BAYARD DRILLING TECHNOLOGIES INC, S-1/A, 1997-10-17

BAYARD DRILLING TECHNOLOGIES INC
S-1/A, 1997-10-17
OIL & GAS FIELD MACHINERY & EQUIPMENT

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997

REGISTRATION NO. 333-34451
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

PRE-EFFECTIVE AMENDMENT NO. 2

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
BAYARD DRILLING TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<C> <C> <C>
DELAWARE
(State or other jurisdiction 1381 73-1508021
of incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
</TABLE>

4005 NORTHWEST EXPRESSWAY, SUITE 550E
OKLAHOMA CITY, OKLAHOMA 73116
(405) 840-9550
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
---------------------
JAMES E. BROWN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BAYARD DRILLING TECHNOLOGIES, INC.
4005 NORTHWEST EXPRESSWAY, SUITE 550E
OKLAHOMA CITY, OKLAHOMA 73116
(405) 840-9550
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
---------------------
Copies to:

<TABLE>
<C> <C>
DAVID G. MONK WILLIAM N. FINNEGAN, IV
BAKER & BOTTS, L.L.P. ANDREWS & KURTH L.L.P.
2001 ROSS AVENUE 600 TRAVIS STREET, SUITE 4200
DALLAS, TEXAS 75201 HOUSTON, TEXAS 77002
(214) 953-6500 (713) 220-4200
</TABLE>

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

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, check the following box: [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
- ------------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
- ------------------

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
---------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
================================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $0.01 per share......... $232,760,000 $70,534
================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).

(2) A portion of this fee was previously paid in connection with the initial
filing of this Registration Statement.

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.
================================================================================
<PAGE> 2

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 OCTOBER 17, 1997

PROSPECTUS
, 1997

9,200,000 SHARES

[BAYARD DRILLING TECHNOLOGIES, INC. LOGO]

COMMON STOCK

Of the 9,200,000 shares of common stock, par value $.01 per share ("Common
Stock"), of Bayard Drilling Technologies, Inc. ("Bayard" or the "Company")
offered hereby (the "Offering"), 4,000,000 shares are being sold by Bayard and
5,200,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). The Company will not receive any of the proceeds from
the sale of shares of Common Stock by the Selling Stockholders pursuant to the
Offering. See "Use of Proceeds" and "Principal and Selling Stockholders."

Prior to the Offering, there has been no public market for the Common
Stock. It is currently estimated that the initial offering price to the public
of the Common Stock will be between $20.00 and $22.00 per share. For information
relating to the factors considered in determining the initial offering price to
the public of the Common Stock, see "Underwriting."

The Common Stock has been approved for listing on the American Stock
Exchange ("AMEX"), subject to official notice of issuance, under the symbol
"BDI."

SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES 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 PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.............................. $ $ $ $
Total(3)............................... $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."
(2) Before deducting expenses estimated at $1,000,000 which will be paid by the
Company.

(3) The Company and certain of the Selling Stockholders have granted the
Underwriters an option, exercisable within 30 days of the date hereof, to
purchase up to 169,050 and 1,210,950 additional shares of Common Stock,
respectively, at the Price to the Public less Underwriting Discounts and
Commissions, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to the Public, Underwriting Discounts and
Commissions, Proceeds to the Company and Proceeds to the Selling
Stockholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."

The shares of Common Stock are being offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters against payment
therefor and subject to various prior conditions, including their right to
reject orders in whole or in part. It is expected that delivery of share
certificates representing the Common Stock will be made in New York, New York on
or about , 1997.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
PRUDENTIAL SECURITIES INCORPORATED
RAUSCHER PIERCE REFSNES, INC.
RAYMOND JAMES & ASSOCIATES, INC.
<PAGE> 3

[MAP OF OPERATING LOCATIONS]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information contained in this
Prospectus (i) assumes that the Underwriters' over-allotment option is not
exercised, (ii) reflects a two-for-one stock split effected by means of a stock
dividend to stockholders of record on August 22, 1997 and (iii) for the purposes
of operating data, fleet statistics, shares outstanding and, where specified,
operating results, gives pro forma effect to the October 16, 1997 acquisition of
Bonray Drilling Corporation ("Bonray"), as described below. Unless the context
otherwise requires, the terms "Bayard" and the "Company" include Bayard Drilling
Technologies, Inc. and its predecessors and subsidiaries.

THE COMPANY

The Company is a leading provider of contract land drilling services to
major and independent oil and gas companies and operates the fifth largest land
drilling fleet in the United States. As of September 30, 1997, the Company's rig
fleet consisted of 54 rigs, of which 48 were being marketed and six were to be
refurbished and expected to be placed in operation within the next 12 months.
During the nine months ended September 30, 1997, the Company experienced a
utilization rate of approximately 94% for its marketed rigs.

The Company's fleet consists primarily of rigs capable of deep drilling
applications (well depths of 15,000 feet or greater). The Company believes that
deep rigs are in high demand due to improved deep drilling economics available
to domestic oil and gas companies. Deep drilling targets are more attractive to
oil and gas companies due to new technologies, including (i) three-dimensional
seismic techniques, (ii) increasingly accurate down hole measurement devices and
(iii) improved guidance systems and directional drilling motors for horizontal
and directional wells. Examples of currently active deep drilling areas include
the Tuscaloosa trend in Louisiana, the Pinnacle Reef trend in East Texas, the
Anadarko and Arkoma basins in Oklahoma and the Austin Chalk in Texas and
Louisiana.

The Company's fleet includes 38 rigs capable of drilling to depths of
15,000 feet or greater, 25 of which are capable of drilling to depths of 20,000
feet or greater. Of these 38 rigs, 21 are diesel electric silicon controlled
rectifier ("SCR") rigs which offer operators superior control and efficiency,
particularly in deep, directional or horizontal applications. Of the five
largest domestic land drillers, the Company ranked first in average measured
depth per well drilled for the nine month period ended September 30, 1997.

The Company's fleet is concentrated in its two core operating
regions -- the Mid-Continent region (which includes principally Oklahoma, North
Texas and the Texas Panhandle) and the Gulf Coast region of Texas and Louisiana.
At September 30, 1997, the Company had 35 rigs marketed in Oklahoma and was the
most active land drilling contractor in the state. In 1996, 1,835 onshore wells
were drilled in Oklahoma, making it the third most active state for domestic
onshore drilling. The Company's rigs operating in the Mid-Continent region are
generally capable of drilling to depths of 10,000 feet or greater and are
marketed by the Company to meet the specific well depth and mobility needs of
producers in that region. At September 30, 1997, the Company had 13 rigs
marketed in the Gulf Coast region, including 11 diesel electric SCR rigs. This
region is characterized by significant drilling activity in deep, technically
challenging formations for which the Company's rigs are particularly well
suited. The Company believes that its high quality equipment, including diesel
electric SCR rigs, powerful mud pumps and high horsepower drawworks, gives the
Company a competitive advantage in attracting premium jobs with customers
engaged in multi-well horizontal drilling programs. In May 1997, one of the
Company's rigs drilled a horizontal well in the Gulf Coast region to a vertical
depth of 18,700 feet before initiating a horizontal lateral of 3,239 feet. The
Company believes this to be the deepest vertical depth at which a horizontal
lateral has ever been initiated.

The Company was formed in December 1996 as the successor to Anadarko
Drilling Company ("Anadarko"), which owned ten rigs, including two rigs
requiring refurbishment. At the time of its formation, the Company also
purchased six rigs requiring refurbishment. Since that time, the Company has
aggressively pursued acquisitions of rigs and components, and through October
16, 1997 had acquired 38 additional rigs (net of sales). Some of these acquired
rigs required refurbishment before the Company placed such rigs in

3
<PAGE> 5

service. Many of the acquired and refurbished rigs were put into service in May
and June 1997, and therefore did not contribute significantly to operating
results through June 30, 1997. The Company expects these rigs to be operational
and to contribute to its profitability throughout the second half of 1997.

BUSINESS STRATEGY

The Company believes that growth in earnings and cash flow can be achieved
by pursuing the following business strategy:

Operating a Technologically Advanced Rig Fleet. The Company has assembled
its existing rig fleet, and will pursue further acquisitions, with the goal of
operating one of the most technologically sophisticated land drilling fleets in
the United States. Many of the Company's rigs include engines, pumps and
drilling mud systems that represent the best drilling technology available and
that the Company believes offer greater efficiencies for customers than many of
the rigs available from its competitors. For example, by deploying its diesel
electric SCR rigs with two or three high horsepower pumps and top drive drilling
systems in challenging deep and horizontal drilling situations, the Company
believes that it can reduce its customers' overall drilling costs, thus securing
and enhancing its relationships with some of the most active operators in the
domestic market. The Company is committed to making the capital investments
required to maintain, and in appropriate circumstances, increase the
technological sophistication and operational efficiencies of its fleet.

Developing Deep Drilling Capabilities. The Company believes demand has been
particularly strong for rigs capable of drilling deeper, more complex wells,
including 1,500 horsepower and larger rigs, and has focused, and will continue
to focus, on acquiring rigs with these capabilities. Management believes that
demand and utilization rates for these types of rigs, particularly SCR rigs,
will remain higher than for rigs with lesser depth capacities due to their
greater operational flexibility and efficiency. At September 30, 1997, 70% of
the Company's rig fleet had deep drilling capability (15,000 feet or greater).
In the nine months ended September 30, 1997, the Company's average depth per
well drilled was 13,016 feet, compared to the national average of 7,100 feet.

Focusing on Core Markets. The Company believes that its strong asset
position and operating expertise in the Mid-Continent and Gulf Coast regions
enable it to achieve operating efficiencies and to provide premium service to
its customers in these markets. The Company is the largest provider of drilling
rigs in Oklahoma and is among the largest operators of deep rigs in the onshore
Gulf Coast region.

Developing and Maintaining Relationships with Strong Operators. In order to
maximize the utilization rate of its rig fleet and to minimize exposure to
market downturns, the Company seeks to maintain and build relationships with
operators committed to active domestic drilling programs. The Company's largest
current customers include Apache Corporation, Chesapeake Energy Corporation,
Enron Oil and Gas Company, Marathon Oil Company, Sonat Exploration Company and
Union Pacific Resources Corporation. Each of these companies was among the most
active onshore operators in the United States during the last three years.
During the six months ended June 30, 1997 (pro forma for the Consolidation
Transactions, as hereinafter defined), the three largest customers for the
Company's contract drilling services were Chesapeake Energy Corporation,
Marathon Oil Company and Sonat Exploration Company, which accounted for
approximately 22%, 10% and 6% of total revenues, respectively.

Acquiring and Refurbishing Additional Rigs and Related Equipment. The
Company intends to continue acquiring additional rigs and related equipment,
including top drive drilling systems. Additionally, the Company has experience
in the acquisition of component parts from which rigs can be assembled or
refurbished and intends to continue to seek opportunities for the expansion and
enhancement of its rig fleet by such means. Since its formation and through
October 16, 1997, the Company has acquired 38 land rigs (net of sales) in eight
transactions. At June 30, 1997, after giving effect to the application of the
proceeds of the Offering, the Company would have had a total debt to total
capitalization ratio of 8.8% and cash of $52.7 million, positioning the Company
with the strong balance sheet needed to be an active acquiror of rigs and
components.

4
<PAGE> 6

DOMESTIC LAND DRILLING INDUSTRY OVERVIEW

The land drilling industry is experiencing higher utilization, increasing
day rates and improved financial performance as a result of a long-term decline
in the supply of rigs and increased demand for rigs attributable to improved oil
and gas industry fundamentals. Industry sources estimate that from its peak in
1982, the supply of domestic land rigs had fallen by 72% through October 1997 as
a result of normal attrition, cannibalization of components to refurbish rigs,
the inability of smaller competitors to raise capital needed to upgrade and
modernize rigs and the export of rigs to international markets. Greater demand
in the industry is evidenced by the increase in the active domestic land rig
count to 1,032 in September 1997 from 790 in September 1996, according to data
published by Baker Hughes Incorporated. The Company believes that the domestic
land drilling industry is currently experiencing utilization rates of
approximately 86% for actively marketed rigs. While these market conditions have
led to increasing day rates in the Company's core areas, the Company does not
believe that such rates have reached levels that would justify the construction
of new rigs.

Beyond the diminished size of the rig fleet, the domestic land drilling
industry is also benefitting from improved fundamentals among domestic oil and
gas exploration and production companies. In particular, new technologies and
improved operating efficiencies have increased drilling success rates, lowered
finding costs and enhanced the industry's profitability recently as compared to
the late 1980's and early 1990's. In addition, the financial positions of many
domestic oil and gas companies, and their access to additional capital, have
improved in recent years, affording these companies the ability to fund
aggressive drilling programs. From 1992 to 1996, the total equity market
capitalization of 35 of the largest domestic exploration and production
companies grew from approximately $255 billion to approximately $465 billion and
their aggregate annual capital expenditures increased from $10.5 billion to
$16.5 billion. The Company believes that these improved industry fundamentals
have allowed oil and gas companies to maintain more consistently active drilling
programs, even in periods of lower commodity prices.

Much of the new technology being employed in the oil and gas industry has
increased demand for rigs capable of drilling deeper wells efficiently and
accurately. For example, more sophisticated and longer life drilling motors and
measurement-while-drilling devices have made deep horizontal drilling less
expensive and more precise. Three-dimensional seismic techniques have also
increased the demand for deep rigs. This technology permits geoscientists to
develop a more complete understanding of deep, complex geology prior to drilling
a well. As shallower fields continue to deplete, oil and gas companies are
likely to continue to pursue deep drilling prospects to maintain or increase
their production levels. While demand for land rigs capable of drilling greater
than 15,000 feet has grown significantly, the supply of such rigs is limited,
contributing to rapid increases in day rates for rigs with these capabilities.

Driven by expectations of improved economic returns and the fundamentals
discussed above, the domestic land drilling industry has experienced a period of
significant consolidation. In 1996, approximately 33% of the footage drilled in
the United States was drilled by only five contractors, down from 25 in 1993.
This consolidation is ongoing, and the Company believes that approximately 26
transactions involving the acquisition of approximately 404 domestic land rigs
have been announced from September 1996 through September 1997, including
acquisitions by the Company.

5
<PAGE> 7

FORMATION AND ACQUISITIONS

Formation Transactions. The Company was formed in December 1996 through a
series of affiliated entity transactions in which the Company became the
successor to Anadarko, the contract drilling subsidiary of privately held AnSon
Partners Limited Partnership (together with its affiliates, "APLP"). In
connection with the formation of the Company (i) APLP contributed ten drilling
rigs, including two rigs requiring refurbishment, for shares of Common Stock,
(ii) Roy T. Oliver and related entities and Energy Spectrum Partners LP ("Energy
Spectrum") exchanged six additional drilling rigs and cash, respectively, for
shares of Common Stock and (iii) Chesapeake Energy Corporation ("Chesapeake")
entered into drilling contracts with two-year terms for six of the Company's
rigs in consideration for an option to purchase shares of Common Stock
(together, the "Formation Transactions"). See "Business -- Formation and
Acquisitions." Since the Formation Transactions, the Company has enhanced its
original fleet through acquisitions and refurbishment of rigs as described
below.

Trend Acquisition. In May 1997, the Company completed the acquisition of
Trend Drilling Co. ("Trend") for $18 million in cash and 250,000 shares of
Common Stock (the "Trend Acquisition"). Trend has operated a land drilling
business in the Mid-Continent region since 1976. Of the 14 rigs acquired from
Trend, three are diesel electric SCR rigs and seven have depth capacities of
15,000 feet or greater. The Company retained substantially all of Trend's
operating personnel.

Ward Acquisition. Also in May 1997, the Company acquired the assets of Ward
Drilling Company, Inc. ("Ward") for $8 million in cash, 400,000 shares of Common
Stock and warrants to purchase an additional 200,000 shares of Common Stock (the
"Ward Acquisition"). Ward has operated a land drilling business in the
Mid-Continent region since 1981. In the Ward Acquisition, the Company acquired
six drilling rigs, including three rigs with depth capacities of 15,000 feet or
greater, further enhancing its presence in the Mid-Continent region. The Company
retained substantially all of Ward's operating personnel.

Bonray Acquisition. In October 1997, the Company acquired Bonray for
3,015,000 shares of Common Stock (the "Bonray Acquisition"). Bonray has operated
a land drilling business in the Mid-Continent region since 1980 and prior to its
acquisition by the Company was a wholly owned subsidiary of DLB Oil & Gas, Inc.
("DLB"). In the Bonray Acquisition, the Company acquired 13 rigs, including
seven rigs with depth capacities of 15,000 feet or greater and two diesel
electric SCR rigs. As of September 30, 1997, 12 of Bonray's rigs were operating
and under contract and one was awaiting refurbishment. The Bonray Acquisition
further strengthens the Company's presence in the Mid-Continent region, making
it the most active driller in the Oklahoma market. The Company expects to retain
substantially all of Bonray's operating personnel.

Individual Rig Acquisitions. In addition to the Trend, Ward and Bonray
Acquisitions, the Company has invested $5.5 million to acquire six rigs in five
transactions involving purchases of individual rigs or rig components (the
"Individual Rig Acquisitions" and, together with the Formation Transactions, the
Trend Acquisition, the Ward Acquisition and the Bonray Acquisition, the
"Consolidation Transactions").

Refurbishment. The Consolidation Transactions included a number of rigs in
need of refurbishment. From January 1, 1997 through September 30, 1997, the
Company completed refurbishment of 12 rigs at an average cost of approximately
$2.6 million per rig (including drill pipe). These rigs were placed in service
at various dates between January and September 30, 1997. At September 30, 1997,
the Company had six additional rigs in various stages of refurbishment. The
Company expects to place three of such rigs in service during the fourth quarter
of 1997, two in the first quarter of 1998 and one in the second half of 1998.
The Company expects the cost to refurbish these six rigs to average
approximately $3.5 million per rig (including drill pipe).

The Company's principal executive offices are located at 4005 Northwest
Expressway, Suite 550E, Oklahoma City, Oklahoma 73116, and its telephone number
at such offices is (405) 840-9550.
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<PAGE> 8

RIG FLEET INFORMATION

The following table sets forth, as of September 30, 1997, certain
information with respect to the drilling rigs owned by the Company. This table
includes information for the 48 rigs marketed at September 30, 1997 and the six
rigs to be refurbished and expected to be placed in operation within the next 12
months. See "Business -- Drilling Equipment and Supplies."

<TABLE>
<CAPTION>
DEPTH CAPACITY (FEET) SCR MECHANICAL TOTAL
<S> <C> <C> <C>
GULF COAST REGION
15,000 to 19,999....................................... 1 1 2
20,000 or greater...................................... 13 1 14
MID-CONTINENT REGION
7,000 to 9,999......................................... 0 1 1
10,000 to 14,999....................................... 0 15 15
15,000 to 19,999....................................... 2 9 11
20,000 or greater...................................... 5 6 11
-- -- --
TOTALS......................................... 21 33 54
== == ==
</TABLE>

RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk. Significant risk factors that should be considered by prospective
investors include, but are not limited to, (i) dependence on the oil and gas
industry, (ii) cyclical conditions in the contract drilling industry, (iii) the
limited operating history of the Company, (iv) risks inherent in the management
of growth and an acquisition strategy, (v) a current shortage of qualified and
experienced labor, (vi) competition, (vii) the concentration of the Company's
customer base, (viii) operating hazards and uninsured risks, (ix) a current
shortage of drilling equipment and supplies, (x) capital requirements and
liquidity, (xi) the Company's reliance on key personnel, (xii) control by
existing management and stockholders and the existence of a voting agreement
among certain stockholders, (xiii) governmental regulation and environmental
matters, (xiv) risks associated with footage and turnkey drilling, (xv) the
absence of a prior public market for the Common Stock, (xvi) the number of
shares eligible for future sale, (xvii) dilution in the net tangible book value
of shares of the Common Stock, (xix) the superior rights of preferred stock
issuable by the Company and (xx) the effects of certain anti-takeover provisions
applicable to the Company. See "Risk Factors."

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered:
By the Company............................. 4,000,000 shares
By the Selling Stockholders................ 5,200,000 shares
Total.............................. 9,200,000 shares
Common Stock to be Outstanding
after the Offering......................... 17,947,000 shares(1)
Use of Proceeds.............................. The net proceeds to the Company from the
Offering will be used for the repayment of
indebtedness, the modification and upgrade of
drilling rigs and other general corporate
purposes, including acquisitions of drilling
rigs and related equipment (including top
drives). The Company will not receive any of
the proceeds from the sale of shares by the
Selling Stockholders. See "Use of Proceeds."
AMEX Symbol.................................. "BDI"
</TABLE>

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

(1) Does not include (i) 741,100 shares of Common Stock subject to issuance
pursuant to outstanding options awarded under the Company's 1997 Stock
Option and Stock Award Plan (the "Employee Stock Plan"), (ii) 60,000 shares
of Common Stock subject to issuance pursuant to options to be granted

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<PAGE> 9

contemporaneously with the consummation of the Offering under the Company's
1997 Non-Employee Directors' Stock Option Plan (the "Director Stock Plan")
or (iii) 412,000 shares of Common Stock subject to issuance pursuant to
other outstanding warrants issued by the Company. See "Use of Proceeds,"
"Management -- 1997 Stock Option and Stock Award Plan" and "Certain
Relationships and Related Transactions." Further, this does not include
shares of Common Stock that may be issued, solely at the option of the
Company, to redeem outstanding Subordinated Notes (as defined in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"). See "Certain Relationships and Related Transactions -- Certain
Financing Arrangements -- Common Stock and Subordinated Notes."

8
<PAGE> 10

SUMMARY HISTORICAL AND PRO FORMA
CONSOLIDATED FINANCIAL AND OPERATING DATA

The following table sets forth summary historical financial and operating
data for the Company for each of the years in the three year period ended
December 31, 1996, for the six months ended June 30, 1996 and 1997, and as of
December 31, 1996 and June 30, 1997. The financial results for the period ended
and as of June 30, 1997 include the results of the Company's consolidated
subsidiary, Trend, beginning May 1, 1997. The Company's historical results
reflect the operations of its predecessor, Anadarko. The consolidated financial
data for the six months ended June 30, 1996 and 1997 is derived from the
unaudited financial statements of the Company. In the opinion of management, the
financial data for the six months ended June 30, 1996 and 1997 reflects all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such data.

The pro forma consolidated financial and operating data for the year ended
December 31, 1996 and the six months ended June 30, 1997 shown below give effect
to (i) the Consolidation Transactions (to the extent not already reflected in
the historical financial statements), (ii) the Chesapeake Transactions (as
described in "Certain Relationships and Related Transactions -- Chesapeake
Transactions"), (iii) the exercise by The CIT Group/Equipment Financing, Inc.
("CIT") of a warrant for 150,000 shares of Common Stock (the "CIT Exercise"),
and (iv) the Offering and the application of the net proceeds to the Company
therefrom as if they occurred on January 1, 1996 for purposes of operations data
and June 30, 1997 for purposes of balance sheet data. The following information
should be read together with Management's Discussion and Analysis of Financial
Condition and Results of Operations, the historical financial statements of
Bayard, Trend, Ward and Bonray, including the notes thereto, and the Pro Forma
Consolidated Financial Data, including the notes thereto, included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------- ----------------------------------
1994 1995 1996 1996 1996 1997 1997
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, RIG AND DAY RATE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues....................... $ 9,910 $ 7,708 $ 9,853 $47,952 $ 4,301 $ 15,107 $35,309
------- ------- -------- ------- ------- -------- -------
Operating expenses:
Drilling and other................. 8,572 6,122 7,699 38,073 3,268 10,897 26,065
Depreciation and amortization...... 1,557 791 1,126 7,866 415 2,645 6,022
General and administrative......... 786 880 658 3,636 323 734 2,057
------- ------- -------- ------- ------- -------- -------
Total operating expenses..... 10,915 7,793 9,483 49,575 4,006 14,276 34,144
------- ------- -------- ------- ------- -------- -------
Operating income (loss).............. (1,005) (85) 370 (1,623) 295 831 1,165
Interest expense and financing
cost............................... (18) (3) (11) (821) -- (982) (860)
Other income (expense)............... 366 (134) 71 601 36 119 139
------- ------- -------- ------- ------- -------- -------
Income (loss) before income taxes.... (657) (222) 430 (1,843) 331 (32) 444
Income tax expense(1)................ -- -- 163 -- 126 (12) 169
------- ------- -------- ------- ------- -------- -------
Net income (loss).................... $ (657) $ (222) $ 267 $(1,843) $ 205 $ (20) $ 275
======= ======= ======== ======= ======= ======== =======
Earnings per share (primary and fully
diluted)........................... $ .02 $ (.11) $ .01 $ 0 $ .02
======== ======= ======= ======== =======
Weighted average shares outstanding
(fully diluted)(2)................. 14,397 16,592 14,397 14,397 16,592
======== ======= ======= ======== =======
CASH FLOWS:
Operating activities............... $ 445 $ 310 $ (462) $ (70) $ 1,029
Investing activities............... (454) (1,710) (10,441) (3,142) (59,265)
Financing activities............... 9 1,400 15,866 3,212 (53,513)
</TABLE>

(continued on following page)

9
<PAGE> 11

<TABLE>
<CAPTION>
DECEMBER 31,
1996 JUNE 30, 1997
------------ -----------------------
HISTORICAL HISTORICAL PRO FORMA
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and investments...................................... $ 4,963 $ 970 $ 52,696
Working capital (deficit), excluding current portion of
long-term debt.......................................... 4,974 (1,277) 51,634
Property, plant and equipment, net........................ 26,973 92,658 127,634
Total assets.............................................. 34,673 113,172 210,559
Long-term debt, including current portion................. 7,000 48,371 16,009
Total stockholders' equity(3)............................. 26,251 44,813 165,062
</TABLE>

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

(1) Income tax expense is presented on a pro forma basis (assuming a 38%
statutory rate) for the year ended December 31, 1996 and for the six months
ended June 30, 1996.

(2) Historical weighted average shares outstanding is calculated using the fully
diluted shares outstanding through October 16, 1997 for the year ended
December 31, 1996 and the six months ended June 30, 1996 and 1997. The pro
forma shares outstanding reflect the sale of a sufficient number of shares
in the Offering to retire certain indebtedness of the Company as described
in "Use of Proceeds." See footnote (g) to "Notes to Unaudited Pro Forma
Consolidated Financial Data."

(3) No dividends were declared through June 30, 1997. See "Dividend Policy."

(4) EBITDA represents operating income (loss) before depreciation and
amortization. EBITDA is frequently used by securities analysts and is
presented herein to provide additional information about the Company's
operations. EBITDA is not a measurement presented in accordance with
generally accepted accounting principles. EBITDA should not be considered in
isolation or as a substitute for net income or cash flow data prepared in
accordance with generally accepted accounting principles or as a measure of
a company's profitability or liquidity.

(5) Rig utilization rates are calculated on a weighted average basis assuming
365 days availability for all rigs available for service. Rigs acquired have
been treated as added to the rig fleet as of the date of acquisition. Rigs
under contract that generate revenues during moves between locations or
during mobilization/ demobilization are also considered to be utilized. Rigs
that are owned but not being marketed, including rigs being refurbished, are
not considered in determining the utilization rate.

(6) Represents total contract drilling revenues (excluding mobilization, cost
reimbursements and fuel), divided by the total number of days the Company's
drilling rig fleet operated during the period, divided by the average number
of rigs in operation.

10
<PAGE> 12

RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should carefully consider and evaluate the following
factors relating to the Company and the Offering, together with the information
and financial data set forth elsewhere in this Prospectus, prior to purchasing
any shares of Common Stock in the Offering.

FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE

This Prospectus contains forward-looking statements and information that
are based on the beliefs of the Company's management as well as assumptions made
by and information currently available to management. All statements other than
statements of historical fact included in this Prospectus are forward-looking
statements, including but not limited to statements identified by the words
"anticipate," "believe," "estimate" and "expect" and similar expressions. Such
statements reflect the Company's current views with respect to future events,
based on what it believes are reasonable assumptions; however, such statements
are subject to certain risks, uncertainties and assumptions, including but not
limited to the risk factors described in this Prospectus. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those in the forward-looking
statements. The Company does not intend to update these forward-looking
statements and information.

DEPENDENCE ON OIL AND GAS INDUSTRY

The Company's revenues, cash flows and earnings are substantially dependent
upon, and affected by, the level of domestic oil and gas exploration and
development activity. Such activity and the resulting level of demand for
contract land drilling and related services are directly influenced by many
factors over which the Company has no control. Such factors include, among
others, the market prices of oil and gas, market expectations about future
prices, the volatility of such prices, the cost of producing and delivering oil
and gas, government regulations and trade restrictions, local and international
political and economic conditions, levels of production by, and other activities
of, the Organization of Petroleum Exporting Countries and other oil and gas
producers, the development of alternate energy sources and the long-term effects
of worldwide energy conservation measures. Substantial uncertainty exists as to
the future level of oil and gas exploration and development activity. There can
be no assurance that the current level of oil and gas exploration and
development activity will be maintained or that demand for the Company's
contract drilling services will reflect the level of such activity.

CYCLICAL CONDITIONS

Historically, the contract drilling industry has been cyclical, with
significant volatility in profitability and rig values. This industry
cyclicality has been due to changes in the level of domestic oil and gas
exploration and development activity and the available supply of drilling rigs.
The market for contract land drilling services has generally been depressed
since 1982, when oil and gas prices began to weaken following a period of
significant increase in new drilling rig capacity. Since that time and except
during occasional upturns, there have been substantially more drilling rigs
available than necessary to meet demand in most operating and geographic
segments of the domestic drilling industry, including the geographic areas in
which the Company operates.

The contract drilling business is currently experiencing increased demand
for drilling services principally due to improved oil and gas drilling and
production economics and a continued reduction in the available supply of rigs
in the domestic land drilling market. Although the Company believes that
improved technologies and stable oil and gas prices have contributed to
increased activity in the exploration and production sector, there can be no
assurance that such factors will continue. In addition, ongoing movement or
reactivation of land drilling rigs (including the movement of rigs from outside
the United States into domestic markets) or new construction of drilling rigs
could increase rig supply and adversely affect contract drilling rates and
utilization levels. The Company cannot predict the future level of demand for
its contract drilling services, future conditions in the contract drilling
industry or future contract drilling rates.

11
<PAGE> 13

LIMITED OPERATING HISTORY

The Company was founded in December 1996 as the successor to Anadarko,
which had operated as a contract land drilling rig service company since 1982 in
Oklahoma. Although Anadarko was owned by and provided drilling services to APLP
prior to December 1996, Anadarko had also provided drilling services to 23
different third party customers between 1982 and December 1996. Prior to
December 1996, however, the Company had not operated as an independent entity.
Although the President and Chief Executive Officer of the Company had been
employed by Anadarko for 14 years and several other key employees of the Company
had been with Anadarko for extended periods, much of the Company's management
group has been assembled recently. Despite the extensive experience and
qualifications of many of the recently added individual managers, there can be
no assurance that the management group will be able to manage the stand-alone
entity as a cohesive team or to implement effectively the Company's business
strategy. The pro forma financial results presented herein include the operating
results of drilling rigs which were not under the Company's control and may not
be indicative of the Company's future operating results.

MANAGEMENT OF GROWTH; RISKS OF ACQUISITION STRATEGY

The Company has experienced rapid and substantial growth since its
formation as a result of acquisitions. The Company anticipates the further
expansion of the Company's drilling fleet through additional acquisitions.
Certain risks are inherent in an acquisition strategy, such as increasing
leverage and debt service requirements and combining disparate company cultures,
which could adversely affect the Company's operating results. Continued growth
and the process of integrating such acquired businesses may involve unforeseen
difficulties and may require a disproportionate amount of management's attention
and the Company's financial and other resources. No assurance can be given that
the Company will be able to continue to identify suitable acquisition
opportunities, negotiate acceptable terms, obtain financing for acquisitions on
satisfactory terms or successfully acquire identified targets. There can be no
assurance that the Company will be able to successfully manage and integrate the
acquired businesses and assets into its existing operations or that it will be
able to successfully maintain the market share attributable to operable drilling
rigs acquired by the Company. If the Company is unable to manage its growth and
successfully integrate the acquired businesses into the Company's existing
operations, or if the Company encounters unexpected costs or liabilities in the
acquired businesses, the Company's results of operations or financial condition
could be materially adversely affected. See "Business -- Business Strategy."

Competition in the market for drilling rigs has caused substantial
increases in the acquisition prices paid for rigs in recent months. Such
competition could adversely affect the Company's growth strategy if it is unable
to purchase additional drilling rigs or related equipment on favorable terms.
There can be no assurance that the Company will be able to compete successfully
in the future for acquisitions of available drilling rigs or related equipment,
or that such competition will not have a material adverse effect on the
Company's business, financial condition and results of operations.

SHORTAGE OF QUALIFIED AND EXPERIENCED LABOR

Increases in both onshore and offshore domestic oil and gas exploration and
production since 1995 and resultant increases in contract drilling activity have
created a shortage of qualified drilling rig personnel in the industry. If the
Company is unable to attract and retain sufficient qualified operating
personnel, its ability to market and operate its drilling rigs will be
restricted. In addition, labor shortages could result in wage increases, which
could reduce the Company's operating margins and have a material adverse effect
on the Company's financial condition and results of operations.

COMPETITION

12
<PAGE> 14

and, while the Company believes that operators consider factors such as quality
of service, type and location of equipment, or the ability to provide ancillary
services, price and rig availability are the primary factors in determining
which contractor is awarded a job. Certain of the Company's competitors have
greater financial and human resources than the Company, which may enable them to
better withstand periods of low rig utilization, to compete more effectively on
the basis of price and technology, to build new rigs or acquire existing rigs
and to provide rigs more quickly than the Company in periods of high rig
utilization.

CONCENTRATION OF CUSTOMER BASE

During the six months ended June 30, 1997 (pro forma for the Consolidation
Transactions), the three largest customers for the Company's contract drilling
services were Chesapeake, Marathon Oil Company and Sonat Exploration Company,
which accounted for approximately 22%, 10% and 6% of total revenues,
respectively. Chesapeake recently announced that it was reducing its drilling
program in the Gulf Coast region, an area in which it utilizes a number of the
Company's rigs. While the Company does not currently expect its rigs operating
for Chesapeake to be affected, and believes that it could successfully remarket
any rigs that might be affected in the future, there can be no assurance that
Chesapeake or any of the Company's other principal customers will continue to
employ the Company's services or that the loss of any of such customers or
adverse developments affecting any of such customers would not have a material
adverse effect on the Company's financial condition and results of operations.

OPERATING HAZARDS AND UNINSURED RISKS

The Company's operations are subject to many hazards inherent in the land
drilling business, including, for example, blowouts, cratering, fires,
explosions, loss of well control, loss of hole, damaged or lost drill strings
and damage or loss from inclement weather. These hazards could cause personal
injury or death, serious damage to or destruction of property and equipment,
suspension of drilling operations, or substantial damage to the environment,
including damage to producing formations and surrounding areas. Generally,
drilling contracts provide for the division of responsibilities between a
drilling company and its customer, and the Company seeks to obtain
indemnification from its customers by contract for certain of these risks. To
the extent not transferred to customers by contract, the Company seeks
protection against certain of these risks through insurance. Although the
Company believes that it is adequately insured for public liability and property
damage to others and injury or death to persons in accordance with industry
standards with respect to its operations, no assurance can be given that such
insurance will be sufficient to protect the Company against liability for all
consequences of well disasters, personal injury, extensive fire damage or damage
to the environment. No assurance can be given that the Company will be able to
maintain adequate insurance in the future at rates it considers reasonable or
that any particular types of coverage will be available. The occurrence of
events, including any of the above-mentioned risks and hazards, that are not
fully insured or the failure of a customer to meet its indemnification
obligations could subject the Company to significant liability and could have a
material adverse effect on the Company's financial condition and results of
operations. See "Business -- Operating Hazards and Insurance."

SHORTAGE OF DRILLING EQUIPMENT AND SUPPLIES

There is a general shortage of certain drilling equipment and supplies used
in the Company's business and the Company believes these shortages may
intensify. Because, until recent years, the land drilling industry was
characterized by an oversupply of land rigs, rig manufacturers have generally
focused on the production of more expensive offshore rigs and rig equipment. As
a result, most rig manufacturers are not currently building new land rigs and
those manufacturers that are building new land rigs and components charge
premium prices (approximately $13 million for a new 2,000 horsepower rig) and
require that orders be placed at least 120 days in advance of requested
delivery. The limited availability of new rigs and equipment has caused land rig
owners and operators, including the Company, to maintain and enhance their
fleets primarily through acquisitions and refurbishments using previously
manufactured rig components and equipment. As the land drilling industry
continues to refurbish rigs using existing components and equipment, the
available supply of such components and equipment continues to deplete.

13
<PAGE> 15

The Company requires a substantial amount of drill pipe in order to achieve
the drilling depths required by its customers. A shortage of drill pipe exists
in the contract drilling industry in the United States. This shortage has caused
the price of drill pipe to increase by more than 54% over the past 24 months and
has required orders for new drill pipe to be placed at least one year in advance
of expected use. The price increase and the delay in delivery has caused the
Company to increase capital expenditures for drill pipe in recent months by 110%
of its original budget. While the Company believes it currently has sufficient
drill pipe for its existing rigs (including those rigs in refurbishment), in the
event the shortage continues, the Company may be unable to obtain the drill pipe
required to expand its contract drilling operations.

CAPITAL REQUIREMENTS AND LIQUIDITY

The oil and gas contract drilling industry is capital intensive. The
Company's cash flow from operations and the continued availability of credit are
subject to a number of variables, including the Company's utilization rate,
operating margins and ability to maintain costs and obtain contracts in a
competitive industry. There can be no assurance that the Company's cash flow
from operations, proceeds from the Offering and present borrowing capacity will
be sufficient to fund its anticipated capital expenditures and working capital
requirements. The Company may from time to time seek additional financing,
either in the form of bank borrowings, sales of the Company's debt or equity
securities or otherwise. Except with respect to the Offering and the Company's
loan agreements with its lenders, the Company has no agreements for any such
financing and there can be no assurance as to the availability or terms of any
such financing. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Financial Condition and Liquidity." To the extent
the Company's capital resources and cash flow from operations are at any time
insufficient to fund its activities or repay its indebtedness as due, the
Company will need to raise additional funds through public or private financings
or additional borrowings. No assurance can be given as to the Company's ability
to obtain any such capital resources. If the Company is at any time not able to
obtain the necessary capital resources, its financial condition and results of
operations could be materially adversely affected. In the event that additional
funds are raised through the issuance of equity securities, the percentage
ownership of the Company's stockholders at that time would be diluted and, in
addition, such equity securities may have rights, preferences or privileges
senior to those of the Common Stock.

RELIANCE ON KEY PERSONNEL

The success of the Company's business is highly dependent upon the
services, efforts and abilities of James E. Brown, the Company's President and
Chief Executive Officer and certain other officers and key employees,
particularly Edward S. Jacob, III, the Company's Executive Vice
President -- Operations & Marketing, David E. Grose, the Company's Vice
President and Chief Financial Officer, and Ron Tyson, the Company's Construction
Manager. The business of the Company could be materially and adversely affected
by the loss of any of these individuals. The Company does not maintain key man
life insurance on the lives of any of its executive officers or key employees.
The Company has employment agreements with Messrs. Brown, Jacob and Grose. See
"Management -- Executive Salaries and Employment Agreements."

CONTROL BY EXISTING MANAGEMENT AND STOCKHOLDERS; VOTING AGREEMENT AMONG CERTAIN
STOCKHOLDERS

Following the completion of the Offering, the Company's directors,
executive officers and holders of more than 5% of the Common Stock will
beneficially own approximately 35.4% of the outstanding shares of Common Stock
(33.6% if the Underwriters' over-allotment option is exercised in full). In
addition, holders of approximately 32.8% of the outstanding shares of Common
Stock (31.1% if the Underwriters' over-allotment option is exercised in full)
will be party to a stockholders and voting agreement (the "Stockholders and
Voting Agreement") with the Company that provides for, among other things, the
nomination of certain individuals for election to the Board of Directors of the
Company (the "Board"). Pursuant to the Stockholders and Voting Agreement, each
of APLP, Energy Spectrum and DLB will be entitled to nominate one person for
election to the Board, subject to maintaining certain ownership thresholds. Each
of APLP, Energy Spectrum, DLB, Carl B. Anderson, III, Continental Illinois
Property Company #3 and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") will be obligated to vote all of their shares of Common Stock for the
election of such nominees. Accordingly, if such stockholders were to act in
concert, they would be able to nominate up to three members of the Board and
exercise significant influence over the Company's affairs. The Stockholders

14
<PAGE> 16

and Voting Agreement also requires that any transferee of stock from a party
thereto (other than sales into the public market) be bound by the terms thereof
as a condition precedent to such transfer. See "Principal and Selling
Stockholders" and "Certain Relationships and Related
Transactions -- Stockholders and Voting Agreement."

GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS

The domestic oil and gas industry is affected from time to time in varying
degrees by political developments and federal, state and local laws and
regulations. In particular, oil and gas production, operations and economics are
or have been affected by price controls, taxes and other laws relating to the
oil and gas industry, by changes in such laws and by changes in administrative
regulations. Except for the handling of solid wastes directly generated from the
operation and maintenance of the Company's drilling rigs, such as waste oils and
wash water, it is the Company's practice to require its customers to
contractually assume responsibility for compliance with environmental
regulations. However, the Company's operations are vulnerable to certain risks
arising from the numerous environmental health and safety laws and regulations.
These laws and regulations may restrict the types, quantities and concentration
of various substances that can be released into the environment in connection
with drilling activities, require reporting of the storage, use or release of
certain chemicals and hazardous substances, require removal or cleanup of
contamination under certain circumstances, and impose substantial civil
liabilities or criminal penalties. Environmental laws and regulations may impose
strict liability, rendering a person liable for environmental damage without
regard to negligence or fault, and could expose the Company to liability for the
conduct of, or conditions caused by, others, or for acts of the Company that
were in compliance with all applicable laws at the time such acts were
performed. Moreover, there has been a trend in recent years toward stricter
standards in environmental, health and safety legislation and regulation which
is likely to continue.

The Company has made and will continue to make expenditures to comply with
governmental regulations, including environmental, health and safety
requirements. As part of the Bonray Acquisition, the Company acquired an
equipment yard which may require certain expenditures or remedial actions for
the removal or cleanup of contamination. In exchange for a $1 million cash
payment to the Company at closing, the Company did not require DLB to indemnify
the Company with respect to such expenditures or remedial actions. While the
Company has not yet had an opportunity to review whether and to what extent such
expenditures or remedial actions may be necessary or advisable, based on the
presently available information, the Company does not believe that such
expenditures will exceed $1 million. There can be no assurance, however, that
the Company will not incur material liability with respect to this property or
any of the Company's other properties or operations. The Company cannot predict
how existing laws and regulations may be interpreted by enforcement agencies or
court rulings, whether additional laws and regulations will be adopted, or the
effect such changes may have on the Company's business, financial condition or
results of operations. Because the requirements imposed by such laws and
regulations are subject to change, the Company is unable to forecast the
ultimate cost of compliance with such requirements. The modification of existing
laws and regulations or the adoption of new laws or regulations curtailing
exploratory or development drilling for oil and gas for economic, political,
environmental or other reasons could have a material adverse effect on the
Company by limiting drilling opportunities. See "Business -- Government
Regulation and Environmental Matters."

RISKS ASSOCIATED WITH FOOTAGE AND TURNKEY DRILLING

The Company in the past has performed drilling services under footage and
turnkey contracts and may enter into such arrangements in the future. Revenues
from footage contracts accounted for approximately 6% of total revenues during
the six months ended June 30, 1997 and the Company had no turnkey contracts
during such period. Under footage contracts, the Company is paid a fixed amount
for each foot drilled, regardless of the time required or the problems
encountered in drilling the well. Under turnkey drilling contracts, the Company
contracts to drill a well to an agreed depth under specified conditions for a
fixed price, regardless of the time required or the problems encountered in
drilling the well. In addition, the Company provides technical expertise and
engineering services, as well as most of the equipment required for the well,
and is compensated only when the contract terms have been satisfied. On a
turnkey well, the Company often subcontracts for related services and manages
the drilling process. The risks to the Company under footage

15
<PAGE> 17

and turnkey contracts are substantially greater than under daywork contracts
because the Company assumes most of the risks associated with drilling
operations that in a daywork contract are generally assumed by the operator,
including risk of blowout, loss of hole, stuck drill pipe, machinery breakdowns,
abnormal drilling conditions and risks associated with subcontractors' services,
supplies, cost escalation and personnel. While the Company's current strategy is
to operate primarily under daywork contracts, management continually analyzes
market conditions, customer requirements, rig demand and the experience of its
personnel to determine how to most profitably contract its fleet. If the Company
were to encounter less favorable conditions within its industry, competitive
pressures and customer demands might require it to consider entering into a
larger number of footage and turnkey drilling contracts. Accordingly, there can
be no assurance that the Company will not suffer a loss that is not insured as a
result of entering into such contracts, and any such uninsured loss could have a
material adverse effect on the Company's financial position and results of
operations. See "Business -- Contract Drilling Operations."

ABSENCE OF A PRIOR PUBLIC MARKET FOR THE COMMON STOCK

Prior to the Offering, there has been no public market for the Common
Stock. Although the Common Stock has been approved for listing on the AMEX,
subject to official notice of issuance, there can be no assurance that an active
public market for the Common Stock will develop or be sustained or that the
price at which the Common Stock will trade after the Offering will not be lower
than the initial public offering price. The initial public offering price of the
Common Stock in the Offering will be determined through negotiations between the
Company and the Representatives. See "Underwriting." Market prices for the
Common Stock following the Offering will be influenced by a number of factors,
including the depth and liquidity of the market for the Common Stock, investor
perceptions of the Company and general economic and other conditions.

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of shares of Common Stock by the Company or its existing
stockholders could adversely affect the market price of the Common Stock. Upon
completion of the Offering, the Company will have 17,947,000 shares of Common
Stock outstanding (18,116,050 shares if the Underwriters' over-allotment option
is exercised in full). Additionally, as of October 10, 1997, (i) options for the
purchase of 741,000 shares of Common Stock (including options for 300,000 shares
to be priced at the initial public offering price) had been granted to certain
employees of the Company pursuant to the Employee Stock Plan, (ii) options for
the purchase of 60,000 shares of Common Stock (all to be priced at the initial
public offering price) were subject to grant contemporaneously with the
consummation of the Offering to certain non-employee directors of the Company
pursuant to the Director Stock Plan and (iii) 412,000 shares of Common Stock
were subject to outstanding warrants issued by the Company. Except for the
options for 360,000 shares to be priced at the initial public offering price,
the exercise prices of these options and warrants are substantially lower than
the anticipated initial public offering price of the Common Stock. In addition,
certain outstanding Subordinated Notes are convertible, solely at the Company's
option, into shares of Common Stock. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Certain Relationships and Related Transactions -- Certain
Financing Arrangements -- Common Stock and Subordinated Notes."

The Company may in the future issue significant amounts of Common Stock or
options or warrants to acquire Common Stock under stock option plans or to
finance capital projects, including acquisitions of rigs and related equipment.
Of the outstanding shares, the 9,200,000 shares (10,580,000 shares if the
Underwriters' over-allotment option is exercised in full) to be sold in the
Offering will be freely tradeable without restrictions or further registration
under the Securities Act, except for shares purchased by an "affiliate" (as
defined in the Securities Act) of the Company. Following the expiration of the
lock-up agreements with the Underwriters, each of the Company's directors and
executive officers and each of its existing stockholders, who will hold upon
completion of the Offering an aggregate of approximately 48.7% of the
outstanding shares of Common Stock (41.6% if the Underwriters' over-allotment
option is exercised in full), may sell such shares subject to the requirements
of Rule 144 under the Securities Act or pursuant to the terms of a registration
rights agreement. See "Certain Relationships and Related Transactions" and
"Shares

16
<PAGE> 18

Eligible for Future Sale." The Company is also a party to two registration
rights agreements pursuant to which it has granted demand and piggyback
registration rights covering an aggregate of 9,387,521 shares of Common Stock
and Common Stock Equivalents. The beneficiaries of these agreements include
Chesapeake, Energy Spectrum, APLP, the Oliver Companies, Ward, DLB, DLJ, James
E. Brown, Edward S. Jacob, III and Carl B. Anderson, III. The terms of these
agreements prohibit the exercise of such registration rights for a period of 180
days following the date of the Offering, subject to certain exceptions,
including granting DLB the ability to distribute its shares of Common Stock to
its shareholders. Additionally, the Company intends to file registration
statements on Form S-8 covering the issuance of shares of Common Stock pursuant
to the Employee Stock Plan and the Director Stock Plan (collectively, the
"Company Stock Plans") within 180 days after completion of the Offering.
Accordingly, shares of Common Stock registered pursuant to the Company's
registration rights agreements or issued pursuant to the Company Stock Plans
will be available for sale in the public market without restriction or
limitation under the Securities Act, except for any shares held by an
"affiliate" of the Company. No prediction can be made as to the effect, if any,
that future sales of shares, the issuance or exercise of options, warrants or
other securities convertible into Common Stock, or the availability of shares
for sale will have on the market price for Common Stock prevailing from time to
time. Sales of a substantial amount of Common Stock, or a perception that such
sales could occur, could adversely affect the prevailing market price of the
Common Stock and could impair the Company's ability to raise additional capital
through the sale of equity securities.

DILUTION

Purchasers of the Common Stock in the Offering will experience immediate
and significant dilution in the net tangible book value of their shares. Based
on an initial public offering price of $21.00 per share, pro forma as of June
30, 1997, such dilution would have been equal to $11.80 per share with respect
to shares purchased pursuant to the Offering. See "Dilution."

SUPERIOR RIGHTS OF PREFERRED STOCK

The Company is authorized to issue preferred stock. The Board, without
stockholder approval, may issue shares of the preferred stock with rights and
preferences adverse to the voting power or other rights of the holders of the
Common Stock. No preferred stock has been issued. See "Description of Capital
Stock -- Preferred Stock."

EFFECTS OF CERTAIN ANTI-TAKEOVER PROVISIONS

The Restated Certificate of Incorporation of the Company (the
"Certificate") (i) contains a "fair price" provision, (ii) does not permit
stockholders to act by written consent, (iii) does not permit stockholders to
call special meetings of stockholders, (iv) requires certain procedures to be
followed and time periods to be met for any stockholder to propose matters to be
considered at annual meetings of stockholders, including nominating directors
for election at those meetings, (v) limits the ability of stockholders to
interfere with the power of the Board in other specified ways, (vi) requires
supermajority votes to amend any of the preceding provisions and (vii)
authorizes the Board to issue up to 20,000,000 shares of preferred stock without
stockholder approval and to set the rights, preferences, and other designations,
including voting rights, of those shares as the Board may determine. See
"Description of Capital Stock -- Certain Provisions of the Certificate and
Bylaws." These provisions, alone or in combination with each other, may
discourage, hinder, delay or prevent transactions involving actual or potential
changes of control of the Company, including transactions that otherwise could
involve payment of a premium over prevailing market prices to holders of Common
Stock. The Company is also subject to provisions of the Delaware General
Corporation Law (the "DGCL") that may make some business combinations more
difficult. See "Description of Capital Stock -- Delaware Anti-Takeover Statute."

