth in Allis-Chalmers` most recent filing on
Form 10-K (including, without limitation, in the "Risk Factors" section) and in
its other SEC filings and publicly available documents. Allis-Chalmers urges
readers not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Allis-Chalmers undertakes no
obligation to revise or update any forward-looking statements in order to
reflect any event or circumstance that may arise after the date of this press
release.

Allis-Chalmers Energy Inc.
Victor M. Perez, CFO, 713-369-0550

Copyright Business Wire 2009