TEXT-S&P rates Allis-Chalmer's $350 mln notes 'B+'

(The following statement was released by the ratings agency)

July 28 - Standard & Poor's Ratings Services said today it assigned its
'B+' (the same as the corporate credit rating) rating to (Allis-Chalmer's)
proposed $350 million senior unsecured notes due 2018. At the same time we
assigned the notes a recovery rating of '3', indicating meaningful (50% to 70%)
recovery in the event of a payment default. The company will use note proceeds
to help to finance the acquisition of Bronco Drilling Co Inc (unrated). We also
affirmed the 'B+' corporate credit rating. The outlook is stable.

The corporate credit rating on Allis reflects recently soft operating
performance at the company, specifically its rental services segment, and low
rig utilization rates at Bronco during the fourth quarter of 2007 and the first
quarter of 2008, which resulted in lower cash flows. Also, the company is very
acquisitive. While the acquisitions have improved Allis' scale and scope of
operations, they also raise questions as to whether management has the ability
to effectively manage such rapid growth. Furthermore, the acquisition of Bronco
represents the company's first venture in the domestic land rig business.
Finally, the oilfield services industry is highly cyclical. We expect demand
for services to improve during the second half of 2008 because of robust
commodity prices, but the rig count has historically been very volatile, and a
reversion to low drilling activities would result in significantly lower cash
flows for Allis.

"The rating also reflects expected improvements in operating performance as
a result of strong industry conditions during the second half of 2008,
adherence to its stated financial policy, and meaningful improvements in the
company's scale and product offerings during the past year," said Standard &
Poor's credit analyst Amy Eddy.

Allis is a small, rapidly growing oilfield services company operating
primarily in Texas, Louisiana, and Argentina. The company has consummated
several acquisitions since 2001 and has increased its pro forma EBITDA to about
$300 million compared with $37 million when Standard & Poor's first rated the
company in January 2006. Although the pace of acquisitions raises questions as
to whether management has the ability to effectively manage such rapid growth
and complicates operating performance comparisons, we recognize that the
acquisitions have strengthened the company's business risk profile.

The outlook is stable. Standard & Poor's recognizes that industry trends
for oilfield services should remain favorable in the near term, which should
improve Allis' cash flows during the second half of 2008. We expect the company
to continue to be acquisitive and maintain a debt to EBITDA ratio of around 3x.
Any further positive rating actions are contingent on Allis' ability to
profitably maintain its scale and scope of operations. Worse-than-expected
financial results, whether due to deteriorating industry fundamentals or
company-specific issues, that result in debt to EBITDA above 4x and interest
coverage of less than 3x could result in a negative rating action.
(New York Ratings Team)