17
<PAGE> 19

USE OF PROCEEDS

The net proceeds to be received by the Company from the Offering, after
deducting underwriting discounts and commissions and the estimated expenses of
the Offering (assuming an initial public offering price of $21.00 per share, the
mid-point of the range set forth on the cover page of this Prospectus), are
expected to be approximately $77.1 million.

The Company intends to use the net proceeds from the Offering to (i) repay
all amounts outstanding under the revolving loan facility between Fleet Capital
Corporation ("Fleet") and the Company (the "Revolving Loan"), which amount was
$7.9 million at September 30, 1997 and which facility will remain available for
future use by the Company, (ii) redeem in full, through a cash payment of $17.4
million (assuming an offering price at the mid-point of the range set forth on
the cover page of this Prospectus), the Subordinated Notes of the Company held
by Chesapeake, (iii) repay 50% of the amount outstanding under the $30.5 million
term loan facility between the Company, CIT and Fleet (the "Term Loan"), which
amount was $28.5 million at September 30, 1997 and which may not be repaid until
January 1998, (iv) make a cash payment to CIT of $750,000 (assuming an offering
price at the mid-point of the range set forth on the cover page of this
Prospectus) in connection with the CIT Exercise, (v) modify, upgrade and
refurbish drilling rigs and equipment currently owned by the Company at an
estimated cost of between $16 million and $18 million and (vi) fund working
capital and for general corporate purposes, including acquisitions of additional
drilling rigs and related equipment (including approximately $3.5 million for
the purchase of three top drives). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Certain Relationships and Related Transactions -- Chesapeake
Transactions." Pending such uses, the net proceeds will be invested in
short-term, investment-grade, interest-bearing securities.

Amounts outstanding under the Revolving Loan bear interest based on Fleet's
prime rate and mature in April 2000. Amounts outstanding under the Term Loan
bear interest, at the election of the Company, at floating rates based upon
Chase Manhattan Bank's prime rate or the London Interbank Offered Rate ("LIBOR")
and mature in March 2002. At September 30, 1997, the applicable interest rates
under the Revolving Loan and the Term Loan were 10% and 9.95%, respectively. The
Subordinated Notes to be redeemed from Chesapeake were issued by the Company in
May 1997 in an original principal amount of $18 million, mature on May 1, 2003
and bear interest at the option of the Company at either (i) 11% per annum,
payable in cash, or (ii) 12.875% per annum, payable in the form of additional
Subordinated Notes. See "Certain Relationships and Related
Transactions -- Certain Financing Arrangements."

The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Stockholders. See "Principal and Selling Stockholders."

DIVIDEND POLICY

The Company currently intends to retain all available earnings generated by
its operations for the development and growth of its business and does not
anticipate paying any cash dividends on its Common Stock in the foreseeable
future. Future dividend policy will be made by the Board and will depend on a
number of factors, including the Company's earnings, capital requirements,
financial condition and business prospects and such other factors as the Board
may deem relevant. The payment of cash dividends on Common Stock is restricted
under the terms of the Term Loan and the Revolving Loan. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

18
<PAGE> 20

DILUTION

The pro forma net tangible book value of the Company at June 30, 1997
(adjusted to reflect the issuance of shares pursuant to the Bonray Acquisition,
the Chesapeake Transactions and the CIT Exercise as if they occurred on June 30,
1997) was $92.6 million or $6.64 per share. After giving effect to the sale by
the Company of 4,000,000 shares of Common Stock in the Offering (at the
mid-point of the range set forth on the cover page of this Prospectus), the
adjusted net tangible book value of the Company at June 30, 1997 would have been
$165.1 million or $9.20 per share. This represents an immediate increase in net
tangible book value of $2.56 per share to the Company's existing stockholders
and an immediate dilution in net tangible book value of $11.80 per share to new
investors purchasing Common Stock in the Offering. The following table
illustrates the dilution to new investors purchasing shares in the Offering:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $21.00
Pro forma net tangible book value per share at June 30,
1997................................................... 6.64
Increase in net tangible book value per share attributable
to new investors....................................... 2.56
Pro forma net tangible book value per share after the
Offering.................................................. 9.20
------
Dilution in net tangible book value per share to new
investors................................................. $11.80
======
</TABLE>

The following table sets forth, at June 30, 1997 (adjusted to reflect the
issuance of shares pursuant to the Bonray Acquisition, the Chesapeake
Transactions and the CIT Exercise as if they occurred on June 30, 1997), the
differences in the number of shares purchased, the consideration paid and the
average price per share paid to the Company by the existing stockholders and by
investors purchasing shares of Common Stock in the Offering (assuming an initial
public offering price at the mid-point of the range set forth on the cover page
of this Prospectus, no exercise of the Underwriters' over-allotment option and
before deducting underwriting discounts and commissions and estimated offering
expenses).

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------- -------------------- PRICE PER
(IN THOUSANDS, EXCEPT PER SHARE DATA) NUMBER PERCENT AMOUNT PERCENT SHARE
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)................ 13,947 77.7% $ 92,608 52.4% $ 6.64
New investors(1)........................ 4,000 22.3 84,000 47.6 21.00
------ ----- -------- -----
Total......................... 17,947 100.0% $176,608 100.0%
====== ===== ======== =====
</TABLE>

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

(1) The net effect of sales by the Selling Stockholders in the Offering will
reduce the number of shares held by existing stockholders to 8,747,000 or
49% of the total number of shares of Common Stock outstanding after the
Offering, and will increase the number of shares held by new investors to
9,200,000 or 51% of the total number of shares of Common Stock outstanding
after the Offering.

The preceding tables exclude the effects of (i) 741,000 shares of Common
Stock subject to issuance pursuant to outstanding options awarded under the
Employee Stock Plan, (ii) 60,000 shares of Common Stock subject to issuance
pursuant to options to be granted contemporaneously with the consummation of the
Offering under the Director Stock Plan and (iii) 412,000 shares of Common Stock
subject to issuance pursuant to other outstanding warrants issued by the
Company. See "Management -- 1997 Stock Option and Stock Award Plan," "-- 1997
Non-Employee Directors' Stock Option Plan" and "Certain Relationships and
Related Transactions." Further, these tables do not include shares of Common
Stock that may be issued, solely at the option of the Company, to redeem
outstanding Subordinated Notes for shares of Common Stock. See "Certain
Relationships and Related Transactions -- Certain Financing
Arrangements -- Common Stock and Subordinated Notes." If all of the outstanding
options and warrants were exercised immediately prior to completion of the
Offering, the immediate dilution in net tangible book value to new investors
purchasing Common Stock in the Offering would have been $12.39 per share instead
of $11.80 per share.

19
<PAGE> 21

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1997 (i) on an historical basis and (ii) on an as adjusted basis after
giving effect to the issuance of shares pursuant to the Bonray Acquisition, the
Chesapeake Transactions and the CIT Exercise and the Offering and the
application of the net proceeds therefrom. The table should be read in
conjunction with "Use of Proceeds," "Pro Forma Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of the Company and related
notes included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
HISTORICAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
Cash and investments........................................ $ 970 $ 52,696
======= ========

Current portion of long-term debt........................... $12,869 $ 1,015
------- --------
Long-term debt:
Term Loan................................................. 18,894 12,954(1)
Subordinated Notes........................................ 16,608 2,040(1)
------- --------
Total long-term debt.............................. 35,502 14,994
------- --------
Stockholders' equity:
Preferred Stock, par value $.01 per
share; no shares outstanding........................... -- --
Common Stock, par value $.01 per
share; 7,490,000 shares outstanding, historical; and
17,947,000 shares outstanding as adjusted(2)........... 75 179
Additional paid-in capital................................ 44,792 167,198
Accumulated deficit....................................... (54) (2,315)
------- --------
Total stockholders' equity........................ 44,813 165,062
------- --------
Total capitalization.............................. $93,184 $181,071
======= ========
</TABLE>

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

(1) The Company intends to use a portion of the net proceeds from the Offering
to repay (i) all amounts outstanding under the Revolving Loan, (ii) the
portion of the Subordinated Notes held by Chesapeake and (iii) 50% of the
amount outstanding under the Term Loan. As of September 30, 1997, $7.9
million was outstanding under the Revolving Loan, $18 million was
outstanding under the Subordinated Notes held by Chesapeake and $28.5
million was outstanding under the Term Loan. See "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Certain Relationships
and Related Transactions -- Chesapeake Transactions."

(2) Does not include (i) 741,000 shares of Common Stock subject to issuance
pursuant to outstanding options awarded under the Employee Stock Plan, (ii)
60,000 shares of Common Stock subject to issuance pursuant to options to be
granted contemporaneously with the consummation of the Offering under the
Director Stock Plan or (iii) 412,000 shares of Common Stock subject to
issuance pursuant to outstanding warrants issued by the Company. See
"Management -- 1997 Stock Option and Stock Award Plan," "-- 1997
Non-Employee Directors' Stock Option Plan" and "Certain Relationships and
Related Transactions."

20
<PAGE> 22

PRO FORMA CONSOLIDATED FINANCIAL DATA

The following unaudited pro forma financial statements are derived from the
historical financial statements of Bayard, Trend, Ward and Bonray included
elsewhere in this Prospectus. The Pro Forma Combined Statements of Operations
for the six months ended June 30, 1997 and for the year ended December 31, 1996
reflect (a) in the column entitled "combined," (i) the Trend Acquisition
(acquired on May 1, 1997 and accounted for as a purchase), (ii) the Ward
Acquisition (acquired on May 30, 1997 and accounted for as a purchase), (iii)
the Bonray Acquisition (acquired on October 16, 1997 and accounted for as a
purchase) and (iv) the May Financing related to the Trend and Ward acquisitions
and (b) in the column entitled "as adjusted," the consummation of, and
application of proceeds from, the Offering as if it occurred on January 1, 1996.
The Pro Forma Balance Sheet at June 30, 1997 reflects the consummation of, and
application of proceeds from, the Chesapeake Transactions, the CIT Exercise, the
Bonray Acquisition and the Offering as if they had occurred on June 30, 1997.
The unaudited pro forma combined financial information should be read in
conjunction with the notes thereto and the historical financial statements of
Bayard, Trend, Ward and Bonray, including the notes thereto, which are included
elsewhere in this Prospectus.

The unaudited pro forma combined financial statements do not purport to be
indicative of the results of operations that would actually have occurred if the
transactions described had occurred as presented in such statements or that may
occur in the future. In addition, future results may vary significantly from the
results reflected in such statements due to general economic conditions, oil and
gas commodity prices, the demand and prices for contract drilling services,
changes in the number of rigs available for service, the Company's ability to
successfully integrate the operations of Trend, Ward and Bonray with its current
business and several other factors, many of which are beyond the Company's
control. See "Risk Factors."

21
<PAGE> 23

BAYARD DRILLING TECHNOLOGIES, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------------------------------- -----------------------------------------------
ACQUISITION OFFERING AS
BAYARD TREND(A) WARD(A) BONRAY(A) ADJUSTMENTS COMBINED ADJUSTMENTS ADJUSTED
<S> <C> <C> <C> <C> <C> <C> <C> <C>

REVENUES.................. $ 9,853 $15,692 $11,385 $11,022 $ -- $47,952 $ -- $47,952
------- ------- ------- ------- ------- ------- ------ -------
COSTS AND EXPENSES:
Drilling costs.......... 7,653 11,752 9,891 8,731 -- 38,027 -- 38,027
Depreciation and
amortization......... 1,126 1,603 966 1,229 1,893(b) 7,866 -- 7,866
1,049(c)
General and
administrative....... 658 1,647 485 846 3,636 -- 3,636
Other operating......... 46 -- -- -- -- 46 -- 46
------- ------- ------- ------- ------- ------- ------ -------
Total costs and
expenses...... 9,483 15,002 11,342 10,806 2,942 49,575 -- 49,575
------- ------- ------- ------- ------- ------- ------ -------
Operating
income........ 370 690 43 216 (2,942) (1,623) -- (1,623)
------- ------- ------- ------- ------- ------- ------ -------
OTHER INCOME (EXPENSE):
Interest income......... -- 8 34 72 -- 114 -- 114
Interest expense and
financing costs...... (11) (261) (72) (128) (2,928)(d) (3,400) 2,579(h) (821)
Gain (loss) on sale of
assets............... 54 2,055 8 (29) (1,738)(e) 350 -- 350
Other................... 17 53 67 -- -- 137 -- 137
------- ------- ------- ------- ------- ------- ------ -------
Total other
income
(expense)..... 60 1,855 37 (85) (4,666) (2,799) 2,579 (220)
------- ------- ------- ------- ------- ------- ------ -------
Income (loss) before
taxes................... 430 2,545 80 131 (7,608) (4,422) 2,579 (1,843)
Income tax expense
(benefit)............... 17 981 -- 10 (1,008)(f) -- -- --
------- ------- ------- ------- ------- ------- ------ -------
Net income (loss)......... $ 413 $ 1,564 $ 80 $ 121 $(6,600) $(4,422) $2,579 $(1,843)
======= ======= ======= ======= ======= ======= ====== =======
Earnings per share,
primary and fully
diluted................. $ 0.03 $ (0.31) $ (0.11)
======= ======= =======
Weighted average shares
outstanding, primary and
fully diluted(g)........ 14,397 14,397 16,592
======= ======= =======
</TABLE>

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

22
<PAGE> 24

BAYARD DRILLING TECHNOLOGIES, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------------------------------- -----------------------------------------------
BAYARD TREND(A) WARD(A) BONRAY(A)
SIX MONTHS FOUR MONTHS FIVE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, APRIL 30, MAY 31, JUNE 30, ACQUISITION OFFERING AS
1997 1997 1997 1997 ADJUSTMENTS COMBINED ADJUSTMENTS ADJUSTED
<S> <C> <C> <C> <C> <C> <C> <C> <C>

REVENUES................. $15,107 $6,390 $4,957 $8,855 $ -- $35,309 $ -- $35,309
COSTS AND EXPENSES:
Drilling costs......... 10,897 4,845 3,914 6,409 -- 26,065 -- 26,065
Depreciation and
amortization......... 2,645 627 413 1,047 765(b) 6,022 -- 6,022
525(c)
General and
administrative....... 734 515 197 611 -- 2,057 -- 2,057
------- ------ ------ ------ ------- ------- ------ -------
Total costs and
expenses........ 14,276 5,987 4,524 8,067 1,290 34,144 -- 34,144
------- ------ ------ ------ ------- ------- ------ -------
Operating income... 831 403 433 788 (1,290) 1,165 -- 1,165
------- ------ ------ ------ ------- ------- ------ -------
OTHER INCOME (EXPENSE):
Interest income........ 51 -- 16 -- -- 67 -- 67
Interest expense and
financing costs...... (982) (47) (27) (35) (1,464)(d) (2,555) 1,695(h) (860)
Gain (loss) on sale of
assets............... 60 -- -- -- -- 60 -- 60
Other.................. 8 -- 31 (27) -- 12 -- 12
------- ------ ------ ------ ------- ------- ------ -------
Total other income
(expense)....... (863) (47) 20 (62) (1,464) (2,416) 1,695 (721)
------- ------ ------ ------ ------- ------- ------ -------
Income (loss) before
taxes.................. (32) 356 453 726 (2,754) (1,251) 1,695 444
------- ------ ------ ------ ------- ------- ------ -------
Income tax expense
(benefit).............. (12) 135 -- 336 (459)(f) -- 169(i) 169
------- ------ ------ ------ ------- ------- ------ -------
Net income (loss)........ $ (20) $ 221 $ 453 $ 390 $(2,295) $(1,251) $1,526 $ 275
======= ====== ====== ====== ======= ======= ====== =======
Earning per share,
primary and fully
diluted................ $ .00 $ (.09) $ .02
======= ======= =======
Weighted average shares
outstanding, primary
and fully diluted(g)... 14,937 14,397 16,592
======= ======= =======
</TABLE>

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

23
<PAGE> 25

BAYARD DRILLING TECHNOLOGIES, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1997
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------- -----------------------------
BAYARD(1) BONRAY ADJUSTMENTS AS ADJUSTED
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and investments....................... $ 970 $ 167 $ 51,559(j) $ 52,696
Accounts receivable........................ 10,517 4,190 14,707
Other...................................... 559 234 793
-------- ------- -------- --------
Total current assets............... 12,046 4,591 51,559 68,196
Property & Equipment, net.................... 92,658 18,243 16,733(k) 127,634
Goodwill, net................................ 6,402 -- 6,261(k) 12,663
Other........................................ 2,066 -- -- 2,066
-------- ------- -------- --------
Total assets....................... $113,172 $22,834 $ 74,553 $210,559
======== ======= ======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable........................... $ 9,632 $ 1,435 $ -- $ 11,067
Accrued liabilities........................ 3,691 1,804 -- 5,495
Current portion of long-term debt.......... 12,869 494 (12,348)(j) 1,015
-------- ------- -------- --------
Total current liabilities.......... 26,192 3,733 (12,348) 17,577
-------- ------- -------- --------
Long-term debt............................... 18,894 74 (6,014)(j) 12,954
-------- ------- -------- --------
Subordinated Notes........................... 16,608 -- (14,568)(j) 2,040
-------- ------- -------- --------
Deferred income tax liabilities.............. 6,665 1,781 4,480(k) 12,926
-------- ------- -------- --------
STOCKHOLDERS' EQUITY:
Common stock............................... 75 424 74(j) 179
(394)(k) --
Additional paid-in capital................. 44,792 16,379 86,676(j) 167,198
19,351(k) --
Retained earnings (accumulated deficit).... (54) 443 (2,261)(j) (2,315)
(443)(k) --
-------- ------- -------- --------
Total stockholders' equity......... 44,813 17,246 103,003 165,062
-------- ------- -------- --------
Total liabilities and stockholders'
equity........................... $113,172 $22,834 $ 74,553 $210,559
======== ======= ======== ========
</TABLE>

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

24
<PAGE> 26

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

(TABLES IN THOUSANDS)

(a) Represents the results of operations for Ward, Trend and Bonray prior to
their acquisition by Bayard. Operations subsequent to the date of purchase
of each of Ward and Trend, May 1 and May 30, 1997, respectively, are
included in the Bayard historical results.

(b) To adjust depreciation expense on assets acquired in the Trend, Ward and
Bonray Acquisitions using allocated purchase prices and based on estimated
useful lives of 12 years calculated on a straight-line basis.

(c) To record amortization of goodwill attributable to the Trend and Bonray
Acquisitions over 12 years on a straight-line basis.

(d) To reflect the addition of interest expense on an aggregate principal
amount of $20.5 million of Subordinated Notes issued in the May Financing
with an original issue discount of $4 million.

(e) To eliminate the gain recognized by Trend on a rig sold to Bayard in
December 1996, prior to the Trend Acquisition in May 1997.

(f) To eliminate income tax expense recognized by Bayard, Trend and Bonray to
conform to the Company's pro forma income tax position.

(g) Calculations of weighted average shares outstanding are based upon the
following:

<TABLE>
<S> <C>
Shares outstanding at June 30, 1997......................... 7,490
Energy Spectrum warrant exercise............................ 98
Chesapeake Transactions..................................... 3,194
CIT Exercise................................................ 150
Bonray Acquisition.......................................... 3,015
------
Shares to be outstanding immediately prior to Offering...... 13,947
Common Stock Equivalents (treasury stock method)............ 450
------
Historical and combined fully diluted shares outstanding.... 14,397
Shares issued in the Offering to the extent necessary to
repay the Subordinated Notes, the Term Loan and the
Revolving Loan............................................ 2,195
------
Pro forma shares outstanding................................ 16,592
======
</TABLE>

(h) To eliminate pro forma and historical interest expense based on the assumed
repayment of debt as set forth in Note (j) as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
--------------------------------- ---------------------------------
PERCENTAGE PERCENTAGE
INCURRED REPAID* PRO FORMA INCURRED REPAID* PRO FORMA
<S> <C> <C> <C> <C> <C> <C>
Revolving Loan (historical).... $ 0 100.0% $ 0 $ 56 100.0% $ 56
Term Loan (historical)......... 22 50.0% 11 710 50.0% 355
Subordinated Notes (pro
forma)....................... 2,928 87.7% 2,568 1,464 87.7% 1,284
------ ------ ------ ------
$2,950 $2,579 $2,230 $1,695
====== ====== ====== ======
</TABLE>

* Represents the percentage of debt to be repaid from proceeds of the
Offering.

(i) To record a provision for federal and state income tax at the statutory
rate of 38%.

25
<PAGE> 27

(j) To adjust for the Chesapeake Transactions and the CIT Exercise
(collectively, the "Stockholder Exercises"), the Offering and the
application of the net proceeds therefrom, as more completely described
under the caption "Use of Proceeds" herein:

<TABLE>
<S> <C> <C> <C>
Net proceeds from the Offering............................................. $77,120
Stockholder Exercises...................................................... 12,031
-------
89,151
-------
</TABLE>

<TABLE>
<CAPTION>
BALANCE AT
JUNE 30, PERCENTAGE
1997 REPAID
<S> <C> <C> <C>
Less debt retired --
Term Loan..................................... $23,102 50.0% 11,551
Revolving Loan................................ 6,811 100.0% 6,811
Subordinated Notes............................ 16,608 87.7%(1) 14,568
------- -------
$46,521 32,930
Additional amount to be paid to Chesapeake upon debt
retirement as a result of an assumed Offering price of $21.00 per
share............................................................... 2,400
Extraordinary loss on early extinguishment of debt..................... 2,262(2)
-------
37,592
-------
Net adjustment to cash................................................. $51,559
=======
</TABLE>

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

(1) Represents repayment of Chesapeake's percentage of the Subordinated
Notes ($18 million/ $20.52 million) as described under the caption "Use
of Proceeds."

(2) The Company estimates that the extraordinary loss from early
extinguishment of the Subordinated Notes, when the notes are retired in
November 1997, will be approximately $1.4 million instead of the $2.3
million reflected in the table above due to the accrual of interest
expense and amortization of original issue discount from July 1997
through November 1997.

(k) To reflect (i) the acquisition of Bonray and the issuance of 3,015,000
shares of Common Stock at $11.86 per share based on the appraisals of the
fair market value of the property and equipment acquired of $35 million,
(ii) the allocation of the purchase price as shown below and (iii) deferred
income taxes related to the book/tax differences in the basis of property
and equipment:

<TABLE>
<S> <C>
Current assets.............................................. $ 4,591
Property and equipment...................................... 34,976
Goodwill.................................................... 6,261
Current liabilities......................................... (3,733)
Long-term liabilities....................................... (74)
Deferred income tax......................................... (6,261)
-------
Purchase price.............................................. $35,760
=======
</TABLE>

(l) On May 1, 1997, the Company completed the Trend Acquisition for $18
million in cash and 250,000 shares of Common Stock, which equates to
$10.64 per share based on the appraisals of the fair market value of the
property and equipment acquired of $21.5 million. The Company incurred
costs of approximately $307,000 in connection with this acquisition.

26
<PAGE> 28

The Trend Acquisition was accounted for as a purchase. The following is an
analysis of the allocation of the purchase price:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Current assets.............................................. $ 2,734
Property and equipment...................................... 21,532
Goodwill.................................................... 6,330
Current liabilities......................................... (2,265)
Long-term liabilities....................................... (1,340)
Deferred income tax liability............................... (6,330)
-------
Purchase price.............................................. $20,661
=======
</TABLE>

On May 30, 1997, pursuant to the Ward Acquisition, the Company acquired six
drilling rigs for approximately $8 million in cash and 400,000 shares of
Common Stock which equates to $8.95 per share based on the appraisal of the
fair market value of the assets acquired of $11.9 million. The Company also
issued warrants to purchase 200,000 shares of Common Stock at $10.00 per
share. The warrant had an estimated fair market value of $294,000 at the
agreement closing date and was recorded as an increase in property and
equipment and additional paid in capital.

27
<PAGE> 29

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The historical financial data presented in the table below for and at the
end of each of the years in the five-year period ended December 31, 1996 are
derived from the financial statements of the Company and relate to the
operations of Anadarko, the predecessor of the Company, and include, generally,
the financial results of the operation of eight rigs.

The financial statements for the years ended December 31, 1994, 1995 and
1996 have been audited by Grant Thornton LLP, independent certified public
accountants. The historical financial data presented in the table below for and
at the end of the six month periods ended June 30, 1997 and 1996 are derived
from the unaudited consolidated financial statements of the Company. In the
opinion of management of the Company, such unaudited consolidated condensed
financial statements include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the financial data for such
periods. The results for the six months ended June 30, 1997 are not necessarily
indicative of the results to be achieved for the full year.

The data presented below should be read in conjunction with the Company's
consolidated financial statements and the notes thereto included elsewhere in
this Prospectus and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------------- ------------------------
1992 1993 1994 1995 1996 1996 1997
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Contract drilling............. $ 9,368 $ 8,349 $ 9,910 $ 7,405 $ 9,793 $ 4,242 $ 15,107
Other......................... -- -- -- 303 60 59 --
--------- --------- --------- --------- ---------- --------- ----------
Total revenues............ 9,368 8,349 9,910 7,708 9,853 4,301 15,107
--------- --------- --------- --------- ---------- --------- ----------
Operating expense:
Drilling...................... 7,835 7,690 8,572 6,075 7,653 3,268 10,897
Depreciation, depletion and
amortization................ 988 1,374 1,557 791 1,126 415 2,645
General and administrative.... 651 819 786 880 658 323 734
Other......................... -- -- -- 47 46 -- --
--------- --------- --------- --------- ---------- --------- ----------
Total operating costs..... 9,474 9,883 10,915 7,793 9,483 4,006 14,276
--------- --------- --------- --------- ---------- --------- ----------
Operating income (loss)......... (106) (1,534) (1,005) (85) 370 295 831
--------- --------- --------- --------- ---------- --------- ----------
Other income and (expense):
Interest expense and financing
cost........................ (8) (30) (18) (3) (11) -- (982)
Interest income............... -- -- -- -- -- -- 51
Gain (loss) on sale of
assets...................... -- -- 366 (131) 54 -- 60
Other income (expense)........ 90 24 -- (3) 17 36 8
--------- --------- --------- --------- ---------- --------- ----------
Income (loss) before income
taxes......................... (24) (1,540) (657) (222) 430 331 (32)
Income tax expense(1)........... -- -- -- -- 163 126 (12)
--------- --------- --------- --------- ---------- --------- ----------
Net income (loss)............... $ (24) $ (1,540) $ (657) $ (222) $ 267 $ 205 $ (20)
========= ========= ========= ========= ========== ========= ==========
Earnings (Loss) Per Common Share:
Primary and fully diluted....... $ .02 $ .01 $ .00
========== ========= ==========
Weighted Average Shares
Outstanding(2): (fully
diluted)........................ 14,397 14,397 14,397
CASH FLOWS:
Operating activities............ $ (786) $ (51) $ 445 $ 310 $ (462) $ (70) $ 1,029
Investing activities............ (1,352) (1,671) (454) (1,710) (10,441) (3,142) (59,265)
Financing activities............ 2,138 1,722 9 1,400 15,866 3,212 53,513
BALANCE SHEET DATA:
Total assets.................... $ 6,858 $ 6,791 $ 6,149 $ 8,054 $ 34,673 $ 11,474 $ 113,172
Working capital (deficit),
excluding current portion of
long-term debt................ 826 711 802 12 4,974 946 (1,277)
Total long-term debt, including
current portion............... 408 365 -- -- 7,000 -- 48,371
Total stockholders' equity(3)... (6,875) (913) (54) (276) 26,251 206 44,813
OTHER FINANCIAL DATA:
EBITDA(4)....................... $ 882 $ (160) $ 552 $ 706 $ 1,496 $ 710 $ 3,476
Capital expenditures............ 1,352 1,671 1,183 2,088 10,578 3,224 66,117
</TABLE>

28
<PAGE> 30

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

(1) Income tax expense is presented on a pro forma basis (assuming a 38%
statutory rate) for the year ended December 31, 1996 and for the six months
ended June 30, 1996.

(2) Historical weighted average shares outstanding is calculated using the fully
diluted shares outstanding through October 16, 1997 for the year ended
December 31, 1996 and six months ended June 30, 1996 and 1997.

(3) No dividends were declared through June 30, 1997. See "Dividend Policy."

29
<PAGE> 31

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

The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and notes thereto included
elsewhere in this Prospectus.

GENERAL

The Company's operations have been and will be significantly affected by
the Consolidation Transactions which have transformed the Company from a
regional competitor with ten rigs in late 1996 to its current position of
operating the fifth largest land drilling fleet in the United States, with a
total of 54 rigs. The historical financial results presented herein include the
effects of the Formation Transactions (16 rigs), the Trend Acquisition (14
rigs), the Ward Acquisition (six rigs), the Bonray Acquisition (13 rigs) and the
Individual Rig Acquisitions (six rigs), only for the periods after such
transactions. In addition, the historical financial results include periods in
which a number of rigs were being refurbished and did not contribute to
revenues. Accordingly, the Company does not believe that the historical
statements of operations presented herein are necessarily indicative of the
Company's future operating results, particularly in light of the magnitude of
its recent acquisitions and rig refurbishment projects and the increased demand
and contract rates for drilling rigs in its core Mid-Continent and Gulf Coast
regions. See "Business -- Formation and Acquisitions."

After giving effect to the above mentioned transactions, the Company's pro
forma revenues and operating loss for the year ended December 31, 1996, were $48
million and $1.6 million, respectively, compared to the Company's actual
revenues and operating income of $9.9 million and $370,000, respectively. The
Company's pro forma revenues and operating income for the six months ended June
30, 1997 were $35.3 million and $1.2 million, compared to the Company's actual
revenues and operating income for the period of $15.1 million and $831,000
respectively. These pro forma results are not necessarily indicative of the
Company's future results. See "Pro Forma Consolidated Financial Data."

DOMESTIC LAND DRILLING INDUSTRY OVERVIEW

Demand for the Company's contract land drilling services is substantially
dependent upon, and affected by, the level of domestic oil and gas exploration
and development activity. Industry sources estimate that from its peak in 1982,
the supply of domestic rigs has fallen by 72% through June 1996 as a result of
normal attrition, cannibalization of components to refurbish rigs, the inability
of smaller competitors to raise capital needed to upgrade and modernize rigs and
the export of rigs to international markets. As a result of these factors, the
contract land drilling industry has been cyclical with significant volatility in
profitability and rig values.

The Company's operating margins are influenced by contract drilling rates,
operating costs and drilling rig utilization. The land drilling industry is
experiencing higher utilization, increasing day rates and improved financial
performance as a result of the long term decline in the supply of rigs and
increased demand for rigs attributable to improved oil and gas industry
fundamentals. In addition, the industry is experiencing a period of rapid
consolidation as larger, better-capitalized drilling companies have acquired
smaller operators. The convergence of land drilling rig supply and demand in its
core domestic markets, along with the acquisition and refurbishment of rigs, has
contributed to higher utilization, increasing day rates and improved financial
results for the Company in recent periods.

FINANCIAL CONDITION AND LIQUIDITY

Since December 1996, the Company has completed the Formation Transactions,
the Trend Acquisition, the Ward Acquisition, the Bonray Acquisition and the
Individual Rig Acquisitions. The Formation Transactions involved the issuance of
an aggregate of 5,600,000 shares of Common Stock to existing stockholders in
consideration for the contribution to the Company of 16 rigs and $10 million in
cash. At the

30
<PAGE> 32

time of the Formation Transactions, the Company entered into a $24 million loan
facility with CIT, principally for the refurbishment of certain of the Company's
rigs. In May 1997, contemporaneously with the Trend Acquisition and in
anticipation of the Ward Acquisition, the Company completed a financing
transaction in which it (i) issued to Chesapeake and Energy Spectrum additional
shares of Common Stock, and two series of warrants together with subordinated
notes due May 1, 2003 (the "Subordinated Notes") for $28.5 million in cash and
(ii) increased the availability under its debt facilities from $24 million to
$40.5 million (collectively, the "May Financing"). In addition, the Company
obtained the right, exercisable solely at the Company's option at any time on or
prior to April 30, 1998, to require Chesapeake to provide an additional $3
million in cash in exchange for the issuance to Chesapeake of additional shares
of Common Stock, Subordinated Notes and warrants to purchase Common Stock. The
Company later waived this right in connection with the Chesapeake Transactions.
See "Certain Relationships and Related Transactions -- Chesapeake Transactions."

The Company's principal requirements for capital, in addition to the
funding of ongoing contract drilling operations, have been capital expenditures,
including the refurbishment of existing rigs and acquisitions. From December
1996 through June 30, 1997, the Company has spent $20 million on the Trend
Acquisition, $11.9 million on the Ward Acquisition, $5.5 million on the
Individual Rig Acquisitions and approximately $33 million on refurbishments and
other related equipment purchases, including drill pipe. As a result, the
Company's net property and equipment increased from $27 million at December 31,
1996 to $92.7 million at June 30, 1997. The Company's principal sources of
liquidity have been the issuance of Common Stock, warrants and the Subordinated
Notes, borrowings under the Term Loan and the Revolving Loan (collectively, the
"Loan Agreements").

The following table summarizes the Company's balance sheet on an historical
basis as of December 31, 1996 and June 30, 1997 and on a pro forma basis as of
June 30, 1997, giving effect to the Bonray Acquisition, the Stockholder
Exercises and the Offering as if they occurred on June 30, 1997 (in thousands).

<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------
DECEMBER 31, 1996 HISTORICAL PRO FORMA
(UNAUDITED)
<S> <C> <C> <C>
Working capital (deficit)..................... $ 4,027 $(14,146) $ 50,619
Property and equipment, net................... 26,973 92,658 127,634
Other noncurrent assets....................... 1,652 8,468 14,729
------- -------- --------
Total............................... $32,652 $ 86,980 $192,982
======= ======== ========
Long-term debt, net of current maturities..... $ 6,053 $ 35,502 $ 14,994
Other long-term liabilities................... 348 6,665 12,926
Stockholders' equity.......................... 26,251 44,813 165,062
------- -------- --------
Total............................... $32,652 $ 86,980 $192,982
======= ======== ========
</TABLE>

The most significant change in the Company's balance sheet from December
31, 1996 to June 30, 1997 was a $65.7 million increase in net property and
equipment. During this same period, long-term debt net of current maturities
increased by $29.4 million and stockholders' equity increased by $18.6 million.
These changes are a direct result of the acquisition and financing transactions
described above.

From December 31, 1996 to June 30, 1997, the Company's working capital
position declined by $18.2 million to a deficit of $14.1 million. This decline
was primarily the result of an $11.9 million increase in current maturities of
long-term debt and a $4 million decrease in cash and investments, as the Company
continued to invest in rig acquisitions and the refurbishment of rigs. Pro forma
for the Chesapeake Transactions, the CIT Exercise, the Bonray Acquisition and
the Offering, the Company would have reported working capital of $50.6 million.

31
<PAGE> 33

Operating Activities

During the year ended December 31, 1996, the Company required $462,000 of
cash to fund operating activities. This was the result of $1.5 million of cash
provided by operations, partially offset by changes in working capital items
that required $2 million of cash. Cash required for changes in working capital
items included (i) increase in accounts receivable of $2.1 million, (ii)
increase in other assets totaling $185,000 and (iii) decrease of $383,000 in
accounts payable, which were partially offset by an increase of $663,000 of
other current liabilities.

During the six months ended June 30, 1997, net cash provided from operating
activities totalled $1 million. The Company generated cash from operations of
$2.6 million and working capital changes utilized $1.6 million.

Investing Activities

During 1996, the Company invested $21.7 million in fixed assets, net of
asset sales. The major components of these expenditures were $10.4 million of
cash expenditures to acquire and refurbish five diesel electric SCR rigs and
$9.8 million of Common Stock issued to acquire rigs in the Formation
Transactions.

During the six months ended June 30, 1997, the Company invested $67.5
million in fixed assets, including the Trend Acquisition, the Ward Acquisition
and the Individual Rig Acquisitions. Rig refurbishments consisted of $20.2
million, and $12.9 million was invested in drill pipe and other drilling related
equipment. The acquisitions of Trend and Ward were partially funded through the
issuance of Common Stock valued at $6.6 million.

Financing Activities

During 1996, the Company raised $15.9 million from financing activities.
The Company borrowed $7.0 million during the year under the Term Loan described
below. The Company also issued 3,600,000 shares of Common Stock for assets and
cash and made debt payments totaling $900,000 during the year.

During the six months ended June 30, 1997, the Company obtained $53.5
million from financing activities, including net borrowings under the Loan
Agreements totaling $24.8 million, $8.2 million from the issuance of Common
Stock and $20.5 million from the issuance of the Subordinated Notes and the
associated warrants. The proceeds from these transactions were used to fund the
Company's working capital requirements and capital expenditures as discussed
above.

Following is a summary of certain material terms of the Formation
Transactions, the Loan Agreements and the May Financing.

Formation Transactions. The Company was formed in December 1996 through a
series of affiliated entity transactions in which the Company became successor
to Anadarko, the contract drilling subsidiary of privately held APLP. In
connection with the Formation Transactions (i) APLP contributed ten drilling
rigs in consideration for 2,000,000 shares of Common Stock, (ii) R.T. Oliver
Drilling, Inc. and Mike Mullen Energy Equipment Resource, Inc. and certain of
their affiliated companies (collectively, "the Oliver Companies") exchanged six
drilling rigs for 1,600,000 shares of Common Stock, (iii) Energy Spectrum
contributed $10 million in consideration for 2,000,000 shares of Common Stock
and (iv) Chesapeake entered into drilling contracts with two-year terms for six
of the Company's rigs in consideration for the grant by the Company of the
Chesapeake Option. See "Business -- Formation and Acquisitions."

Loan Agreements. On December 10, 1996, the Company also entered into the
Term Loan. Subsequent to that date and in connection with the May Financing, the
Company increased the Term Loan from $24 million to $30.5 million. The Term Loan
provides the Company up to approximately $30.5 million of borrowing capacity for
the purchase of additional land drilling rigs, the refurbishment of such rigs
and equipment and for working capital purposes. The Company also entered into a
Revolving Loan with Fleet in

32
<PAGE> 34

May 1997. The Revolving Loan provides for revolving credit loans of up to $10
million, and is being used for general corporate purposes. Amounts outstanding
under the Revolving Loan bear interest based on Fleet's prime rate plus 1.5%
(10.0% at June 30, 1997) and mature in April 2000. Amounts outstanding under the
Term Loan bear interest, at the election of the Company, at floating rates equal
to Chase Manhattan Bank's prime rate plus 2.0% or LIBOR plus 4.25% (9.94% at
June 30, 1997) and mature in March 2002. To date, loans under the Revolving Loan
and the Term Loan have been used for capital expenditures and working capital
requirements. The Loan Agreements are secured by substantially all of the assets
of the Company, including all drilling rigs, equipment and drilling contracts,
and contain customary restrictive covenants (including covenants restricting the
ability of the Company to pay dividends and encumber assets) and affirmative
covenants to maintain specified financial ratios.

May Financing. In order to fund the Trend Acquisition and the Ward
Acquisition, on May 1, 1997, the Company completed the May Financing in which
the Company issued shares of Common Stock, Subordinated Notes and warrants to
purchase Common Stock to Chesapeake and Energy Spectrum in exchange for an
aggregate of $28.5 million in cash, as described below. In addition, the Company
modified the Term Loan and entered into the Revolving Loan as described above.

In the May Financing, the Company issued 1,000,000 shares of Common Stock
to Chesapeake in consideration for $7 million in cash and 140,000 shares of
Common Stock to Energy Spectrum in consideration for $980,000 in cash.
Additionally, the Company issued Subordinated Notes due May 1, 2003 in the
original principal amounts of $18 million and $2.52 million (the "Subordinated
Notes") to Chesapeake and Energy Spectrum, respectively. The Subordinated Notes
bear interest at the Company's option at either (i) 11% per annum, payable in
cash, or (ii) 12.875% per annum, payable in the form of additional Subordinated
Notes, which interest is payable quarterly in arrears. The Subordinated Notes
are general unsecured subordinated obligations of the Company that are
subordinated in right of payment to all existing and future senior indebtedness
of the Company, pari passu with all existing and future subordinated
indebtedness of the Company and senior in right of payment to all future junior
subordinated indebtedness of the Company. Chesapeake and the Company have agreed
that, upon consummation of the Offering, the Company will redeem in full the $18
million principal amount of Subordinated Notes issued to Chesapeake in
consideration for the payment by the Company to Chesapeake of $15 million in
cash, subject to adjustment. See "Certain Relationships and Related
Transactions -- Chesapeake Transactions."

In connection with the issuance of the Subordinated Notes, the Company
issued two series of detachable warrants (the "Warrants") for the purchase of
shares of Common Stock, designated as "Series A Warrants" and "Series B
Warrants." The Warrants are exercisable on or prior to May 1, 2003 at a price of
$0.01 per share in the case of the Series A Warrants and $7.50 per share in the
case of the Series B Warrants. In the May Financing, Chesapeake was issued
Series A Warrants and Series B Warrants representing the right to purchase
700,000 shares and 800,000 shares of Common Stock, respectively, and Energy
Spectrum was issued Series A Warrants and Series B Warrants representing the
right to purchase 98,000 shares and 112,000 shares of Common Stock,
respectively. On July 31, 1997, Energy Spectrum exercised in full its Series A
Warrants, but continues to hold all of the Series B Warrants issued to it. In
August 1997, Chesapeake agreed to the relinquishment and cancellation in full of
its Series A Warrants and Series B Warrants in connection with the Chesapeake
Transactions. See "Certain Relationships and Related Transactions -- Chesapeake
Transactions."

Additional Chesapeake Financing. Additionally, in connection with the May
Financing, the Company obtained the right to require Chesapeake, on or before
April 30, 1998, to provide the Company with an additional $3 million in capital
through the purchase of (i) 120,000 shares of Common Stock for a purchase price
of $7.00 per share, (ii) additional Subordinated Notes in the aggregate
principal amount of $2.16 million, (iii) additional Series A Warrants
exercisable for 84,000 shares of Common Stock and (iv) additional Series B
Warrants exercisable for 96,000 shares of Common Stock. In August 1997, the
Company agreed to waive this right in connection with the Chesapeake
Transactions. See "Certain Relationships and Related Transactions -- Chesapeake
Transactions."

33
<PAGE> 35

The foregoing summaries of the material provisions of the Company's
principal financing agreements do not purport to be complete and are subject to,
and qualified in their entirety by reference to, all of the provisions of the
related agreements, copies or forms of which have been filed as exhibits to the
Registration Statement of which this Prospectus is a part.

Recent Events and Future Activities

The Company believes that the balance of the proceeds from the Offering,
cash flow from operations and, to the extent required, borrowings under the Loan
Agreements will be sufficient to fund the Company's 1997 rig refurbishment
program and to meet its other anticipated capital requirements for 1997. Upon
consummation of the Offering and the application of the net proceeds therefrom,
as described under "Use of Proceeds," the Company will have $13.4 million of
borrowings outstanding under the Loan Agreements and $2.5 million of borrowings
outstanding under the Subordinated Notes, with an additional $10 million of
unused borrowing capacity, and cash or cash equivalents of $33 million.

In October 1997, the Company acquired Bonray in consideration for the
issuance of 3,015,000 shares of Common Stock. See "Business -- Formation and
Acquisitions -- The Bonray Acquisition."

The Company continues to actively review possible acquisition
opportunities. While, except with respect to the Bonray Acquisition, the Company
has no agreements to acquire additional businesses or equipment, suitable
opportunities may arise in the future. The timing or success of any acquisition
effort and the size of the associated potential capital commitments cannot be
predicted at this time. In addition, there can be no assurance that adequate
funding will be available on terms satisfactory to the Company.

RESULTS OF OPERATIONS

Comparison of Six Months Ended June 30, 1997 and 1996

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1997
<S> <C> <C>
Rig days worked(1)......................................... 936 2,470
Average revenues per day(2)................................ $ 4,532 $ 6,116

Drilling revenues.......................................... $4,242,000 $15,107,000
Drilling costs(3).......................................... 3,268,000 10,897,000
---------- -----------
Operating Margin........................................... $ 974,000 $ 4,210,000
========== ===========
</TABLE>

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

(1) Rig days worked represents the number of rigs being marketed by the Company
multiplied by the number of days during which such rigs are being operated,
mobilized, assembled or dismantled while under contract. Rig days are a
common measurement of both utilization rates and fleet size.

(2) Represents total contract drilling revenues (including mobilization revenues
and reimbursement for fuel and other costs) divided by the total number of
rig days worked by the Company's drilling rig fleet marketed during the
period.

(3) Drilling costs exclude depreciation and amortization and general and
administrative expenses.

Drilling revenues increased approximately $10.7 million, or 256% to $15.1
million for the six months ended June 30, 1997, from $4.2 million for the six
months ended June 30, 1996. Drilling revenues increased due to a 1,534 day, or
164%, increase in rig days worked, and a $1,584, or 34.9%, increase in the
average revenue per day. The increase in days worked was a result of an increase
in the average number of rigs owned and available for service. As of June 30,
1997, the Company had 34 rigs available for service. The increase in rigs
available for service was principally the result of the Consolidation
Transactions. Rig days worked consisted of 1,305 days worked in the Gulf Coast
region and 1,165 days worked in the Mid-Continent region.

34
<PAGE> 36

Increases in revenues per day were a result of the overall increase in demand
for land drilling rigs as reflected in the utilization rate increasing from 87%
to 97%.

Drilling costs increased by approximately $7.6 million, or 233%, to $10.9
million for the six months ended June 30, 1997, as compared to $3.3 million for
the six months ended June 30, 1996. The increase in drilling operating expenses
was a direct result of the increase in the number of rigs owned and available
for service and the corresponding 1,534 day increase in the days worked.

Depreciation and amortization expense increased by $2.2 million, or 537%,
to $2.6 million for the six months ended June 30, 1997 as compared to $415,000
for the six months ended June 30, 1996. The increase was primarily due to
additional depreciation associated with the Consolidation Transactions.

General and administrative expense increased by $411,000, or 127%, to
$734,000 for the six months ended June 30, 1997, from $323,000 for the same
period of 1996 due primarily to increased payroll costs associated with new
management and increased corporate staff and increased legal fees due to the
Company's acquisition activities.

Interest expense was $982,000 for the six months ended June 30, 1997. The
Company had no outstanding debt for the six months ended June 30, 1996.

Other income decreased for the six months ended June 30, 1997 as compared
to the six months ended June 30, 1996.

For the six months ended June 30, 1997, the income tax benefit was $12,000.
For the first six months of 1996 the Company was not a taxable entity.

Comparison of Years Ended December 31, 1996 and 1995

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1995 1996
<S> <C> <C>
Rig days worked(1).......................................... 1,489 2,029
Average revenues per day(2)................................. $ 4,973 $ 4,826
Drilling revenues........................................... $7,405,000 $9,793,000
Drilling costs(3)........................................... 6,075,000 7,653,000
---------- ----------
Operating Margin............................................ $1,330,000 $2,140,000
========== ==========
</TABLE>

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

(3) Drilling costs exclude depreciation and amortization and general and
administrative expenses.

Drilling revenues increased approximately $2.4 million, or 32%, to $9.8
million for the year ended December 31, 1996 from $7.4 million for the year
ended December 31, 1995. This improvement was due to an increase in the number
of rig days worked offset by a decrease in the average revenue per day. Rig
utilization also improved from 86% to 88% in 1996, due to an overall improvement
in the contract drilling market.

Drilling costs increased by $1.6 million, or 26%, to $7.7 million for the
year ended December 31, 1996, from $6.1 million for the year ended December 31,
1995. This increase was primarily due to increased utilization and, to a lesser
extent, increased direct labor costs.

35
<PAGE> 37

Depreciation and amortization expenses increased by $335,000, or 42%, to
$1.1 million for the year ended December 31, 1996 from $791,000 for the year
ended December 31, 1995. The increase in depreciation expense was primarily
attributable to acquisition and refurbishment costs.

General and administrative expenses decreased by $222,000 to $658,000 for
the year ended December 31, 1996, from $880,000 for the year ended December 31,
1995, due to the discontinued allocation of expenses associated with the
predecessor company.

Interest expense remained fairly constant for the year end December 31,
1996 primarily as a result of the outstanding debt level remaining fairly
constant. Interest rates during these periods remained relatively unchanged.

Other income increased $197,000 from 1995 to 1996, primarily as a result of
a loss recorded in 1995 in connection with the sale of certain assets.

The Company's income tax expense of $163,000 in 1996 was attributable to
the Company's profitable operations.

The Company had net income of $267,000 in 1996 as compared to a net loss of
$222,000 in 1995. The Company's net loss in 1995 includes net losses from the
sale of assets, for which there was no similar transaction in 1996.

Comparison of Years Ended December 31, 1995 and 1994

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1994 1995
<S> <C> <C>
Rig days worked(1).......................................... 2,047 1,489
Average revenues per day(2)................................. $ 4,841 $ 4,973

Drilling revenues........................................... $9,910,000 $7,405,000
Drilling costs(3)........................................... 8,572,000 6,075,000
---------- ----------
Operating Margin............................................ $1,338,000 $1,330,000
========== ==========
</TABLE>

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

(1) Rig days worked represents the number of rigs being marketed by the Company
multiplied by the number of days. during which such rigs are being operated,
mobilized, assembled or dismantled while under contract. Rig days are a
common measurement of both utilization rates and fleet size.

(3) Drilling costs exclude depreciation and amortization and general and
administrative expenses.

Drilling revenues decreased $2.5 million, or 25%, to $7.4 million for the
fiscal year ended December 31, 1995 from $9.9 million for the twelve months
ended December 31, 1994. This decrease was primarily due to a decrease in the
number of rig days worked, offset by an increase in rig utilization from 84% for
the year ended December 31, 1994 to 86% for the year ended December 31, 1995 and
an increase in average revenues per day from $4,841 during 1994 to $4,973 during
1995.

Drilling costs decreased $2.5 million, or 29%, to $6.1 million for the year
ended December 31, 1995, from $8.6 million for the twelve months ended December
31, 1994. This decrease in costs was due to a decrease in the Company's rig days
worked.

Depreciation and amortization expenses decreased $766,000, or 49%, to
$791,000 for the year ended December 31, 1995 from $1.6 million for the twelve
months ended December 31, 1994. This decrease was primarily due to a change in
the estimated remaining lives of the Company's drilling rigs and other related

36
<PAGE> 38

drilling equipment. These changes were made to more closely approximate the
remaining useful lives of such assets.

General and administrative expenses increased approximately $94,000 to
$880,000 for the year ended December 31, 1995 from $786,000 for the twelve
months ended December 31, 1994 primarily due to increased personnel costs.

Interest expense remained fairly constant for the year ended December 31,
1995. Interest rates and borrowings outstanding during these periods remained
relatively unchanged.

Other income decreased $500,000 from $366,000 in 1994 to a loss of $134,000
in 1995, primarily due to a loss on sale of assets for the year ended December
31, 1995 compared to a gain on sale of assets for the prior year.

The Company had a net loss of $222,000 in 1995 as compared to a loss of
$657,000 for the year ended December 31, 1994.

INFLATION AND CHANGING PRICES

Contract drilling revenues do not necessarily track the changes in general
inflation as they tend to respond to the level of activity on the part of the
oil and gas industry in combination with the supply of equipment and the number
of competing companies. Capital and operating costs are influenced to a larger
extent by specific price changes in the oil and gas industry and to a lesser
extent by changes in general inflation.

RECENT ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No.
128"). SFAS No. 128, which is effective for periods ending after December 15,
1997, including interim periods, simplifies the standards for computing earnings
per share and replaces the presentation of primary earnings per share with a
presentation of basic earnings per share. Initial adoption of this standard is
not expected to have a material impact on the Company's financial position or
results of operations. Early adoption is not permitted.

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<PAGE> 39

BUSINESS

GENERAL

The Company is a leading provider of contract land drilling services to
major and independent oil and gas companies and operates the fifth largest land
drilling fleet in the United States. As of September 30, 1997, the Company's rig
fleet consisted of 54 rigs, of which 48 were being marketed and six were to be
refurbished and are expected to be placed in operation within the next 12
months. During the nine months ended September 30, 1997, the Company experienced
a utilization rate of approximately 94% for its marketed rigs.

The Company's fleet consists primarily of rigs capable of deep drilling
applications (well depths of 15,000 feet or greater). The Company believes that
deep rigs are and will continue to be in high demand due to improved deep
drilling economics available to domestic oil and gas companies. Deep drilling
targets are more attractive to oil and gas companies due to new technologies,
including (i) three-dimensional seismic techniques, (ii) increasingly accurate
down hole measurement devices and (iii) improved guidance systems and
directional drilling motors for horizontal and directional wells. Examples of
currently active deep drilling areas include the Tuscaloosa trend in Louisiana,
the Pinnacle Reef trend in East Texas, the Anadarko and Arkoma basins in
Oklahoma and the Austin Chalk in Texas and Louisiana.

The Company's fleet includes 38 rigs capable of drilling to depths of
15,000 feet or greater, 25 of which are capable of drilling to depths of 20,000
feet or greater. Of these 38 rigs, 21 are diesel electric SCR rigs which offer
operators superior control and efficiency, particularly in deep, directional or
horizontal applications. Of the five largest domestic land drillers, the Company
ranked first in average measured depth per well drilled for the nine month
period ended September 30, 1997.

The Company's fleet is concentrated in its two core operating
regions -- the Mid-Continent region (which includes principally Oklahoma, North
Texas and the Texas Panhandle) and the Gulf Coast region of Texas and Louisiana.
At September 30, 1997, the Company had 35 rigs marketed in Oklahoma and was the
most active land drilling contractor in the state. In 1996, 1,835 onshore wells
were drilled in Oklahoma, making it the third most active state for domestic
onshore drilling. The Company's rigs operating in the Mid-Continent region are
generally capable of drilling to depths of 10,000 feet or greater and are
marketed by the Company to meet the specific well depth and mobility needs of
producers in that region. See "-- Drilling Equipment and Supplies." At September
30, 1997, the Company had 13 rigs marketed in the Gulf Coast region, including
11 diesel electric SCR rigs. This region is characterized by significant
drilling activity in deep, technically challenging formations for which the
Company's rigs are particularly well suited. The Company believes that its high
quality equipment, including diesel electric SCR rigs, powerful mud pumps and
high horsepower drawworks, gives the Company a competitive advantage in
attracting premium jobs with customers engaged in multi-well horizontal drilling
programs. In May 1997, one of the Company's rigs drilled a horizontal well in
the Gulf Coast region to a vertical depth of 18,700 feet before initiating a
horizontal lateral of 3,239 feet. The Company believes this to be the deepest
vertical depth at which a horizontal lateral has ever been initiated.

The Company was formed in December 1996 as the successor to Anadarko, which
owned ten rigs, including two rigs requiring refurbishment. At the time of its
formation, the Company also purchased six rigs requiring refurbishment. See
"-- Formation and Acquisitions." Since that time, the Company has aggressively
pursued acquisitions of additional rigs and components and through October 16,
1997 had acquired 38 additional rigs (net of sales), 32 of which were acquired
in connection with the purchases of Trend, Ward and Bonray and the remaining six
of which were acquired pursuant to individual rig purchases. Some of these
acquired rigs required refurbishment before the Company placed such rigs in
service. Many of the acquired and refurbished rigs were put into service in May
and June 1997, and therefore did not contribute significantly to operating
results through June 30, 1997. The Company expects these rigs to be operational
and to contribute to its profitability throughout the second half of 1997.

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<PAGE> 40

BUSINESS STRATEGY

The Company believes that growth in earnings and cash flow can be achieved
by pursuing the following business strategy:

Operating a Technologically Advanced Rig Fleet. The Company has assembled
its existing rig fleet, and will pursue further acquisitions, with the goal of
operating one of the most technologically sophisticated land drilling fleets in
the United States. Many of the Company's rigs include engines, pumps and
drilling mud systems that represent the best drilling technology available and
that the Company believes offer greater efficiencies for customers than many of
the rigs available from its competitors. For example, by deploying its diesel
electric SCR rigs with two or three high horsepower pumps and top drive drilling
systems in challenging deep and horizontal drilling situations, the Company
believes that it can reduce its customers' overall drilling costs, thus securing
and enhancing its relationships with some of the most active operators in the
domestic market. The Company is committed to making the capital investments
required to maintain the technological sophistication and operational
efficiencies of its fleet.

Developing Deep Drilling Capabilities. The Company believes demand has been
particularly strong for rigs capable of drilling deeper, more complex wells,
including 1,500 horsepower and larger rigs, and has focused, and will continue
to focus, on acquiring rigs with these capabilities. Management believes that
demand and utilization rates for these types of rigs, particularly SCR rigs,
will remain higher than for rigs with lesser depth capacities due to their
greater operational flexibility and efficiency. At September 30, 1997, 70% of
the Company's rig fleet (38 rigs) had deep drilling capability (15,000 feet or
greater). In the nine months ended September 30, 1997, the Company's average
depth per well drilled was 13,016 feet, compared to the national average of
7,100 feet.

Focusing on Core Markets. The Company believes that its strong asset
position and operating expertise in the Mid-Continent and Gulf Coast regions
enable it to achieve operating efficiencies and to provide premium service to
its customers in these markets. The Company is the second largest provider of
drilling rigs in Oklahoma and is among the largest operators of deep rigs in the
onshore Gulf Coast region.

Developing and Maintaining Relationships with Strong Operators. In order to
maximize the utilization rate of its rig fleet and to minimize exposure to
market downturns, the Company seeks to maintain and build relationships with
operators committed to active domestic drilling programs. The Company's largest
current customers include Apache Corporation, Chesapeake, Enron Oil and Gas
Company, Marathon Oil Company, Sonat Exploration Company and Union Pacific
Resources Corporation. Each of these companies was among the most active onshore
operators in the United States during the last three years. During the six
months ended June 30, 1997 (pro forma for the Consolidation Transactions), the
three largest customers for the Company's contract drilling services were
Chesapeake, Marathon Oil Company and Sonat Exploration Company, which accounted
for approximately 22%, 10% and 6% of total revenues, respectively. See "Risk
Factors -- Concentration of Customer Base."

DOMESTIC LAND DRILLING INDUSTRY OVERVIEW

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<PAGE> 41

to improved oil and gas industry fundamentals. Industry sources estimate that
from its peak in 1982, the supply of domestic land rigs had fallen by 72%
through October 1997 as a result of normal attrition, cannibalization of
components to refurbish rigs, the inability of smaller competitors to raise
capital needed to upgrade and modernize rigs and the export of rigs to
international markets. Greater demand in the industry is evidenced by the
increase in the active domestic land rig count to 1,032 in September 1997 from
790 in September 1996, according to data published by Baker Hughes Incorporated.
The Company believes that the domestic land drilling industry is currently
experiencing utilization rates of approximately 86% for actively marketed rigs.
While these market conditions have led to increasing day rates in the Company's
core areas, the Company does not believe that such rates have reached levels
that would justify the construction of new rigs.

Much of the new technology being employed in the oil and gas industry has
increased demand for rigs capable of drilling deeper wells efficiently and
accurately. For example, more sophisticated and, longer life drilling motors and
measurement-while-drilling devices have made deep horizontal drilling less
expensive and more precise. Three-dimensional seismic techniques have also
increased the demand for deep rigs. This technology permits geoscientists to
develop a more complete understanding of deep, complex geology prior to drilling
a well. As shallower fields continue to deplete, oil and gas companies are
likely to continue to pursue deep drilling prospects to maintain or increase
their production levels. While demand for land rigs capable of drilling greater
than 15,000 feet has grown significantly, the supply of such rigs is limited,
contributing to rapid increases in day rates for rigs with these capabilities.

FORMATION AND ACQUISITIONS

Formation Transactions. The Company was formed in December 1996 through a
series of affiliated entity transactions in which the Company became the
successor to Anadarko, the contract drilling subsidiary of privately held APLP.
In connection with the Formation Transactions (i) APLP contributed ten drilling
rigs, including two rigs requiring refurbishment, for 2,000,000 shares of Common
Stock, (ii) the Oliver Companies exchanged six drilling rigs requiring
refurbishment for 1,600,000 shares of Common Stock and (iii) Energy Spectrum
acquired 2,000,000 shares of Common Stock for cash. Additionally, Chesapeake
entered into drilling contracts with two-year terms for six of the Company's
rigs in consideration for an option to purchase 2,000,000 shares of Common Stock
(the "Chesapeake Option").

Since the Formation Transactions, the Company has enhanced its original
fleet through acquisitions and refurbishment of rigs as described below.

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<PAGE> 42

Trend Acquisition. In May 1997, the Company completed the acquisition of
Trend for $18 million in cash and 250,000 shares of Common Stock. Trend has
operated a land drilling business in the Mid-Continent region since 1976. Trend
owned 14 rigs, including three diesel electric SCR rigs and six rigs with depth
capacities of 15,000 feet or greater. The Company retained substantially all of
Trend's operating personnel.

Ward Acquisition. In May 1997, the Company acquired the assets of Ward for
$8 million in cash, 400,000 shares of Common Stock and warrants to purchase an
additional 200,000 shares of Common Stock. Ward has operated a land drilling
business in the Mid-Continent region since 1981. In the Ward Acquisition, the
Company acquired six drilling rigs, including three rigs with depth capacities
of 15,000 feet or greater, further enhancing its presence in the Mid-Continent
region. The Company retained substantially all of Ward's operating personnel.

Bonray Acquisition. In October 1997, the Company acquired Bonray for
3,015,000 shares of Common Stock. Bonray has operated a land drilling business
in the Mid-Continent region since 1980 and prior to its acquisition by the
Company was a wholly owned subsidiary of DLB. In the Bonray Acquisition, the
Company acquired 13 rigs, including seven rigs with depth capacities of 15,000
feet or greater and two diesel electric SCR rigs. As of September 30, 1997, 12
of Bonray's rigs were operating and under contract and one was awaiting
refurbishment. The Bonray Acquisition further strengthens the Company's presence
in the Mid-Continent region, making it the leading competitor in the Oklahoma
market. The Company expects to retain substantially all of Bonray's operating
personnel.

Individual Rig Acquisitions. In addition to the Trend, Ward and Bonray
Acquisitions, the Company has invested $5.5 million to acquire six rigs in five
transactions involving purchases of individual rigs or rig components. In August
1997, the Company sold one rig. See "Certain Relationships and Related
Transactions -- Other Related Party Transactions and Arrangements."

DRILLING EQUIPMENT AND SUPPLIES

A land drilling rig consists of various components, including engines,
drawworks, a derrick or mast, substructure, pumps to circulate drilling fluid,
blowout preventers, drill pipe and related equipment. The actual drilling
capacity of a rig may be more or less than its rated drilling capacity due to
numerous factors, including the length of its drill pipe and the drilling
conditions of any particular well. The intended well depth and the drill site
conditions determine the rig, drill pipe length and other equipment needed to
complete a well. The Company's rigs can be relocated to areas where demand, well
specifications and day rates allow for maximization of gross operating margins
and utilization. Generally, land rigs operate with crews of five to six persons.

The Company's fleet includes 21 rigs that are diesel electric SCR rigs and
33 that are mechanical rigs. Mechanical rigs utilize diesel engines to produce
power that is transferred to drilling equipment, such as drawworks and pumps, by
way of a compound consisting of a series of chains, sprockets and pneumatic
clutches. SCR rigs employ diesel engines that generate alternating current
electricity which is converted and transferred into amps as alternating current
or direct current electricity, which in turn drives electric motors powering the
drilling equipment. The Company believes that SCR rigs offer a number of
advantages over mechanical rigs. SCR rigs enable flexible power distribution to
selected individual drilling equipment components, providing for more precise
drilling control and efficient operation. SCR rigs are also quieter and safer
because the diesel engines are typically located away from the rig floor and
well bore, allowing for better communication among rig crews. SCR rigs are also
more easily adapted to the use of top drive drilling systems

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<PAGE> 43

which are typically electrically powered. The Company has developed a fleet that
uses the advanced drilling technology of diesel electric SCR rigs to provide
greater efficiencies to its customers, especially in deep drilling, horizontal
and directional applications, and uses mechanical rigs primarily in areas such
as the Mid-Continent region where operators target shallower well depths and
require more frequent mobility.

In addition to its SCR rigs, the Company has focused its acquisitions on
rigs with efficient and flexible drilling mud systems as well as high horsepower
drawworks and mud pumps, features which give the Company a competitive advantage
in attracting premium jobs with customers engaged in multi-well horizontal
drilling programs. The majority of the Company's rigs employ diesel engines
manufactured by Caterpillar, Inc. as the rigs' main power sources. The Company
believes that such engines are lighter and more fuel efficient than other
available engines, thus saving the Company and its customers money in terms of
lower trucking costs and reduced fuel consumption.

Finally, the Company has begun equipping certain of its deep drilling rigs
with top drive drilling systems. Top drives provide the Company's customers with
greater control in transferring horsepower to the bit, precise orientation of
drilling tools while drilling complex directional wells, and reduced incidence
of stuck drill pipe in high risk areas. Moreover, top drives enable the
contractor to drill in 90 foot sections (as opposed to conventional 45 foot
sections), a capability which reduces connection time, and are safer for rig
employees and equipment during tubular handling operations and in well control
situations. Currently, the Company has two rigs equipped with top drives, has
two additional top drives on order and anticipates using a portion of the
proceeds of the Offering for the purchase of additional top drives.

RIG FLEET

The following table identifies certain information as of September 30, 1997
regarding the rigs owned and operated by the Company.

<TABLE>
<CAPTION>
DEPTH HORSEPOWER
RIG CAPACITY RIG ----------------------- CURRENT CURRENT
NO. (FT.) DRAWWORKS TYPE(1) DRAWWORKS(2) TOTAL(3) OPERATOR STATUS
<C> <C> <S> <C> <C> <C> <C> <C>
GULF COAST REGION
21 30,000 Continental Emsco C-3 SCR 3,000 4,400 UPR Working
24 25,000 National 1320-UE SCR 2,000 3,960 Refurbishing
11 25,000 Mid Continent U-1220-EB SCR 2,500 3,600 Chesapeake Working
12 25,000 Mid Continent U-1220-EB SCR 2,500 3,600 Chesapeake Working
14 25,000 Mid Continent U-1220-EB SCR 2,500 3,600 Chesapeake Working
15 25,000 Mid Continent U-1220-EB SCR 2,500 3,600 Chesapeake Working
16 25,000 Mid Continent U-1220-EB(4) SCR 2,500 3,600 Chesapeake Working
17 25,000 Mid Continent U-1220-EB SCR 2,500 3,600 UPR Working
18 25,000 Mid Continent U-1220-EB SCR 2,500 3,600 Chesapeake Working
23 25,000 Gardner Denver 1500-E SCR 2,000 3,600 Refurbishing
22 25,000 National 1320-UE (4) SCR 2,000 3,300 Chesapeake Working
40 25,000 National 1320-UE SCR 2,000 3,300 UPR Working
20 20,000 Oilwell 840-E SCR 1,500 2,700 UPR Working
7 20,000 Mid Continent U-914-C Mechanical 1,500 2,700 Oryx Working
4 18,000 Mid Continent U-712-A Mechanical 1,200 2,700 Chesapeake Working
39 16,000 Ideco E-900 SCR 900 2,350 Refurbishing
MID-CONTINENT REGION
10 25,000 Mid Continent U-1220-EB SCR 2,500 3,600 Apache Working
63 25,000 Gardner Denver 1500-E SCR 2,000 3,300 Pioneer Working
46 25,000 BDW 1350 Mechanical 2,000 2,900 Marathon Working
60 25,000 National 1320-M Mechanical 2,000 2,700 SMR Working
52 25,000 National 1320-M Mechanical 2,000 2,700 Toklan Working
</TABLE>

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<PAGE> 44

<TABLE>
<CAPTION>
DEPTH HORSEPOWER
RIG CAPACITY RIG ----------------------- CURRENT CURRENT
NO. (FT.) DRAWWORKS TYPE(1) DRAWWORKS(2) TOTAL(3) OPERATOR STATUS
<C> <C> <S> <C> <C> <C> <C> <C>
35 20,000 National 110-UE SCR 1,500 3,300 Vastar Working
59 20,000 Oilwell 860 Mechanical 1,500 2,700 St. Mary Operating Working
19 20,000 Continental EMSCO C-1 SCR 1,500 2,700 Burlington Working
62 20,000 Mid Continent U914 SCR 1,500 2,700 Unit Petroleum Working
36 20,000 National 110-M Mechanical 1,500 2,700 Sonat Working
61 20,000 National 110-M Mechanical 1,500 2,700 Sanguine Working
5 16,000 Gardner Denver 800 Mechanical 1,000 2,900 Anadarko Working
31 16,000 Gardner Denver 800-E SCR 1,000 2,200 Anadarko Working
27 16,000 National 80-B Mechanical 1,000 1,650 Refurbishing
8 16,000 National 80-B Mechanical 1,000 1,650 Chesapeake Working
51 16,000 Oilwell 760 Mechanical 1,000 1,650 Brigham Working
47 16,000 Ideco H-900 Mechanical 900 1,650 Refurbishing
33 15,000 Brewster N-46 Mechanical 1,000 2,000 Sonat Working
34 15,000 Ideco E-900 SCR 900 1,800 Sonat Working
32 15,000 BDW 800 MI Mechanical 1,000 1,650 Sonat Working
42 15,000 Gardner Denver 700 Mechanical 800 1,650 Seagull Working
44 15,000 Gardner Denver 700 Mechanical 800 1,650 Enron Working
26 14,000 National 610 Mechanical 750 1,650 ONEOK Working
41 14,000 Mid Continent U-36A Mechanical 600 1,650 Enron Working
38 13,000 Mid Continent U-36A Mechanical 600 1,650 Texaco Working
29 13,000 Continental Emsco D-2 Mechanical 750 1,450 National Energy Working
Universal
9 12,000 Gardner Denver 500 Mechanical 650 2,250 Resources Working
57 12,000 National 55 Mechanical 550 2,000 St. Mary Operating Working
53 12,000 Unit U-40 Mechanical 850 1,650 Avalon Working
58 12,000 Ideco 750 Mechanical 750 1,650 Oryx Working
43 12,000 Superior 700 Mechanical 650 1,450 Available
45 12,000 Gardner Denver 500 Mechanical 650 1,450 Anadarko Working
37 11,000 Gardner Denver 500 Mechanical 650 1,900 Available
28 11,000 BDW 650 Mechanical 650 1,350 National Energy Working
56 10,000 Cooper LTD 750 Mechanical 750 1,550 Kilpatrick Working
30 10,000 Brewster N-42 Mechanical 550 1,725 Cross Timbers Working
54 10,000 National 50-A Mechanical 450 900 Refurbishing
55 7,500 Cooper LTD 550 Mechanical 550 1,400 Keener Oil Working
</TABLE>

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

(1) "SCR" denotes a diesel electric silicon controlled rectifier rig.
"Mechanical" denotes a mechanical rig powered by diesel engines.

(2) Drawworks horsepower represents the amount of input power required to
achieve the maximum hoisting capability of the drawworks.

(3) Total horsepower represents the maximum horsepower produced by a rig's
diesel engines for consumption by the drilling equipment.

(4) Rigs 16 and 22 in the Gulf Coast region are each equipped with National
PS350/500 top drives.

Drilling rigs and related equipment deteriorate over time unless they are
operated and maintained properly. The Company strives to keep its drilling rigs
well maintained and technologically competitive. An active maintenance program
during the life of a drilling rig permits the maintenance, replacement and
upgrading of its components on an individual basis. Over the life of a typical
drilling rig, major components, such as engines, pumps, drawworks and drill
pipe, are replaced or rebuilt on a periodic basis as required while other
components, such as the mast and substructure, can be utilized for extended
periods of time with proper maintenance.

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<PAGE> 45

such components and equipment continues to deplete. Additionally, a shortage of
drill pipe in the contract drilling industry has caused the price of drill pipe
to increase by more than 54% over the past 24 months and has required orders for
new drill pipe to be placed at least one year in advance of expected use. The
Company has established arrangements to meet its current needs for certain
necessary drilling equipment and supplies, including drill pipe, on satisfactory
terms, but there can be no assurance that it will continue to be able to do so.
Accordingly, there can be no assurance that the Company will not experience
shortages of, or material price increases in, drilling equipment and supplies,
including drill pipe, in the future. Any such shortages could delay and
adversely affect the Company's ability to refurbish its inventory rigs and
obtain contracts for its marketed rigs.

CONTRACT DRILLING OPERATIONS

The Company's drilling rigs are employed under individual contracts which
extend either over a stated period of time or the time required to drill a well
or a number of wells. Drilling contracts are obtained through either a
competitive bidding process or as a result of direct negotiations with
customers. Terms of the Company's drilling contracts vary based on factors such
as the complexity and risk of operations, on-site drilling conditions, type of
equipment used and the anticipated duration of the work to be performed.
Contracts are typically entered into on a single well basis and obligate the
Company to pay certain operating expenses, including wages of drilling
personnel, maintenance expenses and costs for incidental rig supplies, equipment
and local office facilities. Contracts generally are subject to termination by
the customer on short notice, but are sometimes written on a firm basis for a
specified number of wells or years. The Company has ongoing relationships with a
number of customers that often engage a specific rig for the drilling of
consecutive wells.

At September 30, 1997, all of the Company's marketed rigs were operating
under daywork contracts and one rig to be acquired in the Bonray Acquisition was
operating under a footage contract. The Company and its predecessors in the past
have performed drilling services under footage and turnkey contracts and the
Company may do so again in the future. Revenues from daywork contracts accounted
for approximately 96% of total drilling revenues (excluding mobilization
revenues) during the nine months ended September 30, 1997, with the remainder
from footage contracts.

Daywork Contracts. Under daywork contracts, the Company provides a
drilling rig with required personnel to the operator, who supervises the
drilling of the well. The Company is paid based on a negotiated fixed rate per
day while the rig is utilized. The rates for the Company's services depend on
market and competitive conditions, the nature of the operations to be performed,
the duration of the work, the equipment and services to be provided, the
geographic area involved and other variables. Lower rates may be paid when the
rig is in transit, or when drilling operations are interrupted or restricted by
equipment breakdowns, actions of the customer or adverse weather conditions or
other conditions beyond the control of the Company. In addition, daywork
contracts typically provide for a lump sum fee for the mobilization and
demobilization of the drilling rig. Daywork drilling contracts generally specify
the type of equipment to be used, the size of the hole and the depth of the
well. Under a daywork drilling contract, the customer bears a large portion of
out-of-pocket costs of drilling and the Company generally bears no part of the
usual capital risks associated with oil and gas exploration (such as time delays
for various reasons, including stuck drill pipe and blowouts).

Footage and Turnkey Contracts. Under footage contracts, the Company is
paid a fixed amount for each foot drilled, regardless of the time required or
the problems encountered in drilling the well. The Company pays more of the
out-of-pocket costs associated with footage contracts compared to daywork
contracts. Under turnkey contracts, the Company contracts to drill a well to an
agreed depth under specified conditions for a fixed price, regardless of the
time required or the problems encountered in drilling the well. The Company
provides technical expertise and engineering services, as well as most of the
equipment required for the well, and is compensated when the contract terms have
been satisfied. Turnkey contracts afford an opportunity to earn a higher return
than would normally be available on daywork or footage contracts if the contract
can be completed successfully without complications.

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<PAGE> 46

The risks to the Company under footage and turnkey contracts are
substantially greater than under daywork contracts because the Company assumes
most of the risks associated with drilling operations generally assumed by the
operator in a daywork contract, including risk of blowout, loss of hole, lost or
damaged drill pipe, machinery breakdowns, abnormal drilling conditions and risks
associated with subcontractors' services, supplies, cost escalation and
personnel. See "Risk Factors -- Risks Associated with Footage and Turnkey
Drilling."

CUSTOMERS AND MARKETING

The Company's customers include major oil companies and independent oil and
gas producers. During the six months ended June 30, 1997 (pro forma for the
Consolidation Transactions), the three largest customers for the Company's
contract drilling services were Chesapeake, Marathon Oil Company and Sonat
Exploration Company, which accounted for approximately 22%, 10% and 6% of total
revenues, respectively.

In December 1996, Chesapeake and its operating subsidiary (collectively
referred to in this paragraph as "Chesapeake") entered into drilling contracts
(the "Chesapeake Drilling Agreements") with the Company pursuant to which
Chesapeake agreed to engage six of the Company's rigs for two-year terms. Each
of the Chesapeake Drilling Agreements provides that the Company will utilize a
specified rig to drill wells at locations and to well depths as directed by
Chesapeake. The Company is compensated on a daywork basis at rates that are
subject to annual upward adjustments, in November of each year, to approximately
$100 per day less than the average then-current market rates for the areas of
operation. In the event that the Company and Chesapeake are unable to agree on
the appropriate rate adjustment for a particular rig, the Company will have the
option to terminate the contract for such rig at the conclusion of operations at
the well then being drilled. The Company has the option to extend the Chesapeake
Drilling Agreements with respect to any two of the rigs for two additional years
on the same terms provided in the Chesapeake Drilling Agreements. Chesapeake has
the option to extend each of the other four individual drilling contracts for
two additional years on the same terms. Any of the Chesapeake Drilling
Agreements may be terminated by either party in the event of total loss,
destruction or major breakdown of the applicable rig. The Company believes that
the existence of the Chesapeake Drilling Agreements has enabled it to obtain
financing on more favorable terms than would otherwise have been available. See
"Certain Relationships and Related Transactions -- The Formation
Transactions -- Chesapeake Drilling Agreements."

The Company enters into informal, nonbinding commitments with many of its
customers to provide drilling rigs for future periods at agreed upon rates plus
fuel and mobilization charges, if applicable, and escalation provisions. This
practice is customary in the land drilling business during times of tightening
rig supply. Although neither the Company nor the customer is legally required to
honor these commitments, the Company strives to satisfy such commitments in
order to maintain good customer relations.

The Company's sales force consists of industry professionals with
significant land drilling sales experience who utilize industry contacts and
available public data to determine how to most appropriately market available
rigs.

COMPETITION

The contract drilling industry is a highly competitive and fragmented
business characterized by high capital and maintenance costs. As a result, even
though the Company has the fifth largest active land drilling rig fleet in the
United States, the Company believes that such fleet represents a market share of
approximately 6% of the domestic land drilling industry. Drilling contracts are
usually awarded through a competitive bid process and, while the Company
believes that operators consider factors such as quality of service, type and
location of equipment, or the ability to provide ancillary services, price and
rig availability are the primary factors in determining which contractor is
awarded a job. Certain of the Company's competitors have greater financial and
human resources than the Company, which may enable them to better withstand
periods of low rig utilization, to compete more effectively on the basis of
price and technology, to build new rigs or acquire existing rigs and to provide
rigs more quickly than the Company in periods of high rig utilization.

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<PAGE> 47

OPERATING HAZARDS AND INSURANCE

The Company's insurance coverage for property damage to its rigs and
drilling equipment is based on the Company's estimate of the cost of comparable
used equipment to replace the insured property. There is a deductible per
occurrence on rigs and equipment of $500,000.

The Company's third party liability insurance coverage under the general
policy is $1 million per occurrence, with a self insured retention of $100,000
per occurrence. The commercial umbrella policy has a self insured retention of
$10,000 per occurrence with coverage of $5 million per occurrence. The Company
believes that it is adequately insured for public liability and property damage
to others with respect to its operations. However, such insurance may not be
sufficient to protect the Company against liability for all consequences of well
disasters, extensive fire damage or damage to the environment. See "Risk
Factors -- Operating Hazards and Uninsured Risks."

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

General

The Company's operations are affected from time to time in varying degrees
by political developments and federal, state and local laws and regulations. In
particular, oil and gas production, operations and economics are or have been
affected by price controls, taxes and other laws relating to the oil and gas
industry, by changes in such laws and by changes in administrative regulations.
Although significant capital expenditures may be required to comply with such
laws and regulations, to date, such compliance costs have not had a material
adverse effect on the earnings or competitive position of the Company. In
addition, the Company's operations are vulnerable to risks arising from the
numerous laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection.

Environmental Regulation

The Company's activities are subject to existing federal, state and local
laws and regulations governing environmental quality, pollution control and the
preservation of natural resources. Such laws and regulations concern, among
other things, air emissions, the containment, disposal and recycling of waste
materials, and reporting of the storage, use or release of certain chemicals or
hazardous substances. Numerous federal and state environmental laws regulate
drilling activities and impose liability for discharges of waste or spills,
including those in coastal areas. The Company has conducted drilling activities
in or near ecologically sensitive areas, such as wetlands and coastal
environments, which are subject to additional regulatory requirements. State and
federal legislation also provide special protections to animal and marine life
that could be affected by the Company's activities. In general, under various
applicable environmental programs, the Company may

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potentially be subject to regulatory enforcement action in the form of
injunctions, cease and desist orders and administrative, civil and criminal
penalties for violations of environmental laws. The Company may also be subject
to liability for natural resource damages and other civil claims arising out of
a pollution event.

Except for the handling of solid wastes directly generated from the
operation and maintenance of the Company's drilling rigs, such as waste oils and
wash water, it is the Company's practice to require its customers to
contractually assume responsibility for compliance with environmental
regulations. Laws and regulations protecting the environment have become more
stringent in recent years, and may, in certain circumstances, impose strict
liability, rendering a person liable for environmental damage without regard to
negligence or fault on the part of such person. Such laws and regulations may
expose the Company to liability for the conduct of or conditions caused by
others, or for acts of the Company which were in compliance with all applicable
laws at the time such acts were performed. The application of these requirements
or adoption of new requirements could have a material adverse effect on the
Company.

Environmental regulations that affect the Company's customers also have an
indirect impact on the Company. Increasingly stringent environmental regulation
of the oil and gas industry has led to higher drilling costs and a more
difficult and lengthy well permitting process.

The primary environmental statutory and regulatory programs that affect the
Company's operations include the following:

Oil Pollution Act and Clean Water Act. The Oil Pollution Act of 1990
("OPA") amends certain provisions of the federal Water Pollution Control Act of
1972, commonly referred to as the Clean Water Act ("CWA"), and other statutes as
they pertain to the prevention of and response to spills or discharges of
hazardous substances or oil into navigable waters. Under OPA, a person owning or
operating a facility or equipment (including land drilling equipment) from which
there is a discharge or threat of a discharge of oil into or upon navigable
waters and adjoining shorelines is liable, regardless of fault, as a
"responsible party" for removal costs and damages. Federal law imposes strict,
joint and several liability on facility owners for containment and clean-up
costs and certain other damages, including natural resource damages, arising
from a spill.

The United States Environmental Protection Agency ("EPA") is also
authorized to seek preliminary and permanent injunctive relief and, in certain
cases, criminal penalties and fines. State laws governing the control of water
pollution also provide varying civil and criminal penalties and liabilities in
the case of releases of petroleum or its derivatives into surface waters or into
the ground. In the event that a discharge occurs at a well site at which the
Company is conducting drilling or pressure pumping operations, the Company may
be exposed to claims that it is liable under the CWA or similar state laws.

Certain of the Company's operations are also subject to EPA regulations,
including regulations that require the preparation and implementation of spill
prevention control and countermeasure ("SPCC") plans to address the possible
discharge of oil into navigable waters. Where so required, the Company has SPCC
plans in place.

Superfund. The Comprehensive Environmental, Response, Compensation, and
Liability Act, as amended ("CERCLA"), also known as the "Superfund" Law, imposes
liability, without regard to fault or the legality of the original conduct, on
certain classes of persons with respect to the release of a "hazardous
substance" into the environment. These persons include (i) the current owner and
operator of a facility from which hazardous substances are released, (ii) owners
and operators of a facility at the time any hazardous substances were disposed,
(iii) generators of hazardous substances who arranged for the disposal or
treatment at or transportation to such facility of hazardous substances and (iv)
transporters of hazardous substances to disposal or treatment facilities
selected by them. The Company may be responsible under CERCLA for all or part of
the costs to clean up sites at which hazardous substances have been released. To
date, however, the Company has not been named a potentially responsible party
under CERCLA or any similar state Superfund laws.

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<PAGE> 49

Hazardous Waste Disposal. The Company's operations involve the generation
or handling of materials that may be classified as hazardous waste and subject
to the federal Resource Conservation and Recovery Act and comparable state
statutes. The EPA and various state agencies have limited the disposal options
for certain hazardous and nonhazardous wastes and is considering the adoption of
stricter handling and disposal standards for nonhazardous wastes.

As part of the Bonray Acquisition, the Company acquired an equipment yard
which may require certain expenditures or remedial actions for the removal or
cleanup of contamination. In exchange for a $1 million cash payment to the
Company at closing, the Company did not require DLB to indemnify the Company
with respect to such expenditures or remedial actions. While the Company has not
yet had an opportunity to review whether and to what extent such expenditures or
remedial actions may be necessary or advisable, based on the presently available
information, the Company does not believe that such expenditures will exceed $1
million. Management believes that the Company and its operations are in material
compliance with applicable environmental laws and regulations.

Health and Safety Matters

The Company's facilities and operations are also governed by laws and
regulations, including the federal Occupational Safety and Health Act ("OSHA"),
relating to worker health and workplace safety. As an example, the Occupational
Safety and Health Administration has issued the Hazard Communication Standard
("HCS") requiring employers to identify the chemical hazards at their facilities
and to educate employees about these hazards. HCS applies to all private-sector
employers, including the oil and gas exploration and producing industry. HCS
requires that employers assess their chemical hazards, obtain and maintain
certain written descriptions of these hazards, develop a hazard communication
program and train employees to work safely with the chemicals on site. Failure
to comply with the requirements of the standard may result in administrative,
civil and criminal penalties. The Company believes that appropriate precautions
are taken to protect employees and others from harmful exposure to materials
handled and managed at its facilities and that it operates in substantial
compliance with all OSHA regulations. While it is not anticipated that the
Company will be required in the near future to expend material amounts by reason
of such health and safety laws and regulations, the Company is unable to predict
the ultimate cost of compliance with these changing regulations.

FACILITIES AND OTHER PROPERTY

The Company leases approximately 7,500 square feet of office space for its
principal executive offices in Oklahoma City, Oklahoma at a cost of
approximately $7,000 per month. In addition, the Company owns approximately ten
acres of land in El Reno, Oklahoma and five acres of land in Weatherford,
Oklahoma that it uses for rig storage and maintenance. The Company has
negotiated the lease of a facility in Houston, Texas that includes approximately
5,000 square feet of warehouse space and 1,300 square feet of office space. As
part of the Bonray Acquisition, the Company acquired approximately 40 acres of
land in Oklahoma City with facilities including 3,600 square feet of office
space, an 8,000 square foot repair shop and three warehouses. The Company
considers all of its facilities to be in good operating condition and adequate
for their present uses.

EMPLOYEES

As of September 30, 1997, giving effect to the Bonray Acquisition, the
Company had approximately 910 employees, of which approximately 110 were
salaried and approximately 800 were employed on an hourly basis. None of the
Company's employees is represented by any collective bargaining unit. Management
believes that the Company's relationship with its employees is good.

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<PAGE> 50

LEGAL PROCEEDINGS

The Company is involved in litigation from time to time in the ordinary
course of its business. As of September 30, 1997, the Company was not a party in
any commercial litigation, but was involved in several workers' compensation
claims. Management does not believe that any litigation in which the Company
currently is involved, individually or in the aggregate, is material to the
Company's financial condition or results of operations.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the Company's
directors and executive officers, including their respective ages.

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
James E. Brown....................... 45 Chairman of the Board, President and Chief
Executive Officer
Edward S. Jacob, III................. 45 Executive Vice President -- Operations &
Marketing
David E. Grose....................... 45 Vice President and Chief Financial Officer
Carl B. Anderson, III................ 42 Director
Merrill A. Miller, Jr................ 47 Director
Sidney L. Tassin..................... 40 Director
Lew O. Ward.......................... 67 Director
</TABLE>

James E. Brown is Chairman of the Board and has served as President and
Chief Executive Officer and as a director of the Company since its formation in
1996. From 1992 until joining the Company in 1996, Mr. Brown served as President
of Anadarko Drilling Company, an Oklahoma general partnership and the
predecessor of the Company. From 1982 through 1992, Mr. Brown served as Chief
Financial Officer of AnSon Gas Corporation and its predecessor entities. From
1979 through 1982, Mr. Brown served as Vice President, Treasurer and Controller
of Blocker Energy Corporation. Prior thereto, Mr. Brown served as an accountant
in various positions with Arthur Andersen & Co.

Edward S. Jacob, III has served as Executive Vice President -- Operations &
Marketing since April 1997 and prior thereto served as Vice President of
Operations and Marketing for the Company since its formation. From 1983 until
joining the Company, Mr. Jacob was employed by Helmerich & Payne International
Drilling Co., serving as U.S. Marketing Manager from 1990 through 1996. Mr.
Jacob is a Director of the International Association of Drilling Contractors
("IADC"), serving on its Contracts and Marketing Committee, and is a former IADC
Chapter Chairman.

David E. Grose has served as Vice President and Chief Financial Officer of
the Company since July 1997. Prior to joining the Company, Mr. Grose was
affiliated with Alexander Energy Corporation from its inception in March 1980,
serving from 1987 through 1996 as a director and Vice President, Treasurer and
Chief Financial Officer. In August 1996, National Energy Group acquired
Alexander Energy Corporation and Mr. Grose served as Vice President -- Finance
and Treasurer through February 1997.

Carl B. Anderson, III has served as a director of the Company since its
formation in December 1996. Since 1994, Mr. Anderson has served as Managing
General Partner and Chief Executive Officer of APLP, a diversified energy
company and parent of Anadarko, the Company's predecessor. From 1978 through
1994, Mr. Anderson served in various capacities for APLP.

Merrill A. Miller, Jr. has served as a director of the Company since
October 1997. Since February 1996, Mr. Miller has served in various capacities
for National-Oilwell, Inc., a publicly traded oilfield services company,
including President of its Products & Technology Group since May 1997, Vice
President and General Manager of Drilling Systems since July 1996 and Vice
President of Marketing, Drilling Systems from February 1996 through July 1996.
Prior thereto, Mr. Miller served in various capacities for Anadarko, the
Company's predecessor, from January 1995 through February 1996. From May 1980
through January 1995, Mr. Miller served in various capacities with Helmerich &
Payne International Drilling Co., including Vice President of U.S. Operations.

Sidney L. Tassin has served as a director of the Company since its
formation in 1996. Since March 1996, Mr. Tassin has been the President of Energy
Spectrum Capital LP, the general partner of Energy Spectrum, an equity fund that
invests in the energy industry. From 1980 to 1994, Mr. Tassin was associated
with MESA

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Inc., serving in various financial executive capacities, including Vice
President -- Finance from 1986 to 1988 and President of BTC Partners Inc., a
financial and strategic consultant to MESA Inc., from 1988 to 1994.

Lew O. Ward has served as a director of the Company since May 1997. Since
1981, Mr. Ward has served as Chairman and Chief Executive Officer of Ward
Petroleum Corporation, an independent oil and gas company founded by Mr. Ward.
Mr. Ward is a former Director and Area Vice President of the Independent
Petroleum Association of America ("IPAA") and currently serves as Chairman of
the IPAA.

BOARD OF DIRECTORS

Board Composition. The Board is currently composed of five directors.
Following consummation of the Offering and pursuant to the Stockholders and
Voting Agreement, DLB will be entitled to nominate a sixth member of the Board.
Directors are elected for one-year terms at each annual meeting of stockholders.
Three of the Company's current directors were elected pursuant to the terms of
the Stockholders and Voting Agreement. See "Certain Relationships and Related
Transactions -- Stockholders and Voting Agreement."

Board Committees. The Company has established two standing committees of
the Board: a Compensation Committee and an Audit Committee. The current members
of the Compensation Committee are Carl B. Anderson, III and Sidney L. Tassin.
The Compensation Committee recommends to the Board the base salaries and
incentive bonuses for the officers of the Company and is charged with
administering the Company Stock Plans. The current members of the Audit
Committee are Sidney L. Tassin and Lew O. Ward. The Audit Committee reviews the
functions of the Company's management and independent auditors pertaining to the
Company's financial statements and performs such other related duties and
functions as are deemed appropriate by the Audit Committee or the Board. The
Board does not have a standing nominating committee or other committee
performing similar functions.

Director Compensation. Directors who are also employees of the Company are
not compensated for service on the Board or on any committee of the Board. Under
the compensation policy to become effective upon consummation of the Offering,
non-employee directors will receive an annual retainer of $10,000. Additionally,
all directors of the Company are entitled to reimbursement for their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the Board or committees thereof. In October 1997, the Company
adopted the Director Stock Plan pursuant to which each non-employee director is
entitled to receive (i) upon the later of the consummation of the Offering and
such director's initial election to the Board, an option to purchase 15,000
shares of Common Stock and (ii) immediately following each annual meeting at
which such director is reelected to the Board, an option to purchase 5,000
shares of Common Stock. Such non-employee directors are also entitled under the
Director Stock Plan to elect to receive options to purchase Common Stock in lieu
of their annual cash retainer and to receive certain other stock option awards.
Directors who are also employees of the Company are not eligible to receive
awards under the Director Stock Plan. See "-- 1997 Non-Employee Directors' Stock
Option Plan."

EXECUTIVE COMPENSATION

Because the Company was formed in December 1996, total compensation awarded
to or earned by James E. Brown, the Chairman of the Board, President and Chief
Executive Officer of the Company, for the Company's last fiscal year included
$9,167 in salary, an option to purchase 200,000 shares of Common Stock and $900
in other compensation. No options to purchase Common Stock were exercised by Mr.
Brown at any time during the fiscal year ended December 31, 1996. No executive
officer of the Company received salary and bonus in excess of $100,000 for
services rendered in all capacities during such fiscal year. For anticipated
executive compensation levels in 1997 and beyond, see "-- Executive Salaries and
Employment Agreements."

On December 10, 1996, the Company granted Mr. Brown an option (the "1996
Brown Option") to purchase 200,000 shares of Common Stock at an exercise price
of $5 per share, becoming exercisable with respect to 20% of the underlying
shares each anniversary of the grant date. The option terminates as to any
unexercised portion on December 10, 2002. The potential realizable values of the
1996 Brown Option,

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assuming that the market price of the Common Stock appreciates in value from $5
per share (the estimated market price of the Common Stock based upon the cash
price paid for shares of Common Stock by an independent third party in a
separate transaction consummated on the date of grant) through the end of the
option term at annualized rates of 5% and 10%, would be $340,096 and $771,561,
respectively. If the 1996 Brown Option was fully exercisable and exercised on
the date of the Offering, the realized value of the option would be $3.2
million, assuming an initial public offering price of $21.00 per share. The
Company did not grant any options to purchase Common Stock to any other
executive officer or other employee of the Company during the fiscal year ended
December 31, 1996. The Company has not granted any stock appreciation rights.

The Company adopted the Employee Stock Plan in April 1997 and made the
terms thereof applicable to the 1996 Brown Option. Through October 16, 1997 and
including the 1996 Brown Option, the Company had granted to James E. Brown,
Edward S. Jacob, III, and David E. Grose options to purchase 200,000, 50,000 and
50,000 shares of Common Stock, respectively, at exercise prices of $5, $5 and
$10 per share, respectively. Additionally, the Company has granted to Mr. Brown
and Mr. Jacob, subject to the closing of the Offering, options to purchase
200,000 and 100,000 shares of Common Stock, respectively, at an exercise price
equal to the initial public offering price. None of such options has been
exercised, and all of such options remain outstanding, as of the date of this
Prospectus. Each of the option agreements relating to stock options granted
under the Employee Stock Plan provides for the vesting of 20% of the shares
subject to the option each year beginning on the first anniversary of the date
of grant. The option ceases to be exercisable on the earliest of (i) the sixth
anniversary of the date of grant, (ii) the date of the employee's voluntary
termination of employment with the Company or the Company's termination of the
employee's employment for Due Cause (as defined in the employee's employment
agreement) or (iii) the date that is 90 days after termination of the employee's
employment by means of retirement, disability or death. In the event of a Change
of Control (as defined in the Employee Stock Plan), the committee that is
charged with administering the Employee Stock Plan (the "Committee") may
accelerate the exercisability of the options or take certain other actions
provided in the Employee Stock Plan. See "-- 1997 Stock Option and Stock Award
Plan." The options are exercisable for cash, or in the Committee's discretion,
in an acceptable equivalent, by the assignment of shares of Common Stock owned
by the option holder or the surrender of another Incentive Award (as hereinafter
defined).

The Company and James E. Brown are parties to a restricted stock award
agreement (the "Restricted Stock Award Agreement") pursuant to which Mr. Brown
purchased 100,000 shares (the "Restricted Shares") of Common Stock at a price of
$2.50 per share in February 1997. The Restricted Stock Award Agreement provides
for vesting of the Restricted Shares at a rate of 20% per year beginning on
December 10, 1997. Mr. Brown is required to remain continuously employed by the
Company through each vesting date for the applicable portion of the Restricted
Shares to vest and, prior to vesting, the Restricted Shares are not
transferable. In the event of termination of Mr. Brown's employment due to a
Change of Control (as defined in the Employee Stock Plan), all Restricted Shares
will vest immediately and all restrictions on transfer will terminate. If Mr.
Brown's employment with the Company terminates for any other reason, all
unvested Restricted Shares (the "Unvested Shares") will no longer be eligible
for vesting but, under certain circumstances, will be eligible for purchase by
the Company or Mr. Brown, as applicable. If Mr. Brown resigns or is terminated
by the Company for Due Cause (as defined in the Restricted Stock Award
Agreement), the Company may purchase the Unvested Shares from Mr. Brown for
$2.50 per share. If the Company elects not to purchase the Unvested Shares from
Mr. Brown, Mr. Brown will forfeit such Unvested Shares to the Company without
any payment therefor. If the Company terminates Mr. Brown's employment for any
reason other than Due Cause or if Mr. Brown's employment with the Company
terminates due to the death or disability of Mr. Brown, Mr. Brown may keep the
Unvested Shares by paying the Company an additional $5.00 per share. If Mr.
Brown elects not to make such additional payment, the Company may purchase the
Unvested Shares from Mr. Brown for $2.50 per share or allow Mr. Brown to keep

the Unvested Shares.

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<PAGE> 54

EXECUTIVE SALARIES AND EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with James E. Brown,
Edward S. Jacob, III and David E. Grose. The aggregate of the annual salaries
for all three executive officers (taken as a group) at the completion of the
Offering will be $375,000.

Pursuant to an employment agreement dated December 10, 1996 (the "Brown
Agreement"), James E. Brown is employed as President of the Company and, if
elected by the Board, the Chairman of the Board. The Brown Agreement provides
that Mr. Brown will receive an annual salary of not less than $120,000, subject
to annual adjustment in the sole discretion of the Board based upon the
performance and accomplishments of Mr. Brown. Upon consummation of the Offering,
Mr. Brown's annual salary will be $140,000. If the Company's earnings before
deducting interest, taxes and depreciation during any full quarterly period
equal or exceed the greater of (i) $1.5 million or (ii) 5% of the sum of the
Company's stockholders' equity and long-term debt (averaged on a daily basis
throughout such quarterly period), then Mr. Brown will be eligible to receive a
quarterly bonus of $12,500. The Brown Agreement also provides for the grant of
non-transferrable options to purchase 200,000 shares of Common Stock at an
exercise price of $5 per share, which options are subject to vesting and other
restrictions provided in an option agreement. Pursuant to the Brown Agreement,
Mr. Brown purchased 100,000 shares of restricted Common Stock which are subject
to vesting in equal amounts annually over a five year period and other
restrictions provided in the agreement, including Mr. Brown's continued
employment with the Company and Mr. Brown's right, under certain circumstances,
to purchase unvested shares for $2.50 per share. See "-- Executive
Compensation." Mr. Brown is also entitled to reimbursement of reasonable
business expenses incurred by him in the performance of his duties, as well as
certain fringe benefits. The initial term of the Brown Agreement expires on
November 30, 1998 and is subject to extension for additional one-year periods by
mutual consent of Mr. Brown and the Company. In the event Mr. Brown's employment
is terminated by Mr. Brown voluntarily or by the Company for due cause, Mr.
Brown has agreed, for a period of two years thereafter, not to take certain
actions in competition with the Company in the states of Oklahoma, Texas, New
Mexico, Louisiana or any other state in which the Company then owns, leases or
operates its assets. If, in the event of a Change of Control (as defined in the
Brown Agreement), Mr. Brown is terminated without due cause or Mr. Brown
voluntarily elects to terminate his employment for any reason, then Mr. Brown
will be entitled to continue to receive his base salary and other employee
benefits through the remaining term of the Brown Agreement and to receive a cash
payment in an amount equal to any earned but unpaid quarterly bonus for the
previous quarter.

The Company has entered into employment agreements dated as of January 1,
1997 with Edward S. Jacob, III (the "Jacob Agreement") and July 16, 1997 with
David E. Grose (the "Grose Agreement" and collectively with the Jacob Agreement,
the "Executive Agreements"). Pursuant to the Executive Agreements, Mr. Jacob is
employed as Executive Vice President -- Operations & Marketing and Mr. Grose is
employed as Vice President and Chief Financial Officer. The Jacob Agreement
provides that Mr. Jacob will receive an annual salary of not less than $105,000
in 1997 and $115,000 in 1998, subject to annual adjustment in the sole
discretion of the Board based upon performance and accomplishments of Mr. Jacob.
Upon consummation of the Offering, Mr. Jacob's annual salary will be $130,000.
The Grose Agreement provides that Mr. Grose will receive an annual salary of not
less than $105,000, subject to annual adjustment in the sole discretion of the
Board based upon performance and accomplishments of Mr. Grose. If the Company's
earnings before deducting interest, taxes and depreciation during any full
quarterly period equal or exceed the greater of (i) $1.5 million or (ii) 5% of
the sum of the Company's stockholders' equity and long-term debt (averaged on a
daily basis throughout such quarterly period), then each of Messrs. Jacob and
Grose will be eligible to receive a quarterly bonus of $5,000. The Executive
Agreements also provide for the grant of non-transferrable options to purchase
50,000 shares of Common Stock to each of Messrs. Jacob and Grose at an exercise
price of $5 per share, for Mr. Jacob, and $10 per share, for Mr. Grose. Such
options were granted to Mr. Jacob on January 1, 1997 and to Mr. Grose on July
16, 1997 and are subject to vesting and other restrictions. Such options
generally become exercisable in equal annual amounts over five years. Each of
Messrs. Jacob and Grose are entitled to reimbursement of reasonable business
expenses incurred by him in the performance of his duties, as well as certain
fringe benefits. The Jacob Agreement also provided for payment to Mr. Jacob of a
relocation allowance of $50,000, which was paid by the Company in January 1997.
The initial terms of the

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Jacob Agreement and the Grose Agreement expire on December 31, 1998 and June 30,
1999, respectively, and are subject to extension for additional one-year periods
by mutual consent. Each of the Executive Agreements provides that if the
applicable executive officer's employment is terminated by the executive
voluntarily or by the Company for due cause, for a period of two years
thereafter, the executive will not take certain actions in competition with the
Company in the states of Oklahoma, Texas, New Mexico, Louisiana or any other
state in which the Company then owns, leases or operates its assets. If, in the
event of a Change of Control (as defined in the Executive Agreement), the
executive is terminated without due cause or the executive voluntarily elects to
terminate his employment for any reason, then the executive will be entitled to
continue to receive his base salary and other employee benefits through the
remaining term of his Executive Agreement and to receive a cash payment in an
amount equal to any earned but unpaid quarterly bonus for the previous quarter.

1997 STOCK OPTION AND STOCK AWARD PLAN

The description set forth below represents a summary of the principal terms
and conditions of the Employee Stock Plan and does not purport to be complete.
Such description is qualified in its entirety by reference to the Employee Stock
Plan, a copy of which has been filed as an exhibit to the Registration Statement
of which this Prospectus is a part.

General

Purpose. The Company adopted the Employee Stock Plan for the purposes of
strengthening the ability of the Company and its subsidiaries to attract,
motivate and retain employees of superior capability and encouraging valued
employees to have a proprietary interest in the Company. To accomplish these
purposes, the Employee Stock Plan provides terms upon which certain eligible
employees of the Company and its subsidiaries may be granted stock options
("Options"), stock appreciation rights ("SARs"), restricted stock, performance
units, performance shares or phantom stock rights (collectively, "Incentive
Awards").

Administration. The Employee Stock Plan is administered by a committee (the
"Committee") consisting of two or more non-employee members of the Board elected
to the Committee by a majority of the Board. Presently, the members of the
Committee are Carl B. Anderson, III and Sidney L. Tassin. Subject to the terms
of the Employee Stock Plan, the Committee has the ability to (i) determine,
among other things, which full-time employees (by individual or by class) are
eligible to receive Incentive Awards and the time or times at which Incentive
Awards are granted, (ii) determine the number of shares of Common Stock,
Options, SARs, restricted stock awards, performance units or shares or phantom
stock rights that will be subject to each Incentive Award and the terms and
provisions of each Incentive Award, (iii) interpret the Employee Stock Plan and
agreements thereunder, (iv) prescribe, amend and rescind any rules relating to
the Employee Stock Plan and (v) make all other determinations necessary for
Employee Stock Plan administration.

Shares Subject to Employee Stock Plan. Initially, an aggregate of 1,600,000
shares of Common Stock (subject to certain adjustments) may be issued,
transferred or exercised pursuant to Incentive Awards under the Employee Stock
Plan. If the total number of issued and outstanding shares of Common Stock
increases, (other than any increase due to issuances of Common Stock in
connection with Incentive Awards under the Employee Stock Plan), then the number
of shares reserved under the Employee Stock Plan will be increased one time per
year, each January 1 during the existence of the plan, such that the number of
shares reserved and available for issuance under the Employee Stock Plan will
equal 10% of the total number of shares of issued and outstanding Common Stock.
Notwithstanding the foregoing, only a total of 400,000 of the original 1,600,000
shares of Common Stock reserved under the Employee Stock Plan may be issued,
transferred or exercised pursuant to incentive stock options ("ISOs") that
comply with the requirements of Section 422 of the Code under the Employee Stock
Plan, and the number of shares eligible for such treatment as ISOs shall not be
subject to annual adjustment. At the discretion of the Board or the Committee,
the shares of Common Stock delivered under the Employee Stock Plan may be made
available from (i) authorized but unissued

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shares, (ii) treasury shares or (iii) previously issued but reacquired shares
(or through a combination thereof).

Eligibility and Participation. The Employee Stock Plan authorizes the
Committee to designate, by individual or class, those persons who are eligible
to receive Incentive Awards under the Plan ("Participants"). Participants must
be employed on a full-time basis by the Company or its subsidiaries. Members of
the Board who are not officers or employees of the Company may not be
Participants.

Incentive Awards

Except to the extent that the Committee in a written agreement evidencing
an Incentive Award (an "Incentive Award Agreement") or the Employee Stock Plan
provides otherwise, Incentive Awards vest and become exercisable in equal
amounts on the first, second, third, fourth and fifth anniversaries of their
grant. For purposes of all Incentive Awards under the Employee Stock Plan, the
term "Fair Market Value" means the closing price per share of such Common Stock
on the principal stock exchange or quotation system on which the Common Stock is
traded or listed on the date of grant or other specified measuring date, or, if
there shall have been no such price so reported or listed on that date, on the
last preceding date on which a price was so reported or listed. If Common Stock
is not publicly traded, then "Fair Market Value" shall mean the value of a share
of Common Stock, as determined by the Committee, in the Committee's sole and
absolute discretion, at least annually. The Committee may utilize the services
of an independent third party in determining the Fair Market Value of the Common
Stock for this purpose. The types of Incentive Awards that may be made under the
Employee Stock Plan are as follows:

Options. Options are rights to purchase a specified number of shares of
Common Stock at a specified price. An Option granted pursuant to the Employee
Stock Plan may consist of either an ISO or a non-qualified stock option ("NQSO")
that does not comply with the requirements of section 422 of the Code. ISOs may
not be granted to any employee who owns or would own immediately after the grant
of such ISO, directly or indirectly, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company (unless at the time
of such grant, the incentive stock option price is at least 110% of fair market
value and such Option is not exercisable after the expiration of five years from
the date of grant). The exercise price for an ISO must be at least equal to fair
market value of the Common Stock on the date of grant and the term of such
option cannot be greater than 10 years. The exercise price for a NQSO must be
equal to at least the greater of (i) the par value of the Common Stock or (ii)
50% of the fair market value of the Common Stock on the date of grant. The
exercise price of an Option is payable in cash or an equivalent acceptable to
the Committee. At the discretion of the Committee, the exercise price for an
Option may be paid in Common Stock valued at fair market value on the exercise
date, another Incentive Award valued at fair market value, or a combination
thereof equal in value to the exercise price. Subject to the foregoing, the
exercise price and other terms and conditions relating to each Option are
determined by the Committee at the time of grant.

Stock Appreciation Rights. SARs are rights to receive a payment, in cash or
Common Stock, equal to the excess of the fair market value of a specified number
of shares of Common Stock on the date of exercise over a specified strike price.
The Committee may grant SARs in connection with an Option (either at the time of
grant or at any time during the term of the Option) or without relation to an
Option. For SARs related to Options, the applicable strike price is the exercise
price of the related Stock Option and for SARs granted without relationship to
an Option, the applicable strike price is the fair market value of a share of
Common Stock on the date of grant of the SAR. Options related to SARs cease to
be exercisable when the SAR is exercised. Subject to certain exceptions, an SAR
granted in connection with an Option is exercisable at such time or times and
only to the extent that the related Option is exercisable, and may not be
disposed by the holder except to the extent that such related Option may be
disposed. The Committee may provide at the date of grant of an SAR for a limit
on the amount payable upon exercise of the SAR. Any such limitation must be
noted in the agreement evidencing the holder's SAR.

Restricted Stock Awards. The Committee may grant shares of restricted stock
pursuant to the Employee Stock Plan. Shares of restricted stock may not be
disposed of until the restrictions are removed or expire, and

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<PAGE> 57

the Committee may impose other conditions on such shares as it may deem
advisable. The restrictions upon restricted stock awards lapse as determined by
the Committee, subject to certain other lapse provisions. Shares of restricted
stock may remain subject to certain restrictions as set forth in the restricted
stock agreement. Each restricted stock award may have a different restriction
period, in the discretion of the Committee. The Committee may, in its
discretion, prospectively change the restriction period applicable to a
particular restricted stock award. Subject to certain provisions, the Committee
may, in its discretion, determine what rights, if any, a grantee of a restricted
stock award will have with respect to such stock, including the right to vote
the shares and receive all dividends and other distributions paid or made with
respect thereto.

Performance Awards. Performance units or performance shares (collectively,
"Performance Awards") may be granted under the Employee Stock Plan subject to
the attainment of one or more performance goals. Performance goals may relate to
any financial, production, sales or cost performance objectives determined by
the Committee at the beginning of a designated period. If minimum performance is
achieved or exceeded, the value of a Performance Award will be based on the
degree to which actual performance exceeds the preestablished minimum
performance standards. The Committee may, at any time, modify the performance
measures previously established for a Performance Award as it considers
appropriate and equitable. Payments with respect to Performance Awards are made
in cash or Common Stock valued at fair market value as of the close of the
applicable performance period (or a combination of both) in the discretion of
the Committee following the close of the applicable performance period.

Phantom Stock Rights. Phantom stock rights entitle a holder, upon
conversion, to receive payment of cash or in shares of Common Stock valued at
fair market value on the date of conversion of the phantom stock right (or both)
in the discretion of the Committee. Upon conversion of a phantom stock right,
the Participant shall be entitled to receive payment of an amount determined by
multiplying (i) the fair market value of a share of Common Stock on the date of
conversion, by (ii) the number of shares of Common Stock as to which such
phantom stock right has been converted. Any payment of shares of Common Stock
upon conversion of a phantom stock right may be made in shares of restricted
stock.

Additional Provisions of the Employee Stock Plan

Expiration of Incentive Awards and Effects of Employment Separation. Except
to the extent that the Committee provides otherwise in an Incentive Award
Agreement, Incentive Awards (whether or not vested) expire immediately or are
forfeited by the recipient upon termination of such recipient's employment with
the Company or any subsidiary employing such recipient for any reason other than
death, disability or retirement. Most, if not all, of the Incentive Award
Agreements provide that vested Incentive Awards are not forfeited if the
recipient is terminated for reasons other than Due Cause (as defined in the
Incentive Award Agreement). Upon death, retirement, or disability resulting in
the cessation of an employee's employment with the Company or its subsidiaries,
any unexercised Options or SARs or outstanding phantom stock rights terminate on
the date that is 90 days following the date of death, retirement or disability
(unless it expires by its terms on an earlier date). In the event of death,
disability or retirement, or other reasons that the Committee deems appropriate,
the Performance Awards will continue after the date of the applicable event for
such period of time as determined by the Committee, subject to the terms of the
Incentive Award Agreement or any other applicable agreement, but only to the
extent exercisable on the date of the applicable event.

If a holder of a restricted stock award ceases to be an employee because of
retirement, death, permanent and total disability, or because of other reasons
as the Committee deems appropriate, the Committee may determine that
restrictions on all or some portion of the restricted stock award subject to
restrictions at the time of such employment termination will be deemed to have
lapsed. If an eligible employee who has purchased restricted stock under the
Employee Stock Plan terminates employment with the Company for any reason, then
all shares of restricted stock that have not previously vested will be
repurchased by the Company at the cost paid by such employee. In addition, upon
an eligible employee's termination of employment with the Company and all of its
subsidiaries for any reason (including by reason of death or disability), the

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<PAGE> 58

Company has the right to purchase from such employee all shares of Common Stock
awarded under the Employee Stock Plan on the terms and conditions set forth in
the applicable Incentive Award.

Adjustment Provisions. The Employee Stock Plan provides that upon the
dissolution or liquidation of the Company, certain types of reorganizations,
mergers or consolidations, the sale of all or substantially all of the assets of
the Company, or a "change of control" (as defined in the Employee Stock Plan),
the Committee may determine (without stockholder approval), subject to the terms
of any applicable agreement evidencing an Incentive Award, that (i) all or some
Incentive Awards then outstanding under the Employee Stock Plan will be fully
vested and exercisable or convertible, as applicable, (ii) some or all
restrictions on restricted stock lapse immediately, or (iii) there will be a
substitution of new Incentive Awards by such successor employer corporation or a
parent or subsidiary company therefor, with appropriate adjustments as to the
number and kind of shares or units subject to such awards and prices. In
addition, in the event of a "change of control," the Committee may take certain
actions, without stockholder approval, including but not limited to (i)
acceleration of the exercise dates of any outstanding SARs or Options or
immediate vesting, (ii) acceleration of the restriction (lapse of forfeiture
provision) period of any restricted stock award, (iii) grants of SARs to holders
of outstanding Options, (iv) payment of cash to holders of Options in exchange
for the cancellation of their outstanding Options, (v) payment for outstanding
Performance Awards, (vi) acceleration of the conversion dates of outstanding
phantom stock rights, (vii) grants of new Incentive Awards or (viii) other
adjustments or amendments to outstanding Incentive Awards.

Transfer of Incentive Awards. No Incentive Award and no right under the
Employee Stock Plan, contingent or otherwise, may be assigned, transferred or
otherwise disposed by a recipient other than pursuant to a court order, by will
or beneficiary designation, or pursuant to the laws of descent and distribution.
Pursuant to the Employee Stock Plan, so long as the Common Stock has not been
publicly traded for at least 90 days, any Common Stock obtained pursuant to an
Incentive Award will be subject to the Company's right of first purchase for the
price and upon the other terms provided in the Incentive Award agreement if the
holder of such shares intends to transfer them. In addition, upon an employee's
death, the Company has the right to purchase all or some of the Common Stock
that such employee obtained pursuant to an Incentive Award at its fair market
value within nine months of the employee's death.

Amendment and Termination of the Employee Stock Plan. Subject to
stockholder approval where expressly required by law, the Board may amend,
suspend or terminate the Employee Stock Plan at any time. No amendment, unless
approved by the holders of a majority of the outstanding shares of voting stock
of the Company may (i) change the class of persons eligible to receive Incentive
Awards, (ii) materially increase the benefits accruing to Participants, (iii)
increase by more than 10% the number of shares of Common Stock subject to the
Employee Stock Plan (except for certain adjustments required by the Employee
Stock Plan) or (iv) transfer the administration of the Employee Stock Plan to
any person who is not a nonemployee director. Except as otherwise provided in
the Employee Stock Plan, the Committee may not, without the Participant's
consent, modify the terms and conditions of an Incentive Award. No amendment,
suspension, or termination of the Employee Stock Plan may, without the
Participant's consent, alter, terminate or impair any right or obligation under
any Incentive Award previously granted under the Employee Stock Plan. Unless
previously terminated, the Employee Stock Plan will terminate and no more
Incentive Awards may be granted after the tenth anniversary of the adoption of
the Employee Stock Plan by the Board. The Employee Stock Plan will continue in
effect with respect to Incentive Awards granted before termination of the
Employee Stock Plan and until such Incentive Awards have been settled,
terminated or forfeited.

1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

The description set forth below represents a summary of the principal terms
and conditions of the Director Stock Plan and does not purport to be complete.
Such description is qualified in its entirety by reference to the Director Stock
Plan, a copy of which has been filed as an exhibit to the Registration Statement
of which this Prospectus is a part.

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<PAGE> 59

General

Purpose. The Company adopted the Director Stock Plan for the purposes of
strengthening the ability of the Company to attract and retain experienced and
knowledgeable independent individuals to act as non-employee directors of the
Company and encouraging such directors to have a proprietary interest in the
Company. To accomplish these purposes, the Director Stock Plan provides terms
upon which members of the Board who are not employees of the Company or any of
its subsidiaries ("non-employee directors") will be granted non-qualified
Options.

Administration. The Director Stock Plan is administered by a committee (the
"Director Plan Committee") consisting of two or more non-employee directors
elected to the Committee by a majority of the Board. Currently, the members of
the Director Plan Committee are Carl B. Anderson, III and Sidney L. Tassin.
Subject to the terms of the Director Stock Plan, the Director Plan Committee has
the ability to (i) determine the terms and provisions of the agreements under
which Options are granted under the Director Stock Plan, (ii) to interpret the
Director Stock Plan and the agreements thereunder, (iii) to prescribe, amend and
rescind any rules relating to the Director Stock Plan and (iv) to make all other
determinations necessary for the administration of the Director Stock Plan. The
Director Plan Committee does not have discretion or authority to disregard or
change any of the terms and conditions under which Options are granted to non-
employee directors.

Shares Subject to Director Stock Plan. Initially, an aggregate of 200,000
shares of Common Stock may be issued, transferred or exercised pursuant to
Options under the Director Stock Plan (the "Authorized Shares"). If the total
number of issued and outstanding shares of Common Stock increases after the
consummation of the Offering (other than any increase due to issuances of Common
Stock in connection with awards of Options under the Director Stock Plan), then
the number of Authorized Shares will automatically increase one time per year,
commencing January 1, 1998 and occurring each January 1 thereafter during the
existence of the Director Stock Plan, by a sufficient number of shares of Common
Stock such that the number of Authorized Shares reserved and available for
issuance under the Plan shall equal 1.2% of the total number of shares of issued
and outstanding Common Stock. At the discretion of the Board or the Director
Plan Committee, the shares of Common Stock delivered under the Director Stock
Plan may be made available from (i) authorized but unissued shares, (ii)
treasury shares or (iii) previously issued but reacquired shares (or through a
combination thereof).

Eligibility and Participation. Each non-employee director is automatically
eligible to participate in the Director Stock Plan unless he does not retain the
annual retainer to which he is entitled for service on the Board. No
non-employee director may be issued an Option to acquire more than 15,000 shares
of Common Stock in any plan year.

Options

Automatic Initial and Annual Awards of Options. Upon the consummation of
the Offering, each person who is then a non-employee director will receive, and
thereafter on the date at which a person first becomes a non-employee director,
such non-employee director will receive, a one-time grant of an Option to
acquire 15,000 shares of Common Stock (an "Initial Award"). In each year
succeeding the year in which a non-employee director receives an Initial Award,
the non-employee director, if reelected to the Board, will be granted an
additional Option to acquire 5,000 shares of Common Stock (an "Annual Award").
Annual Awards will be made as of the date of the Company's regular annual
meeting of stockholders and will be immediately exercisable. No Option granted
as an Initial Award or Annual Award will be exercisable after the tenth
anniversary of the date of grant.

Retainer Options. Under the Director Stock Plan, a non-employee director
may elect to receive, in lieu of any or all of the annual cash retainer he would
otherwise receive in cash during the succeeding plan year (currently $10,000
annually), Options for the purchase of a number of shares equal to the amount of
the annual retainer so forgone divided by the fair market value of the Common
Stock on the date of grant.

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<PAGE> 60

Exercise Price. Each Option granted pursuant to the Director Stock Plan
will be exercisable at a per share price equal to the fair market value of a
share of Common Stock as of the date of grant. Such price may be paid in cash
or, in the discretion of the Director Plan Committee, by assigning to the
Company shares equal in value to the exercise price.

Termination. Except to the extent the Director Plan Committee provides
otherwise in the agreement evidencing an Option under the Director Stock Plan,
all Options granted under the Director Stock Plan that are held by a
non-employee director will expire and be forfeited upon the date of resignation
or removal from the Board of such non-employee director, unless such resignation
or removal results from the death or permanent and total disability of the
director, or resignation upon the attainment of 65 years. Upon such death,
disability or resignation at age 65, such Options will remain exercisable and
effective for six months following the date of the event causing the
non-employee director to cease membership on the Board.

Effect of Corporate Changes. In the event of certain significant corporate
changes, including (i) dissolution or liquidation of the Company, (ii) a
reorganization, merger or consolidation (other than for purposes of
reincorporation in a different state) in which the Company is not the survivor,
(iii) the sale of all or substantially all of the assets of the Company, or (iv)
a Change of Control (as defined in the Director Stock Plan), subject to the
terms of any applicable agreement, the Director Plan Committee may, in its
discretion, without obtaining stockholder approval, take any one or more of the
following actions: (i) determine that all or some Options then outstanding will
be fully vested and exercisable, (ii) substitute new Options by a successor
employer with appropriate adjustments as to the number and kind of shares
subject to such awards and prices or (iii) cancel such Options and pay the
non-employee directors or their beneficiaries the difference between the
exercise price and the fair market value of the shares subject to the Option as
of the date of such corporate change.

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

Certain of the directors and executive officers of the Company are
beneficial owners of shares of Common Stock. See "Principal and Selling
Stockholders."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended December 31, 1996, the Company had no
compensation committee or other committee of the Board performing similar
functions and no executive officer of the Company participated in deliberations
of the Board concerning executive officer compensation. Decisions concerning
compensation of executive officers during 1996 were made by, and the Company's
Compensation Committee currently consists of, Carl B. Anderson, III and Sidney
L. Tassin, both of whom are nonemployee directors. See "-- Board of
Directors -- Board Committees." Mr. Anderson and Mr. Tassin each had direct or
indirect interests in certain transactions described in "Certain Relationships
and Related Transactions."

INDEMNIFICATION AGREEMENTS

The Company has entered into Indemnification Agreements (the
"Indemnification Agreements") with its directors and certain of its officers
(the "Indemnitees"), a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. Under the terms of
the Indemnification Agreements, the Company is required to indemnify the
Indemnitees against certain liabilities arising out of their services for the
Company. The Indemnification Agreements require the Company to indemnify each
Indemnitee to the fullest extent permitted by law and to advance certain
expenses incurred by an Indemnitee. The Indemnification Agreements provide
limitations on the Indemnitees' rights to indemnification in certain
circumstances. To the extent that indemnification provisions contained in the
Indemnification Agreements purport to include indemnification for liabilities
arising under the Securities Act, the Company has been informed that in the
opinion of the Securities and Exchange Commission (the "Commission"), such
indemnification is contrary to public policy and is therefore unenforceable.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of October 16, 1997 and as adjusted to reflect
the Offering by (i) each person known by the Company to own more than 5% of the
outstanding shares of Common Stock, (ii) each of the Company's directors, (iii)
each named executive officer, (iv) all executive officers and directors as a
group and (v) each Selling Stockholder. All persons listed have an address in
care of the Company's principal executive offices and have sole voting and
investment power with respect to their shares unless otherwise indicated.

<TABLE>
<CAPTION>
SHARES OWNED SHARES OWNED
BEFORE THE OFFERING(1) AFTER THE OFFERING(1)(4)
NAME AND ADDRESS ---------------------------- SHARES TO BE SOLD -------------------------
OF BENEFICIAL OWNER NUMBER PERCENTAGE(2) IN THE OFFERING(3) NUMBER PERCENTAGE(2)
<S> <C> <C> <C> <C> <C>
Chesapeake Energy Corporation
P.O. Box 18496
Oklahoma City, Oklahoma 73154...... 4,194,000 30.1% 3,400,000 794,000 4.4%
DLB Oil & Gas, Inc.
1601 Northwest Expressway, Suite
700
Oklahoma City, Oklahoma 73118...... 2,955,000(5) 21.2 -- 2,955,000 16.5
Energy Spectrum LLC
5956 Sherry Lane, Suite 600
Dallas, Texas 75225................ 2,350,000(6) 16.7 772,669 1,577,331 8.7
Carl B. Anderson, III
c/o AnSon Partners Limited
Partnership
4005 Northwest Expressway, Suite
400E
Oklahoma City, Oklahoma 73116...... 2,000,000(7) 14.3 362,000 1,341,000 7.5
Mike Mullen
c/o Mike Mullen Energy Equipment
Resource, Inc.
8411 Preston Road, Suite 730, LB2
Dallas, Texas 75225................ 1,250,000(8) 8.9 370,881 879,119 4.9
Roy T. Oliver
c/o R.T. Oliver Drilling, Inc.
6601 S.W. 29th Street
Oklahoma City, Oklahoma 73179...... 1,250,000(9) 8.9 370,881 879,119 4.9
Continental Illinois Property
Corporation #3
231 South LaSalle Street
Chicago, Illinois 60697............ 624,000(10) 4.5 312,000 312,000 1.7
Harold G. Hamm
302 North Independence
Enid, Oklahoma 73702............... 250,000(11) 1.8 77,267 172,733 1.0
The CIT Group/Equipment Financing,
Inc.
1211 Avenue of the Americas
New York, New York 10036........... 150,000 1.1 150,000 -- --
A. Brad Curtis, II
c/o Ward Petroleum Corporation
502 South Fillmore Road
Enid, Oklahoma 73703............... 1,000 * 193 807 *
Richard R. Tozzi
c/o Ward Petroleum Corporation
502 South Fillmore Road
Enid, Oklahoma 73703............... 5,800 * 328 5,472 *
James E. Brown....................... 310,000(12) 2.2 -- 310,000 1.7
Edward S. Jacob, III................. --(13) * -- -- *
David E. Grose....................... --(14) * -- -- *
Merrill A. Miller, Jr.
c/o National-Oilwell, Inc.
5555 San Felipe
Houston, Texas 77056............... -- -- -- 15,000 *
Sidney L. Tassin
c/o Energy Spectrum Partners LP
5956 Sherry Lane, Suite 600
Dallas, Texas 75225................ 2,350,000(15) 16.7 772,669 1,592,331 8.8
</TABLE>

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<PAGE> 62

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

* Less than 1%

(1) The information contained in this table with respect to beneficial
ownership reflects "beneficial ownership" as defined in Rule 13d-3 under
the Exchange Act. In computing the number of shares beneficially owned by
a person and the percentage ownership of that person, shares of Common
Stock subject to options or warrants held by that person that are
exercisable on October 16, 1997 or become exercisable within 60 days
following October 16, 1997 are deemed outstanding. However, such shares
are not deemed outstanding for the purpose of computing the percentage
ownership of any other person. All information with respect to the
beneficial ownership of any stockholder has been furnished by such
stockholder and, unless otherwise indicated, each stockholder has sole
voting and investment power with respect to the shares listed as
beneficially owned by such stockholder, subject to community property laws
where applicable.

(2) Percentage of ownership is based on 13,947,000 shares of Common Stock
outstanding before the Offering and 17,947,000 shares of Common Stock
outstanding after the Offering, in each case including the 3,015,000
shares of Common Stock to be issued by the Company upon consummation of
the Bonray Acquisition.

(3) Assumes no exercise of the Underwriters' over-allotment option. If the
over-allotment option is exercised in full, then the following Selling
Stockholders will sell the following number of additional shares of Common
Stock: Chesapeake Energy Corporation -- 794,000; Energy Spectrum LLC --
227,331; Carl B. Anderson, III -- 38,000; Mike Mullen -- 109,119; Roy T.
Oliver -- 109,119; Harold G. Hamm -- 22,733; A. Brad Curtis, II -- 57;
Richard R. Tozzi -- 97; Sidney L. Tassin -- 227,331; Lew O.
Ward -- 19,767.

(4) Assumes no exercise of the Underwriters' over-allotment option. If the
Underwriters' over-allotment option is exercised in full, after the
Offering 18,116,050 shares of Common Stock will be outstanding and the
Selling Stockholders will beneficially own the following number of shares
which represent the percentage ownership indicated: Energy Spectrum
LLC -- 1,350,000 (112,000 of such shares may be acquired in the next 60
days upon the exercise of outstanding options), 7.4%; Carl B. Anderson,
III -- 1,303,000 (Mr. Anderson has been granted an irrevocable voting
proxy for 170,000 of these shares by Mr. Brown), 7.2%; Mike
Mullen -- 770,000, 4.2%; Roy T. Oliver -- 770,000, 4.2%; Harold G.
Hamm -- 150,000, less than 1%; A. Brad Curtis, II -- 750, less than 1%;
Richard R. Tozzi -- 5,375, less than 1%; Sidney L. Tassin -- 1,365,000
(112,000 of such shares may be acquired in the next 60 days upon the
exercise of outstanding options), 7.4%; Lew O. Ward -- 468,725, 2.6%; all
parties to the Stockholders and Voting Agreement
(post-Offering) -- 5,668,000, 31.1%; all directors and executive officers
as a group (7 persons) -- 3,291,725 shares, 17.8%. Other than the Selling
Stockholders listed above and Chesapeake Energy Corporation, which will
not own any shares of Common Stock if the Underwriters' over-allotment
option is exercised in full, no other share numbers or percentages set
forth in the above table will change as a result of the exercise of the
Underwriters' over-allotment option.

(5) Represents shares of Common Stock issued to DLB in connection with the
Bonray Acquisition, less 60,000 shares subsequently transferred by DLB to
DLJ. Charles E. Davidson, Chairman of the Board of DLB, is the beneficial
owner of a majority of the outstanding common stock of DLB and may be

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<PAGE> 63

deemed to have beneficial ownership of the shares of Common Stock held by
DLB. Mark Liddell and Michael Liddell, as executive officers and
significant stockholders of DLB, also may be deemed to have beneficial
ownership of these shares.

(6) Represents shares of Common Stock (including 112,000 shares of Common
Stock that may be acquired within the next 60 days upon exercise of
outstanding Series B Warrants) held of record by Energy Spectrum Partners
LP, of which Energy Spectrum Capital LP is the sole general partner.
Energy Spectrum LLC is the sole general partner of Energy Spectrum Capital
LP and possesses sole voting and investment power with respect to such
shares. Sidney L. Tassin, as President and a member of Energy Spectrum
LLC, may be deemed to have beneficial ownership of these shares. Mr.
Tassin disclaims beneficial ownership of such shares.

(7) Includes (i) 1,106,000 shares held of record by APLP, of which Mr.
Anderson is managing general partner, (ii) 624,000 shares held of record
by Continental Illinois Property Corporation #3 that are subject to voting
rights retained by Mr. Anderson pursuant to an irrevocable proxy that will
expire upon consummation of the Offering, (iii) 170,000 shares held of
record by James E. Brown that are subject to voting rights retained by Mr.
Anderson pursuant to an irrevocable proxy and (iv) 100,000 shares held of
record and beneficially by Mr. Anderson.

(8) Includes (i) 480,000 shares held of record by Mullen-Oliver Partnership,
Ltd., a limited partnership partially owned and indirectly controlled by
Mr. Mullen, (ii) 400,000 shares held of record by Mr. Mullen, (iii)
320,000 shares held of record by Grupo de Hercules, Ltd., a limited
partnership partially owned and indirectly controlled by Mr. Mullen and
(iv) 50,000 shares that may be acquired within the next 60 days upon the
exercise of outstanding Warrants held by Mr. Mullen.

(9) Includes (i) 480,000 shares held of record by Mullen-Oliver Partnership,
Ltd., a limited partnership partially owned and indirectly controlled by
Mr. Oliver, (ii) 200,000 shares held of record by RR&T, Inc., a
corporation owned and controlled by Mr. Oliver, (iii) 200,000 shares held
of record by Oliver Family Trust, (iv) 320,000 shares held of record by
Grupo de Hercules, Ltd., a limited partnership partially owned and
indirectly controlled by Mr. Oliver and (v) 50,000 shares that may be
acquired within the next 60 days upon the exercise of outstanding Warrants
held by RR&T, Inc.

(10) All shares held by Continental Illinois Property Corporation #3 are
subject to voting rights retained by Carl B. Anderson, III pursuant to an
irrevocable proxy that will expire upon completion of the Offering.

(11) Harold G. Hamm holds all of all such shares as Trustee of the Harold G.
Hamm Revocable Inter Vivos Trust dated April 23, 1984.

(12) Includes (i) 100,000 shares of Common Stock held by Mr. Brown which vest
pro rata over five years starting on December 10, 1997 and are subject to
certain restrictions on resale and provisions for the repurchase by the
Company at a specified price and upon certain conditions, including
termination of employment with the Company, (ii) 170,000 shares for which
an irrevocable voting proxy has been granted to Carl B. Anderson, III and
(iii) 40,000 shares subject to options granted pursuant to the Employee
Stock Plan that vest within the next 60 days. Excludes options to purchase
an aggregate of 360,000 shares held by Mr. Brown which were granted
pursuant to the Employee Stock Plan, subject to vesting and other
conditions contained in stock option agreements, none of which options are
exercisable within the next 60 days.

(13) Excludes options to purchase 150,000 shares held by Mr. Jacob which were
granted pursuant to the Employee Stock Plan, subject to vesting and other
conditions contained in stock option agreements. None of such options are
exercisable within the next 60 days.

(14) Excludes options to purchase 50,000 shares held by Mr. Grose which were
granted pursuant to the Employee Stock Plan, subject to vesting and other
conditions contained in a stock option agreement. None of such options are
exercisable within the next 60 days.

(15) Represents shares held of record by Energy Spectrum Partners LP and
beneficially by Energy Spectrum LLC. Mr. Tassin, a director of the
Company, is the President of Energy Spectrum LLC,

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which is the ultimate general partner of Energy Spectrum Partners LP. Mr.
Tassin disclaims beneficial ownership of such shares. See note (6) above.

(16) Includes (i) 338,300 shares held of record by Wil-Cas Investments, L.P., a
family limited partnership controlled by Lew O. Ward and a family trust
for the benefit of Mr. Ward's children, William C. Ward and Casidy Ward,
of which Bank of Oklahoma, N.A. is trustee, (ii) 1,700 shares held of
record by Mr. Ward, (iii) 60,000 shares held of record by certain current
and former employees of Ward Drilling Company, Inc. that are subject to
voting rights retained by Mr. Ward pursuant to an irrevocable proxy that
will expire upon consummation of the Offering and (iv) 200,000 shares that
may be acquired within the next 60 days upon the exercise of outstanding
warrants held in the name of Ward Drilling Company, Inc., of which Mr.
Ward is the Chairman.

(17) Upon consummation of the Offering, the stockholders party to the
Stockholders and Voting Agreement will be DLB, Energy Spectrum, APLP, Carl
B. Anderson, III and DLJ. See "Certain Relationships and Related
Transactions -- Stockholders and Voting Agreement."

(18) Includes (i) 112,000 shares that may be acquired by Energy Spectrum
Partners LP within the next 60 days upon the exercise of outstanding
Series B Warrants, (ii) 794,000 shares subject to voting rights retained
by Mr. Anderson (such voting rights will expire with respect to 624,000
shares upon completion of the Offering), (iii) 100,000 shares of
restricted stock held by Mr. Brown, (iv) 40,000 shares subject to options
granted to Mr. Brown pursuant to the Employee Stock Plan that vest within
the next 60 days and (v) 200,000 shares that may be acquired by Ward
Drilling Company, Inc. within the next 60 days upon the exercise of
outstanding warrants.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following discussion identifies certain of the Company's relationships
and related transactions in which any founder, director or executive officer of
the Company, any person known to the Company to own of record or beneficially
over 5% of the Common Stock, or any member of the immediate family of any such
persons had, or has, a direct or indirect material interest. Chesapeake, DLB,
Energy Spectrum, APLP and the Oliver Companies are each record or beneficial
owners of over 5% of the Common Stock. APLP, Energy Spectrum, the Oliver
Companies and Chesapeake participated in the Formation Transactions as founders
of the Company. Three of the Company's former directors, Aubrey K. McClendon,
Tom L. Ward and Marcus C. Rowland, are stockholders, executive officers and/or
directors of Chesapeake. One of the Company's directors, Sidney L. Tassin, and
one of the Company's former directors, James W. Spann, are executive officers
and partners of the ultimate general partner of Energy Spectrum. Roy T. Oliver,
a former director of the Company, is a director, executive officer and
significant stockholder of certain of the Oliver Companies. Mike Mullen is a
director, executive officer and significant stockholder of certain of the Oliver
Companies. Prior to the Ward Acquisition, Lew O. Ward, a director of the
Company, was a director, executive officer and significant stockholder of Ward.
Carl B. Anderson, III, a director of the Company, and Robert E. Bell, a former
director of the Company, are directors, executive officers and holders of
substantial ownership interests in APLP (of which Anadarko is a subsidiary).
James E. Brown is a director and executive officer of the Company and, prior to
the formation of the Company, was a director and executive officer of Anadarko.
Each of such persons and entities has or had a direct or indirect material
interest in one or more of the arrangements and transactions described below.

REGISTRATION RIGHTS AGREEMENTS

The Company and certain of its investors, including certain directors,
officers and significant stockholders, are party to a Registration Rights
Agreement (the "Registration Rights Agreement") covering shares of Common Stock,
including the shares of Common Stock issuable upon the exercise of options,
warrants and other Company securities (collectively, "Common Stock
Equivalents"), owned by such investors (the "Registrable Securities"). The
Registration Rights Agreement applies to Registrable Securities owned by
Chesapeake, Energy Spectrum, APLP (including Anadarko), the Oliver Companies,
Ward and certain of its transferees, James E. Brown and Carl B. Anderson, III.
After giving effect to the consummation of the Stockholder Exercises and the
Offering, 5,482,000 outstanding shares of Common Stock (4,204,667 shares if the
Underwriters' over-allotment option is exercised in full) and 412,000 shares of
Common Stock Equivalents will be subject to the Registration Rights Agreement.
Additionally, any shares issued by the Company upon conversion of the
Subordinated Notes will be subject to the Registration Rights Agreement. All of
the shares of Common Stock offered hereby by the Selling Stockholders are being
registered pursuant to the terms of the Registration Rights Agreement.

The Registration Rights Agreement provides, among other things, that, at
any time (subject to customary "black-out" periods) subsequent to the earlier of
(i) an initial public offering resulting in proceeds of at least $25 million to
the Company or (ii) January 1, 2000, the holders of Registrable Securities with
a minimum aggregate share value of at least $20 million may require the Company
to effect the registration under the Securities Act of the Registrable
Securities, subject to certain limitations. The Registration Rights Agreement
also provides certain "piggyback" registration rights to the holders of
Registrable Securities whenever the Company proposes to register an offering of
any of its capital stock under the Securities Act, subject to certain
exceptions, including pro rata reduction if, in the reasonable opinion of the
managing underwriter of the offering, such a reduction is necessary to prevent
an adverse effect on the marketability or offering price of all the securities
proposed to be offered in such offering.

The Registration Rights Agreement contains customary provisions regarding
the payment of expenses by the Company and regarding mutual indemnification
agreements between the Company and the holders of Registrable Securities for
certain securities law violations.

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In connection with the Bonray Acquisition, the Company entered into a
registration rights agreement (the "DLB Registration Rights Agreement") for the
benefit of DLB and its financial advisor with respect to such transaction. The
DLB Registration Rights Agreement covers 3,015,000 shares of Common Stock issued
in the Bonray Acquisition. The DLB Registration Rights Agreement provides, among
other things, that, at any time (subject to customary "black-out" periods
following 120 days after the Offering) DLB may request the Company to register
the distribution of Common Stock to DLB's stockholders. In addition, at any time
after 180 days following the Offering, certain of DLB's stockholders together
with DLB's financial advisor holding Common Stock with a minimum aggregate value
of at least $20 million may require the Company to effect up to two
registrations under the Securities Act, subject to certain limitations. The DLB
Registration Rights Agreement also provides certain "piggyback" registration
rights to the holders of Registrable Securities whenever the Company proposes to
register an offering of any of its capital stock under the Securities Act,
subject to certain exceptions, including pro rata reduction if, in the
reasonable opinion of the managing underwriter of the offering, such a reduction
is necessary to prevent an adverse effect on the marketability or offering price
of all the securities proposed to be offered in such offering.

The DLB Registration Rights Agreement requires the Company to pay expenses
associated with any registration of a distribution of Common Stock to DLB
stockholders. The beneficiaries of the DLB Registration Rights Agreement to
reimburse the Company in connection with the exercise of any other demand
registration. In addition, the DLB Registration Statement contains customary
provisions regarding mutual indemnification agreements between the Company and
the holders of Registrable Securities for certain securities law violations.

The foregoing summary of the principal provisions of the Company's
registration rights agreements does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all of the provisions of the
Registration Rights Agreement and the DLB Registration Rights Agreement, copies
of which have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.

STOCKHOLDERS AND VOTING AGREEMENT

The Company is party to a Stockholders and Voting Agreement ("Stockholders
and Voting Agreement") with DLB, Energy Spectrum, APLP, Carl B. Anderson, III
and DLJ (the "Bound Stockholders") that provides for certain agreements
regarding the corporate governance of the Company, transfer restrictions on
shares of Common Stock and Common Stock Equivalents, and other customary terms
and conditions. Immediately following the Offering, the parties to the
Stockholders and Voting Agreement will beneficially own 5,933,331 shares of
Common Stock, representing 32.8% of the issued and outstanding shares of Common
Stock (5,668,000 shares representing 31.1% if the Underwriters' over-allotment
option is exercised in full). The Stockholders and Voting Agreement will
terminate on the tenth anniversary of the Offering.

Board Representation. The Stockholders and Voting Agreement provides that
the Board shall not consist of more than ten members. In addition, the
Stockholders and Voting Agreement provides that, upon the consummation of the
Offering, certain stockholders will have the right to designate a specified
number of persons to be nominated for election as directors. Upon effectiveness
of the Stockholders and Voting Agreement, each of Energy Spectrum, Anadarko and
DLB will have the right to designate one nominee for director as follows: (i)
Energy Spectrum will have the right to designate one nominee for director as
long as it owns at least (a) 5% of the outstanding Common Stock of the Company,
(b) 50% in principal amount of the Subordinated Notes purchased by it in the May
Financing or (c) 600,000 shares of Common Stock, (ii) Anadarko will have the
right to designate one nominee for director as long as it owns at least (a) 5%
of the outstanding Common Stock of the Company or (b) 600,000 shares of Common
Stock, and (iii) assuming consummation of the Bonray Acquisition, DLB will have
the right to designate one nominee for director as long as it owns at least 5%
of the outstanding Common Stock of the Company. The Bound Stockholders are
obligated to vote all of their voting securities (including certain Common Stock
Equivalents) of the Company for these designees.

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Certain Transfer Restrictions. In accordance with the Stockholders and
Voting Agreement and in connection with the Offering, the Bound Stockholders
have agreed to a "lock-up" period of up to 180 days, during which such
stockholders will not transfer any Common Stock or Common Stock Equivalents
without the prior written consent of the Board, with any members of the Board
designated by such Bound Stockholder abstaining. Following completion of the
Offering, the Bound Stockholders have agreed that any such Bound Stockholder
holding 5% or more of the Common Stock (on a fully diluted basis) shall not,
subject to certain exceptions, transfer 5% or more of the Common Stock (on a
fully diluted basis) unless such Bound Stockholder has received the prior
written consent of the Board, with any member of the Board designated by such
Bound Stockholder abstaining.

The foregoing summary of the material provisions of the Stockholders and
Voting Agreement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions of such
agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.

CERTAIN ARRANGEMENTS RELATED TO THE CONSOLIDATION TRANSACTIONS

The Formation Transactions

The Company was formed in December 1996 through a series of affiliated
entity transactions in which the Company became the successor to Anadarko, the
contract drilling subsidiary of privately held APLP. In connection with the
Formation Transactions (i) APLP contributed ten drilling rigs, including two
rigs requiring refurbishment, for 2,000,000 shares of Common Stock, (ii) the
Oliver Companies exchanged six drilling rigs requiring refurbishment for
1,600,000 shares of Common Stock and (iii) Energy Spectrum acquired 2,000,000
shares of Common Stock for $10 million. Additionally, Chesapeake entered into
drilling contracts with two-year terms for six of the Company's rigs in
consideration for the Chesapeake Option. See "Business -- Formation and
Acquisitions." In connection with the Formation Transactions, the ten rigs
acquired from APLP were valued at an aggregate of $10.8 million, the six rigs
acquired from the Oliver Companies were valued at an aggregate of $9.5 million
and the six Chesapeake Drilling Agreements were valued at an aggregate of $1.1
million. The valuations of the rigs acquired in the Formation Transactions from
APLP and the Oliver Companies, the values placed upon the Chesapeake Drilling
Agreements and the consideration to be received by each such founder were
determined and established through negotiations among representatives of APLP
and Anadarko (including Carl B. Anderson, III), Energy Spectrum (including
Sidney L. Tassin), the Oliver Companies (including Roy T. Oliver and Mike
Mullen) and Chesapeake (including Aubrey McClendon), taking into account the
then existing market values of available rigs, the anticipated costs to complete
the necessary refurbishment of the contributed rigs and the expected values of
revenues to be received by the Company from the Chesapeake Drilling Agreements.

Three of the rigs acquired by the Company from APLP were acquired by APLP
within the two years prior to their contribution to the Company. APLP acquired
one rig in each of August, September and October 1996 for $1.3 million, $922,000
and $450,000, respectively. At the time of their contribution to the Company,
such rigs were valued on the books of the Company at $2.7 million. Four of the
rigs acquired by the Company from the Oliver Companies were acquired by the
contributing founder within the two years prior to their contribution to the
Company at an aggregate cost of $2.6 million. At the time of their contribution
to the Company, such rigs were valued on the books of the Company at $4.4
million.

Chesapeake Option. Upon issuance by the Company, the Chesapeake Option
provided Chesapeake with the right to purchase up to 2,000,000 shares of Common
Stock from the Company at an exercise price of $6 per share. The Chesapeake
Option would have expired (i) as to 668,000 shares, on December 5, 2000 and (ii)
as to 1,332,000 shares, on December 5, 1998, subject to extension to December 5,
2000 if Chesapeake extends four of the Chesapeake Drilling Agreements for
additional two-year terms. In August 1997, Chesapeake relinquished the
Chesapeake Option in connection with the Chesapeake Transactions. See
"-- Chesapeake Transactions."

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Chesapeake Drilling Agreements. In December 1996 in connection with the
Formation Transactions, Chesapeake and its operating subsidiary (collectively
referred to in this discussion as "Chesapeake") entered into the Chesapeake
Drilling Agreements with the Company pursuant to which Chesapeake agreed to
engage six of the Company's rigs for two-year terms. The Company has the option
to extend the Chesapeake Drilling Agreements with respect to any two of the rigs
for two additional years on the same terms provided in the Chesapeake Drilling
Agreements. Chesapeake has the option to extend each of the other four
Chesapeake Drilling Agreements for two additional years on the same terms.

Each of the Chesapeake Drilling Agreements provides that the Company will
utilize a specified rig to drill wells at locations and to well depths as
directed by Chesapeake. The Company is compensated for each day that a rig is in
operation at specified rates. The day rates for three of the rigs are subject to
additional charges for each rig in which the actual cost of drill pipe exceeds
$20 per foot, unless standard day rates are adjusted upward by certain amounts
under the terms of the Chesapeake Drilling Agreements. Reduced day rates are
applicable when the rig is in transit, when the Company's crew is standing by
for directions from Chesapeake and during periods when normal operations are
suspended due to certain conditions outside the control of the parties, such as
inclement weather, labor strikes and inability to obtain fuel or materials.
Through July 31, 1997, the Company had recognized aggregate revenues of $6.2
million from the Chesapeake Drilling Agreements.

The standard day rates are subject to upward, but not downward, adjustment
annually in November to the average then-current market rates for the areas of
operation, less $100 per day. The Company and Chesapeake are required to
consider such adjustment each November during the term of the particular
Chesapeake Drilling Agreement and if no agreement is timely reached as to the
appropriate rate adjustment, the Company will have the option to terminate the
contract for such rig at the conclusion of operations at the well then being
drilled. Any agreed rate adjustment will apply to wells spudded after each
December 1 that the contract remains in effect.

The Company is also entitled to reimbursement of 110% of the costs of
material, equipment, work or services that are required to be furnished by
Chesapeake but are instead furnished by the Company at the request of
Chesapeake. The rates provided in the individual contracts will be revised to
reflect changes if certain costs such as labor, insurance and fuel vary by more
than 5% from such costs on the date the contract was entered into or any date
such rates are revised.

Any of the Chesapeake Drilling Agreements may be terminated by either party
in the event of total loss, destruction or major breakdown of the applicable
rig. Unless so terminated, a lump sum demobilization fee of $10,000 will be
payable to the Company for each rig after the last well is drilled under the
applicable Chesapeake Drilling Agreement.

In addition to the Chesapeake Drilling Agreements, between December 1996
and July 31, 1997, Chesapeake engaged five of the Company's rigs under short
term drilling contracts on standard daywork terms. The Company recognized
aggregate revenues of $3.4 million from such contracts over that period. The
Company recognized aggregate revenues of $9.6 million over that period from all
drilling contracts with Chesapeake.

Oliver Companies' Put Rights. Also in connection with the Formation
Transactions, the Company granted the Oliver Companies a right, exercisable at
any time between June 2, 1998 and July 2, 1998 if the Company had not previously
completed an IPO (as defined in the Master Agreement providing for such right),
to require the Company to either (at the Company's option) (i) repurchase all
1,600,000 of the shares of Common Stock held by the Oliver Companies for an
aggregate purchase price of $12 million ($7.50 per share) in cash or (ii) issue
to the Oliver Companies an aggregate of 400,000 additional shares of Common
Stock. This right will terminate upon consummation of the Offering.

Fees Paid to Energy Spectrum. In January 1997, the Company paid Energy
Spectrum Capital LP ("ESC"), the general partner of Energy Spectrum, a fee in
the amount of $300,000 in consideration for assistance provided by Energy
Spectrum in the structuring of the Formation Transactions and arrangement

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and negotiation of external financing. The Company also reimbursed ESC for
expenses incurred in connection with the rendering of such services.

The Ward Acquisition

On May 31, 1997, the Company completed the Ward Acquisition involving the
acquisition by the Company of all of the issued and outstanding common units of
a subsidiary of Ward that held six drilling rigs in consideration for $8 million
in cash, 400,000 shares of Common Stock and a warrant (the "Ward Warrant") to
purchase up to 200,000 shares of Common Stock at an exercise price of $10 per
share. The Ward Warrant is exercisable at any time on or before the later of (i)
May 30, 2000 or (ii) one year after the completion of an initial public offering
of the Common Stock (which would be satisfied by the Offering), but no later
than June 1, 2003.

In connection with the Ward Acquisition, the Company entered into an
agreement (the "Ward Transportation Agreement") with Geronimo Trucking Company
("Geronimo"), a company owned and controlled by Lew O. Ward, a director of the
Company. The Ward Transportation Agreement provides that the Company will have a
preferential right to engage Geronimo's trucking services for covered
transportation needs and that Geronimo will make its trucking services available
to the Company at rates that are competitive in the area. The Ward
Transportation Agreement also provides Geronimo with the preferential right to
perform trucking services contracted for by the Company for the movement of the
rigs acquired by the Company in the Ward Acquisition. The Company is obligated
to allow Geronimo to bid on any covered rig movement required by the Company and
to allow Geronimo the opportunity to match or better any bid received from a
third party. Unless earlier terminated by the parties, the Ward Transportation
Agreement is effective through May 2000. Through July 31, 1997, the Company paid
an aggregate of $71,000 under the Ward Transportation Agreement.

The Bonray Acquisition

In October 1997, the Company acquired all of the issued and outstanding
capital stock of Bonray from DLB in consideration for the issuance of 3,015,000
shares of Common Stock. In connection with the Bonray Acquisition, DLB obtained
certain rights to require the Company to effect the registration under the
Securities Act of the shares of Common Stock acquired by DLB in the Bonray
Acquisition. See "-- Registration Rights Agreements." Additionally, DLB is a
party to the Stockholders and Voting Agreement and following the Offering will
be entitled to designate one Board nominee as long as DLB owns at least 10% of
the Common Stock of the Company. See "-- Stockholders and Voting Agreement."

Individual Rig Acquisitions

In May 1997, the Company purchased from R.T. Oliver Drilling, Inc. two
drilling rigs for an aggregate purchase price consisting of $3.3 million in cash
and warrants (the "Oliver Warrants") for the purchase of an aggregate of 100,000
shares of Common Stock at an exercise price of $8 per share. One of the Oliver
Warrants was issued to RR&T, Inc. and the other was issued to Mike Mullen. Each
of the Oliver Warrants expires on May 1, 2000 and is separately exercisable for
50,000 shares of Common Stock.

CERTAIN FINANCING ARRANGEMENTS

On May 1, 1997, the Company completed a financing transaction (the "May
Financing") in which the Company issued shares of Common Stock, subordinated
notes and warrants to purchase Common Stock to certain significant stockholders
in exchange for an aggregate of $28.5 million in cash, as described below. The
following summary of terms of the May Financing does not purport to be complete
and is qualified in its entirety by reference to the Securities Purchase
Agreement, dated as of April 30, 1997, the Subordinated Notes, Series A Warrants
and Series B Warrants, copies or forms of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part.

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Common Stock and Subordinated Notes. In the May Financing, the Company
issued 1,000,000 shares of Common Stock to Chesapeake in consideration for $7
million in cash and 140,000 shares of Common Stock to Energy Spectrum in
consideration for $980,000 in cash. Additionally, the Company issued
Subordinated Notes due May 1, 2003 in the original principal amounts of $18
million and $2.52 million (the "Subordinated Notes") to Chesapeake and Energy
Spectrum, respectively. The Subordinated Notes bear interest at the Company's
option at either (i) 11% per annum, payable in cash, or (ii) 12.875% per annum,
payable in the form of additional Subordinated Notes, which interest is payable
quarterly in arrears. On each quarterly interest payment date, the Company may
make an election as to the interest rate to be applied for the previous quarter.
The Subordinated Notes are redeemable, solely at the option of the Company, in
whole or in part, at any time at varying redemption prices. The Company must
offer to redeem the Subordinated Notes upon the occurrence of certain events
constituting a "Change of Control" (as defined in the Subordinated Notes) at a
redemption price equal to 100% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of redemption. The Subordinated
Notes are convertible into Common Stock at the option of the Company, in whole
or in part, in conjunction with a "Convertible Event" (as defined in the
Subordinated Notes), which includes certain underwritten public offerings
(including the Offering), mergers, consolidations and other business combination
transactions. The Subordinated Notes are general unsecured subordinated
obligations of the Company that are subordinated in right of payment to all
existing and future senior indebtedness of the Company, pari passu with all
existing and future subordinated indebtedness of the Company and senior in right
of payment to all future junior subordinated indebtedness of the Company. See
"Use of Proceeds." Chesapeake and the Company have agreed that, upon
consummation of the Offering, the Company will redeem in full the $18 million
principal amount of Subordinated Notes issued to Chesapeake in consideration for
the payment by the Company to Chesapeake of $15 million in cash, subject to
adjustment to a maximum of $18 million or a minimum of $12 million, based on the
price to public in the Offering. See "-- Chesapeake Transactions." In May 1997,
the Company paid Chesapeake a commitment fee of $250,000 in connection with the
funding of the Common Stock and Subordinated Notes in the May Financing.

Warrants. In the May Financing, the Company also issued two series of
detachable warrants (the "Warrants") for the purchase of shares of Common Stock,
designated as "Series A Warrants" and "Series B Warrants." The Warrants are
exercisable on or prior to May 1, 2003 at a price of $0.01 per share in the case
of the Series A Warrants and $7.50 per share in the case of the Series B
Warrants. In the May Financing, Chesapeake was issued Series A Warrants and
Series B Warrants representing the right to purchase 700,000 shares and 800,000
shares of Common Stock, respectively, and Energy Spectrum was issued Series A
Warrants and Series B Warrants representing the right to purchase 98,000 shares
and 112,000 shares of Common Stock, respectively. The Warrants expire on May 1,
2003 and are exercisable (i) at any time with a cash payment or (ii) pursuant to
a cashless exercise at any time after the completion of a "Qualified IPO" (as
defined in the Warrants), which includes certain underwritten public offerings
(including the Offering), mergers, consolidations and other business combination
transactions. The exercise prices, as well as the number and kind of shares
issuable under the Warrants, are subject to adjustment upon the happening of
certain events described in the Warrants, including, the payment of in-kind
dividends or distributions and the subdivision, reclassification or
recapitalization of the Common Stock, whether in connection with a consolidation
or merger or otherwise. On July 31, 1997, Energy Spectrum exercised in full its
Series A Warrants. On the date hereof, Energy Spectrum holds all of the Series B
Warrants issued to it in the May Financing. In August 1997, Chesapeake
relinquished its Series A Warrants and Series B Warrants as part of the
Chesapeake Transactions. See "-- Chesapeake Transactions."

CHESAPEAKE TRANSACTIONS

In August 1997, Chesapeake and the Company agreed to complete a series of
transactions (the "Chesapeake Transactions") pursuant to which the Company has
issued 3,194,000 shares of Common Stock to Chesapeake in consideration for (i)
$9 million in cash, (ii) the relinquishment and cancellation of the Chesapeake
Option and the Warrants issued to Chesapeake in connection with the May
Financing and (iii) the redemption in full of the $18 million principal amount
of Subordinated Notes held by Chesapeake at a cash redemption price of $17.4
million (assuming an offering price at the mid-point of the range set forth on

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the cover page of this Prospectus), subject to adjustment, to be paid from the
proceeds of the Offering. Also in connection with the Chesapeake Transactions,
the Company waived its right under the Securities Purchase Agreement to require
Chesapeake to purchase additional Common Stock, Warrants and Subordinated Notes
for $3 million.

OTHER RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

Weatherford Storage Yard. In connection with the Formation Transactions,
Anadarko granted the Company a transferrable option, exercisable at any time
prior to June 30, 1998, to either purchase from Anadarko a storage yard located
in Weatherford, Oklahoma (the "Weatherford Storage Yard") for a price of $1,000
in cash or lease from Anadarko, for any period specified by the Company through
a date not later than December 31, 1999, the Weatherford Storage Yard for a
lease price of $100 per year. In August 1997, the Company acquired from Anadarko
approximately five acres of land also in Weatherford, Oklahoma, in consideration
for the relinquishment of the Company's option to acquire or lease the
Weatherford Storage Yard.

Fees Paid to Energy Spectrum. In May 1997, the Company paid ESC a fee in
the amount of $220,000 for financial advisory and other services rendered to the
Company in connection with the valuation, negotiation and closing of the Trend
Acquisition, for assistance in the arrangement of alternative financing sources,
and for structuring, negotiating and closing the amended financing arrangements
with CIT and Fleet. The Company also reimbursed ESC for expenses incurred in
connection with the rendering of such services.

Transactions with Affiliates of Roy T. Oliver. The Company has in the past
purchased drilling rig equipment from U.S. Rig & Equipment, Inc., an affiliate
of Roy T. Oliver, a former director of the Company and control person of certain
of the Oliver Companies. From December 1996 through July 31, 1997, the Company
paid U.S. Rig & Equipment, Inc. an aggregate of $1.3 million in connection with
such purchases. Additionally, in August 1997, the Company sold to an affiliate
of Mr. Oliver one rig acquired in the Trend Acquisition that did not meet the
Company's operational and technical standards. The Company believes that the
$500,000 price received by the Company in that sale is equivalent to the price
that would have been received from an unaffiliated third party.

APLP Trucking Services. The Company has engaged affiliates of APLP for the
provision of trucking services related to the movement of the Company's rigs on
numerous occasions. From December 1996 through July 31, 1997, the Company paid
such affiliates of APLP an aggregate of $245,000 in consideration for such
trucking services.

APLP Administrative Services. Since December 13, 1996, APLP has made
available to the Company certain of APLP's employees, office space and
administrative equipment, such as computer and telephone systems. In
consideration for such assistance, through June 30, 1997, the Company had
reimbursed APLP an aggregate of $135,000. APLP continues to provide certain
computer services to the Company.

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DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of common stock, par value $0.01 per share, and 20,000,000 shares of preferred
stock, par value $0.01 per share ("Preferred Stock"). Upon the consummation of
the Offering, 17,947,000 shares of Common Stock (18,116,050 shares if the
Underwriters' over-allotment option is exercised in full) and no shares of
Preferred Stock will be outstanding. The following summary is qualified in its
entirety by reference to the Certificate and Bylaws, copies of which are filed
as exhibits to the Registration Statement of which this Prospectus is a part.

COMMON STOCK

All shares of Common Stock issued in the Offering will be fully paid and
nonassessable. As of October 16, 1997, there were 13,947,000 shares of Common
Stock outstanding held of record by 30 stockholders. The holders of Common Stock
are entitled to one vote for each share held on all matters submitted to a vote
of common stockholders of the Company. The Common Stock does not have cumulative
voting rights in the election of directors. Shares of Common Stock have no
preemptive rights, conversion rights, redemption rights or sinking fund
provisions. The Common Stock is not subject to redemption by the Company.

Subject to the rights of the holders of any class of capital stock of the
Company having any preference or priority over the Common Stock, the holders of
Common Stock are entitled to dividends in such amounts as may be declared by the
Board from time to time out of funds legally available for such payments and, in
the event of liquidation, to share ratably in any assets of the Company
remaining after payment in full of all creditors and provision for any
liquidation preferences on any outstanding preferred stock ranking prior to the
Common Stock.

PREFERRED STOCK

The Certificate authorizes the Board, subject to limitations prescribed by
law, to provide for the issuance of up to 20,000,000 shares of Preferred Stock
in one or more series. The Board is authorized to establish the number of shares
to be included in any such series and to fix the designations, powers,
preferences and rights of the shares of each such series, and any
qualifications, limitations or restrictions thereof.

The Company believes that the ability of the Board to issue one or more
series of Preferred Stock will provide the Company with flexibility in
structuring possible future financings and acquisitions, and in meeting other
corporate needs which might arise from time to time. The authorized shares of
Preferred Stock, as well as shares of Common Stock, will be available for
issuance without further action by the Company's stockholders, unless such
action is required by applicable law or the rules of any stock exchange or
automated quotation system on which the Company's securities may be listed or
traded. If the approval of the Company's stockholders is not required for the
issuance of shares of Preferred Stock or Common Stock, the Board may determine
not to seek stockholder approval.

Although the Board has no intention at the present time of doing so, it
could issue a series of Preferred Stock that may, depending on the terms of such
series, hinder, delay or prevent the completion of a merger, tender offer or
other takeover attempt. Among other things, the Board could issue a series of
Preferred Stock having terms that could discourage an acquisition attempt
through which an acquirer may be able to change the composition of the Board,
including a tender offer or other transaction that some, or a majority, of the
Company's stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then current
market price of such stock.

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<PAGE> 73

CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS

The Board consists of directors who are elected for one-year terms at each
annual meeting of stockholders. Stockholders may remove a director only for
cause. In general, the Board, not the stockholders, has the right to appoint
persons to fill vacancies on the Board.

The Certificate contains a "fair price" provision that requires the
affirmative vote of the holders of at least 80% of the Company's voting stock
and the affirmative vote of at least 66 2/3% of the Company's voting stock not
owned, directly or indirectly, by a Company Related Person (hereinafter defined)
to approve any merger, consolidation, sale or lease of all or substantially all
of the Company's assets, or certain other transactions involving a Company
Related Person. For purposes of this fair price provision, a "Company Related
Person" is any person beneficially owning 10% or more of the voting power of the
outstanding capital stock of the Company who is a party to the transaction at
issue. The voting requirement is not applicable to certain transactions,
including those that are approved by the Company's Continuing Directors (as
defined in the Certificate) or that meet certain "fair price" criteria contained
in the Certificate.

The Certificate further provides that stockholders may act only at annual
or special meetings of stockholders and not by written consent, that special
meetings of stockholders may be called only by the Board, and that only business
proposed by the Board may be considered at special meetings of stockholders.

The Certificate also provides that the only business (including election of
directors) that may be considered at an annual meeting of stockholders, in
addition to business proposed (or persons nominated to be directors) by the
directors of the Company, is business proposed (or persons nominated to be
directors) by stockholders who comply with the notice and disclosure
requirements set forth in the Certificate. In general, the Certificate requires
that a stockholder give the Company notice of proposed business or nominations
no later than 60 days before the annual meeting of stockholders (meaning the
date on which the meeting is first scheduled and not postponements or
adjournments thereof) or (if later) ten days after the first public notice of
the annual meeting is sent to common stockholders. In general, the notice must
also contain information about the stockholder proposing the business or
nomination, his interest in the business, and (with respect to nominations for
director) information about the nominee of the nature ordinarily required to be
disclosed in public proxy solicitations. The stockholder also must submit a
notarized letter from each of his nominees stating the nominee's acceptance of
the nominations and indicating the nominee's intention to serve as director if
elected.

The Certificate also restricts the ability of stockholders to interfere
with the powers of the Board in certain specified ways, including the
constitution and composition of committees and the election and removal of
officers.

The Certificate provides that approval by the holders of at least 66 2/3%
of the outstanding voting stock of the Company is required to amend the
provisions of the Certificate discussed above and certain other provisions,
except that (i) approval by the holders of at least 80% of the outstanding
voting stock of the Company, together with approval by the holders of at least
66 2/3% of the outstanding voting stock not owned, directly or indirectly, by
the Company Related Person, is required to amend the fair price provisions and
(ii) approval of the holders of at least 80% of the outstanding voting stock is
required to amend the provisions prohibiting stockholders from acting by written
consent.

DELAWARE ANTI-TAKEOVER STATUTE

The Company is a Delaware corporation and is subject to Section 203 of the
DGCL. In general, Section 203 prevents an "interested stockholder" (defined
generally as a person owning 15% or more of the outstanding voting stock of the
Company) from engaging in a "business combination" (as defined in Section 203)
with the Company for three years following the date that person becomes an
interested stockholder unless (i) before that person became an interested
stockholder, the Board approved the transaction in which the interested
stockholder became an interested stockholder or approved the business
combination, (ii) upon completion of the transaction that resulted in the
interested stockholder's becoming an interested stockholder, the interested
stockholder owns at least 85% of the Company's voting stock outstanding

72
<PAGE> 74

at the time the transaction commenced (excluding stock held by directors who are
also officers of the Company and by employee stock plans that do not provide
employees with the right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer), or (iii) following
the transaction in which that person became an interested stockholder, the
business combination is approved by the Board and authorized at a meeting of
stockholders by the affirmative vote of the holders of at least two-thirds of
the outstanding voting stock of the Company not owned by the interested
stockholder.

Under Section 203, these restrictions also do not apply to certain business
combinations proposed by an interested stockholder following the announcement or
notification of one of certain extraordinary transactions involving the Company
and a person who was not an interested stockholder during the previous three
years or who became an interested stockholder with the approval of a majority of
the Company's directors, if that extraordinary transaction is approved or not
opposed by a majority of the directors who were directors before any person
became an interested stockholder in the previous three years or who were
recommended for election or elected to succeed such directors by a majority of
such directors then in office.

LIABILITY OF DIRECTORS; INDEMNIFICATION

The Certificate provides, as authorized by Section 102(b)(7) of the DGCL,
that a director of the Company will not be personally liable to the Company or
any of its stockholders for monetary damages for breach of fiduciary duty as a
director involving any act or omission of any such director, except that such
provisions do not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
as it now exists or hereafter may be amended, or (iv) for any transaction from
which the director derived an improper personal benefit. The Certificate also
provides that if the DGCL is amended after the date of filing of the Certificate
to authorize corporate action further limiting or eliminating the personal
liability of directors, then the liability of a director of the Company, in
addition to the limitation on personal liability provided for already, shall be
limited to the fullest extent permitted by the DGCL as so amended. Any repeal or
modification of such provision in the Certificate by the stockholders of the
Company will be effective prospective only, and will not adversely affect any
limitation on the personal liability of a director of the Company existing at
the time of such repeal or modification.

The Certificate also provides for indemnification of directors to the
fullest extent permitted by the DGCL. Such indemnification may be available for
liabilities arising in connection with this Offering. Insofar as indemnification
for liabilities under the Securities Act may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. Pursuant to its Certificate, the Company may
indemnify its officers, employees, agents and other persons to the fullest
extent permitted by the DGCL. The Company's Bylaws obligate the Company, under
certain circumstances, to advance expenses to its directors and officers in
defending an action, suit or proceeding for which indemnification may be sought.
The Company has entered into Indemnification Agreements with certain of its
directors and officers. See "Management -- Indemnification Agreements."

The Company's Bylaws also provide that the Company shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company, or who, while a director,
officer, employee or agent, is or was serving as a director, officer, trustee,
general partner, employee or agent of one of the Company's subsidiaries or, at
the request of the Company, of any other organization, against any liability
asserted against such person or incurred by such person in any such capacity,
where the Company would have the power to indemnify such person against such
liability under the DGCL.

TRANSFER AGENT AND REGISTRAR

Norwest Bank Minnesota, N.A. will be the transfer agent and registrar for
the Common Stock.

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<PAGE> 75

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have 17,947,000 shares of
Common Stock outstanding (18,116,050 shares if the Underwriters' over-allotment
option is exercised in full). Additionally, as of October 10, 1997, (i) options
for the purchase of 741,000 shares of Common Stock (including options for the
purchase of 300,000 shares to be priced at the initial public offering price)
had been granted to certain employees of the Company pursuant to the Employee
Stock Plan, (ii) options for the purchase of 60,000 shares of Common Stock (all
to be priced at the initial public offering price) were subject to grant
contemporaneously with the consummation of the Offering to certain non-employee
directors of the Company pursuant to the Director Stock Plan and (iii) 412,000
shares of Common Stock were subject to outstanding warrants issued by the
Company. Except for the options for the purchase of 360,000 shares to be priced
at the initial public offering price, the exercise prices of these options and
warrants are substantially lower than the anticipated initial public offering
price of the Common Stock. In addition, the Subordinated Notes are convertible,
solely at the Company's option, into shares of Common Stock. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Certain Relationship and
Related Transactions -- Certain Financing Arrangements -- Common Stock and
Subordinated Notes."

Of the outstanding shares, the 9,200,000 shares of Common Stock (10,580,000
shares if the Underwriters' over-allotment option is exercised in full) sold in
the Offering will be freely tradeable in the public market without restriction
or limitation under the Securities Act, except for any shares purchased by an
"affiliate" (as defined in the Securities Act) of the Company. The shares of
Common Stock that continue to be held by the existing stockholders of the
Company after the Offering will constitute "restricted shares" for purposes of
Rule 144 under the Securities Act, and may not be sold by such persons other
than in compliance with the registration requirements of the Securities Act or
pursuant to an available exemption therefrom. The Company, its officers,
directors and the Selling Stockholders have agreed that they will not offer or
sell any shares of Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of the Representatives. See
"Underwriting." Following the expiration of the lock-up agreements with the
Underwriters, each of the Company's directors and executive officers and each of
its existing stockholders, who will hold upon completion of the Offering an
aggregate of approximately 49% of the outstanding shares of Common Stock (42% if
the Underwriters' over-allotment option is exercised in full), may sell such
shares subject to the requirements of Rule 144 under the Securities Act or
pursuant to the terms of a registration rights agreement. See "Certain
Relationships and Related Transactions -- Registration Rights Agreement." The
Company is also a party to certain registration rights agreements pursuant to
which it has granted demand and piggyback registration rights covering an
aggregate of 9,387,521 shares of Common Stock and Common Stock Equivalents. The
beneficiaries of the agreements include Chesapeake, Energy Spectrum, APLP, the
Oliver Companies, Ward, DLB, DLJ, James E. Brown, Edward S. Jacob, III and Carl
B. Anderson, III. The terms of these agreements prohibit the exercise of such
registration rights for a period of 180 days following the date of the Offering,
subject to certain exceptions, including DLB's ability to distribute its shares
of Common Stock to its shareholders. In addition, the Company intends to file
registration statements on Form S-8 covering the issuance of shares of Common
Stock registered pursuant to the Company's registration rights agreements or
pursuant to the Company Stock Plans within 180 days after completion of the
Offering. Accordingly, shares of Common Stock issued pursuant to the Company
Stock Plans will be available for sale in the public market without restriction
or limitation under the Securities Act, except for any shares held by an
"affiliate" of the Company.

In general, under Rule 144 as currently in effect, an "affiliate" of the
Company may sell within any three-month period a number of shares that does not
exceed the greater of (i) 1% of the then outstanding shares of such class or
(ii) the average weekly trading volume on the AMEX during the four calendar
weeks preceding the date on which a notice of sale is filed with the Commission
with respect to the proposed sale. Sales under Rule 144 are subject to certain
restrictions relating to the manner of sale, notice and the availability of
current public information about the issuer. A person who has not been an
affiliate of the Company at any time during the 90 days preceding a sale, and
who has beneficially owned shares for at least two years (including the holding
period of any prior owner other than an affiliate), would be entitled to sell
such shares without regard to the volume limitations, manner of sale provisions,
notice or other requirements of Rule 144.

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<PAGE> 76

UNDERWRITING

Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement"), each of the underwriters named below (the
"Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), Lehman Brothers, Prudential Securities Incorporated, Rauscher Pierce
Refsnes, Inc. and Raymond James & Associates, Inc. are acting as representatives
(the "Representatives"), has severally agreed to purchase from the Company the
respective number of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Lehman Brothers Inc.........................................
Prudential Securities Incorporated..........................
Rauscher Pierce Refsnes, Inc................................
Raymond James & Associates, Inc.............................
---------
Total............................................. 9,200,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions. If any of the shares of Common Stock are purchased
by the Underwriters pursuant to the Underwriting Agreement, all such shares
(other than those covered by the over-allotment option described below) must be
so purchased. The offering price and underwriting discounts and commissions per
share for Common Stock sold by the Company and the Selling Stockholders are
identical.

The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public initially at the Price to the
Public set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $ per share, and that the
Underwriters may allow, and such dealers may re-allow, a discount not in excess
of $ per share on sales to other dealers. After the Offering, the
offering price and the concessions and discounts to dealers may be changed by
the Representatives.

The Company and certain of the Selling Stockholders have granted to the
Underwriters an option to purchase up to an aggregate of 1,380,000 additional
shares of Common Stock at the Price to the Public set forth on the cover page
hereof, less underwriting discounts and commissions, solely for the purpose of
covering over-allotments. Such option may be exercised at any time until 30 days
after the date of this Prospectus. To the extent that such option is exercised,
each Underwriter will be committed, subject to certain conditions, to purchase a
number of shares proportionate to such Underwriter's initial commitment as
indicated in the preceding table.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof. Such indemnification provisions would
require the Company and the Selling Stockholders to hold the Underwriters
harmless from and against any and all losses, claims, damages, liabilities and
judgments caused by any untrue statement contained in this Prospectus or by any
omission to state a material fact herein, except for untrue statements or
omissions based upon information relating to any Underwriter furnished in
writing to the Company by such Underwriter expressly for use in this Prospectus,
and subject to certain other limitations.

The Company, its executive officers and directors and the Selling
Stockholders have agreed with the Underwriters not to offer, sell, pledge,
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of directly or indirectly any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
in any manner transfer all or a portion of the economic consequences associated
with the ownership of any Common Stock for a period of 180 days after the date
of the Prospectus without the prior written consent of DLJ and subject to
certain limited exceptions. See "Shares Eligible for Future Sale."

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<PAGE> 77

No action has been taken in any jurisdiction by the Company, the Selling
Stockholders or the Underwriters that would permit a public offering of the
Common Stock offered pursuant to the Offering in any jurisdiction where action
for that purpose is required, other than the United States. The distribution of
this Prospectus and the offering or sale of the shares of Common Stock offered
hereby in certain jurisdictions may be restricted by law. Accordingly, the
shares of Common Stock offered hereby may not be offered or sold, directly or
indirectly, and neither this Prospectus nor any other offering material or
advertisements in connection with the Common Stock may be distributed or
published, in or from any jurisdiction, except under circumstances that will
result in compliance with applicable rules and regulations of any such
jurisdiction. Such restrictions may be set out in applicable Prospectus
supplements. Persons into whose possession this Prospectus comes are required by
the Company, the Selling Stockholders and the Underwriters to inform themselves
about and to observe any applicable restrictions. This Prospectus does not
constitute an offer of, or an invitation to subscribe for purchase of, any
shares of Common Stock and may not be used for the purpose of an offer to, or
solicitation by, anyone in any jurisdiction or in any circumstances in which
such offer or solicitation is not authorized or is unlawful.

The Representatives have advised the Company that the Underwriters will not
confirm sales of shares of Common Stock to accounts over which they exercise
discretionary authority.

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price for the shares of Common Stock will be
negotiated among the Company, the Selling Stockholders and the Representatives.
The factors to be considered in determining the initial public offering price of
the Common Stock, in addition to the prevailing market conditions, will be the
Company's historical performance, estimates of the business potential and
earnings prospects of the Company, an assessment of the Company's management and
the consideration of the above factors in relation to market valuation of
companies in related businesses.

In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may bid for and purchase shares of
Common Stock in the open market to cover syndicate short positions. In addition,
the Underwriters may bid for and purchase shares of Common Stock in the open
market to stabilize the price of the Common Stock. These activities may
stabilize or maintain the market price of the Common Stock above independent
market levels. The Underwriters are not required to engage in these activities
and may end these activities at any time.

The Common Stock has been approved for listing on the AMEX, subject to
notice of official issuance, under the symbol "BDI."

DLJ served as the financial advisor to DLB in connection with the Bonray
Acquisition and as compensation therefor received 60,000 shares of Common Stock,
a customary fee for a transaction of this type. The Company has granted DLJ
certain registration rights with respect to these shares. See "Certain
Relationships and Related Transactions -- Registration Rights Agreements."

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered by this
Prospectus will be passed upon for the Company by Baker & Botts, L.L.P., Dallas,
Texas. Certain legal matters in connection with the sale of the Common Stock
offered hereby will be passed upon for the Underwriters by Andrews & Kurth
L.L.P., Houston, Texas.

INDEPENDENT PUBLIC ACCOUNTANTS

The financial statements of the Company as of December 31, 1994, 1995 and
1996 and for the fiscal years then ended included in this Prospectus and
elsewhere in the Registration Statement have been audited by

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<PAGE> 78

Grant Thornton LLP, independent public accountants, as stated in their reports
thereon appearing elsewhere herein, and are so included in reliance on such
reports given upon the authority of that firm as experts in auditing and
accounting. The financial statements of the Company as of June 30, 1997 and for
the six months then ended, the financial statements of Trend as of December 31,
1995 and 1996 and for the three fiscal years ended December 31, 1996, 1995 and
1994, and the financial statements of Ward as of December 31, 1996 and for the
fiscal year then ended, included in this Prospectus and elsewhere in the
Registration Statement have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent public accountants, given upon the
authority of that firm as experts in auditing and accounting. The financial
statements of Bonray as of December 31, 1996 and June 30, 1996 and for the
six-month period ended December 31, 1996 and years ended June 30, 1996 and 1995
included in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance on such report given
upon the authority of such firm as experts in accounting and auditing.

In preparation for its initial public offering, the Board appointed Coopers
& Lybrand L.L.P. as auditors for the Company's financial statements for the six
months ended June 30, 1997, and for the year ending December 31, 1997. During
the period Grant Thornton LLP was engaged by the Company and up to and including
March 7, 1997, the date of the Coopers & Lybrand engagement, there were no
disagreements with Grant Thornton LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure and
there were no "reportable events" as the term is defined under the Securities
Act. The audit reports previously issued by Grant Thornton LLP with respect to
the Company's financial statements did not contain an adverse opinion or a
disclaimer of opinion, nor were such reports qualified or modified as to
uncertainty, audit scope or accounting principles.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to the
shares of Common Stock offered by this Prospectus. This Prospectus constitutes a
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted from
this Prospectus as permitted by the rules and regulations of the Commission.
Statements made in this Prospectus regarding the contents of any contract,
agreement or other document are not necessarily complete. With respect to each
contract, agreement or other document filed with the Commission as an exhibit to
the Registration Statement, reference is made to the exhibit for further
information regarding the contents thereof, and each such statement is qualified
in its entirety by such reference. For further information regarding the Company
and the shares of Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits and schedules thereto.

The Registration Statement, including the exhibits and schedules thereto,
are available for inspection at, and copies of such materials may be obtained at
prescribed rates from, the public reference facilities maintained by the
Commission at its principal offices located at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at its regional offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60601 and 7 World Trade Center, New York, New York 10048. The
Commission also makes electronic filings publicly available on the Internet at
http://www.sec.gov and the Registration Statement, including the exhibits and
schedules thereto, may be inspected at such site.

The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a
result of the Offering, the Company will become subject to the informational
requirements of the Exchange Act. The Company will fulfill its obligations with
respect to such requirements by filing periodic reports and other information
with the Commission. In addition, the Company intends to furnish to its
stockholders annual reports containing consolidated financial statements
examined by an independent public accounting firm.

77
<PAGE> 79

[INTENTIONALLY LEFT BLANK]
<PAGE> 80

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF BAYARD DRILLING
TECHNOLOGIES, INC.
Report of Independent Certified Public Accountants........ F-2
Report of Independent Accountants......................... F-3
Balance Sheets as of December 31, 1995 and 1996 and six
months ended June 30, 1997............................. F-4
Statements of Operations for the years ended December 31,
1994, 1995 and 1996 and six months ended June 30, 1996
and 1997............................................... F-5
Statements of Equity (Deficit) for the years ended
December 31, 1994, 1995 and 1996 and six months ended
June 30, 1997.......................................... F-6
Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996 and six months ended June 30, 1996
and 1997............................................... F-7
Notes to Financial Statements............................. F-9
FINANCIAL STATEMENTS OF TREND DRILLING COMPANY
Report of Independent Accountants......................... F-21
Balance Sheets as of December 31, 1995 and 1996 and as of
April 30, 1997......................................... F-22
Statements of Operations for the years ended December 31,
1994, 1995 and 1996 and four months ended April 30,
1997 (unaudited)....................................... F-23
Statements of Stockholders' Equity for the years ended
December 31, 1994, 1995 and 1996....................... F-24
Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996 and four months ended April 30,
1997 (unaudited)....................................... F-25
Notes to the Financial Statements......................... F-26
FINANCIAL STATEMENTS OF WARD DRILLING COMPANY, INC.
Report of Independent Accountants......................... F-30
Balance Sheet as of December 31, 1996 and May 31, 1997.... F-31
Statements of Operations and Retained Earnings for the
year ended December 31, 1996 and five months ended May
31, 1997 (unaudited)................................... F-32
Statements of Cash Flows for the year ended December 31,
1996 and five months ended May 31, 1997 (unaudited).... F-33
Notes to Financial Statements............................. F-34
FINANCIAL STATEMENTS OF BONRAY DRILLING CORPORATION
Report of Independent Auditors............................ F-37
Balance Sheets as of June 30, 1997 (unaudited) and
December 31, 1996...................................... F-38
Statements of Operations and Accumulated Deficit for the
six-month periods ended June 30, 1997 (unaudited) and
December 31, 1996 and years ended June 30, 1996 and
1995................................................... F-39
Statements of Cash Flows for the six-month periods ended
June 30, 1997 (unaudited) and December 31, 1996 and
years ended June 30, 1996 and 1995..................... F-40
Notes to Financial Statements............................. F-41
</TABLE>

F-1
<PAGE> 81

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Bayard Drilling Technologies, Inc.

We have audited the accompanying balance sheets of Bayard Drilling
Technologies, Inc. (Note A), as of December 31, 1996 and 1995, and the related
statements of operations, equity (deficit), and cash flows for each of the three
years in the period ended December 31, 1996. 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 financial position of Bayard Drilling
Technologies, Inc., as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.

GRANT THORNTON LLP

Oklahoma City, Oklahoma
January 20, 1997

F-2
<PAGE> 82

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors

Bayard Drilling Technologies, Inc.

We have audited the accompanying balance sheet of Bayard Drilling
Technologies, Inc., as of June 30, 1997, and the related statements of
operations, equity (deficit), and cash flows for the six months ended June 30,
1997. 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 audit.

We conducted our audit 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 audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bayard Drilling
Technologies, Inc., as of June 30, 1997 and the results of its operations and
its cash flows for the six months ended June 30, 1997 in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Oklahoma City, Oklahoma

October 3, 1997

F-3
<PAGE> 83

BAYARD DRILLING TECHNOLOGIES, INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
<S> <C> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ -- $ 4,963 $ 240
Restricted investments.................................... -- -- 730
Accounts receivable....................................... 1,692 286 5,993
Accounts receivable -- affiliate.......................... -- 798 4,524
Other current assets...................................... 19 1 559
------ ------- --------
Total current assets.............................. 1,711 6,048 12,046
Property, plant and equipment, net.......................... 6,343 26,973 92,658
Goodwill, net of accumulated amortization of $98............ -- -- 6,402
Other assets................................................ -- 1,652 2,066
------ ------- --------
Total assets...................................... $8,054 $34,673 $113,172
====== ======= ========

LIABILITIES AND EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable.......................................... $1,219 $ 409 $ 8,794
Accounts payable -- affiliate............................. -- -- 838
Payable to affiliate...................................... 433 412 --
Accrued liabilities....................................... 47 253 3,691
Current portion of long-term debt......................... -- 947 12,869
------ ------- --------
Total current liabilities......................... 1,699 2,021 26,192
------ ------- --------
Payable to affiliate........................................ 6,631 -- --
------ ------- --------
Deferred income tax liabilities............................. -- 348 6,665
------ ------- --------
Long-term debt, less current maturities..................... -- 6,053 18,894
------ ------- --------
Subordinated notes.......................................... -- -- 16,608
------ ------- --------

Commitments and Contingencies

EQUITY (DEFICIT):
Partners' deficit......................................... (276) -- --
Stockholders' equity
Preferred stock, $.01 par value, 20,000,000 shares
authorized; none issued or outstanding............... -- -- --
Common stock, $.01 par value, 100,000,000 shares
authorized; 5,600,000 shares issued and outstanding
at December 31, 1996; 7,490,000 at June 30, 1997..... -- 56 75
Additional paid-in capital (net of deferred compensation
of $292 at June 30, 1997).............................. -- 26,229 44,792
Accumulated deficit....................................... -- (34) (54)
------ ------- --------
Total equity (deficit)............................ (276) 26,251 44,813
------ ------- --------
Total liabilities and equity (deficit)............ $8,054 $34,673 $113,172
====== ======= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE> 84

BAYARD DRILLING TECHNOLOGIES, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------- ---------------------
1994 1995 1996 1996 1997
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Drilling...................................... $ 7,842 $5,491 $ 8,995 $4,242 $ 7,029
Drilling -- affiliate......................... 2,068 1,914 798 -- 8,078
Other......................................... -- 303 60 59 --
------- ------ ------- ------ -------
Total revenues............................. 9,910 7,708 9,853 4,301 15,107
------- ------ ------- ------ -------
COSTS AND EXPENSES:
Drilling...................................... 8,572 6,075 7,653 3,268 10,897
General and administrative.................... 786 880 658 323 734
Depreciation and amortization................. 1,557 791 1,126 415 2,645
Other......................................... -- 47 46 -- --
------- ------ ------- ------ -------
Total costs and expenses................... 10,915 7,793 9,483 4,006 14,276
------- ------ ------- ------ -------
Operating income (loss).................... (1,005) (85) 370 295 831
------- ------ ------- ------ -------
OTHER INCOME (EXPENSE):
Interest expense.............................. (18) (3) (11) -- (982)
Interest income............................... -- -- -- -- 51
Gain (loss) on sale of assets................. 366 (131) 54 -- 60
Other......................................... -- (3) 17 36 8
------- ------ ------- ------ -------
Total other income (expense)............... 348 (137) 60 36 (863)
------- ------ ------- ------ -------
Earnings (loss) before income taxes............. (657) (222) 430 331 (32)
Income tax provision (benefit) -- deferred...... -- -- 17 -- (12)
------- ------ ------- ------ -------
Net earnings (loss)............................. $ (657) $ (222) $ 413 $ 331 $ (20)
======= ====== ======= ====== =======
Net earnings (loss) per share................... $ .00
=======
PRO FORMA INFORMATION:
Additional income tax expense................. -- -- 146 126
------- ------ ------- ------
Pro forma net earnings (loss)................. $ (657) $ (222) $ 267 $ 205
------- ------ ------- ------
Pro forma earnings per share.................. $ (.05) $ (.02) $ .02 $ .01
======= ====== ======= ======
Weighted average common shares outstanding...... 14,397 14,397 14,397 14,397 14,397
======= ====== ======= ====== =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 85

BAYARD DRILLING TECHNOLOGIES, INC.

STATEMENTS OF EQUITY (DEFICIT)

(IN THOUSANDS)

<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY
---------------------------------------------------
PARTNERS ADDITIONAL
CAPITAL COMMON PAID-IN DEFERRED RETAINED
(DEFICIT) STOCK CAPITAL COST EARNINGS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994............... $ (912) $ -- $ -- $ -- $ -- $ --
Net loss............................... (657) -- -- -- -- --
Capital contribution................... 1,515 -- -- -- -- --
------- ---- ------- ----- ---- -------
Balance at December 31, 1994............. (54) -- -- -- -- --
Net loss............................... (222) -- -- -- -- --
------- ---- ------- ----- ---- -------
Balance at December 31, 1995............. (276) -- -- -- -- --
Net earnings through date of corporate
capitalization...................... 447 -- -- -- -- --
Net increase in equity arising from
affiliate transactions.............. 5,285 -- -- -- -- --
Issuance of stock in corporate
capitalization...................... (5,456) 20 5,436 -- -- 5,456
Sale of stock.......................... -- 20 9,980 -- -- 10,000
Issuance of stock options and warrants
for drilling agreements and debt.... -- -- 1,319 -- -- 1,319
Issuance of stock and options for
property and equipment.............. -- 16 9,494 -- -- 9,510
Net loss from date of corporate
capitalization to December 31,
1996................................ -- -- -- -- (34) (34)
------- ---- ------- ----- ---- -------
Balance at December 31, 1996............. -- 56 26,229 -- (34) 26,251
Net earnings........................... -- -- -- -- (20) (20)
Issuance of stock options to
employees........................... -- -- 60 (59) -- 1
Sale of stock.......................... -- 12 8,218 -- -- 8,230
Issuance of stock options and
warrants............................ -- -- 4,023 -- -- 4,023
Executive compensation agreements...... -- -- 250 (233) -- 17
Issuance of stock for acquisitions..... -- 7 6,304 -- -- 6,311
------- ---- ------- ----- ---- -------
Balance at June 30, 1997................. $ -- $ 75 $45,084 $(292) $(54) $44,813
======= ==== ======= ===== ==== =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 86

BAYARD DRILLING TECHNOLOGIES, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------- ----------------------
1994 1995 1996 1996 1997
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss).................................. $ (657) $ (222) $ 413 $ 331 $ (20)
Adjustments to reconcile net earnings (loss) to net
cash (used in) provided by operating activities --
Depreciation and amortization...................... 1,557 791 1,126 415 2,645
(Gain) loss on sale of assets...................... (366) 131 (54) 0 (60)
Compensation expense............................... -- -- -- -- 18
Deferred income taxes (benefit).................... -- -- 17 -- (12)
Change in assets and liabilities, net of effects of
affiliate transactions --
Decrease (increase) in accounts receivable....... (96) 242 (2,059) (556) (5,707)
(Increase) in accounts receivable from
affiliate..................................... -- -- -- -- (3,726)
Decrease (increase) in other assets.............. 2 (6) (185) 13 (1,608)
Increase (decrease) in accrued liabilities....... (101) (237) 251 44 3,438
Increase (decrease) in accounts payable.......... 106 (389) (383) (324) 5,635
Increase in accounts payable to affiliate........ -- -- -- -- 838
Increase (decrease) in payable to affiliate...... -- -- 412 7 (412)
------- ------- -------- ----------- --------
Net cash (used in) provided by operating
activities.................................. 445 310 (462) (70) 1,029
------- ------- -------- ----------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment................ (1,183) (2,088) (10,578) (3,278) (32,539)
Acquisition of businesses............................ -- -- -- -- (26,056)
Proceeds from sale of assets......................... 729 378 137 136 60
Purchase of investments.............................. -- -- -- -- (730)
------- ------- -------- ----------- --------
Net cash used in investing activities......... (454) (1,710) (10,441) (3,142) (59,265)
------- ------- -------- ----------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments made to affiliates.......................... (16,608) (8,828) (19,719) (4,496) --
Advances received from affiliates.................... 16,982 10,228 18,791 7,708 --
Retirement of notes payable.......................... (365) -- -- -- --
Proceeds from borrowings............................. -- -- 7,000 -- 41,044
Proceeds from issuance of stock...................... -- -- 10,000 -- 8,230
Debt issuance costs.................................. -- -- (206) --
Payments on long-term debt........................... -- -- -- -- (2,572)
Borrowings under line of credit...................... -- -- -- -- 6,811
------- ------- -------- ----------- --------
Net cash provided by financing activities..... 9 1,400 15,866 3,212 53,513
------- ------- -------- ----------- --------
Net change in cash..................................... -- -- 4,963 -- (4,723)
Cash at beginning of period............................ -- -- -- -- 4,963
------- ------- -------- ----------- --------
Cash at end of period.................................. $ -- $ -- $ 4,963 $ -- $ 240
======= ======= ======== =========== ========
Cash paid during the period for interest............... $ 20 $ -- $ -- $ -- $ 653
Cash paid during the period for income taxes........... $ -- $ -- -- -- --
======= ======= ======== =========== ========
</TABLE>

Continued

F-7
<PAGE> 87

BAYARD DRILLING TECHNOLOGIES, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

Continued

Supplemental noncash activity:

During 1994 certain affiliate payables were extinguished resulting in a
$1,515 capital contribution to the Company.

During 1995 an affiliate transferred drilling equipment to the Company at
the affiliate's basis totaling $173, net of accumulated depreciation of $1,306,
which has been reflected as an increase in payable to affiliate. Additionally,
the Company acquired property and equipment through trade payables totaling
$1,180.

During 1996 the Company acquired property and equipment totaling $9,841
through the issuance of stock and options and assumed a net deferred income tax
liability of $331. The Company acquired property and equipment through trade
payables and payables to affiliates totaling $1,390. The Company transferred
property and equipment totaling $29, net of accumulated depreciation of $1,254
to an affiliate which has been reflected as a decrease in payables to
affiliates. The Company issued stock options and warrants in exchange for
certain drilling agreements and debt. The stock options were valued at $1,100
and the warrants associated with the debt were valued at $219.

Additionally in 1996, the Company transferred the following assets and
liabilities to affiliates which resulted in a net increase in equity at the time
of corporate capitalization, effective December 1, 1996.

<TABLE>
<S> <C>
Accounts receivable......................................... $ 2,667
Other assets................................................ 17
Cash........................................................ 9,252
Accounts payable and accrued liabilities.................... (1,799)
Payable to affiliates....................................... (15,422)
--------
$ (5,285)
========
</TABLE>

During 1997 the Company acquired property and equipment through the
issuance of stock and options for $6,591 and through issuance of trade payables
of $2,750.

The accompanying notes are an integral part of these financial statements.

F-8
<PAGE> 88

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

NOTE A -- NATURE OF OPERATIONS

Bayard Drilling Technologies, Inc. together with its predecessor, (the
"Company"), a Delaware corporation, is the successor to the drilling operations
of Anadarko Drilling Company ("Anadarko"), which began drilling operations in
1980. The Company provides land-based contract drilling services primarily to
independent oil and gas companies in the Mid-Continent and Gulf Coast regions of
the United States whose level of drilling activity is related to oil and gas
prices, among other factors.

Beginning in October 1996, AnSon Partners Limited Partnership ("APLP")
initiated a series of transactions among its wholly owned affiliates, Anadarko,
a partnership, and Bayard Drilling Company ("BDC"), a corporation, and the
Company. These series of transactions resulted in the corporate capitalization
of the Company in December 1996 with net assets, primarily drilling rigs,
previously owned by Anadarko. Such transactions were accounted for as a
reorganization of entities under common control.

NOTE B -- SUMMARY OF ACCOUNTING POLICIES

The summary of significant accounting policies applied in the preparation
of the accompanying financial statements follows.

1. Basis of Presentation and Consolidation

The financial statements and information for periods prior to December 1,
1996 represent those of the predecessor. The consolidated financial statements
for periods after December 31, 1996 include the accounts of the Company and its
wholly-owned subsidiaries, Trend Drilling Company ("Trend") and WD Equipment,
L.L.C. All significant intercompany accounts and transactions have been
eliminated.

2. Cash

The Company considers all cash and investments with an original maturity of
90 days or less to be cash equivalents. The Company maintains its cash in a bank
deposit account which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts and believes it is not
exposed to any significant credit risk on cash.

3. Investments

Investments consist of certificates of deposits pledged to state insurance
departments and insurance companies to support payment of workers compensation
claims.

4. Concentration of Credit Risk

The primary market for the Company's services are independent oil and gas
companies whose level of activities are related to, among other things, oil and
gas prices. The Company performs ongoing credit evaluations of its customers and
provides for potential credit losses when necessary. No allowance was required
at December 31, 1996 and 1995 or June 30, 1997. At June 30, 1997, approximately
71% of the Company's trade receivables and over 80% of total revenues were
derived from five customers.

F-9
<PAGE> 89

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

5. Property and Equipment

Property and equipment are stated at cost, reduced by provisions to
recognize economic impairment in value when management determines that such
impairment has occurred. Drilling equipment is depreciated using the declining
balance method over the estimated useful lives from five to twelve years. Other
property and equipment are depreciated on a declining balance basis over
estimated useful lives from three to ten years. Refurbishments and betterments
on drilling equipment are capitalized if such expenditures are significant and
extend the lives of the equipment. Maintenance and repairs are expensed as
incurred. When assets are sold, retired or disposed of, the cost and related
accumulated depreciation are eliminated from the accounts and the gain or loss
is recognized.

6. Revenue Recognition

Revenues generated from the Company's dayrate drilling contracts are
recognized as services are performed. For all drilling contracts under which the
Company bears the risk of completion (such as footage and turnkey contracts)
revenues and expenses are recognized using the completed contracts method. When
estimates of projected revenues and expenses indicate a loss, the total
estimated loss is accrued.

7. Net Earnings (Loss) Per Share

Earnings per common and equivalent shares is computed based on the weighted
average number of common and equivalent shares outstanding during the period.
Pro forma net earnings (loss) per share are presented to reflect the provision
for income taxes for periods Anadarko was a partnership. Pro forma net earnings
(loss) per share is computed by dividing the pro forma net earnings (loss) by
the weighted average number of shares of common stock and equivalent shares
outstanding during the period.

Under guidelines issued by the Securities and Exchange Commission, common
shares, options and warrants issued prior to a public offering at prices below
the initial offering price are treated as outstanding for all periods presented
(using the Treasury stock method) in computing net earnings (loss) per share.

8. Income Taxes

Income taxes were not provided in the financial statements for earnings
attributable to Anadarko since the partners would pay income taxes or receive as
a deduction their distributive share of Anadarko's taxable income or loss. Pro
forma adjustments are reflected on the statement of operations to provide for
income taxes in accordance with Statement of Financial Accounting Standards No.
109 at an effective rate of 38%.

The Company uses the liability method of accounting for deferred income
taxes under SFAS No. 109, whereby deferred tax assets and liabilities are
recognized based upon differences between the financial statement and tax bases
of assets and liabilities using presently enacted tax rates. If it is more
likely that not some portion or all of a deferred tax asset will not be
realized, a valuation allowance is recognized.

9. Goodwill and Other Assets

Goodwill related to the acquisition of Trend is being amortized over twelve
years. Amortization expense of $97,527 has been recognized as of June 30, 1997.

Other assets consist of (i) organizational costs incurred for the
organization of Bayard, (ii) debt issuance costs incurred on the term loan
disclosed in Note G, and (iii) deferred contract costs related to options

F-10
<PAGE> 90

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

granted to a related party. Amortization expense for such other assets is
recognized over one to five years on a straight-line basis. $667,626 of
amortization expense has been recognized for the six months ended June 30, 1997
for these costs.

On an ongoing basis, management reviews the valuation and amortization of
goodwill and other intangibles to determine possible impairment. The
recoverability of these assets is assessed by determining whether the
amortization can be recovered from undiscounted future cash flows.

10. Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain 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; accordingly actual results could differ from those estimates.

11. Fair Value of Financial Instruments

The Company's financial instruments consist of cash and investments which
approximate fair value because of the short maturity of those instruments, a
payable to an affiliate which approximates fair value due to the demand nature
of this obligation and a floating rate term loan which approximates fair value
because the interest rate adjusts to the market rate, and notes payable which
approximate fair value because the interest rates on these notes reflects the
borrowing terms currently available to the Company.

12. Interim Financial Statements and Disclosures

In the opinion of management, the unaudited interim financial statements
for June 30, 1997 and 1996 and unaudited interim financial statement disclosures
subsequent to December 31, 1996 include all adjustments, consisting of normal
recurring accruals, necessary to present fairly the Company's financial position
as of June 30, 1997 and results of operations and cash flows for the six months
ended June 30, 1997 and 1996. Results for the period ended June 30, 1997 are not
necessarily indicative of the results to be expected for the entire fiscal year.

13. Stock Based Compensation

The Company applies APB Opinion 25 in accounting for its stock option
plans. Under this standard, compensation expense is only recognized for grants
of options which include an exercise price less than the market price of the
stock on the date of grant. Accordingly, based on the Company's grants for 1996
and for the six months ended June 30, 1997, the Company recognized $0 and
approximately $292,000 of deferred compensation and $0 and approximately $18,000
of compensation expense, respectively. For grants of options which include an
exercise price equal to or greater than the market price of the stock on the
date of grant, the Company has disclosed the pro forma effects of recording
compensation based on fair value in Note N to the financial statements as
allowed by Financial Accounting Standard No. 123 "Accounting for Stock-Based
Compensation."

F-11
<PAGE> 91

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

NOTE C -- ACQUISITIONS

On May 1, 1997, the Company completed the acquisition of the common stock
of Trend ("Trend Acquisition") for $18 million in cash and 250,000 shares of
common stock which equates to $10.64 per share based on the appraisals of the
fair market value of the property and equipment acquired of $21,532,000. The
Company incurred costs of approximately $307,000 in connection with this
acquisition.

The Trend Acquisition was accounted for as a purchase. The following is an
analysis of the allocation of the purchase price:

On May 30, 1997, the Company acquired WD Equipment, L.L.C. (which owned six
drilling rigs, but had no operations) from Ward Drilling Company, Inc. ("Ward
Acquisition") for approximately $8 million in cash and 400,000 shares of common
stock which equates to $8.95 per share based on the appraisal of the fair market
value of the assets acquired of $11,931,000. The Company also issued warrants to
purchase 200,000 shares of common stock at $10.00 per share. The warrant had an
estimated fair market value of $294,000 at the agreement closing date and was
recorded as an increase in property and equipment and additional paid in
capital.

The following is the unaudited pro forma results of operations as if Trend
and Ward had been acquired January 1, 1996 (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
<S> <C> <C>
Revenues............................................. $36,930 $26,454
======= =======
Net Loss............................................. $(2,347) $(1,305)
======= =======
Loss per common share................................ $ (.16) $ (.09)
======= =======
</TABLE>

F-12
<PAGE> 92

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

NOTE D -- PROPERTY AND EQUIPMENT

Major classes of property and equipment consist of the following:

<TABLE>
<CAPTION>
SIX MONTHS
DECEMBER 31, ENDED
----------------- JUNE 30,
1995 1996 1997
(IN THOUSANDS)
<S> <C> <C> <C>
Drilling rigs and components............................ $21,152 $42,303 $108,486
Automobiles, trucks, and trailers....................... 1,546 431 1,332
Buildings and property.................................. -- -- 277
Furniture, fixtures, and other.......................... 69 7 208
------- ------- --------
22,767 42,741 110,303
Less accumulated depreciation......................... 16,424 15,768 17,645
------- ------- --------
$ 6,343 $26,973 $ 92,658
======= ======= ========
</TABLE>

NOTE E -- CHANGE IN ESTIMATED LIVES

Effective January 1, 1995, the Company changed the estimated remaining
lives of its drilling rigs and other related drilling equipment to 84 months
from remaining lives which ranged from 31 months to 113 months. The Company also
changed the estimated remaining life of drill collars from 20 months to 36
months. These changes were made to more closely approximate the remaining useful
lives of such assets. The effect of this change was to decrease the historical
net loss by approximately $539,000 and to reduce the pro forma net loss by
approximately $539,000 or $.05 per share (Note B(7)) for the year ended December
31, 1995.

Effective January 1, 1996, the Company changed the estimated remaining
lives of certain drilling component equipment from 84 months to 120 months and
changed the estimated remaining life of drill collars and pipe from 36 months to
60 months. After review and study by the Company, the useful lives of drilling
rigs acquired after January 1, 1996 were changed from 84 months to 144 months.
These changes were made to more closely approximate the remaining useful lives
of such assets. The effect of these changes was to increase the historical net
earnings by approximately $405,000 and to increase pro forma net earnings by
approximately $251,000, net of pro forma income taxes of $154,000, or $.02 per
share (Note B(7)) for the year ended December 31, 1996.

NOTE F -- INCOME TAXES

On October 28, 1996, Anadarko conveyed its operating assets to its
wholly-owned subsidiary, BDC, which caused a change in tax status of the
drilling operations from a partnership to a taxable corporation. A deferred tax
asset was recognized for the temporary differences which existed at the date of
conveyance together with a related valuation allowance. At December 31, 1996,
the Company has net operating loss carry forwards of approximately $418,000
which will expire in 2011 if unused.

F-13
<PAGE> 93

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

Components of net deferred income tax liabilities are as follows:

<TABLE>
<CAPTION>
OCTOBER 28, DECEMBER 31,
1996 1996
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets (liabilities)
Operating loss carryforwards.............................. $ -- $ 167
Property and equipment.................................... 1,818 (515)
Total valuation allowance................................. (1,818) --
------- -----
Net deferred tax liabilities........................... $ -- $(348)
======= =====
</TABLE>

The Company's effective income tax rate differed from the federal statutory
rate of 34% as follows for the years ended December 31: (in thousands)

<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Income tax expense (benefit) at federal statutory rate...... $ (75) $ 146
Income tax (expense) benefit attributable to individual
partners.................................................. 75 (129)
-------- ---------
$ -- $ 17
======== =========
</TABLE>

The Company's valuation allowance on tax assets was established October 28,
1996 due to a change in taxable status and decreased $1,818,000 during the
period from October 28, 1996 to December 31, 1996. The Company was not a taxable
entity in 1995 and had no valuation allowance. Effective December 1, 1996, the
Company acquired assets with deferred tax liabilities of approximately $2
million in which the purchase price allocation resulted in the reduction of the
Company's tax asset valuation allowance of approximately $1,724,000.

NOTE G -- LONG-TERM DEBT AND SUBORDINATED NOTES

Long-term debt at December 31, 1996 consisted of borrowings under loan
agreements (the "Loan Agreements") which provide for a term loan (the "Term
Loan") and a revolving loan (the "Revolving Loan"). The Term Loan of $7,000,000
bears interest at the Company's choice of LIBOR plus 4.25% (9.65% at December
31, 1996) or the prime rate of Chase Manhattan Bank, N.A. and requires monthly
payments of principal and interest in amounts sufficient to repay borrowings at
maturity on March 31, 2002. The Loan Agreements permit borrowings to a maximum
of $20 million under the Term Loan if defined collateral provisions are met. The
loan is collateralized by drilling equipment.

The Loan Agreements also permit borrowings up to $4 million under the
Revolving Loan through December 31, 1998 subject to a $2 million limitation if
the borrowings under the Term Loan exceed $17 million. Amounts advanced under
the Revolving Loan, if any, will be converted to a term loan on December 31,
1998 and will be repaid in monthly installments until maturity on January 31,
2002.

Starting in 1997, the Loan Agreements require the maintenance of defined
collateral values, cash flow and liquidity ratios, financial reporting
requirements, and the maintenance of total liabilities to tangible net worth not
greater than 1.25 and imposes certain limitations on capital expenditures and
incurrence of additional debt.

F-14
<PAGE> 94

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

A December 31, 1996, the aggregate yearly maturities on long-term
obligations are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
<S> <C>
1997................................................... $ 947,000
1998................................................... 1,240,000
1999................................................... 1,365,000
2000................................................... 1,503,000
2001................................................... 1,654,000
Thereafter............................................. 291,000
----------
$7,000,000
==========
</TABLE>

In May 1997, the Company amended and increased the availability under the
Loan Agreements. The Term Loan provides the Company up to $30.5 million for the
purchase of additional land drilling rigs, the refurbishment of such rigs and
equipment and for working capital purposes. The Revolving Loan provides the
revolving credit loans of up to $10 million, $2 million of which is available
for the issuance of letters of credit, and which is being used for general
corporate purposes. Amounts outstanding under the Revolving Loan bear interest
based on Fleet National Bank's prime rate plus 1.5% (10% at June 30, 1997) and
mature in April 2000. Amounts outstanding under the Term Loan bear interest, at
the election of the Company, at floating rates equal to Chase Manhattan Bank's
prime rate plus 2.0% or LIBOR plus 4.25% (9.94% at June 30, 1997) and mature in
March 2002. The Loan Agreements are collateralized by substantially all of the
assets of the Company, including all drilling rigs, equipment and drilling
contracts, and contain customary restrictive covenants (including covenants
restricting the ability of the Company to pay dividends or encumber assets) and
an affirmative covenant to maintain Total Available Liquidity (as defined in the
Loan Agreements) of at least $4.5 million through December 31, 1997 and $3
million through December 31, 1998. Pursuant to the Loan Agreements, the Company
must maintain certain financial ratios, including a Cash Flow Coverage ratio (as
defined in the Loan Agreements) of at least 1.25 to 1 until December 1997, 1.5
to 1 in 1998 and 1.75 to 1 thereafter and a ratio of Total Liabilities (as
defined in the Loan Agreements) to Tangible Net Worth no greater than 1.25 to 1
in 1997 and 1 to 1 in 1998. Under the Loan Agreements the Company is obligated
to pay certain fees, including an annual commitment fee in an amount equal to
0.5% of the unused portion of the commitment.

Additionally, the Company issued Subordinated Notes due May 1, 2003 in the
original principal amounts of $18 million and $2.52 million (the "Subordinated
Notes") to Chesapeake Energy Corporation ("Chesapeake") and Energy Spectrum
Partners LP ("Energy Spectrum"), respectively. The Subordinated Notes bear
interest at either (i) 11% per annum, payable in cash or (ii) 12.875% per annum,
payable in the form of additional Subordinated Notes, which interest is payable
quarterly in arrears. On each quarterly interest payment date, the Company may
make an election as to the interest rate to be applied for the previous quarter.
The Subordinated Notes are redeemable, solely at the option of the Company, in
whole or in part, at any time after May 31, 1998 at varying redemption prices.
The Company must offer to redeem the Subordinated Notes upon the occurrence of
certain events constituting a "Change of Control" (as defined in the
Subordinated Notes) at a redemption price equal to 100% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
redemption. The Subordinated Notes are convertible into Common Stock at the
option of the Company, in whole or in part, in conjunction with a "Convertible
Event" (as defined in the Subordinated Notes), which includes certain
underwritten public offerings (including the Offering), mergers, consolidations
and other business combination transactions. The Subordinated Notes are general
unsecured subordinated obligations of the Company that are subordinated in
rights of payment to all existing and future senior indebtedness of the Company,
pari passu with all existing and future subordinated

F-15
<PAGE> 95

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

indebtedness of the Company and senior in right of payment to all future junior
subordinated indebtedness of the Company.

NOTE H -- RELATED PARTY TRANSACTIONS

Before the corporate capitalization, Anson Gas Corporation served as the
managing general partner responsible for all management and operational
functions of the Company and charged the Company for such expenses. The Company
expensed approximately $198,000, $390,000 and $435,000 for such services
received in 1996, 1995 and 1994, respectively.

Prior to December 31, 1996, the Company and its affiliates made advances to
each other from time to time which generally had no specific repayment terms.
The Company's payable to affiliate at December 31, 1995 was in the form of a
noninterest-bearing payable to APLP.

The Company purchased drilling equipment and supplies from an affiliate
totaling $2,862,000, $779,000 and $904,000 in 1996, 1995 and 1994, respectively.
The Company also transferred drilling equipment to an affiliate at the Company's
basis totaling $29,000, net of accumulated depreciation, which resulted in a
decrease in payable to affiliate.

An affiliate transferred drilling equipment to Anadarko at the affiliates
basis totaling $173,000, net of accumulated depreciation, during 1995 which has
been reflected as an increase in payable to affiliate.

In December 1996, Anadarko granted the Company a transferrable option,
exercisable at any time prior to June 30, 1998, to either purchase from Anadarko
a storage yard located in Weatherford, Oklahoma (the "Weatherford Storage Yard")
for a price of $1,000 in cash or lease from Anadarko, for any period specified
by the Company through a date not later than December 31, 1999, the Weatherford
Storage Yard for a lease price of $100 per year. In August 1997, the Company
acquired from Anadarko approximately 5 acres of land also in Weatherford,
Oklahoma, in consideration for the relinquishment by the Company of the option
to acquire or lease the Weatherford Storage Yard.

In May 1997, the Company paid Energy Spectrum a fee in the amount of
$220,000 for financial advisory and other services rendered to the Company in
connection with the completion of the Trend Acquisition, including the valuation
and negotiation of the Trend Acquisition and for assistance in the arrangement
of alternative financing sources and structuring, negotiating and closing the
amended financing arrangements with CIT and Fleet. The Company also reimbursed
Energy Spectrum for expenses incurred in connection with the rendering of such
services.

The Company has in the past purchased rigs and related equipment from U.S.
Rig & Equipment, Inc., an affiliate of Roy T. Oliver, a director of the Company.
From January 1997 through June 30, 1997, the Company paid U.S. Rig & Equipment,
Inc. an aggregate of $1.3 million in connection with such purchases.
Additionally, in August 1997, the Company sold one of its rigs to an affiliate
of Mr. Oliver for $500,000. The Company believes that this sale price is
equivalent to the price that would have been received from an unaffiliated third
party.

The Company has engaged affiliates of APLP for the provision of trucking
services related to the movement of the Company's rigs on numerous occasions.
From January 1997 through June 30, 1997, the Company paid such affiliates of
APLP an aggregate of $225,000 in consideration for such trucking services.

Since December 13, 1996, APLP has made available to the Company certain of
APLP's employees, office space and administrative equipment, such as computer
and telephone systems. In consideration for such

F-16
<PAGE> 96

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

assistance, the Company had reimbursed APLP an aggregate of $135,000 as of June
30, 1997 and APLP continues to provide certain computer services to the Company.

Accounts receivable at June 30, 1997 included $4.5 million of receivables
from affiliates. Accounts payable at June 30, 1997 included $838,000 owed to
affiliates. Interest expense at June 30, 1997 included $330,000 to affiliates.

NOTE I -- SIGNIFICANT CUSTOMERS

During the first six months of 1997, 51% of revenues was generated from an
affiliated customer and 10% of revenues was generated from an unaffiliated
customer. During 1996, sales to two customers were, respectively, 75% (inclusive
of $798,000 attributable to Chesapeake, which became an affiliate in December
1996) and 18% of drilling revenues. During 1995, sales to one customer totaled
36% of drilling revenue. During 1994, sales to two customers totaled 34% and 11%
of total drilling revenues.

NOTE J -- STOCKHOLDER'S EQUITY AND OPTIONS

In December 1996, the Company issued 2,000,000 shares of Common Stock to
Anadarko for the operating assets of BDC, Anadarko's subsidiary. Further, the
Company issued 2,000,000 shares of Common Stock to Energy Spectrum for $10
million cash. The Company also acquired six drilling rigs and related equipment
by the issuance of 1,600,000 shares of Common Stock and put options on the
Company's common stock. The drilling rigs were recorded in accordance with
appraisals of the estimated fair value of the assets acquired ($9,500) and the
net deferred income tax liability assumed. If the Company does not complete an
initial public stock offering prior to June 2, 1998, the holder of the options
has a thirty-day period in which to request that the Company purchase the
1,600,000 shares of Common Stock at $7.50 per share. The Company, at its option,
can either purchase the shares or issue 400,000 additional shares of Common
Stock to the holder. The estimated fair value of the put options are recorded as
additional contributed capital to the Company.

The Company executed in December 1996 certain drilling agreements to supply
six drilling rigs to Chesapeake at rates equal to defined comparable market
rates but not less than $5,000 per day per rig. The Company granted the operator
an option to purchase 2,000,000 shares of Common Stock at $6 per share, subject
to performance of the operator under the drilling agreement. The estimated fair
value of the options of $1,100,000 was recorded as additional paid-in capital
and a deferred charge to be amortized over a twelve month period consistent with
the annual negotiations of contract terms.

In February 1997, the Company sold 100,000 shares of Common Stock at $2.50
per share to the President of the Company, which are subject to the terms of a
Restricted Stock Award Agreement. Deferred compensation in the amount of
$250,000 was recorded related to this stock grant as the purchase price was
below the fair market value of the Company's Common Stock at the date of grant.
See Note N.

On December 10, 1996, the Company granted the issuer of the Term Loan (Note
G) warrants to immediately purchase up to 290,000 shares of the Company's Common
Stock at $8 per share or up to 300,000 shares at $8 per share when total
outstanding Common Stock exceeds 6,000,000 shares. The warrants expire at the
earlier of December 13, 2001 or eighteen months after completion of the initial
public stock offering by the Company. The warrant holder can also elect to
receive in stock the excess of the stock market value over the warrant exercise
price. These warrants have an estimated fair value of $219,000, which has been
recorded as debt issue costs and is being amortized over the term of the loan.

F-17
<PAGE> 97

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

The Company purchased during May 1997, two drilling rigs from U.S. Rig &
Equipment, Inc. for cash and granted options to purchase 100,000 shares of
Common Stock at $8 per share.

In connection with the issuance of Subordinated Notes executed in May 1997,
the Company issued 1,140,000 shares of Common Stock at $7 per share.
Additionally, the Company issued two series of detachable Warrants, designated
as Series A Warrants and Series B Warrants. The Series A Warrants are
exercisable at a price of $.01 per share and the Series B Warrants are
exercisable at $7.50 per share. Both Warrants expire 72 months from issuance.
The Company issued Series A Warrants and Series B Warrants representing the
right to purchase 798,000 shares and 912,000 shares of Common Stock,
respectively. The fair market value of these warrants at the agreement closing
date was $6 million, $4,024,000 of which was attributable to the Subordinated
Notes. The warrant value applicable to the Subordinated Notes was allocated
between the Subordinated Notes and warrants and recorded as a discount to the
Subordinated Notes and additional paid in capital.

In October, 1995 SFAS No. 123 "Accounting for Stock Based Compensation" was
issued. The statement required the computation of compensation expense for
stock, stock options and other equity instruments issued to employees based on
the fair value of the instrument at the date the instrument was granted. The
compensation is to be recorded as an expense in the financial statements or
alternatively, disclosed. The Company has elected to disclose such information.

In June 1997, the Company granted options to employees to purchase 59,600
shares of Common Stock at $8 per share. Deferred compensation in the amount of
$59,600 was recorded related to these stock options as the exercise price was
below the fair market value of the Company's Common Stock at the date of grant.
See Note N. During 1996 and 1997, the Company issued stock options to three
executive officers pursuant to the 1997 Stock Option and Stock Award Plan to
purchase 200,000, 50,000 and 50,000 shares of Common Stock, respectively, at an
exercise price of $5, $5 and $10 per share, respectively. None of such options
has been exercised, and all of such options remain outstanding.

NOTE K -- COMMITMENTS AND CONTINGENCIES

In December 1996, the Company entered into a drilling agreement whereby
Chesapeake agreed to engage six of the Company's rigs for two-year terms,
subject to annual negotiations. The Company has the option to extend the
agreement with respect to any two of the rigs for two additional years on the
same terms. Chesapeake has the option to extend each of the other four
individual drilling rigs for two additional years on the same terms. The
agreement provides standard day rates, subject to upward, but not downward,
adjustment annually to approximately $100 per day less than the average
then-current market rates for the areas of operation. This adjustment is
determined each November during the term of the agreement and becomes effective
for any wells spudded after December 1, while such agreement remains in effect.
If a timely agreement is not reached as to a rate adjustment, the Company will
have the option to terminate the contract for the respective rig at the
conclusion of operations for the related well being drilled.

The Company has entered into two year employment agreements with three
executive officers, which provide for the payment of the remaining term of each
agreement upon a change of control. As of June 30, 1997, benefits under such
agreements, assuming a change of control, would aggregate approximately
$547,500.

As of June 30, 1997, the Company had construction commitments totaling
approximately $3.5 million for five rigs in various stages of refurbishment.

A shortage of drill pipe exists in the contract drilling industry in the
United States. This shortage has caused the price of drill pipe to increase
significantly over the past 24 months and has required orders for new

F-18
<PAGE> 98

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

drill pipe to be placed at least one year in advance of expected use. The price
increase and the delay in delivery has caused the Company to substantially
increase capital expenditures for drill pipe in recent months. In the event the
shortage continues, the Company may be unable to obtain the drill pipe required
to expand its contract drilling operations.

NOTE L -- SUBSEQUENT EVENTS

In August 1997, the Company issued 3,149,000 shares of Common Stock to
Chesapeake for $9 million in cash and the relinquishment by Chesapeake of its
right to exercise the Chesapeake Option and the warrants issued to it in
connection with the May Financing (the "Chesapeake Transactions"). In connection
with the Chesapeake Transactions, the Company agreed that, simultaneously with
the Offering, the Company will redeem in full the $18 million principal amount
of Subordinated Notes held by Chesapeake at a cash redemption price of $15
million, subject to adjustment. The Company estimates a $1.4 million
extraordinary loss from early extinguishment of debt on the Subordinated Notes,
which estimate may change in connection with the adjustment. Also in connection
with the Chesapeake Transactions, the Company waived its right under the
Securities Purchase Agreement to require Chesapeake to purchase additional
Common Stock, Warrants and Subordinated Notes for $3 million.

At the August 19, 1997 Board of Directors meeting, the number of authorized
shares of Common Stock was increased from 10,000,000 to 100,000,000 and the
number of authorized shares of preferred stock was increased from 2,000,000 to
20,000,000. Additionally, a two-for-one stock split effected as a stock dividend
on an August 22, 1997 record date was approved. All stock option data, per share
earnings and references to common stock have been restated to give effect to the
stock split.

On July 31, 1997, Energy Spectrum exercised in full its Series A Warrants,
at a price of $0.01 per share, for 98,000 shares of Common Stock.

SUBSEQUENT EVENTS -- UNAUDITED

On October 16, 1997, the Company acquired Bonray Drilling Corporation
("Bonray") for 3,015,000 shares of Common Stock, subject to certain working
capital adjustments. The acquisition will be accounted for as a purchase.

NOTE M -- EMPLOYEE BENEFIT PLAN

The Company has a profit sharing plan for certain eligible employees who
have attained the age of 21 and completed at least one year of service.
Participants may contribute up to 20% of compensation for any plan year. The
Company's discretionary contribution is based on the participants total years of
service. The Company has made contributions of approximately $9,000 through June
30, 1997.

NOTE N -- BENEFIT AND COMPENSATION PLAN

In April 1997, the Board of Directors approved the adoption of an Employee
Stock Plan ("the Plan") whereby 1,600,000 shares of Common Stock are authorized
for issuance under the Plan to officers and employees. The Plan permits the
issuance of qualified or nonqualified stock options, as well as granting of
certain other awards, including shares of restricted stock. Options granted
become vested at the rate of 20% per year one year after being granted, with the
options expiring six years from the original grant date. The exercise price for
options granted through June 30, 1997 was based on the Company's estimate of the
fair

F-19
<PAGE> 99

BAYARD DRILLING TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION FOR THE PERIOD ENDED JUNE 30, 1996 IS UNAUDITED

market value on the date of the grant. Through June 30, 1997, 309,600 options
and 100,000 shares of restricted stock (denoted below) were issued under the
Plan, none of which were exercisable at June 30, 1997.

Activity pertaining to the Plan is as follows:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding at
December 10, 1996......................................... -- $ --
Granted................................................ 200,000 5.00
Exercised.............................................. -- --
-------
Outstanding at
January 1, 1997........................................... 200,000 5.00
Granted................................................ 209,600 4.66
Exercised.............................................. -- --
-------
June 30, 1997............................................. 409,600 $4.83
=======
</TABLE>

<TABLE>
<CAPTION>
WEIGHTED AVERAGE FAIR MARKET
WEIGHTED AVERAGE FAIR VALUE OF VALUE OF DEFERRED
EXERCISE NUMBER OF REMAINING WEIGHTED AVERAGE STOCK OPTIONS ON COMMON STOCK COMPENSATION
PRICE RANGE SHARES CONTRACTUAL LIFE EXERCISE PRICE DATE OF GRANT AT DATE OF GRANT COST
----------- --------- ---------------- ---------------- ---------------- ---------------- ------------
<C> <C> <C> <C> <C> <C> <C>
$2.50 100,000(1) 0 $2.50 $ -- $5.00 $233,000
5.00 250,000 5.46 5.00 2.09 5.00 --
8.00 59,600 5.96 8.00 4.18 9.00 59,000
</TABLE>

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

(1) Unvested restricted stock.

The Company applies APB Opinion 25 in accounting for the Plan. Had
compensation been determined on the basis of fair value pursuant to FASB
Statement No. 123, net income and earnings per share would have been reduced as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ --------
<S> <C> <C>
Net Income (In thousands):
As reported............................................... 413 (20)
Pro forma (net of effective tax of 38%)................... 407 (90)
Primary Earnings per Share, Primary and Fully Diluted:
As reported............................................... .03 (.00)
Pro forma................................................. .03 (.01)
</TABLE>

The fair value of each option granted is estimated using the Black-Scholes
model. This model includes, among others, a variable of stock volatility. As the
Company is not yet public, the volatility used in the model was .40 based on
volatilities of a similar entity that is currently publicly traded. Dividend
yield was estimated to remain at zero with risk free interest rates ranging
between 5.72 and 6.31 percent. As there is no prior experience available to use
in estimating an expected life for the options, an average of the time between
the vesting and expiration dates of the options was used in determining the
expected lives of the options ranging from 3.5 to 5.5 years. Fair value of
options granted during 1997 and 1996 under the Plan were $415,990 and $354,590,
respectively.

F-20
<PAGE> 100

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Bayard Drilling Technologies, Inc.

We have audited the accompanying balance sheets of Trend Drilling Company
as of December 31, 1996 and 1995, and the related statements of operations,
stockholder's equity, and cash flows for each of the three years in the period
ended December 31, 1996. 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 audits 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 respect, the financial position of Trend Drilling Company as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.

COOPERS & LYBRAND, L.L.P.

Oklahoma City, Oklahoma
April 28, 1997

F-21
<PAGE> 101

TREND DRILLING COMPANY

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------ AS OF
1995 1996 APRIL 30, 1997
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................... $ 448,857 $ 570,873 $ 149,352
Accounts receivable................................. 2,398,231 3,474,043 2,544,526
Other current assets................................ 34,899 40,661 40,661
Deferred tax asset.................................. 175,593 -- --
---------- ---------- ----------
Total current assets........................ 3,057,580 4,085,577 2,734,539
Property, plant and equipment, net.................... 4,781,019 4,176,964 4,133,639
Goodwill, net of accumulated amortization of $60,000,
$84,000 and $92,000, respectively................... 60,000 36,000 28,000
Deferred tax asset.................................... 186,688 379,850 379,850
---------- ---------- ----------
Total assets................................ $8,085,287 $8,678,391 $7,276,028
========== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable.................................... $2,358,575 $1,424,415 $ 583,405
Accrued liabilities................................. 626,883 1,049,338 280,049
Income taxes payable................................ -- 986,834 1,157,103
Current portion of long-term debt................... 1,457,976 415,445 232,394
Deferred tax liability.............................. -- 11,939 11,939
---------- ---------- ----------
Total current liabilities................... 4,443,434 3,887,971 2,264,890
---------- ---------- ----------
Long-term debt........................................ 1,755,437 1,339,992 1,339,992
---------- ---------- ----------

Commitments and contingencies

STOCKHOLDERS' EQUITY:
Common stock, $1 par value, 25,000 shares
authorized; 500 shares issued and outstanding.... 500 500 500
Additional paid-in capital.......................... 2,483,880 2,483,880 2,483,880
Retained earnings (accumulated deficit)............. (597,964) 966,048 1,186,766
---------- ---------- ----------
Stockholders' equity........................ 1,886,416 3,450,428 3,671,146
---------- ---------- ----------
Total liabilities and stockholders'
equity.................................... $8,085,287 $8,678,391 $7,276,028
========== ========== ==========
</TABLE>

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

F-22
<PAGE> 102

TREND DRILLING COMPANY

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------- FOUR MONTHS ENDED
1994 1995 1996 APRIL 30, 1997
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Drilling contracts.............. $12,563,991 $12,283,649 $15,692,056 $6,389,703
----------- ----------- ----------- ----------
OPERATING EXPENSES:
Drilling........................ 10,070,842 9,218,081 11,752,135 4,844,669
General and administrative...... 1,415,842 1,878,347 1,647,330 514,937
Depreciation and amortization... 1,077,292 1,344,835 1,602,832 627,350
----------- ----------- ----------- ----------
Total operating
expenses.............. 12,563,976 12,441,263 15,002,297 5,986,956
----------- ----------- ----------- ----------
Operating income (loss)........... 15 (157,614) 689,759 402,747
----------- ----------- ----------- ----------
OTHER INCOME (EXPENSE):
Interest expense................ (183,768) (280,741) (261,331) (46,750)
Interest income................. 5,880 17,380 8,035 --
Other........................... 140,021 43,673 53,523 --
Gain on disposition of
equipment.................... 71,366 42,573 2,055,230 --
----------- ----------- ----------- ----------
Total other income
(expense)............. 33,499 (177,115) 1,855,457 (46,750)
----------- ----------- ----------- ----------
Income (loss) before income
taxes........................... 33,514 (334,729) 2,545,216 355,997
Income tax benefit (expense)...... (17,177) 112,906 (981,204) (135,279)
----------- ----------- ----------- ----------
Net Income (loss)................. $ 16,337 $ (221,823) $ 1,564,012 $ 220,718
=========== =========== =========== ==========
</TABLE>

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

F-23
<PAGE> 103

TREND DRILLING COMPANY

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
RETAINED
CAPITAL IN EARNINGS
COMMON EXCESS OF (ACCUMULATED
STOCK PAR VALUE DEFICIT) TOTAL
<S> <C> <C> <C> <C>
Balance, December 31, 1993.................. $500 $2,483,880 $ (392,478) $2,091,902
Net income................................ -- -- 16,337 16,337
---- ---------- ---------- ----------
Balance, December 31, 1994.................. 500 2,483,880 (376,141) 2,108,239
Net loss.................................. -- -- (221,823) (221,823)
---- ---------- ---------- ----------
Balance, December 31, 1995.................. 500 2,483,880 (597,964) 1,886,416
Net income................................ -- -- 1,564,012 1,564,012
---- ---------- ---------- ----------
Balance, December 31, 1996.................. $500 $2,483,880 $ 966,048 $3,450,428
==== ========== ========== ==========
</TABLE>

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

F-24
<PAGE> 104

TREND DRILLING COMPANY

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------- FOUR MONTHS ENDED
1994 1995 1996 APRIL 30, 1997
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................... $ 16,337 $ (221,823) $ 1,564,012 $ 220,718
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization...... 1,077,292 1,344,836 1,602,832 627,350
Gain on disposition of property,
plant and equipment.............. (71,366) (42,573) (2,055,230) --
Deferred tax expense (benefit)..... 17,177 (112,906) (5,630) --
Change in assets and liabilities:
Accounts receivable.............. (1,436,642) (120,759) (1,075,812) 929,517
Prepaid expenses................. 2,867 (19,349) (5,762) --
Accounts payable and accrued
liabilities................... 903,866 929,719 (511,705) (1,610,299)
Income taxes payable............. -- -- 986,834 170,269
Deferred revenue................. (172,250) -- -- --
----------- ----------- ----------- ----------
Net cash provided by operating
activities.................. 337,281 1,757,145 499,539 337,555
----------- ----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of equipment... 264,219 42,573 2,872,647 --
Capital expenditures.................. (3,645,969) (1,552,257) (1,792,194) (576,027)
----------- ----------- ----------- ----------
Net cash provided by (used in)
investing activities........ (3,381,750) (1,509,684) 1,080,453 (576,027)
----------- ----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt........ 3,000,000 850,000 775,000 --
Principal payments under debt
obligations........................ (299,809) (658,104) (2,232,976) (183,049)
----------- ----------- ----------- ----------
Net cash provided by (used in)
financing activities........ 2,700,191 191,896 (1,457,976) (183,049)
----------- ----------- ----------- ----------
Net increase (decrease) in cash and cash
equivalents........................... (344,278) 439,357 122,016 (421,521)
Cash and cash equivalents, beginning of
period................................ 353,778 9,500 448,857 570,873
----------- ----------- ----------- ----------
Cash and cash equivalents, end of
period................................ $ 9,500 $ 448,857 $ 570,873 $ 149,352
=========== =========== =========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest........................... $ 136,857 $ 232,553 $ 254,110 $ 46,750
=========== =========== =========== ==========
Income taxes....................... $ -- $ -- $ -- $ 275,000
=========== =========== =========== ==========
</TABLE>

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

F-25
<PAGE> 105

TREND DRILLING COMPANY

NOTES TO THE FINANCIAL STATEMENTS
INFORMATION RELATING TO THE FOUR MONTHS ENDED APRIL 30, 1997 IS UNAUDITED

(A) NATURE OF OPERATIONS

Trend Drilling Company (the "Company"), an Oklahoma corporation, began
operations in 1981. The Company provides contract drilling services in the
Mid-Continent region of the United States. The Company's customers are primarily
independent oil and gas companies.

On February 13, 1997, the owner of the Company and sole stockholder,
entered into a stock purchase agreement (the "Agreement"), with Bayard Drilling
Technologies, Inc. ("Bayard") for the sale of the Company (the "Bayard
Acquisition"). The executed agreement states a purchase price of $18 million
plus shares of Bayard stock, adjusted for changes in working capital as of the
closing date compared to December 31, 1996.

(B) SUMMARY OF SIGNIFICANT ACCOUNT POLICIES

REVENUE RECOGNITION

The Company recognizes revenue and expenses on dayrate contracts as the
drilling progresses (percentage-of-completion method). For footage and turnkey
contracts, the Company recognizes the revenue and expenses upon completion of
the well (completed-contract method).

Revenue earned of $279,390, but not billed, is included in accounts
receivable at December 31, 1996.

CASH AND CASH EQUIVALENTS

For purposes of the balance sheet, the Company considers cash equivalents
to be all instruments that had a remaining maturity of three months or less at
the date of purchase.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is recorded at cost. Depreciation of
property, plant and equipment is determined primarily on the straight-line
method over the estimated useful lives of the assets at the following rates:

<TABLE>
<CAPTION>
YEARS
<S> <C>
Buildings................................................... 15-39
Drilling rigs and related equipment......................... 5-14
Vehicles.................................................... 5
Furniture and office equipment.............................. 5-10
</TABLE>

Upon retirement or disposal, the related cost and accumulated depreciation
are removed from the accounts and any gain or loss is included in operations.
Repairs and maintenance, which extend the useful life of property, plant and
equipment, are capitalized.

GOODWILL

The excess of the purchase price over the fair value of assets acquired is
amortized on the straight-line method over five years. Amortization expense was
$24,000 for the years-ended December 31, 1996, 1995 and 1994.

INCOME TAXES

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). Accordingly, deferred taxes are determined based on the difference
between the financial statement and tax bases of assets and liabilities using

F-26
<PAGE> 106

TREND DRILLING COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
INFORMATION RELATING TO THE FOUR MONTHS ENDED APRIL 30, 1997 IS UNAUDITED

the enacted tax rate in effect in the years in which the differences are
expected to reverse. Deferred tax expense represents the change in the deferred
tax liability balance.

CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade receivables with oil
and natural gas companies. For the years ended December 31, 1996 and 1995 over
ninety-five percent of the Company's trade receivables were from ten or less
customers. These customers also represented 63%, 51% and 54% of total revenues
for 1996, 1995 and 1994, respectively.

At December 31, 1996 and 1995, the Company had deposits in domestic banks
in excess of federally insured limits of approximately $467,000 and $348,000,
respectively.

ACCOUNTING 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 for certain revenues and expenses during the
reporting period. Actual results could differ from those estimates.

INTERIM FINANCIAL STATEMENTS AND DISCLOSURES

In the opinion of management, the unaudited interim financial statements
for the period ended April 30, 1997 and unaudited interim financial statement
disclosures subsequent to December 31, 1996 include all adjustments, consisting
of normal recurring accruals, necessary to present fairly the Company's results
of operations for the four months ended April 30, 1997.

Property, plant and equipment consist of the following at December 31,

<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Building.................................................. $ 295,946 $ 295,946
Drilling rigs and related equipment....................... 12,323,939 12,887,107
Vehicles.................................................. 233,018 227,018
Furniture and office equipment............................ 153,984 141,131
Leasehold costs........................................... -- 9,290
----------- -----------
13,006,887 13,560,492
Less accumulated depreciation............................. 8,225,868 9,383,528
----------- -----------
$ 4,781,019 $ 4,176,964
=========== ===========
</TABLE>

(D) LONG-TERM DEBT

Long-term debt consisted of the following at December 31,

<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Notes payable to banks...................................... $3,213,413 $1,755,437
Less current portion........................................ 1,457,976 415,445
---------- ----------
Total long-term debt.............................. $1,755,437 $1,339,922
========== ==========
</TABLE>

F-27
<PAGE> 107

TREND DRILLING COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
INFORMATION RELATING TO THE FOUR MONTHS ENDED APRIL 30, 1997 IS UNAUDITED

On March 26, 1996, the Company entered into a term loan (the "Note") of
$3,098,058, which consolidated all of the Company's bank borrowings into one
term loan. At December 31, 1996, long-term debt consisted of borrowings under
this note of $1,755,437 which bears an interest rate at the prime rate, adjusted
quarterly (8.25% at December 31, 1996). The Note contains a subjective
acceleration clause which allows the lender to demand payment of the Note when
the lender, at its sole discretion, determines that the Note is impaired.
However, the Note has been classified based on the scheduled maturities in the
accompanying balance sheet as management does not believe such impairment has
occurred. The Note requires the maintenance of financial reporting requirements
and annual personal financial statements from the owner of the Company.

The Note requires monthly payments of principal and interest in amounts
sufficient to repay borrowings at maturity on March 26, 2001. The Note is
collateralized by Accounts Receivable and Property, Plant and Equipment and is
personally guaranteed by the owner of the Company.

At December 31, 1995, long-term debt consisted of borrowings under four
bank notes with an aggregate amount of $3,213,413 which bore interest at a rate
of 1% over prime (which was 8.75% on December 31, 1995).

At December 31, 1996, the aggregate scheduled yearly maturities on
long-term obligations are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1997................................................... $ 415,445
1998................................................... 373,762
1999................................................... 406,799
2000................................................... 442,757
2001................................................... 116,674
----------
$1,755,437
==========
</TABLE>

(E) INCOME TAXES

Income tax expense (benefit) for the years ended December 31, 1994, 1995
and 1996 is summarized as follows:

<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Current:
Federal......................................... $ -- $ -- $882,957
State........................................... -- -- 103,877
Deferred:
Federal......................................... 15,369 (101,021) (5,037)
State........................................... 1,808 (11,885) (593)
-------- --------- --------
$ 17,177 $(112,906) $981,204
======== ========= ========
</TABLE>

F-28
<PAGE> 108

TREND DRILLING COMPANY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
INFORMATION RELATING TO THE FOUR MONTHS ENDED APRIL 30, 1997 IS UNAUDITED

Total income tax expense (benefit) differs from the amount computed by
multiplying income (loss) before income taxes by the U.S. federal income tax
statutory rate. The reasons for this difference are as follows:

<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Computed expected tax expense (benefit)........... $11,394 $(113,807) $ 865,373
State income taxes................................ 1,340 (13,389) 101,808
Non-deductible business meals and entertainment
expense......................................... 4,443 14,290 14,023
------- --------- ---------
$17,177 $(112,906) $ 981,204
======= ========= =========
</TABLE>

The components of the deferred tax assets and (liabilities) consisted of
the following at December 31:

<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Deferred tax assets:
Net operating loss and tax credit carry-forwards.......... $ 38,549 $ --
Excess of book basis over tax basis of current
liabilities............................................ 112,054 --
Excess of tax basis over book basis of current assets..... 24,990 --
Depreciation of property, plant and equipment............. 190,488 383,650
Deferred tax liabilities:
Excess of tax basis over book basis of current
liabilities............................................ -- (11,939)
Amortization of goodwill.................................. (3,800) (3,800)
-------- --------
Net deferred tax asset...................................... $362,281 $367,911
======== ========
</TABLE>

(F) RELATED PARTIES

The Company has several affiliates in the oil and gas industry with which
the Company does business throughout the year. The type of transactions with
these related parties varies from the Company drilling wells for affiliates to
affiliates moving rigs from one well site to another, as well as receiving
certain administrative support for which the Company was not billed (i.e.,
computer support).

As of December 31, 1996 and 1995, the Company had trade receivables with
related parties in the amount of $375,016 and $32,633, respectively, and trade
payables with related parties of $168,169 and $505,426, respectively.

For the period ended December 31, 1996, 1995 and 1994 the Company had
revenues of $462,535, $917,743 and $1,422,658, respectively and expenses of
$2,121,975, $2,003,356 and $1,660,169, respectively, with related parties.

The Company leases office space from an affiliate. For the years ended
December 31, 1996, 1995 and 1994, the Company paid rent of approximately
$10,000.

The Company has an agreement for 1997 to continue renting this office space
for approximately $1,000 per month.

(G) EMPLOYEE BENEFIT PLAN

The Company has a profit sharing plan ("the Plan") for certain eligible
employees who have attained the age of 21 and completed at least six months of
service. Participants may contribute up to 15% of compensation for any Plan
year. The Company's discretionary contribution is allocated to each
participant's account in the proportion which that participant's compensation
bears to the total compensation of all eligible participants. The Company made
contributions of approximately $130,000, $35,000 and $20,000 to the Plan in
1996, 1995 and 1994, respectively.

F-29
<PAGE> 109

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Bayard Drilling Technologies, Inc.

We have audited the accompanying balance sheet of Ward Drilling Company,
Inc. as of December 31, 1996, and the related statement of operations and
retained earnings, and cash flows for the year ended December 31, 1996. 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ward Drilling Company as of
December 31, 1996, and the results of its operations and its cash flows for the
year ended December 31, 1996, in conformity with generally accepted accounting
principles.

COOPERS & LYBRAND, L.L.P.

Oklahoma City, Oklahoma
August 22, 1997

F-30
<PAGE> 110

WARD DRILLING COMPANY, INC.

BALANCE SHEET

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, MAY 31,
1996 1997
<S> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 7,038 $ --
Accounts receivable....................................... 1,733,647 1,287,069
Prepaids and other assets................................. 781,470 520,204
----------- ----------
Total current assets.............................. 2,522,155 1,807,273
----------- ----------
EQUIPMENT:
Drilling equipment........................................ 14,701,019 14,843,582
Other equipment........................................... 444,606 448,918
Other..................................................... 373,263 376,882
----------- ----------
15,518,888 15,669,382
Less accumulated depreciation............................. 8,569,372 8,509,445
----------- ----------
Net equipment.......................................... 6,949,516 7,159,937
----------- ----------
Total assets................................. $ 9,471,671 $8,967,210
=========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Book overdraft............................................ $ 118,765 $ 5,295
Accounts payable.......................................... 1,246,022 383,329
Accrued expenses.......................................... 590,161 474,582
Advances from affiliate and stockholder................... 3,265,480 3,899,629
----------- ----------
Total current liabilities......................... 5,220,428 4,762,835
----------- ----------
Note payable to bank........................................ 500,000 --
----------- ----------
Commitments and contingencies
STOCKHOLDER'S EQUITY:
Common stock of $1 par value. Authorized 25,000 shares;
issued and outstanding 1,000 shares.................... 1,000 1,000
Additional paid-in capital................................ 99,014 99,014
Retained earnings......................................... 3,651,229 4,104,361
----------- ----------
Total stockholder's equity........................ 3,751,243 4,204,375
----------- ----------
Total liabilities and stockholder's equity... $ 9,471,671 $8,967,210
=========== ==========
</TABLE>

See accompanying notes to financial statements.

F-31
<PAGE> 111

WARD DRILLING COMPANY, INC.

STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

<TABLE>
<CAPTION>
DECEMBER 31, FIVE MONTHS ENDED
1996 MAY 31, 1997
(UNAUDITED)
<S> <C> <C>

DRILLING REVENUES........................................... $11,384,944 $4,956,971
----------- ----------
OPERATING EXPENSES:
Drilling.................................................. 9,890,597 3,914,240
Depreciation.............................................. 966,328 413,249
General and administrative................................ 484,748 196,747
----------- ----------
Total operating expenses.......................... 11,341,673 4,524,236
----------- ----------
Operating income.................................. 43,271 432,735
----------- ----------
OTHER INCOME (EXPENSE):
Interest income........................................... 34,536 16,810
Interest expense.......................................... (72,056) (27,224)
Gain on sale of assets.................................... 7,895 --
Miscellaneous income...................................... 66,678 30,810
----------- ----------
Total other income................................ 37,053 20,396
----------- ----------
Net income (loss)................................. $ 80,324 $ 453,131
=========== ==========

Retained earnings at beginning of year...................... $ 3,570,905
===========

Retained earnings at end of year............................ $ 3,651,229
===========
</TABLE>

See accompanying notes to financial statements.

F-32
<PAGE> 112

WARD DRILLING COMPANY, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
DECEMBER 31, FIVE MONTHS ENDED
1996 MAY 31, 1997
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 80,324 $ 453,131
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation........................................... 966,328 413,249
Gain on sale of assets................................. (7,895) --
Change in assets and liabilities:
(Increase) decrease in accounts receivable........... (485,735) 446,578
(Increase) decrease in prepaids and other assets..... (330,577) 261,266
Decrease in cost incurred or contracts in progress... 463,588 --
Decrease in accounts payable......................... (75,797) (862,693)
Increase (decrease) in accrued expenses.............. 250,400 (115,579)
----------- ---------
Net cash provided by operating activities.............. 860,636 595,952
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, including major
repairs and betterments................................ (1,564,162) (623,669)
Proceeds from sale of assets.............................. 21,034 --
----------- ---------
Net cash used in investing activities.................. (1,543,128) (623,669)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on revolving line of credit...................... 50,000
Payments on revolving line of credit...................... -- (500,000)
Advances from affiliate and stockholder................... 1,301,282 634,149
Payments to affiliates.................................... (616,136) --
Decrease in book overdraft................................ (52,671) (113,470)
----------- ---------
Net cash provided by financing activities.............. 682,475 20,679
----------- ---------
Net decrease in cash........................................ (17) (7,038)
Cash at beginning of year................................... 7,055 7,038
----------- ---------
Cash at end of year......................................... $ 7,038 $ --
=========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 57,244 $ 20,000
=========== =========
</TABLE>

See accompanying notes to financial statements.

F-33
<PAGE> 113

WARD DRILLING COMPANY, INC.

NOTES TO FINANCIAL STATEMENTS
INFORMATION RELATING TO THE FIVE MONTHS ENDED MAY 31, 1997 IS UNAUDITED

(A) NATURE OF OPERATIONS

Ward Drilling Company (the "Company"), an Oklahoma corporation, began
operations in 1981. The Company provides contract drilling services in the
Mid-Continent region of the United States for independent oil and gas companies.

In May 1997, the Company's parent, L.O. Ward Revocable Trust transferred
all the fixed assets of the Company into WD Equipment L.L.C. in anticipation of
the sale of these assets to Bayard Drilling Technologies, Inc. ("Bayard"), which
was consummated on May 31, 1997 (the "Bayard Acquisition"). The Company and
Bayard agreed to a purchase price of approximately $8 million plus 400,000
shares of Bayard stock plus warrants to purchase up to 200,000 shares of Bayard
stock in exchange for the purchase of WD Equipment L.L.C.

(B) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

The Company recognizes revenue and expenses on dayrate contracts as the
drilling progresses (percentage-of-completion method). For turnkey and footage
contracts, the Company recognizes the revenue and expenses upon completion of
the well (completed-contract method).

CASH AND CASH EQUIVALENTS

The Company considers cash equivalents to be all instruments that had a
remaining maturity of three months or less at the date of purchase.

EQUIPMENT

Equipment is recorded at cost. Depreciation on drilling equipment is
determined using the units-of-production method based upon management's
estimates of remaining drilling days by rig. Depreciation on all other equipment
is determined using the straight-line method over the estimated useful lives of
the assets ranging from three to seven years. Upon retirement or disposal, the
related cost and accumulated depreciation are removed from the accounts and any
gain or loss is included in operations.

The costs of major repairs and overhauls which extend the useful life of
drilling equipment are capitalized by charges to the allowance for accumulated
depreciation. Other additions and improvements are charged to the applicable
equipment account.

INCOME TAXES

The Company is an electing S corporation for federal and state income tax
purposes. The Company's taxable income or loss will be included in its
stockholder's income tax return. Accordingly, no provision for income taxes has
been included in these financial statements.

CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of trade receivables with oil
and natural gas companies. At December 31, 1996 over ninety-eight percent of the
Company's trade receivables were from four customers. For the year ended
December 31, 1996 the ten largest customers account for over 96% of total
revenues.

At December 31, 1996 the Company had deposits in domestic banks in excess
of federally insured limits of approximately $156,000.

F-34
<PAGE> 114

WARD DRILLING COMPANY, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION RELATING TO THE FIVE MONTHS ENDED MAY 31, 1997 IS UNAUDITED

ACCOUNTING ESTIMATES

The Company has available a line of credit with a bank for $500,000 which
expires in March 1998. The line of credit is collateralized by inventory,
accounts receivable, and other miscellaneous assets. Interest is at the bank's
base rate plus one percent (9.25% and 9.5% at December 31, 1996 and 1995,
respectively.) Upon consummation of the sale of the Company on May 31, 1997,
this line of credit was extinguished.

(D) RELATED PARTIES

The Company conducts drilling activities for companies owned or controlled
by L.O. Ward, one of the trustees of the L.O. Ward Revocable Trust (the Related
Parties); however no drilling activities were conducted for the Related Parties
in 1996.

General and administrative expense in the accompanying statement of
operations is net of management fee income received from one of the Related
Parties aggregating $10,320 in 1996.

The Company allocates office space and administrative expenses directly to
Related Parties. Amounts allocated under this arrangement aggregated
approximately $25,000 for 1996.

The Company paid approximately $75,000 in 1996 to one of the Related
Parties for services which includes finding drilling contracts for the Company
and certain other administrative services. Certain expenses incurred by the
Related Parties and attributable to the Company's operations are not billed to
the Company.

Accounts receivable at December 31, 1996 included $8,446 of receivables
from affiliated entities. Accounts payable at December 31, 1996 included
$241,233 owed to affiliated entities.

(E) EMPLOYMENT AGREEMENTS

The Company has issued stock appreciation rights to certain employees which
may entitle them to receive bonuses. These bonuses are based on net income and
the ratio of stock appreciation rights owned by the employees to total
outstanding shares of common stock at year end. Ninety-nine stock appreciation
rights were outstanding at December 31, 1996. A bonus payment of approximately
$37,500 was payable to employees at December 31, 1996.

(F) SAVINGS PLAN

The Company participates in a salary deferral retirement plan which is
available to substantially all employees. Participants in the plan may make
contributions to the plan, with the Company matching up to 25% of the employee's
basic contribution. The basic contribution cannot exceed 5% of the employee's
base salary. Total contributions by the Company were approximately $10,000 in
1996.

F-35
<PAGE> 115

WARD DRILLING COMPANY, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION RELATING TO THE FIVE MONTHS ENDED MAY 31, 1997 IS UNAUDITED

(G) CONTINGENCIES

The Company maintains a self insurance plan for workers' compensation and
is liable for claims up to $400,000 per-occurrence. The Company is involved in
legal actions arising out of workers' compensation claims. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the Company's financial position. Total expense for workers'
compensation was approximately $335,000 in 1996, and accrued liabilities
included a reserve for unpaid and incurred but not reported claims of $310,000
at December 31, 1996.

F-36
<PAGE> 116

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Bonray Drilling Corporation

We have audited the accompanying balance sheets of Bonray Drilling
Corporation as of December 31, 1996 and June 30, 1996, and the related
statements of operations and accumulated deficit and cash flows for the
six-month period ended December 31, 1996 and the years ended June 30, 1996 and
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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bonray Drilling Corporation
at December 31, 1996 and June 30, 1996, and the results of its operations and
its cash flows for the six-month period ended December 31, 1996 and the years
ended June 30, 1996 and 1995, in conformity with generally accepted accounting
principles.

Ernst & Young LLP

Oklahoma City, Oklahoma

April 17, 1997

F-37
<PAGE> 117

THE ACQUISITION OF BONRAY DRILLING CORPORATION WAS ACCOUNTED FOR USING THE
PURCHASE METHOD OF ACCOUNTING. ACCORDINGLY, THE PURCHASE PRICE WAS "PUSHED-DOWN"
AND RECORDED IN THE ACCOMPANYING FINANCIAL STATEMENTS WHICH AFFECTS THE
COMPARABILITY OF THE JUNE 30, 1997 FINANCIAL POSITION, RESULTS OF OPERATIONS AND
CASH FLOWS.

BONRAY DRILLING CORPORATION

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, JUNE 30,
1996 1996 1997
<S> <C> <C> <C>
(UNAUDITED)

<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............................... $ 187 $ 58 $ 167
Accounts receivable (Note 5)............................ 2,172 2,100 4,190
Drilling contracts in progress.......................... 20 -- 62
Prepaid expenses........................................ 89 166 172
------- ------- -------
Total current assets............................ 2,468 2,324 4,591
Properties and equipment:
Drilling equipment (Notes 1 and 3)...................... 20,411 20,927 18,463
Land.................................................... 110 110 110
Buildings............................................... 356 356 73
Other equipment......................................... 1,145 1,006 475
------- ------- -------
22,022 22,399 19,121
Less accumulated depreciation (Note 1).................. 14,179 14,210 878
------- ------- -------
Net properties and equipment.............................. 7,843 8,189 18,243
------- ------- -------
Total assets.................................... $10,311 $10,513 $22,834
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................ $ 689 $ 871 $ 1,435
Notes payable (Note 3):
Short-term line of credit............................ 555 -- 322
Other................................................ 189 343 172
Accrued liabilities:
Salaries and wages................................... 246 268 317
Payroll and other taxes.............................. 57 17 95
Workers' compensation insurance (Note 4)............. 446 768 1,245
Income taxes payable................................. -- 4 19
Other................................................ 120 120 128
------- ------- -------
Total current liabilities....................... 2,302 2,391 3,733
Obligations due after one year:
Workers' compensation insurance (Note 4)................ 75 75 74
Other................................................... 28 14 --
Deferred income taxes................................... -- -- 1,781
Stockholders' equity:
Common stock, $1.00 par value; 800,000 shares
authorized; 432,740 shares issued at December 31,
1996 and June 30, 1996; 423,540 shares issued at June
30, 1997............................................. 433 433 424
Capital in excess of par value.......................... 12,497 12,497 16,379
Retained earnings (accumulated deficit) (Note 1)........ (4,932) (4,805) 443
------- ------- -------
7,998 8,125 17,246
Less 9,200 shares of treasury stock, at cost............ 92 92 --
------- ------- -------
Total stockholders' equity...................... 7,906 8,033 17,246
------- ------- -------
Total liabilities and stockholders' equity...... $10,311 $10,513 $22,834
======= ======= =======
</TABLE>

See accompanying notes.

F-38
<PAGE> 118

BONRAY DRILLING CORPORATION

STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
YEAR ENDED SIX-MONTH SIX-MONTH
------------------- PERIOD ENDED PERIOD ENDED
JUNE 30, JUNE 30, DECEMBER 31, JUNE 30,
1995 1996 1996 1997
(DOLLARS IN THOUSANDS, (UNAUDITED)
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues:
Contract drilling operations (Note 5).......... $ 8,486 $ 10,257 $ 6,004 $ 8,855
Gain (loss) on sales of assets................. 1,029 (66) 27 --
Interest and other income...................... 172 89 27 36
-------- -------- -------- --------
Total revenues......................... 9,687 10,280 6,058 8,891
Costs and expenses (Note 4):
Contract drilling operations................... 6,865 8,189 4,836 6,409
General and administrative..................... 752 864 473 611
Interest and other expense..................... 39 85 43 98
Depreciation................................... 1,130 1,284 569 1,047
-------- -------- -------- --------
8,786 10,422 5,921 8,165
-------- -------- -------- --------
Income (loss) before provision for income
taxes.......................................... 901 (142) 137 726
Provision for income taxes (Note 2).............. 35 -- 10 336
-------- -------- -------- --------
Net income (loss)................................ 866 (142) 127 390
Accumulated deficit at beginning of period....... (5,656) (4,790) (4,932) (4,805)
Elimination of accumulated deficit from purchase
adjustment (Note 1)............................ -- -- -- 4,858
-------- -------- -------- --------
Retained earnings (accumulated deficit) at end of
period......................................... $ (4,790) $ (4,932) $ (4,805) $ 443
======== ======== ======== ========
Net income (loss) per share...................... $ 2.05 $ (0.34) $ 0.30 $ 0.92
======== ======== ======== ========
Weighted average shares outstanding.............. 423,540 423,540 423,540 423,540
======== ======== ======== ========
</TABLE>

See accompanying notes.

F-39
<PAGE> 119

BONRAY DRILLING CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED SIX-MONTH SIX-MONTH
-------------------- PERIOD ENDED PERIOD ENDED
JUNE 30, JUNE 30, DECEMBER 31, JUNE 30,
1995 1996 1996 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers.......................... $ 10,910 $10,628 $ 6,457 $ 7,523
Cash paid to suppliers and employees.................. (10,178) (9,662) (5,325) (6,753)
Interest received..................................... 36 5 -- 8
Interest paid......................................... (27) (66) (27) (20)
Income taxes paid..................................... (30) (5) (6) --
Other cash receipts................................... 152 85 61 11
-------- ------- ------- -------
Net cash provided by operating activities............. 863 985 1,160 769
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of assets......................... 1,659 27 43 --
Capital expenditures.................................. (2,120) (987) (931) (4,772)
-------- ------- ------- -------
Net cash used by investing activities................. (461) (960) (888) (4,772)
CASH FLOWS FROM FINANCING ACTIVITIES
Contributed capital................................... -- -- -- 3,961
Borrowings on notes payable........................... -- -- 395 --
Payments on notes payable............................. (86) (553) (241) (171)
Net increase (decrease) in borrowings on short-term
line
of credit........................................... (165) 555 (555) 322
-------- ------- ------- -------
Net cash provided (used) by financing activities...... (251) 2 (401) 4,112
-------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents......................................... 151 27 (129) 109
Cash and cash equivalents at beginning of period...... 9 160 187 58
-------- ------- ------- -------
Cash and cash equivalents at end of period............ $ 160 $ 187 $ 58 $ 167
======== ======= ======= =======
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income (loss)..................................... $ 866 $ (142) $ 127 $ 390
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation........................................ 1,130 1,284 569 1,047
(Gain) loss on sales of assets...................... (1,029) 66 (27) --
Deferred income taxes............................... -- -- -- 314
Change in assets and liabilities:
Decrease (increase) in current assets:
Accounts receivable............................. (434) (33) 72 (2,090)
Drilling contracts in progress.................. 13 1 20 (62)
Prepaid expenses................................ 9 5 (77) (6)
Increase (decrease) in current liabilities:
Accounts payable.................................. 68 (276) 182 564
Accrued liabilities............................... (48) 479 308 627
Accrued workers' compensation insurance and other
due after one year.............................. 288 (399) (14) (15)
-------- ------- ------- -------
Total adjustments............................ (3) 1,127 1,033 379
-------- ------- ------- -------
Net cash provided by operating activities.... $ 863 $ 985 $ 1,160 $ 769
======== ======= ======= =======
</TABLE>

DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITY

During the year ended June 30, 1995, the Company acquired property, plant
and equipment by issuing a note payable of $828,050.

See accompanying notes.

F-40
<PAGE> 120

BONRAY DRILLING CORPORATION

NOTES TO FINANCIAL STATEMENTS
SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND DECEMBER 31, 1996
AND YEARS ENDED JUNE 30, 1996 AND 1995

INFORMATION RELATING TO THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 IS UNAUDITED

1. BASIS OF FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Bonray Drilling Corporation (the "Company") is engaged in domestic onshore
contract drilling of oil and gas wells. The Company currently owns and has
available for operation fifteen drilling rigs located in Oklahoma, having depth
capabilities ranging from 7,000 to 25,000 feet.

On February 10, 1997, substantially all of the Company's shares of
outstanding common stock were purchased by DLB Oil & Gas, Inc. ("DLB") for $30
per share or approximately $12,700,000. As a result of the completed
transaction, the Company became a subsidiary of DLB. Effective on the date of
the acquisition, the Company changed its fiscal year end from June 30 to
December 31 to correspond with the year end of DLB.

The transaction was accounted for as a purchase using push down accounting
treatment. This resulted in a step up in the basis of the acquired assets and
the elimination of the previously recorded balance of accumulated depreciation
and amortization. Additionally, the accumulated deficit was eliminated as a
result of a new basis established for the acquired assets and liabilities.

Cash and Cash Equivalents

Cash and cash equivalents include cash deposits in banks and short-term
investments with original maturities of three months or less from the date of
purchase by the Company.

Contract Drilling Operations

Revenue earned from footage and turnkey contracts is recognized by the
completed contract method, while revenue earned from daywork contracts is
recognized by the percentage-of-completion method. Provision is made for the
entire amount of expected losses on contracts, if any, in the period in which
such losses are first determined.

Valuation of Properties and Equipment

Drilling equipment is stated at amounts representing historical cost
adjusted by prior year write-downs based on the expected future economic value
of such equipment. This value was determined by projecting the estimated future
undiscounted cash flows generated by drilling equipment based on the Company's
historical utilization rates and profit margins as well as consideration of the
economic conditions of the industry. The Company continues to review these
assets for possible impairment based on expected future cash flows and other
available information and has determined that no impairment in the value of the
assets exists at December 31, 1996 or June 30, 1997, 1996 or 1995. However, due
to the uncertainty of such factors it is reasonably possible that the estimated
future cash flows may change. Additions to drilling equipment, land, buildings
and other equipment are reported at cost.

F-41
<PAGE> 121

BONRAY DRILLING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION RELATING TO THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 IS UNAUDITED

Depreciation

Depreciation of drilling equipment is computed on an operating day basis
(net of estimated salvage value), except for drilling rigs and related equipment
which are "mothballed" or otherwise not expected to be used for an extended
period of time. During the year ended June 30, 1996, there was a decrease in the
estimated salvage value of these inactive drilling rigs and equipment. As a
result, depreciation on this equipment was increased during the year ended June
30, 1996 to reduce the net book value of these assets to their estimated salvage
value. Depreciation recorded on these inactive rigs and equipment was $269,000
and $36,000 for the years ended June 30, 1996 and 1995, respectively (none for
the six-month period ended December 31, 1996). The net book value of such
drilling equipment is $457,000, which approximates the estimated salvage value
of the equipment at December 31, 1996.

Depreciation of buildings and other equipment is computed by the
straight-line method over the estimated useful lives of the assets.

Income (Loss) Per Share

Income (loss) per share is computed on the basis of weighted average number
of shares of common stock and dilutive common stock equivalents outstanding.

Credit Risk

The Company operates its rigs in the state of Oklahoma and grants credit,
which is generally unsecured, to its customers (Note 5). At December 31, 1996,
approximately 90% of the Company's accounts receivable were from five customers.
The Company has not experienced any significant credit losses in the six-month
periods ended December 31, 1996 and June 30, 1997, or the years ended June 30,
1996 or 1995 and is not aware of any significant uncollectible accounts at
December 31, 1996.

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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in
estimating their fair values of financial instruments: Cash and cash equivalents
are estimated to have a fair value approximating the carrying amount due to the
short maturity of those instruments. Notes payable have variable interest rates
with carrying values approximating fair values.

Interim Financial Statements and Disclosures

In the opinion of management, the unaudited interim financial statements as
of and for the six-month period ended June 30, 1997 and unaudited interim
financial statement disclosures subsequent to December 31, 1996 include all
adjustments, consisting of normal recurring accruals, necessary to present
fairly the Company's financial position as of June 30, 1997 and results of
operations and cash flows for the six-month period ended June 30, 1997. Results
for the period ended June 30, 1997 are not necessarily indicative of the results
to be expected for the entire year.

F-42
<PAGE> 122

BONRAY DRILLING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION RELATING TO THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 IS UNAUDITED

2. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of December 31, 1996 and
June 30, 1996 are as follows (dollars in thousands):

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1996
<S> <C> <C>
Deferred tax liability --
Tax depreciation over book depreciation and
write-downs....................................... $ 658 $ 629
====== ======
Deferred tax assets:
Net revenues and expenses recognized for tax purposes
which are deferred for financial purposes......... $ 25 $ 25
Net operating loss carryforwards..................... 2,073 1,999
------ ------
Total deferred tax assets before valuation allowance... 2,098 2,024
Less valuation allowance recognized.................. 1,440 1,395
------ ------
Net deferred tax assets................................ $ 658 $ 629
====== ======
</TABLE>

The deferred tax assets and liability are offset and, therefore, no
deferred tax asset or liability is reflected in the Company's balance sheets at
December 31, 1996 and June 30, 1996.

The difference between the amount of the provision for income taxes and the
amount which would result from the application of the statutory rate to income
(loss) before provision for income taxes is analyzed as follows (dollars in
thousands):

<TABLE>
<CAPTION>
YEAR ENDED SIX-MONTH
JUNE 30, PERIOD ENDED
------------ DECEMBER 31,
1995 1996 1996
<S> <C> <C> <C>
Provision (credit) for income taxes at a statutory
rate................................................... $ 306 $(48) $ 47
Difference resulting from:
Increase (decrease) in valuation allowance for net
deferred tax assets................................. (330) 24 (45)
Alternative minimum tax................................ 35 -- --
Other.................................................. 24 24 8
----- ---- ----
Provision for income taxes............................... $ 35 $ -- $ 10
===== ==== ====
</TABLE>

At December 31, 1996, the Company has net operating loss carryforwards for
federal tax purposes of approximately $4,600,000 which will expire beginning in
the year 2001 if not used. At December 31, 1996, the net operating loss
carryforwards for state tax purposes amounted to approximately $12,100,000.

3. NOTES PAYABLE

During the six-month period ended December 31, 1996, the Company acquired
drilling equipment with the proceeds from two notes with a bank in the amounts
of $245,000 and $150,000, respectively. The notes are payable in monthly
installments of principal and interest in the amounts of $21,415 and $13,102,
respectively, until paid in full with interest at a rate of 1/2% above the
national prime lending rate (aggregate rate of 8.75% at

F-43
<PAGE> 123

BONRAY DRILLING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION RELATING TO THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 IS UNAUDITED

December 31, 1996) and are secured by the equipment purchased as well as other
specific drilling equipment owned by the Company. The balances of the two notes
at December 31, 1996 are $205,000 and $138,000, respectively, all of which is
due within one year. Subsequent to June 30, 1997, all outstanding note balances
were retired by DLB.

The Company has a revolving line of credit agreement (the "credit
agreement") with a bank. Credit availability is subject to a monthly borrowing
base determination calculated as 75% of the Company's accounts receivable less
than 90 days old, not to exceed $750,000. At December 31, 1996, no borrowings
were outstanding under the revolving line of credit ($555,000 outstanding at
June 30, 1996). The credit agreement, which expires November 3, 1997 unless
renewed, provides for monthly interest payments, which accrue at a rate of 1/2
of 1% over the lender's national prime rate (aggregate rate of 8.75% at December
31, 1996). Outstanding advances and accrued interest are due in full upon
expiration of the credit agreement. The credit agreement is secured by the
Company's accounts receivable.

During the year ended June 30, 1995, the Company acquired drilling and
other equipment by issuing a note payable to the seller of the equipment. The
$189,000 balance on the note at June 30, 1996 was paid by the Company during the
six-month period ended December 31, 1996.

4. WORKERS' COMPENSATION

The Company is covered by a workers' compensation insurance plan for its
employees under which the Company is responsible for claims up to $100,000 per
incident.

At December 31, 1996 and June 30, 1996, the Company has an estimated net
liability for accrued workers' compensation costs totaling $843,000 and $521,000
respectively. Under the plan, the Company is to reimburse the administrator for
costs as the administrator pays those costs, normally over a five-year period.
Accordingly, at both December 31, 1996 and June 30, 1996, $75,000 is classified
as due after one year, in the accompanying balance sheets.

Total workers' compensation costs incurred by the Company were $538,000 for
the six-month period ended December 31, 1996 and $597,000 and $979,000 for the
years ended June 30, 1996 and 1995, respectively, and were based on actual and
estimated claims incurred. For the six-month period ended December 31, 1996 and
the year ended June 30, 1996, workers' compensation expense was reduced by
$38,000 and $48,000 ($0.09 and $0.11 per share, respectively) for changes in
estimates of claims relating to prior fiscal years. Workers' compensation
expense for the year ended June 30, 1995 was increased by $40,000 ($0.09 per
share), for changes in the estimated costs of claims that occurred in prior
fiscal years.

The Company accrues losses for workers' compensation based on management's
estimate of the expected cost of claims incurred. The estimates are based upon
known information, historical experiences and consideration of risk reduction
techniques, when applicable, such as stop loss insurance on individual claims.
Due to uncertainties inherent in the estimation process, it is reasonably
possible that these estimates will be revised in the near-term; however,
management does not expect that such changes will be material to the financial
position or results of operations of the Company.

F-44
<PAGE> 124

BONRAY DRILLING CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION RELATING TO THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 IS UNAUDITED

5. MAJOR CUSTOMERS

Contract drilling operations revenues include revenues from certain
customers, which individually account for 10% or more of contract drilling
operations revenues as follows (dollars in thousands):

<TABLE>
<CAPTION>
YEAR ENDED SIX-MONTH
------------------------------ PERIOD ENDED
CUSTOMER JUNE 30, 1995 JUNE 30, 1996 DECEMBER 31, 1996
<S> <C> <C> <C>
A....................................... $ 879 $3,333 $1,301
B....................................... 2,561 1,881 1,166
C....................................... -- -- 728
D....................................... 2,082 1,042 721
E....................................... -- -- 695
------ ------ -------
$5,522 $6,256 $4,611
====== ====== =======
</TABLE>

6. SUBSEQUENT EVENTS

In July 1997, the Company entered into a $23 million credit agreement in
connection with which substantially all of the Company's assets were pledged as
collateral. Additionally, the company's parent, DLB, pledged as collateral all
of the outstanding common stock of the Company. Upon consummation of the
acquisition of the Company by Bayard, the shares of common stock of the Company
will be released by the lender and the shares of common stock of Bayard acquired
by DLB in the acquisition will be pledged in lieu thereof.

7. CONTINGENCIES

During the normal course of business, the Company enters into agreements
and executes transactions that may result in a contingent liability to the
Company. At June 30, 1997, management does not believe such contingencies would
be material to the financial statements.

F-45
<PAGE> 125

[INTENTIONALLY LEFT BLANK]
<PAGE> 126

[INTENTIONALLY LEFT BLANK]
<PAGE> 127

[INTENTIONALLY LEFT BLANK]
<PAGE> 128

[PICTURE OF RIG]
<PAGE> 129

======================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 11
Use of Proceeds....................... 18
Dividend Policy....................... 18
Dilution.............................. 19
Capitalization........................ 20
Pro Forma Consolidated Financial
Data................................ 21
Selected Consolidated Financial and
Operating Data...................... 28
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 30
Business.............................. 38
Management............................ 50
Principal and Selling Stockholders.... 60
Certain Relationships and Related
Transactions........................ 64
Description of Capital Stock.......... 71
Shares Eligible for Future Sale....... 74
Underwriting.......................... 75
Legal Matters......................... 76
Independent Public Accountants........ 76
Available Information................. 77
Index to Financial Statements......... F-1
</TABLE>

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

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

======================================================

9,200,000 SHARES

BAYARD LOGO

COMMON STOCK
-------------------------

PROSPECTUS
-------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

LEHMAN BROTHERS

PRUDENTIAL SECURITIES INCORPORATED

RAUSCHER PIERCE REFSNES, INC.

RAYMOND JAMES &
ASSOCIATES, INC.
, 1997
======================================================
<PAGE> 130

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

All capitalized terms used and not defined in Part II of this Registration
Statement shall have the meanings assigned to them in the Prospectus which forms
a part of this Registration Statement.

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is a statement of estimated expenses incurred by the Company
in connection with the issuance and distribution of the securities being
registered pursuant to this Registration Statement, other than underwriting
discounts and commissions.

<TABLE>
<CAPTION>
AMOUNT
<S> <C>

Securities Act registration fee............................. $ 70,534
----------
NASD filing fee............................................. 16,968
Blue sky qualification fees and expenses.................... 5,000
Printing and engraving fees and expenses.................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Transfer agent and registrar fees and expenses.............. *
American Stock Exchange listing fee......................... 50,000
Miscellaneous............................................... *
----------
Total..................................................... $1,000,000
==========
</TABLE>

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

* To be completed by amendment.

All of the foregoing estimated costs, expenses and fees will be borne by
the Company.

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Delaware General Corporation Law

Section 145(a) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

Section 145(b) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought

II-1
<PAGE> 131

shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.

Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.

Section 145(d) of the DGCL provides that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsections (a) and (b) of Section 145. Such determination shall be
made (1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.

Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in Section 145. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.

Section 145(f) of the DGCL provides that the indemnification and
advancement of expenses provided by, or granted pursuant to, Section 145 shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.

Section 145(g) of the DGCL provides that a corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his capacity as such, whether or not the corporation
would have the power to indemnify him against such liability under Section 145.

Restated Certificate of Incorporation

Article Thirteenth of the Restated Certificate of Incorporation of the
Company (the "Certificate"), a copy of which is filed as Exhibit 3.1 to the
Registration Statement, provides as follows:

A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (1) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (2) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, (3) under Section 174 of the Delaware General Corporation Law,
as the same exists or as such provision may hereafter be amended, supplemented
or replaced, or (4) for any transaction from which the director derived an
improper personal benefit. Any repeal or amendment of this Article Thirteenth by
the stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation arising from an act or omission occurring prior to the time of such
repeal or amendment. In addition to the circumstances in which a director of the
Corporation is not personally liable as set forth in the foregoing provisions of
this Article Thirteenth, a director shall not be liable to the Corporation or
its stockholders to such further extent as permitted by any law hereafter
enacted, including without limitation any subsequent amendment to the

II-2
<PAGE> 132

Delaware General Corporation Law. Notwithstanding any other provisions of this
Certificate of Incorporation or any provision of law that might otherwise permit
a lesser or no vote, but in addition to any affirmative vote of the holders of
any particular class or series of the capital stock of the Corporation required
by law or by this Restated Certificate, the affirmative vote of the holders of
not less than 66 2/3% in voting power of the shares of the Corporation then
entitled to be voted in an election of directors, voting together as a single
class, shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article Thirteenth.

Article Twelfth of the Certificate provides as follows:

The Corporation shall indemnify any person who was, is, or is threatened to
be made a party to a proceeding (as hereinafter defined) by reason of the fact
that he or she (1) is or was a director or officer of the Corporation or (2)
while a director or officer of the Corporation, is or was serving at the request
of the Corporation as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another foreign or domestic
corporation, limited liability company, association, partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other enterprise, entity or
organization to the fullest extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. Such right
shall be a contract right and as such shall run to the benefit of any director
or officer who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this Article Twelfth is in effect. Any repeal or amendment of
this Article Twelfth shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or officer
in any of the foregoing capacities prior to any such repeal or amendment to this
Article Twelfth. Such right shall include the right to be paid by the
Corporation expenses (including attorneys' fees) incurred in defending any such
proceeding in advance of its final disposition to the maximum extent permitted
under the Delaware General Corporation Law, as the same exists or may hereafter
be amended. If a claim for indemnification or advancement of expenses hereunder
is not paid in full by the Corporation within 60 days after a written claim has
been received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim, and, if
successful in whole or in part, the claimant shall also be entitled to be paid
the expenses of prosecuting such claim. It shall be a defense to any such action
that such indemnification is not permitted under the Delaware General
Corporation Law, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors or any committee thereof or independent legal counsel, or
stockholders) to have made its determination prior to the commencement of such
action that indemnification of the claimant is permissible in the circumstances
nor an actual determination by the Corporation (including its board of directors
or any committee thereof, independent legal counsel or stockholders) that such
indemnification is not permissible shall be a defense to the action or create a
presumption that such indemnification is not permissible. In the event of the
death of any person having a right of indemnification under the foregoing
provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, bylaw, resolution of stockholders or
directors, agreement or otherwise.

The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.

As used herein, the term "proceeding" means any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit or proceeding,
and any inquiry or investigation that could lead to such an action, suit or
proceeding.

Bylaws

Article Eight of the Amended and Restated Bylaws of the Company (the
"Bylaws"), a copy of which is filed as Exhibit 3.2 to the Registration Statement
provides as follows:

Each person who at any time shall serve or shall have served as a director,
officer, employee or agent of the Corporation (including any predecessor of the
Corporation), or any person who is or was serving at the written request of the
Corporation (in accordance with written procedures adopted from time to time by
the

II-3
<PAGE> 133

Board of Directors) as a director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise, shall be entitled to (a) indemnification and
(b) the advancement of expenses incurred by such person from the Corporation as,
and to the fullest extent, permitted by Section 145 of the Delaware General
Corporation Law or any successor statutory provision, as from time to time
amended. The foregoing right of indemnification and to the advancement of
expenses shall not be deemed exclusive of any other rights to which those to be
indemnified may be entitled as a matter of law or under any agreement, vote of
stockholders or disinterested directors of the Corporation, or other
arrangement.

The Corporation may purchase and maintain insurance or another arrangement
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation or who is or was serving at the written request of the
Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against and
incurred by such person in such capacity or arising out of such person's status
in such capacity, whether or not the Corporation would have the power to
indemnify such person against that liability under this Article Eight or the
Delaware General Corporation Law.

Indemnification Agreements

The Company has entered into Indemnification Agreements (the
"Indemnification Agreements") with its directors and certain of its officers
(the "Indemnitees"), a form of which is filed as Exhibit 10.26 to the
Registration Statement. Under the terms of the Indemnification Agreements, the
Company has generally agreed to indemnify, and advance expenses to, each
Indemnitee to the fullest extent permitted by applicable law on the date of such
agreements and to such greater extent as applicable law may thereafter permit.
In addition, the Indemnification Agreements contain specific provisions pursuant
to which the Company has agreed to indemnify each Indemnitee (i) if such person
is, by reason of his or her status as a director, nominee for director, officer,
agent or fiduciary of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise with which such
person was serving at the request of the Company (any such status being
hereinafter referred to as a "Corporate Status"), made or threatened to be made
a party to any threatened, pending or completed action, suit, arbitration,
alternative dispute resolution mechanism, investigation or other proceeding
(each, a "Proceeding"), other than a Proceeding by or in the right of the
Company, (ii) if such person is, by reason of his or her Corporate Status, made
or threatened to be made a party to any Proceeding brought by or in the right of
the Company to procure a judgment in its favor, except that no indemnification
shall be made in respect of any claim, issue or matter in such Proceeding as to
which such Indemnitee shall have been adjudged to be liable to the Company if
applicable law prohibits such indemnification (unless and only to the extent
that a court shall otherwise determine), (iii) against expenses actually and
reasonably incurred by such person or on his or her behalf in connection with
any Proceeding to which such Indemnitee was or is a party by reason of his or
her Corporate Status and in which such Indemnitee is successful, on the merits
or otherwise, (iv) against expenses actually and reasonably incurred by such
person or on his or her behalf in connection with a Proceeding to the extent
that such Indemnitee is, by reason of his or her Corporate Status, a witness or
otherwise participates in any Proceeding at a time when such person is not a
party in the Proceeding, and (v) against expenses actually and reasonably
incurred by such person in any judicial adjudication of or any award in
arbitration to enforce his or her rights under the Indemnification Agreements.

Furthermore, under the terms of the Indemnification Agreements, the Company
has agreed to pay all reasonable expenses incurred by or on behalf of an
Indemnitee in connection with any Proceeding, whether brought by or in the right
of the Company or otherwise, in advance of any determination with respect to
entitlement to indemnification and within 15 days after the receipt by the
Company of a written request from such Indemnitee for such payment. In the
Indemnification Agreements, each Indemnitee has agreed that he or she will
reimburse and repay the Company for any expenses so advanced to the extent that
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Company against such expenses.

II-4
<PAGE> 134

The Indemnification Agreements also include provisions that specify the
procedures and presumptions which are to be employed to determine whether an
Indemnitee is entitled to indemnification thereunder. In some cases, the nature
of the procedures specified in the Indemnification Agreements varies depending
on whether there has occurred a "Change of Control" (as defined in the
Indemnification Agreements) of the Company.

Stockholders and Voting Agreement

The Stockholders and Voting Agreement, a copy of which is filed as Exhibit
9.1 to the Registration Statement, provides that the Certificate, Bylaws and
other organizational documents of the Company and each of its subsidiaries shall
at all times, to the fullest extent permitted by law, provide for
indemnification of, advancement of expenses to, and limitation of the personal
liability of, the members of the Board of Directors of the Company and the
members of the boards or similar managing bodies of subsidiaries of the Company.
Additionally, such agreement provides that any Energy Spectrum Non-Voting
Observer (as defined in the Stockholders and Voting Agreement) shall be entitled
to indemnification from the Company to the maximum extent permitted by law, as
though such person were a director of the Company or any of its subsidiaries.
Any amendment, repeal or modification of this provision may not be adverse to
any member of the Board of Directors of the Company, any Energy Spectrum
Non-Voting Observer or any member of the boards of directors or other similar
managing bodies of any subsidiary of the Company, without the consent of a
majority of the members of the Board of Directors.

Underwriting Agreement

The Underwriting Agreement, the form of which is filed as Exhibit 1.1 to
the Registration Statement, provides for the indemnification of the directors
and officers of the Company against certain liabilities, including liabilities
arising under the Securities Act.

The above discussion of the Certificate, Bylaws, Stockholders and Voting
Agreement, Underwriting Agreement and Section 145 of the DGCL is not intended to
be exhaustive and is respectively qualified in its entirety by the Certificate,
Bylaws, Stockholders and Voting Agreement, Underwriting Agreement and such
statute.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following information relates to securities of the Company issued or
sold within the past three years which were not registered under the Securities
Act:

On December 10, 1996, the Company issued 2,000,000, 1,600,000 and 2,000,000
shares (collectively, the "Initial Shares") of Common Stock to APLP, the Oliver
Companies and Energy Spectrum, respectively, and an option (the "Chesapeake
Option") to purchase 2,000,000 shares of Common Stock at a price of $6 per share
to Chesapeake. In consideration for the Initial Shares (i) APLP contributed ten
drilling rigs (and the Company paid APLP approximately $9.3 million in cash),
(ii) the Oliver Companies contributed six drilling rigs and (iii) Energy
Spectrum contributed $10 million. In consideration for the Chesapeake Option,
Chesapeake entered into drilling contracts with two-year terms for six of the
Company's rigs. Such issuances were exempt from the registration requirements of
the Securities Act by virtue of Section 4(2) thereof as transactions not
involving a public offering.

On December 10, 1996, the Company issued to The CIT Group/Equipment
Financing, Inc., a New York corporation ("CIT"), a warrant to purchase, at an
exercise price of $8 per share, up to 300,000 shares of Common Stock. The
warrant was issued for and in consideration of $500 in connection with the
entering into a loan agreement between the Company, as borrower, and CIT, as
lender, for a loan from CIT to the Company of up to $24 million. The issuance of
the warrant was exempt from the registration requirements of the Securities Act
under Section 4(2) thereof as not involving a public offering. CIT will exercise
in part the warrant for 150,000 shares of Common Stock in connection with the
Offering.

II-5
<PAGE> 135

On February 28, 1997, the Company issued to James E. Brown, a director and
the President and Chief Executive Officer of the Company, 100,000 shares of
Common Stock (the "Restricted Shares") at a purchase price of $2.50 per share,
pursuant to a restricted stock award agreement. The issuance of the Restricted
Shares was exempt from the registration requirements of the Securities Act under
Section 4(2) thereof as a transaction not involving a public offering.

On May 1, 1997, the Company issued to Harold G. Hamm, as Trustee of the
Harold G. Hamm Revocable Inter Vivos Trust, dated April 23, 1984, 250,000 shares
of Common Stock in connection with the acquisition by the Company of all of the
issued and outstanding capital stock of Trend. The issuance of the shares of
Common Stock was exempt from the registration requirements of the Securities Act
under Section 4(2) thereof as a transaction not involving a public offering.

On May 1, 1997, the Company issued to Chesapeake the following: (i)
1,000,000 shares of Common Stock; (ii) a subordinated note in the original
principal amount of $18 million; (iii) a warrant to purchase up to 700,000
shares of Common Stock at an exercise price of $.01 per share; and (iv) a
warrant to purchase up to 800,000 shares of Common Stock at an exercise price of
$7.50 per share, all in consideration for an aggregate purchase price of $25
million. The Company also issued to Energy Spectrum the following: (i) 140,000
shares of Common Stock; (ii) a subordinated note in the original principal
amount of $2.52 million; (iii) a warrant to purchase up to 98,000 shares of
Common Stock at an exercise price of $.01 per share; and (iv) a warrant to
purchase up to 112,000 shares of Common Stock at an exercise price of $7.50 per
share, all in consideration for an aggregate purchase price of $3.5 million. The
issuances of the shares of Common Stock, subordinated notes and warrants were
exempt from the registration requirements of the Securities Act under Section
4(2) thereof as transactions not involving a public offering.

On May 1, 1997, the Company issued to each of RR&T, Inc., an Oklahoma
corporation, and Mike Mullen warrants to purchase up to 50,000 shares of Common
Stock each at an exercise price of $8 per share in connection with the
acquisition by the Company of a drilling rig for a purchase price of $1.8
million. The issuance of the warrants was exempt from the registration
requirements of the Securities Act under Section 4(2) thereof as transactions
not involving a public offering.

On May 30, 1997, the Company issued to Ward Drilling Company, Inc., an
Oklahoma corporation, (i) 400,000 shares of Common Stock and (ii) a warrant to
purchase up to 200,000 shares of Common Stock at an exercise price of $10 per
share, each in connection with the acquisition by the Company of all of the
issued and outstanding common units of WD Equipment, L.L.C., a Delaware limited
liability company. The issuances of the shares of Common Stock and the warrant
were exempt from the registration requirements of the Securities Act under
Section 4(2) thereof as a transaction not involving a public offering.

On July 31, 1997, upon the exercise by Energy Spectrum of its warrant to
purchase 98,000 shares of Common Stock at an exercise price of $.01 per share
and the payment by Energy Spectrum of an aggregate of $490 in consideration of
such exercise price, the Company issued to Energy Spectrum 98,000 shares of
Common Stock. The issuance of the shares of Common Stock was exempt from the
registration requirements of the Securities Act under Section 4(2) thereof as a
transaction not involving a public offering.

On October 3, 1997, pursuant to a letter agreement dated August 20, 1997,
the Company issued to Chesapeake 3,194,000 shares of Common Stock in
consideration for (i) the cancellation of each of the Chesapeake Option, a
warrant to purchase up to 700,000 shares of Common Stock at an exercise price of
$.01 per share and a warrant to purchase up to 800,000 shares of Common Stock at
an exercise price of $7.50 per share, (ii) the payment by Chesapeake of $9
million in cash and (iii) the redemption in full of $18 million principal amount
of Subordinated Notes issued by the Company to Chesapeake for a cash redemption
price of $15 million, subject to adjustment. The issuance of the shares of
Common Stock was exempt from the registration requirements of the Securities Act
under Section 4(2) thereof as not involving a public offering.

On October 10, 1997, upon the exercise by The CIT Group/Equipment
Financing, Inc. ("CIT") of its warrant to purchase 300,000 shares of Common
Stock at an exercise price of $8.00 per share, pursuant to the revised net
exercise provisions of such warrant, the Company issued to CIT 150,000 shares of
Common Stock

II-6
<PAGE> 136

in consideration for the surrender of the warrant to the Company and an
agreement that, following the Offering, CIT or the Company will make a cash
payment to the other, in an amount to be determined based upon the initial
public offering price (net of discounts and commissions) in the Offering, to
reconcile any variance between the 150,000 shares issued upon exercise and the
number of shares of Common Stock that would have been issuable pursuant to the
net exercise provisions of such warrant at a market value equal to the initial
public offering price (net of discounts and commissions) in the Offering. The
issuance of the shares of Common Stock was exempt from the registration
requirements of the Securities Act under Section 4(2) thereof as a transaction
not involving a public offering.

On October 6, 1997, the Company issued to DLB OIl & Gas, Inc. ("DLB") and
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") 2,955,000 and 60,000
shares of Common Stock, respectively, upon the closing of the merger
contemplated by the Agreement and Plan of Merger, dated as of October 9, 1997,
by and among DLB, the Company, Bonray Acquisition Corp. and Bonray Drilling
Corporation, pursuant to which the Company acquired all of the business of
Bonray Drilling Corporation. The issuance of the shares of Common Stock was
exempt from the registration requirements of the Securities Act under Section
4(2) thereof as a transaction not involving a public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS

II-7
<PAGE> 137

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
10.8 -- Option Agreement, dated as of December 10, 1996, by and
between the Company and Chesapeake Energy Corporation.
10.9 -- Chesapeake Energy Corporation Option to Purchase Common
Stock of the Company, dated December 10, 1996.
10.10 -- Securities Purchase Agreement, dated as of April 30,
1997, by and among the Company, Energy Spectrum Partners
LP and Chesapeake Energy Corporation (the "April
Securities Purchase Agreement").
10.11 -- Form of Subordinated Note of the Company issued pursuant
to the April Securities Purchase Agreement.
10.12 -- Form of Series A Warrant to Purchase Common Stock of the
Company issued pursuant to the April Securities Purchase
Agreement.
10.13 -- Form of Series B Warrant to Purchase Common Stock of the
Company issued pursuant to the April Securities Purchase
Agreement.
10.14 -- Ward Drilling Company, Inc. Warrant to Purchase Common
Stock of the Company, dated May 30, 1997.
10.15 -- Preferential Right to Transport Agreement, dated as of
May 30, 1997, by and between the Company and Geronimo
Trucking Company.
10.16 -- RR&T, Inc. Warrant to Purchase Common Stock of the
Company, dated May 1, 1997.
10.17 -- Mike Mullen Warrant to Purchase Common Stock of the
Company, dated May 1, 1997.
10.18 -- The CIT Group/Equipment Financing, Inc. Warrant to
Purchase Common Stock of the Company, dated December 10,
1996.
10.19 -- Loan and Security Agreement, dated as of May 1, 1997 by
and among Fleet Capital Corporation, the Company and
Trend Drilling Co.
10.20 -- Amended and Restated Loan Agreement, dated as of May 1,
1997, by and among The CIT Group/Equipment Financing,
Inc. and Fleet Capital Corporation, as Lenders, and the
Company and Trend Drilling Co., as Borrowers.
10.21 -- Employment Agreement, dated as of December 10, 1996, by
and between the Company and James E. Brown.
10.22 -- Restricted Stock Award Agreement, dated as of December
10, 1996, by and between the Company and James E.
Brown.**
10.23 -- Employment Agreement, dated as of January 1, 1997, by and
between the Company and Ed Jacob.*
10.24 -- Employment Agreement, dated as of July 16, 1997, by and
between the Company and David E. Grose.
10.25 -- Letter Agreement, dated as of August 20, 1997, by and
between the Company and Chesapeake Energy Corporation.
10.26 -- Form of Indemnification Agreement to be entered into by
the Company and each of the directors and certain
officers of the Company in connection with the Offering.
10.27 -- Agreement and Plan of Merger, dated as of October 9,
1997, by and among DLB Oil & Gas, Inc., the Company,
Bonray Acquisition Corp. and Bonray Drilling
Corporation.*
10.28 -- 1997 Non-Employee Directors' Stock Option Plan of the
Company.*
10.29 -- Form of Nonqualified Option Agreement under the 1997
Non-Employee Directors' Option Plan of the Company.*
10.30 -- Registration Rights Agreement, dated as of October 16,
1997, by and among the Company, DLB Oil & Gas, Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation.*
10.31 -- Letter Agreement, dated as of October 3, 1997, by and
between the Company and The CIT Group/Equipment
Financing, Inc.*
10.32 -- Form of Second Amended and Restated Registration Rights
Agreement, dated as of October , 1997, by and among the
Company and the stockholders of the Company that are
signatories thereto.*
</TABLE>

II-8
<PAGE> 138

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
11.1 -- Statement regarding computation of per share earnings.
16.1 -- Letter re: Change in certifying Accountant.
21.1 -- Subsidiaries of the Company.*
23.1 -- Consent of Coopers & Lybrand L.L.P. regarding financial
statements of Ward Drilling Company.*
23.2 -- Consent of Coopers & Lybrand L.L.P. regarding financial
statements of Trend Drilling Company.*
23.3 -- Consent of Grant Thornton LLP.*
23.4 -- Consent of Ernst & Young LLP.*
23.5 -- Consent of Baker & Botts, L.L.P. (included in the opinion
filed as Exhibit 5.1 to this Registration Statement).**
23.6 -- Consent of Coopers & Lybrand L.L.P. regarding financial
statements of the Company as of June 30, 1997 and the six
months then ended.*
24.1 -- Powers of Attorney (included in the signature pages of
the Registration Statement as initially filed and this
Pre-Effective Amendment No. 2).
27.1 -- Financial Data Schedule.
</TABLE>

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

* Filed herewith

** To be filed by amendment

(b) FINANCIAL STATEMENT SCHEDULES

None.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
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 the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant 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, the Registrant 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.

The undersigned Registrant also undertakes that:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and this offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-9
<PAGE> 139

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on October 17, 1997.

BAYARD DRILLING TECHNOLOGIES, INC.

By: /s/ JAMES E. BROWN
------------------------------------
James E. Brown
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 and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>

/s/ JAMES E. BROWN Chairman of the Board, October 17, 1997
- --------------------------------------------------- President and Chief Executive
James E. Brown Officer
(Principal Executive Officer)

/s/ DAVID E. GROSE Vice President and Chief October 17, 1997
- --------------------------------------------------- Financial Officer
David E. Grose (Principal Financial and
Accounting Officer)

* Director October 17, 1997
- ---------------------------------------------------
Carl B. Anderson, III

* Director October 17, 1997
- ---------------------------------------------------
Sidney L. Tassin

* Director October 17, 1997
- ---------------------------------------------------
Lew O. Ward

/s/ MERRILL A. MILLER, JR. Director October 17, 1997
- ---------------------------------------------------
Merrill A. Miller, Jr.

*By: /s/ JAMES E. BROWN
---------------------------------------------
James E. Brown
Attorney-in-Fact
</TABLE>

II-10
<PAGE> 140

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Bayard
Drilling Technologies, Inc., a Delaware corporation, which is filing a
Registration Statement on Form S-1 with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), hereby constitutes and appoints James E. Brown and David E. Grose, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead,
and in any and all capacities, to sign and file (i) any and all amendments
(including post-effective amendments) to this Registration Statement, with all
exhibits thereto, and other documents in connection therewith, and (ii) a
registration statement, and any and all amendments thereto, relating to the
offering covered hereby filed pursuant to Rules 462(b) under the Securities Act,
with the Securities and Exchange Commission, it being understood that said
attorneys-in-fact and agents, and each of them, shall have full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person and that the undersigned hereby ratifies and
confirms all that said attorneys-in-fact as agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>

/s/ MERRILL A. MILLER, JR. Director October 17, 1997
- ---------------------------------------------------
Merrill A. Miller, Jr.
</TABLE>

II-11
<PAGE> 141

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
1.1 -- Form of Underwriting Agreement.**
3.1 -- Restated Certificate of Incorporation of the Company.
3.2 -- Amended and Restated Bylaws of the Company, as adopted
August 19, 1997.
4.1 -- Specimen Stock Certificate for the Common Stock, par
value $.01 per share, of the Company.*
5.1 -- Opinion of Baker & Botts, L.L.P. regarding legality of
securities being registered.**
9.1 -- Second Amended and Restated Stockholders and Voting
Agreement, dated as of October 16, 1997, by and among the
Company and the several stockholders that are signatories
thereto.*
10.1 -- 1997 Stock Option and Stock Award Plan of the Company.
10.2 -- Forms of Non-Qualified Stock Option Agreements under the
1997 Stock Option and Stock Award Plan.
10.3 -- Amended and Restated Registration Rights Agreement, dated
as of April 30, 1997, by and among the Company and the
stockholders of the Company that are signatories thereto.
10.4 -- First Amendment to Amended and Restated Registration
Rights Agreement, dated as of May 30, 1997, by and among
the company and the stockholders of the Company that are
signatories thereto.
10.5 -- Master Agreement, dated as of November 26, 1996, by and
among the Company and the stockholders of the Company
that are signatories thereto.
10.6 -- Master Drilling Agreement, dated as of December 10, 1996,
by and among the Company, Chesapeake Energy Corporation
and Chesapeake Operating, Inc.
10.7 -- Form of Chesapeake Drilling Agreement, by and between
Chesapeake Operating, Inc., as Operator, and the Company,
as Contractor.
10.8 -- Option Agreement, dated as of December 10, 1996, by and
between the Company and Chesapeake Energy Corporation.
10.9 -- Chesapeake Energy Corporation Option to Purchase Common
Stock of the Company, dated December 10, 1996.
10.10 -- Securities Purchase Agreement, dated as of April 30,
1997, by and among the Company, Energy Spectrum Partners
LP and Chesapeake Energy Corporation (the "April
Securities Purchase Agreement").
10.11 -- Form of Subordinated Note of the Company issued pursuant
to the April Securities Purchase Agreement.
10.12 -- Form of Series A Warrant to Purchase Common Stock of the
Company issued pursuant to the April Securities Purchase
Agreement.
10.13 -- Form of Series B Warrant to Purchase Common Stock of the
Company issued pursuant to the April Securities Purchase
Agreement.
10.14 -- Ward Drilling Company, Inc. Warrant to Purchase Common
Stock of the Company, dated May 30, 1997.
10.15 -- Preferential Right to Transport Agreement, dated as of
May 30, 1997, by and between the Company and Geronimo
Trucking Company.
10.16 -- RR&T, Inc. Warrant to Purchase Common Stock of the
Company, dated May 1, 1997.
10.17 -- Mike Mullen Warrant to Purchase Common Stock of the
Company, dated May 1, 1997.
10.18 -- The CIT Group/Equipment Financing, Inc. Warrant to
Purchase Common Stock of the Company, dated December 10,
1996.
10.19 -- Loan and Security Agreement, dated as of May 1, 1997 by
and among Fleet Capital Corporation, the Company and
Trend Drilling Co.
</TABLE>

<PAGE> 142

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
10.20 -- Amended and Restated Loan Agreement, dated as of May 1,
1997, by and among The CIT Group/Equipment Financing,
Inc. and Fleet Capital Corporation, as Lenders, and the
Company and Trend Drilling Co., as Borrowers.
10.21 -- Employment Agreement, dated as of December 10, 1996, by
and between the Company and James E. Brown.
10.22 -- Restricted Stock Award Agreement, dated as of December
10, 1996, by and between the Company and James E.
Brown.**
10.23 -- Employment Agreement, dated as of January 1, 1997, by and
between the Company and Ed Jacob.*
10.24 -- Employment Agreement, dated as of July 16, 1997, by and
between the Company and David E. Grose.
10.25 -- Letter Agreement, dated as of August 20, 1997, by and
between the Company and Chesapeake Energy Corporation.
10.26 -- Form of Indemnification Agreement to be entered into by
the Company and each of the directors and certain
officers of the Company in connection with the Offering.
10.27 -- Agreement and Plan of Merger, dated as of October 9,
1997, by and among DLB Oil & Gas, Inc., the Company,
Bonray Acquisition Corp. and Bonray Drilling
Corporation.*
10.28 -- 1997 Non-Employee Directors' Stock Option Plan of the
Company.*
10.29 -- Form of Nonqualified Option Agreement under the 1997
Non-Employee Directors' Stock Option Plan of the
Company.*
10.30 -- Registration Rights Agreement, dated as of October 16,
1997, by and among the Company, DLB Oil & Gas, Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation*.
10.31 -- Letter Agreement, dated as of October 3, 1997, by and
between the Company and The CIT Group/Equipment
Financing, Inc.*
10.32 -- Form of Second Amended and Restated Registration Rights
Agreement, dated as of October , 1997, by and among the
Company and the stockholders of the Company that are
signatories thereto.*
11.1 -- Statement regarding computation of per share earnings.
16.1 -- Letter re: Change in certifying Accountant.
21.1 -- Subsidiaries of the Company.*
23.1 -- Consent of Coopers & Lybrand L.L.P. regarding financial
statements of Ward Drilling Company.*
23.2 -- Consent of Coopers & Lybrand L.L.P. regarding financial
statements of Trend Drilling Company.*
23.3 -- Consent of Grant Thornton LLP.*
23.4 -- Consent of Ernst & Young LLP.*
23.5 -- Consent of Baker & Botts, L.L.P. (included in the opinion
filed as Exhibit 5.1 to this Registration Statement).**
23.6 -- Consent of Coopers & Lybrand L.L.P. regarding financial
statements of the Company as of June 30, 1997 and the six
months then ended.*
24.1 -- Powers of Attorney (included in the signature pages of
the Registration Statement as initially filed and this
Pre-Effective Amendment No. 2).
27.1 -- Financial Data Schedule.
</TABLE>

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

* Filed herewith

** To be filed by amendment

<PAGE> 1
EXHIBIT 4.1

INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE

NUMBER BAYARD SHARES
C DRILLING TECHNOLOGIES, INC.

COMMON STOCK PAR VALUE $0.01

THIS CERTIFICATE IS TRANSFERABLE CUSIP 072700 10 7
IN MINNEPOLIS, MN OR NEW YORK, NY SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CERTIFIES THAT

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF

BAYARD DRILLING TECHNOLOGIES, INC. transferable on the books of the Corporation
by the holder hereof in person or by a duly authorized attorney upon surrender
of this Certificate properly endorsed. This Certificate and the shares
represented hereby are issued and shall be held subject to the provisions of
the laws of the State of Delaware and to all of the provisions of the Restated
Certificate of Incorporation and Bylaws of the Corporation, as amended from
time to time (copies of which are on file at the office of the Corporation), to
all of which the holder of this Certificate by acceptance hereof assents. This
Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.

Dated:

Countersigned and Registered:
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT AND REGISTRAR

[SEAL]

/s/ JAMES E. BROWN /s/ KIRK K. WAITE By
President Secretary Authorized Signature

<PAGE> 2
BAYARD DRILLING TECHNOLOGIES, INC.

The Corporation will furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof which the Corporation is authorized to issue and the
qualifications, limitations or restrictions of such preferences and/or rights.
Any such request is to be addressed to the Secretary of the Corporation at its
principal place of business or to the Transfer Agent.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the ------ --------
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to
right of survivorship Minors
and not as tenants Act
in common ------------------
(State)

Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

For Value Received, __________________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
----------------------------------------------------------------------------

----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

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

----------------------------------------------------------------------------
Shares
----------------------------------------------------------------------
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
--------------------------------------------------------------------
to register the transfer of the said shares of Common Stock on the books of
the within-named Corporation, with full power of substitution in the premises.

Dated
---------------------------------
X
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT ----------------------------------
MUST CORRESPOND WITH THE NAMES AS (SIGNATURE)
WRITTEN UPON THE FACE OF THE X
CERTIFICATE IN EVERY PARTICULAR ----------------------------------
WITHOUT ALTERATION OR ANY CHANGE (SIGNATURE)
WHATEVER.

- --------------------------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE PROGRAM), PURSUANT TO S.E.C.
RULE 17Ad-15.
- --------------------------------------------------------------------------------

SIGNATURE(S) GUARANTEED BY:

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

<PAGE> 1
EXHIBIT 9.1

================================================================================

SECOND AMENDED AND RESTATED
STOCKHOLDERS AND VOTING AGREEMENT

BY AND AMONG

BAYARD DRILLING TECHNOLOGIES, INC.

AND

THE STOCKHOLDERS

THAT ARE SIGNATORIES HERETO

OCTOBER 16, 1997

================================================================================
<PAGE> 2
TABLE OF CONTENTS

PAGE

ARTICLE I

<TABLE>
<CAPTION>
DEFINITIONS
<S> <C> <C>
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -

ARTICLE II

AMENDED AND RESTATED AGREEMENT
SECTION 2.1 Effectiveness; Amended and Restated Agreement . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
SECTION 2.2 Continuing and Departing Stockholder Parties . . . . . . . . . . . . . . . . . . . . . . . . - 9 -

ARTICLE III

CORPORATE GOVERNANCE
SECTION 3.1 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10 -
SECTION 3.2 Energy Spectrum Non-Voting Observer . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
SECTION 3.3 Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
SECTION 3.4 Directors' and Officers' Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
SECTION 3.5 Contractual Management Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
SECTION 3.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
SECTION 3.7 Certain Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
SECTION 3.8 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
SECTION 3.9 Designation of DLB Director Prior to Initial Public Offering . . . . . . . . . . . . . . . - 14 -

ARTICLE IV

RESTRICTIONS ON TRANSFER
SECTION 4.1 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 15 -
SECTION 4.2 Holdback Agreements; Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
SECTION 4.3 Pledge of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
SECTION 4.4 Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
</TABLE>

i
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE V

COVENANTS
<S> <C> <C>
SECTION 5.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
SECTION 5.2 Cooperation with Financings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
SECTION 5.3 No Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -

ARTICLE VI

REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -

ARTICLE VII

MISCELLANEOUS
SECTION 7.1 General Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
SECTION 7.2 DLB Distribution Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
SECTION 7.3 Duration of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
SECTION 7.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
SECTION 7.5 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
SECTION 7.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
SECTION 7.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
SECTION 7.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
SECTION 7.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
SECTION 7.10 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
SECTION 7.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
SECTION 7.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
SECTION 7.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
SECTION 7.14 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
</TABLE>

ii
<PAGE> 4
SECOND AMENDED AND RESTATED
STOCKHOLDERS AND VOTING AGREEMENT

BAYARD DRILLING TECHNOLOGIES, INC.

This SECOND AMENDED AND RESTATED STOCKHOLDERS AND VOTING
AGREEMENT (this "Agreement") is made as of October 16, 1997, by and among
Bayard Drilling Technologies, Inc., a Delaware corporation (the "Company"), the
stockholders of the Company identified on the signature pages attached hereto
as the "Continuing Stockholder Parties" (the "Continuing Stockholder Parties")
and the stockholders of the Company identified on the signature pages attached
hereto as the "Departing Stockholder Parties" (the "Departing Stockholder
Parties").

WITNESSETH:

WHEREAS, as of December 10, 1996, the Company and certain of
its stockholders entered into that certain Stockholders and Voting Agreement
(the "Original Stockholders and Voting Agreement"), pursuant to which the
parties thereto set forth certain agreements by and among the stockholders of
the Company party thereto and the Company with respect to (i) the corporate
governance of the Company, (ii) transfer restrictions on shares of Common Stock
(as herein defined) and Common Stock Equivalents (as herein defined) and (iii)
other customary terms and conditions;

WHEREAS, as of April 30, 1997, the Company and certain of its
stockholders entered into that certain Amended and Restated Stockholders and
Voting Agreement (as amended, the "First Amended and Restated Stockholders and
Voting Agreement"), pursuant to which the parties thereto amended and restated
the Original Stockholders and Voting Agreement in its entirety;

WHEREAS, DLB Oil and Gas, Inc. ("DLB"), the Company, Bonray
Acquisition Corp. ("Newco") and Bonray Drilling Corporation ("Bonray") have
entered into that certain Agreement and Plan of Merger, dated as of October 9,
1997 (the "Bonray Merger Agreement");

<PAGE> 5
Shares") of Common Stock, all of which will initially be held by DLB (as the
former holder of all of the capital stock of Bonray);

WHEREAS, immediately after the consummation of the
transactions contemplated by the Merger Agreement, DLB intends to transfer
60,000 of the Acquired Shares to Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") such that after such transfer to DLJ, DLB will hold an
aggregate of 2,955,000 shares (the "DLB Shares") of Common Stock; and

WHEREAS, the Company and the other parties hereto desire to
amend and restate the First Amended and Restated Stockholders and Voting
Agreement in its entirety in order to provide, among other things, that (i) the
Departing Stockholder Parties will not be parties to this Agreement and will
have no rights and obligations hereunder and (ii) DLB and DLJ will become, and
the other Continuing Stockholder Parties will continue to be, parties to this
Agreement and will have the rights and obligations set forth herein;

NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, the mutual benefits to be
gained by the performance thereof and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged and accepted, the
Company and the Continuing Stockholder Parties agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 Definitions. As used herein, the following
terms shall have the following meanings:

"Accredited Investor" means a Person that qualifies as an
"accredited investor" as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.

"Acquired Shares" has the meaning set forth in the Recitals
hereto.

"Affiliate" means, with respect to any Person, any other
Person directly or indirectly Controlling or Controlled by, or under
direct or indirect common Control with, such Person.

- 2 -
<PAGE> 6
"Agreement" has the meaning set forth in the Preamble hereto.

"AnSon" means AnSon Partners Limited Partnership, an Oklahoma
limited partnership.

"AnSon Designee" has the meaning set forth in Section
3.1(b)(ii) hereof.

"AnSon Director" has the meaning set forth in Section
3.1(b)(iv) hereof.

"AnSon Group" means (i) AnSon, (ii) Carl B. Anderson, III and
(iii) any Affiliate of AnSon that executes a counterpart to this
Agreement, agreeing to be bound by the terms hereof as a "Continuing
Stockholder Party."

"Bonray" has the meaning set forth in the Recitals hereto.

"Bonray Merger Agreement" has the meaning set forth in the
Recitals hereto.

"Board of Directors" has the meaning set forth in Section
3.1(a) hereof.

"Business Day" means any day other than a Saturday, Sunday or
other day on which national banks are authorized or required by law to
be closed in Dallas, Texas.

"Bylaws" means the Bylaws of the Company, as in effect on the
date hereof and as the same may be amended from time to time
hereafter.

"Capital Stock" means all shares, interests, participations or
other equivalents of capital stock of a corporation, however
designated, and any warrants, options or other rights to purchase or
acquire any such capital stock and any securities convertible into or
exchangeable or exercisable for any such capital stock.

"Certificate" means the Certificate of Incorporation of the
Company, as in effect on the date hereof and as the same may be
amended from time to time hereafter.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means the Common Stock, par value $.01 per
share, of the Company and any equity securities issued or issuable
with respect to the

- 3 -
<PAGE> 7
Common Stock in connection with a combination or division of shares,
recapitalization, merger, consolidation or other reorganization.

"Common Stock Equivalents" means securities convertible into,
or exchangeable or exercisable for, shares of Common Stock, including
without limitation the Series B Warrant held by Energy Spectrum, but
not including the Subordinated Notes unless and until they are
converted into Common Stock.

"Company" has the meaning set forth in the Preamble hereto.

"Competitor" means any Person which competes directly or
indirectly, in any material respect with the Company or any of its
Subsidiaries, including, without limitation, any Person that does so
through providing contract drilling services (whether on land or
offshore, in the United States or internationally) or being engaged in
any other manner of oil field services.

"Continuing Stockholder Parties" has the meaning set forth in
the Preamble hereto.

"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by
contract or otherwise.

"Departing Stockholder Parties" has the meaning set forth in
the Preamble hereto.

"Designees" has the meaning set forth in Section 3.1(b)(iv)
hereof.

"Distributing Party" means DLB or, if applicable, the DLB
Successor.

"DLB" has the meaning set forth in the Recitals hereto.

"DLB Designator" means a member of the DLB Group who holds, or
is designated by the holders of, 51% or more of the DLB Shares held by
the DLB Group.

"DLB Designee" has the meaning set forth in Section
3.1(b)(iii) hereof.

"DLB Director" has the meaning set forth in Section 3.1(b)(iv)
hereof.

- 4 -
<PAGE> 8
"DLB Distribution" means (i) the distribution by the
Distributing Party of the DLB Shares held by it to the DLB
Stockholders (whether in the form of a dividend payable on shares of
capital stock of the Distributing Party or in any other form not
involving the payment of any cash consideration or any other
consideration whatsoever, other than (if applicable) the surrender,
exchange or cancellation of shares of capital stock of the
Distributing Party) or (ii) any other transaction resulting directly
or indirectly in the distribution or transfer of the DLB Shares to the
DLB Stockholders which has been approved by the Company, acting
through its Board of Directors (it being understood that the Company
shall consider in good faith the approval of any distribution or
transfer referred to in clause (ii) above and the Company, DLB and the
Distributing Party shall endeavor in good faith to structure such
distribution or transfer in such a way as to meet the business
objectives of each of the parties).

"DLB Group" means (i) DLB, (ii) Michael Liddell, (iii) Mark
Liddell, (iv) Charles E. Davidson and (v) any other Person that
acquires 51% or more of the DLB Shares as permitted under the terms of
this Agreement, so long as such Person identified in any of clauses
(i) through (iv) executes a Supplemental Agreement as contemplated by
Section 4.1(a).

"DLB Stockholders" means (i) if the Distributing Party is DLB,
the stockholders of DLB or (ii) if the Distributing Party is the DLB
Successor, the Persons who were stockholders of DLB immediately prior
to the merger, transfer of assets or other transaction in which the
DLB Successor acquired 51% or more of the DLB Shares.

"DLB Shares" has the meaning set forth in the Recitals hereto.

"DLB Successor" means any Person who is a successor to DLB
(whether as result of a merger, transfer of assets or any other
transaction) and, as such, acquires 51% or more of the DLB Shares, so
long as (i) the only Persons who have any right to receive a
distribution of such DLB Shares from such successor or have any other
beneficial interest in such shares are the DLB Stockholders and (ii)
such successor executes and delivers a Supplemental Agreement as
contemplated by Section 4.1(a).

"DLJ" has the meaning set forth in the Recitals hereto.

- 5 -
<PAGE> 9
"Energy Spectrum" means Energy Spectrum Partners LP, a
Delaware limited partnership.

"Energy Spectrum Designee" has the meaning set forth in
Section 3.1(b)(i) hereof.

"Energy Spectrum Director" has the meaning set forth in
Section 3.1(b)(iv) hereof.

"Energy Spectrum Non-Voting Observer" has the meaning set
forth in Section 3.2 hereof.

"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.

"First Amended and Restated Stockholders Agreement" has the
meaning set forth in the Recitals hereto.

"Indebtedness" means, with respect to any Person, all
obligations of such Person for borrowed money or evidenced by bonds,
debentures, notes or similar instruments.

"Initial Public Offering" means the initial underwritten
public offering of shares of Common Stock registered under the
Securities Act pursuant to a Registration Statement on Form S-1
(Commission File No. 333- 34451) of the Company.

"Initial Public Offering Effective Date" means the date of
effectiveness of the Initial Public Offering.

"May Financing" means the purchase by Energy Spectrum and
Chesapeake Energy Corporation, an Oklahoma corporation ("Chesapeake"),
of shares of Common Stock, certain subordinated debt and certain
warrants of the Company, all pursuant to that certain Securities
Purchase Agreement, dated as of April 30, 1997, by and among the
Company, Energy Spectrum and Chesapeake.

"Newco" has the meaning set forth in the Recitals hereto.

"Original Stockholders and Voting Agreement" has the meaning
set forth in the Recitals hereto.

- 6 -
<PAGE> 10
"Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government
or any agency or political subdivisions thereof.

"Qualified Public Sale" means, with respect to shares of
Stock, a sale of such shares (i) in an underwritten public offering
registered pursuant to the Securities Act or (ii) pursuant to Rule 144
under the Securities Act in a "brokers' transaction" (as defined in
Rule 144) in which no solicitation or direct contact with any specific
buyer shall have occurred.

"Registration Rights Agreements" means (i) that certain Second
Amended and Restated Registration Rights Agreement dated as of October
16, 1997, by and among the Company and the stockholders of the
Company that are signatories thereto and (ii) that certain
Registration Rights Agreement, dated as of October 16, 1997, by and
among the Company, DLB and DLJ, as applicable, as both such agreements
may be amended, modified, replaced or superseded from time to time
hereafter.

"Restricted Shares" has the meaning set forth in Section 4.4
hereof.

"Securities Act" means the Securities Act of 1933, as amended.

"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.

"Series B Warrants" means the Series B Warrants, exercisable
for shares of Common Stock at an exercise price of $7.50 per share,
issued by the Company in connection with the May Financing.

"Stock" means any shares of Common Stock and any Common Stock
Equivalents, in each case, whether owned on the date hereof or
acquired hereafter.

"Subordinated Notes" means the subordinated notes issued in
connection with the May Financing and the subordinated notes issuable
as interest on such notes.

"Subsidiary" means, with respect to any Person, (i) any
corporation, partnership or other entity of which shares of capital
stock or other ownership interests having ordinary voting power to
elect a majority of the board of directors

- 7 -
<PAGE> 11
or other similar managing body of such corporation, partnership or
other entity are at the time owned by such Person, or (ii) the
management of which is otherwise Controlled, directly or indirectly,
through one or more intermediaries by such Person.

"Supplemental Agreement" has the meaning set forth in Section
4.1(a) hereof.

"Total Shares" means the total number of shares of Common
Stock issued and outstanding, assuming the exercise, exchange or
conversion of all outstanding Common Stock Equivalents.

"Transfer" as to any Stock, means to sell, or in any other way
directly or indirectly transfer, assign, distribute, pledge, encumber
or otherwise dispose of, either voluntarily or involuntarily.

"Transferee" means a Person that acquires any shares of Stock,
or any interest therein, as a result of a Transfer.

"Transferor" means a Person that Transfers shares of Stock, or
any interest therein.

"Voting Shares" means any securities of the Company the
holders of which are generally entitled to vote for members of the
Board of Directors.

"Widely Distributed Offering" means an offering of shares of
Common Stock for sale in a transaction which constitutes a Qualified
Public Sale and in which no Person acquires from the Transferor of the
Stock (either directly or indirectly through one or more underwriters,
dealers or other intermediaries, in a single transaction or a series
of related transactions) shares which represent 1% or more of the
total number of outstanding shares of Common Stock.

SECTION 1.2 Methodology for Calculations. For purposes
of this Agreement, the Transfer of a Common Stock Equivalent shall be treated
as the Transfer of the shares of Common Stock into which such Common Stock
Equivalent can be converted, exchanged or exercised. Except as otherwise
provided in this Agreement, for purposes of calculating (i) the amount of
outstanding Common Stock as of any date, (ii) the amount of Common Stock held
by a Person hereunder and (iii) related percentages, all Common Stock
Equivalents shall be treated as having been converted, exchanged or exercised
for shares of Common Stock.

- 8 -
<PAGE> 12
ARTICLE II

AMENDED AND RESTATED AGREEMENT

SECTION 2.1 Effectiveness; Amended and Restated Agreement.

(a) This Agreement shall become effective, and the First
Amended and Restated Stockholders Agreement shall be amended and restated in its
entirety as set forth herein, upon the later of (i) the execution and delivery
of this Agreement by stockholders of the Company who are parties to the First
Amended and Restated Stockholders Agreement and who hold at least 66 2/3% of the
outstanding shares of Stock and (ii) the Initial Public Offering Effective Date.

(b) Notwithstanding paragraph (a) above, the provisions
of Section 3.9 shall be binding on each party (and such provisions shall,
insofar as they relate to such party, become effective) immediately upon the
execution of this Agreement by such party.

(c) Notwithstanding paragraph (a) above, the provisions of
Article IV shall be binding on DLB and DLJ (and such provisions shall, insofar
as they relate to DLB and DLJ, become effective) immediately upon the execution
of this Agreement by DLB and DLJ.

SECTION 2.2 Continuing and Departing Stockholder Parties. As of
the date upon which this Agreement becomes effective, (i) the parties to this
Agreement shall be the Continuing Stockholder Parties and (ii) the Departing
Stockholder Parties shall not be parties to this Agreement and shall have no
rights or obligations hereunder.

ARTICLE III

CORPORATE GOVERNANCE

SECTION 3.1 Board of Directors. From and after the date upon
which this Agreement becomes effective, each Continuing Stockholder Party shall
use its best efforts and shall take all necessary actions within its power,
including without limitation, (x) the voting of all Voting Shares owned by such
Continuing Stockholder Party at any annual or special meeting of the
stockholders of the Company called for the purpose of voting on the election of
directors or (y) consenting with respect to all Voting Shares owned by such
Continuing Stockholder Party in connection with any written consent of the
stockholders

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<PAGE> 13
of the Company to be delivered in connection with the election of directors, to
effectuate and carry out the following provisions:

(a) Board of Directors. The Company shall at all times
be managed by or under the direction of the board of directors (the "Board
of Directors"), which shall consist of no more than ten members.

(b) Composition of the Board of Directors.

(i) In connection with any election for members
of the Board of Directors, the Company shall, at the request
of Energy Spectrum, include in the slate of directors
recommended by the Board of Directors to the stockholders of
the Company for election as directors one representative
designated by Energy Spectrum so long as Energy Spectrum holds
(x) 5% or more of the outstanding Common Stock, (y) at least
$1,260,000 in principal amount of the Subordinated Notes
purchased by it pursuant to the May Financing or (z) 600,000
shares of Common Stock (such representative designated by
Energy Spectrum being referred to herein as the "Energy
Spectrum Designee").

(ii) In connection with any election for members
of the Board of Directors, the Company shall, at the request
of AnSon, include in the slate of directors recommended by the
Board of Directors to the stockholders of the Company for
election as directors one representative designated by AnSon
so long as the AnSon Group holds (x) 5% or more of the
outstanding Common Stock or (y) 600,000 shares of Common Stock
(such representative designated by AnSon being referred to
herein as the "AnSon Designee").

(iii) In connection with any election for members
of the Board of Directors, the Company shall, at the request
of the DLB Designator, include in the slate of directors
recommended by the Board of Directors to the stockholders of
the Company for election as directors one representative
designated by the DLB Designator so long as the DLB Group
holds 5% or more of the outstanding Common Stock (such
representative designated by the DLB Designator being referred
to herein as the "DLB Designee").

(iv) The Company and each Continuing Stockholder
Party shall each use its best efforts to cause each of the
Energy Spectrum

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<PAGE> 14
Designee, the AnSon Designee and the DLB Designee
(collectively, the "Designees") to be elected to, and to be
maintained as members of, the Board of Directors (including,
(x) in the case of the Company, recommending to the
stockholders of the Company the election of each of the
Designees to the Board of Directors and opposing any proposal
to remove any Designee at each meeting of stockholders of the
Company at which the election or removal of members of the
Board of Directors is on the agenda and (y) in the case of
each Continuing Stockholder Party, voting all of their Voting
Shares in favor of each of the Designees, and voting such
shares against any Person opposing any Designees), and shall
take no action which would diminish the prospects of the
Designees being elected to the Board of Directors or increase
the prospects of any Designees being removed from the Board of
Directors. Once elected, the Energy Spectrum, AnSon and DLB
Designees shall be deemed to be the Energy Spectrum, AnSon and
DLB Directors, respectively, for all purposes under this
Agreement.

(c) Committees. The Board of Directors may, by
resolution passed by a majority of the members of the Board of Directors,
designate one or more committees to conduct the business of the Board of
Directors in respect of audit, compensation, nomination and other
appropriate matters; provided, however, that the Board of Directors may
not designate a committee of the Board of Directors, such as an executive
committee, to exercise all of the general powers and authority of the
Board of Directors in the management of the business and the affairs of
the Company.

(d) Vacancies. If any AnSon Director, Energy Spectrum
Director or DLB Director shall cease to serve as a director of the Company
for any reason, the vacancy resulting thereby shall be filled by another
Person designated by AnSon in the case of an AnSon Director, Energy
Spectrum in the case of an Energy Spectrum Director and DLB in the case of
a DLB Director.

(e) Removal. None of the Energy Spectrum Director, the
AnSon Director or the DLB Director shall be removed from office without
the consent of the Continuing Stockholder Party or Parties entitled to
designate such director. Each director on the Board of Directors may be
retired from office at any time, with or without cause, at the request of
the Continuing Stockholder Party or Parties entitled to designate such
director.

SECTION 3.2 Energy Spectrum Non-Voting Observer. If at any meeting

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<PAGE> 15
for the election of directors any Energy Spectrum Director or Energy Spectrum
Designee is not elected to the Board of Directors, or if for any other reason,
at any time, an Energy Spectrum Director is not a member of the Board of
Directors, Energy Spectrum, so long as Energy Spectrum shall hold 1% or more of
the Total Shares, shall be entitled to have one observer (an "Energy Spectrum
Non-Voting Observer"), selected by Energy Spectrum, present at all meetings of
the Board of Directors. The Energy Spectrum Non-Voting Observer shall have the
same access to information concerning the business and operations of the
Company at the same time as directors of the Company and shall be entitled to
participate in discussions and consult with, and make proposals and furnish
advice to, the Board of Directors, without voting; provided, however, that the
Board of Directors shall be under no obligation to take any action with respect
to any proposals made or advice furnished by the Energy Spectrum Non-Voting
Observer, other than to give due consideration thereto. In addition to any
requirements specified in the Bylaws, the Company shall notify the Energy
Spectrum Non- Voting Observer, by telecopy, of every meeting, or action by
written consent, of the Board of Directors at least two days in advance of such
meeting or distribution of written consents, or, if such notice under the
circumstances is not practicable, as soon before the meeting or distribution as
is practicable, provided that nothing in this Section 3.2 shall be construed in
any way to authorize or allow a party hereto not to comply with its obligations
hereunder.

SECTION 3.3 Representatives. In the event that, after receiving
proper notice of a meeting of the Board of Directors (and any committee
thereof), or a meeting of any board of directors or similar managing body of
any Subsidiary of the Company in accordance with such entity's bylaws, if any
member of the Board of Directors elected pursuant to Section 3.1 or any Energy
Spectrum Non-Voting Observer determines that he or she is unable to attend such
meeting, the Continuing Stockholder Party which designated such director or
observer shall have the right to designate a representative to attend and
observe such meeting on behalf of such Continuing Stockholder Party, which
representative shall be entitled to fully participate, other than the right to
vote, in such meeting as if he or she were, as the case may be, an Energy
Spectrum Non-Voting Observer, a member of the Board of Directors (or committee
thereof), or a member of the board of directors or similar managing body of the
relevant Subsidiary of the Company.

SECTION 3.4 Directors' and Officers' Indemnification.

(a) The Certificate, Bylaws and other organizational
documents of the Company and each of its Subsidiaries shall at all times,
to the fullest extent permitted by law, provide for indemnification of,
advancement of expenses to, and limitation of the personal liability of,
the members of the Board of Directors and the members of the boards of
directors or other similar managing bodies of each of the

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<PAGE> 16
Company's Subsidiaries and such other Persons, if any, who, pursuant to a
provision of such Certificates, Bylaws or other organizational documents,
exercise or perform any of the powers or duties otherwise conferred or
imposed upon members of the Board of Directors or the boards of directors
or other similar managing bodies of each of any Subsidiary of the Company.
Any Energy Spectrum Non-Voting Observer shall be entitled to
indemnification from the Company to the maximum extent permitted by law as
though he or she were a director of the Company and any of its
Subsidiaries. This paragraph (a) may not be amended, repealed or
otherwise modified in any manner adverse to any member of the Board of
Directors, any Energy Spectrum Non-Voting Observer or any member of the
boards of directors or other similar managing bodies of any Subsidiary of
the Company, without the consent of a majority of the members of the Board
of Directors.

(b) Each of the members of the Board of Directors and
each Energy Spectrum Non-Voting Observer is intended to be a third-party
beneficiary of the obligations of the Company pursuant to this Section
3.4, and the obligations of the Company pursuant to this Section 3.4 shall
be enforceable by each such individual.

SECTION 3.5 Contractual Management Rights. The Company and each
Continuing Stockholder Party acknowledge that the provisions of this Agreement,
including this Article III, are intended to provide Energy Spectrum with
"contractual management rights" within the meaning of the ERISA.

SECTION 3.6 Expenses. Subject to proper documentation being
provided to the Company, the Company shall pay the reasonable out-of-pocket
expenses incurred by each of the members of the Board of Directors and any
Energy Spectrum Non-Voting Observer in connection with performing his or her
duties, including without limitation, the reasonable out- of-pocket expenses
incurred by such Person attending meetings of the Board of Directors or any
committee thereof or meetings of any board of directors or other similar
managing body (and any committee thereof) of any Subsidiary of the Company.

SECTION 3.7 Certain Restrictions. No Continuing Stockholder
Party shall grant any proxy, other than to an officer of the Company designated
by the Board of Directors, or enter into or agree to be bound by any voting
trust agreement or arrangement of any kind with respect to any shares of Common
Stock, nor shall any Continuing Stockholder Party enter into any stockholder
agreement or arrangement of any kind with respect to any shares of Common Stock
inconsistent with the provisions of this Agreement, including, but not limited
to, any agreement or arrangement with respect to the voting of

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<PAGE> 17
shares of Common Stock, or act as a member of a group or in concert with any
other Person in connection with the acquisition of shares of Common Stock in
any manner inconsistent with the provisions of this Agreement.

SECTION 3.8 Cooperation. Each Continuing Stockholder Party shall
vote all of its Voting Shares and shall take all other necessary actions within
its control, including without limitation, attending all meetings in person or
by proxy for purposes of obtaining a quorum, executing all written consents in
lieu of meetings and voting to remove members of the Board of Directors, as
applicable, and the Company shall take all necessary and desirable actions
within its control, including without limitation, calling special Board of
Directors and stockholder meetings and voting to remove members of the Board of
Directors, as applicable, to effectuate the provisions of this Article III.

SECTION 3.9 Designation of DLB Director Prior to Initial Public
Offering. In the event that the Initial Public Offering Date shall not have
occurred prior to or on December 1, 1997, upon request of DLB or the DLB
Successor, each party to this Agreement shall use its reasonable best efforts
to cause the Company and each other party to the First Amended and Restated
Stockholders Agreement to enter into an appropriate amendment to the First
Amended and Restated Stockholders Agreement which grants to DLB and the other
members of the DLB Group the right to designate a member of the Board of
Directors on terms which are at least as favorable to DLB and the other members
of the DLB Group as those set forth in Section 3.1 hereof.

ARTICLE IV

RESTRICTIONS ON TRANSFER

SECTION 4.1 Restrictions on Transfer.

(a) General Restrictions. No Continuing Stockholder
Party shall effect any Transfer of shares of Stock owned or held by such
Continuing Stockholder Party (other than pursuant to a Qualified Public
Sale) unless (i) the certificate or certificates representing such shares
bear a legend as provided in Section 7.1 hereof (or, in the case of a
Transfer pursuant to the DLB Distribution, the applicable legend set forth
in Section 7.2 hereof), (ii) the Transferee of such shares of Stock shall
have executed, as a condition to obtaining ownership of such shares, an
appropriate document (a "Supplemental Agreement") in which the Transferee
agrees that its ownership of such shares shall be subject to, and that the
Transferee shall comply with, all of the terms and conditions of this
Agreement and that the Transferee shall not effect any Transfer of such
shares except in compliance

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<PAGE> 18
with the provisions hereof and (iii) the Supplemental Agreement shall have
been promptly delivered to the Company and approved by it in its
reasonable discretion prior to the acquisition by such Transferee of the
shares of Stock; provided, however, that a DLB Stockholder who is not a
member of the DLB Group and who acquires shares of Stock pursuant to the
DLB Distribution shall not be obligated to execute and deliver a
Supplemental Agreement as contemplated by clauses (i) and (ii) above. The
Company shall not unreasonably withhold or delay its approval of any
Supplemental Agreement. A Transferee that is not already a party to this
Agreement, by executing a Supplemental Agreement approved by the Company
as hereinabove provided, shall become a Continuing Stockholder Party for
all purposes of this Agreement and shall have the same rights and shall be
subject to the same restrictions as the Continuing Stockholder Party
effecting the Transfer.

(b) Restrictions on Transfer During Initial 180-Day
Period. Notwithstanding any provision of this Agreement to the contrary,
until the expiration of 180 days after the Initial Public Offering
Effective Date, no Continuing Stockholder Party shall (other than pursuant
to the DLB Distribution) directly or indirectly offer, sell, contract to
sell, pledge, grant any option, right or warrant to purchase or otherwise
Transfer or dispose of any Stock owned or held by such Continuing
Stockholder Party or, in any manner, Transfer all or a portion of the
economic consequences associated with the ownership of such Stock, without
the prior written consent of the Company acting through its Board of
Directors, with any members of the Board of Directors designated or
elected by such Continuing Stockholder Party pursuant to Article III
recusing themselves in such vote. Each Continuing Stockholder Party
agrees that the Company may, and that each Continuing Stockholder Party
will, (i) with respect to any Stock for which a Continuing Stockholder
Party is the record holder, cause the transfer agent for the Company to
note stop transfer instructions with respect to such Stock on the transfer
books and records of the Company and (ii) with respect to any Stock for
which a Continuing Stockholder Party is the beneficial holder but not the
record holder, cause the record holder of such Stock to cause the transfer
agent for the Company to note stop transfer instructions with respect to
such Stock on the transfer books and records of the Company; provided,
however, that DLB shall only be required to comply with such stop transfer
obligations with respect to Transfers other than pursuant to the DLB
Distribution.

(c) Restriction on Transfer of 5% Holdings. No
Continuing Stockholder Party shall effect any Transfer (other than
pursuant to the DLB Distribution or a Qualified Public Sale) of shares of
Stock constituting 5% or more of the Total Shares to any Person or group
of Affiliated Persons, unless such

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<PAGE> 19
Continuing Stockholder Party receives the prior written consent of the
Company acting through its Board of Directors (which consent shall not be
unreasonably withheld), with any members of the Board of Directors
designated or elected by such Continuing Stockholder Party pursuant to
Article III recusing themselves in such vote.

(d) Restrictions on Transfer by DLB Group.
Notwithstanding any provision of this Agreement to the contrary, (other
than clause (e) below) none of DLB, any other member of the DLB Group or
the DLB Successor shall, at any time, effect any Transfer of all or any
part of the shares of Stock owned or held by it except (i) in the DLB
Distribution, (ii) in a Widely Distributed Offering or (iii) in a
transaction which does not involve a Transfer of such shares to a Person
who is a Competitor of the Company and which has been approved by the
Company acting through its Board of Directors (which approval shall not be
unreasonably withheld), with any members of the Board of Directors
designated or elected by the DLB Designator pursuant to Article III
recusing themselves in such vote.

(e) Transfer Upon Foreclosure By Administrative Agent.
(i) Bonray Holding (as defined below) shall
(notwithstanding any provision herein to the contrary, but subject to
compliance with subparagraph (ii) of this paragraph (e)) be permitted to
pledge the shares (the "Pledged Shares") of Stock owned or held by it to
the Administrative Agent (as defined below), for the benefit of the
Administrative Agent and the Lenders (as defined below) to secure the
obligations of Bonray Holding owing the Administrative Agent and the
Lenders under the Credit Agreement (as defined below). In the event that
any event or circumstance occurs or exists (including, without limitation,
the failure to pay any amount when due thereunder) that entitles the
Administrative Agent to accelerate the maturity of the obligations of
Bonray Holding under the Credit Agreement, or in the event that any amount
owing by Bonray Holding under the Credit Agreement is not paid when due at
final maturity, the Adminsitrative Agent may (notwithstanding any
provision herein to the contrary, but subject to subparagraph (ii) of this
paragraph (e) and the agreement of the Administrative Agent referred to in
said subparagraph) exercise its remedies (the "Remedies") as a secured
party with repsect to any Pledged Shares. Any Transferee of the Pledged
Shares that acquires the Pledged Shares pursuant to the exercise by the
Administrative Agent of its Remedies shall (notwithstanding any provision
herein to the contrary) not succeed to or acquire any rights under or be
bound by any obligations of this Agreement with respect to the Pledged
Shares.

(ii) As a condition precedent to the pledge by Bonray
Holding of the Pledged Shares contemplated by this paragraph (e), DLB shall
deliver to the Company an agreement by the Administrative Agent, in form
satisfactory to the Company, to the effect that the Administrative Agent
(1) shall not, without the prior written approval of the Company acting
through its Board of Directors (which approval shall not be unreasonably
withheld), with any members of the Board of Directors designated or elected
by the DLB Designator pursuant to Article III recusing themselves in such
vote, Transfer the Pledged Shares to a Person who is a Competitor, (2)
shall not Transfer any of the Pledged Shares other than in accordance
with the Securities Act and applicable United States state securities
laws, (3) subject to subparagraph (iii) of this paragraph (e), shall at all
times be bound by the requirements of Section 7.1 regarding the general
legend to be contained on certificates representing the Pledged Shares and
(4) shall at all times be bound by the requirements of Section 4.1(b)
except, that, solely for the purposes of this paragraph (e), to the
extent the Initial Public Offering Effective Date has not occurred prior
to December 1, 1997, the requirements of Section 4.1(b) shall not apply
during the period from December 1, 1997 until the Initial Public Offering
Effective Date).

(iii) In the event that the Administrative Agent
Transfers any Pledged Shares as permitted by this paragraph (e), the
Company, shall duly issue substitute certificates evidencing such
Transferred Pledged Shares, which certificates shall omit the legend
referred to in Section 7.1(a)(ii). The Administrative Agent, the Lenders
and each Transferee of Pledged Shares are third party beneficiaries of
this paragraph (e).

As used in this paragraph (e), the following terms shall have
the following meanings:

"Administrative Agent" means Lehman Commercial Paper
Inc., as administrative agent under the Credit Agreement.

"Bonray Holding" means Bonray Holding, L.L.C., a
Delaware limited liability company.

"Credit Agreement" means that certain Credit Agreement,
dated as of July 11, 1997, by and among Bonray Holding, L.L.C. (as
successor to Bonray Drilling Corporation), the Lenders referred to therein
and Lehman Commercial Paper Inc. as administrative agent and as arranger.

"Lenders" means the Lenders referred to in the Credit
Agreement.

SECTION 4.2 Holdback Agreements; Adjustments.

(a) Each Continuing Stockholder Party agrees that, (i) to
the extent requested in writing by a managing underwriter of any
underwritten public offering effected pursuant to a demand registration
request under any Registration Rights Agreement to which such Continuing
Stockholder Party is a party, such Continuing Stockholder Party will not
Transfer any Stock or any other equity security of the Company (other than
as part of such underwritten public offering) during the time period
reasonably requested by the managing underwriter, not to exceed 180 days,
and (ii) to the extent requested in writing by a managing underwriter of
any underwritten public offering effected by the Company for its own
account within three years after the date upon which this Agreement
becomes effective, such Continuing Stockholder Party will not Transfer
after such offering any of the Stock or any other equity security of the
Company (other than as part of such underwritten public offering) during
the time period reasonably requested by the managing underwriter, which
period shall (x) not exceed 180 days, in the event that such Continuing
Stockholder Party participates in such public offering pursuant to
"piggyback" registration rights granted under any Registration Rights
Agreement to which such Continuing Stockholder Party is a party, and (y)
not exceed 120 days, in the event that any such Continuing Stockholder
Party does not so participate in such public offering.

(b) The Company shall take all reasonable steps necessary to

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effect a subdivision or consolidation of shares if, with respect to any
demand registration request under any Registration Rights Agreement, in
the reasonable judgment of the managing underwriter for the offering in
respect of such demand registration, such subdivision or consolidation
would enhance the marketability of the securities proposed to be
registered thereunder. Each Continuing Stockholder Party shall vote all
of its shares of Capital Stock in a manner, and shall take all other
actions necessary, to permit the Company to carry out the intent of the
preceding sentence, including without limitation, voting in favor of an
amendment to the Certificate in order to increase or decrease (as the case
may be) the number of authorized shares of Capital Stock of the Company.

SECTION 4.3 Pledge of Shares. A Continuing Stockholder Party
shall have the right to pledge any Stock owned or held by such Continuing
Stockholder Party to the Company, a commercial bank, savings and loan
association or other lending or financial institution as security for any
Indebtedness of such Continuing Stockholder Party; provided, however, that no
such pledge shall be made unless: (a) the Person to which such pledge is made
shall have executed an appropriate document in which such Person agrees that,
in the event of realization upon such Stock, such realization shall be deemed a
Transfer and the shares of such Stock shall continue to be subject to the terms
and conditions of this Agreement and that such Person will not effect any
Transfer of such Stock except in compliance with the provisions hereof; and (b)
such document shall have been promptly delivered to, and shall have been
approved by, the Board of Directors prior to the pledge of such Stock. The
Board of Directors shall not unreasonably withhold or delay its approval of any
such document.

SECTION 4.4 Securities Laws. Each holder and Transferee of
shares of Common Stock bearing the restrictive legend set forth in Section 7.1
hereof ("Restricted Shares"), by acceptance thereof, agrees that, unless a
registration statement is in effect under the Securities Act with respect to
the sale or other disposition of such Restricted Shares, prior to any Transfer
or attempted Transfer of such Restricted Shares pursuant to this Article IV,
such holder shall give the Company (a) written notice describing the proposed
Transfer of any Restricted Shares in reasonable detail, (b) certification that
the proposed Transferee of the Restricted Shares is an Accredited Investor, (c)
such other information about the proposed Transfer of such Restricted Shares or
the proposed Transferee of such Restricted Shares as the Company may reasonably
request and (d) an opinion of counsel reasonably acceptable to the Company to
the effect that the proposed Transfer of such Restricted Shares may be effected
without registration of such Restricted Shares under the Securities Act and
applicable United States state securities laws. In addition, if the holder of
the Restricted Shares delivers to the Company an opinion of counsel that
subsequent Transfers of such Restricted Shares will not require registration or
qualification under the

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<PAGE> 21
Securities Act, the Company shall cause the transfer agent promptly after such
contemplated Transfer to deliver new certificates for such Restricted Shares
that do not bear the legend set forth in Section 7.1 hereof. If the foregoing
conditions entitling the holder to effect a proposed Transfer of such
Restricted Shares without registration under the Securities Act have not been
satisfied, the holder shall not Transfer the Restricted Shares, and the Company
shall cause the transfer agent not to Transfer such Restricted Shares on its
books or issue any certificates representing such Restricted Shares. Any
purported Transfer not in accordance with the terms hereof shall be void ab
initio.

ARTICLE V

COVENANTS

SECTION 5.1 Confidentiality. Each Continuing Stockholder Party
who receives any confidential information or other proprietary information or
data from the Company or from any representative of the Company concerning the
business of the Company (including without limitation information regarding
strategic plans, planned acquisitions or dispositions, financing sources,
operating performance, financial statements or other information), shall hold
such information or data in strictest confidence and shall not disclose such
information or data to any other Person or use such information or data for
such Continuing Stockholder Party's own benefit or for the benefit of any other
Person without the prior written consent of the Company.

SECTION 5.2 Cooperation with Financings. Each Continuing
Stockholder Party shall provide the Company with all information that is
reasonably required to effect any public or private offering of securities of
the Company, including completing and executing all undertakings,
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of any underwriting
agreement or other financing agreement or under applicable law.

SECTION 5.3 No Conflicting Agreements. No Continuing Stockholder
Party shall grant any proxy or become party to any voting trust or other
agreement which is inconsistent with or conflicts with any provision of this
Agreement.

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<PAGE> 22
ARTICLE VI

REPRESENTATIONS AND WARRANTIES

SECTION 6.1 Representations and Warranties. Each party hereto
represents and warrants to the other parties hereto as follows:

(a) Such party hereto has full power and authority to
execute, deliver and perform its obligations under this Agreement.

(b) This Agreement has been duly and validly authorized,
executed and delivered by such party hereto, and constitutes a valid and
binding obligation of it, enforceable against it in accordance with its
terms except to the extent that enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally.

(c) The execution, delivery and performance of this
Agreement by such party hereto does not (i) violate, conflict with, or
constitute a breach of or default under its organizational documents, if
any, or any material agreement to which it is a party or by which it is
bound or (ii) violate any law, regulation, order, writ, judgment,
injunction or decree applicable to it.

(d) No consent or approval of, or filing with, any
governmental or regulatory body is required to be obtained or made by such
party hereto in connection with the transactions contemplated hereby.

(e) Such party hereto has not granted and is not a party
to any proxy, voting trust or other agreement which is inconsistent with
or conflicts with the rights of any party hereunder or otherwise conflicts
with any provision of this Agreement.

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<PAGE> 23
ARTICLE VII

MISCELLANEOUS

SECTION 7.1 General Legend.

(a) Each Continuing Stockholder Party and the Company
shall take all such action necessary to cause each certificate representing
outstanding shares of Stock to bear the following legends containing the
following words:

(i) "THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR ANY STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, EXCHANGED, TRANSFERRED OR
OTHERWISE DISPOSED OF (i) UNLESS (A)
REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES AND "BLUE SKY" LAWS OR (B)
AN EXEMPTION FROM REGISTRATION UNDER THE ACT
AND ANY SUCH LAWS IS AVAILABLE AND, IN SUCH
CASE, AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO BAYARD
DRILLING TECHNOLOGIES, INC. (THE "COMPANY")
SHALL HAVE BEEN DELIVERED TO THE COMPANY TO
THE EFFECT THAT THE OFFER, SALE, TRANSFER,
DISPOSITION, PLEDGE, HYPOTHECATION OR
EXCHANGE THEREOF IS EXEMPT FROM REGISTRATION
UNDER THE ACT AND ANY SUCH LAWS OR (ii)
UNLESS SOLD PURSUANT TO AND IN COMPLIANCE
WITH RULE 144 OF THE ACT AND APPLICABLE
SECURITIES OR "BLUE SKY" LAWS."

(ii) "IN ADDITION, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER AND TO THE VOTING
AGREEMENTS SET FORTH IN THE SECOND AMENDED
AND RESTATED STOCKHOLDERS AND VOTING
AGREEMENT, DATED AS OF OCTOBER __, 1997, BY
AND AMONG THE COMPANY AND THE PARTIES
THERETO, A COPY OF WHICH IS ON FILE
IN THE OFFICE OF THE COMPANY."

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<PAGE> 24

(b) The requirement that the securities legend in clause
(i) above be placed upon certificates evidencing shares of Stock shall
cease and terminate upon the earliest of the following events: (1) when
such shares are Transferred pursuant to the DLB Distribution, (2) when
such shares are Transferred in a Qualified Public Sale or (3) when such
shares are Transferred in any other transaction if the Transferor delivers
to the Company an opinion of its counsel, which counsel and opinion shall
be reasonably satisfactory to the Company to the effect that such legend
is no longer necessary in order to protect the Company against a violation
by it of the Securities Act upon any sale or other disposition of such
shares without registration thereunder. The requirement that the legend
regarding this Agreement in clause (ii) above be placed upon certificates
evidencing shares of Stock shall cease and terminate upon the earliest of
the following events: (A) when such shares are Transferred to Persons
other than the members of the DLB Group pursuant to the DLB Distribution
or (B) when such shares are Transferred in a Qualified Public Sale. Upon
the consummation of any event requiring the removal of a legend hereunder,
the Company, upon the surrender of certificates containing such legend,
shall, at its own expense, deliver to the holder of any such shares of
Stock as to which the requirement for such legend shall have terminated,
one or more new certificates evidencing such shares of Stock not bearing
such legend.

SECTION 7.2 DLB Distribution Legends.

(a) The Company, DLB and each other member of the DLB
Group shall take all such action necessary to cause each certificate
representing shares of Stock to be distributed in the DLB Distribution to
Persons other than the members of the DLB Group to bear a legend
containing the following words:

"NO HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY OFFER, PLEDGE, SELL, CONTRACT TO SELL, SELL ANY OPTION OR
CONTRACT TO PURCHASE, PURCHASE ANY OPTION OR CONTRACT TO SELL,
GRANT ANY OPTION, RIGHT OR WARRANT TO PURCHASE OR OTHERWISE
TRANSFER OR DISPOSE OF, DIRECTLY OR INDIRECTLY, ANY OF THE
SECURITIES OR ENTER INTO ANY SWAP OR OTHER ARRANGEMENT THAT
TRANSFERS ALL OR A

- 21 -
<PAGE> 25
PORTION OF THE ECONOMIC CONSEQUENCES ASSOCIATED WITH THE
OWNERSHIP OF THE SECURITIES (REGARDLESS OF WHETHER ANY OF THE
DESCRIBED TRANSACTIONS IS TO BE SETTLED BY THE DELIVERY OF THE
SECURITIES, IN CASH OR OTHERWISE) PRIOR TO [THE 180TH DAY
AFTER THE INITIAL PUBLIC OFFERING EFFECTIVE DATE]."

(b) The Company, DLB and each other member of the DLB
Group shall take all such action necessary to cause each certificate
representing shares of Stock to be distributed in the DLB Distribution to
members of the DLB Group to bear a legend containing the following words:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE RESTRICTIONS ON TRANSFER AND TO THE VOTING AGREEMENTS SET
FORTH IN THE SECOND AMENDED AND RESTATED STOCKHOLDERS AND
VOTING AGREEMENT, DATED AS OF OCTOBER __, 1997, BY AND AMONG
THE COMPANY AND THE PARTIES THERETO, A COPY OF WHICH IS ON
FILE IN THE OFFICE OF THE COMPANY."

SECTION 7.3 Duration of Agreement. The rights and obligations of
a Continuing Stockholder Party under this Agreement shall terminate at such
time as such Continuing Stockholder Party no longer is the beneficial holder of
any shares of Stock. This Agreement shall terminate upon the tenth anniversary
of the date upon which it becomes effective, except that the terms of Sections
3.1 through 3.8, 4.1, 4.2, 5.1, 7.6 and 7.13 hereof shall survive until, by
their respective terms, they are no longer operative.

SECTION 7.4 Further Assurances. At any time or from time to time
after the date hereof, the parties hereto agree to cooperate with each other,
and at the request of any other party hereto, to execute and deliver any
further instruments or documents and to take all such further action as such
other party may reasonably request in order to evidence or effectuate the
consummation of the transactions contemplated hereby and to otherwise carry out
the intent of the parties hereunder.

SECTION 7.5 Amendment and Waiver. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement

- 22 -
<PAGE> 26
shall be effective against the Company or any Continuing Stockholder Party
unless such modification, amendment or waiver is approved in writing by (i) the
Company and by (ii) the holders of at least (x) 66 2/3% of the outstanding
shares of Stock held by the Continuing Stockholder Parties with respect to
modifications, amendments or waivers of Section 3.1, 3.2, 3.3, 4.1 or 4.2
hereof or this Section 7.5, and (y) 51% of the outstanding shares of Stock held
by the Continuing Stockholder Parties in the case of all other provisions. In
addition, this Agreement may not be modified or amended in a manner that would
deny to Energy Spectrum, in the opinion of counsel to Energy Spectrum,
"contractual management rights" with respect to the Company within the meaning
of the ERISA. The failure of any party hereto to enforce any of the provisions
of this Agreement shall in no way be construed as a waiver of such provisions
and shall not affect the right of such party thereafter to enforce each and
every provision of this Agreement in accordance with its terms.

SECTION 7.6 Severability. Whenever possible, each provision of
this Agreement shall 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
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

SECTION 7.7 Entire Agreement. Except as otherwise expressly set
forth herein, this document and the other documents dated the date hereof
embodies the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.

SECTION 7.8 Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns and each Continuing
Stockholder Party and its respective successors and assigns so long as they
hold Stock. Except pursuant to a Transfer of Stock in compliance with Article
IV, no Continuing Stockholder Party shall have the right to assign its rights
and obligations under this Agreement, without the consent of each of the other
Continuing Stockholder Parties.

SECTION 7.9 Counterparts. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.

- 23 -
<PAGE> 27
SECTION 7.10 Remedies. Each Continuing Stockholder Party shall be
entitled to enforce its rights under this Agreement specifically to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in their favor. The parties hereto agree
and acknowledge that money damages may not be an adequate remedy for any breach
of the provisions of this Agreement, including without limitation any breach of
Article III, and that each party may in its sole discretion apply to any court
of law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting a bond or other security) in order to
enforce or prevent any violation of the provisions of this Agreement.

SECTION 7.11 Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered by hand, by
telex or telecopier, or by certified or registered mail, postage prepaid and
return receipt requested. Notices shall be deemed to have been given upon
delivery, if delivered by hand, three days after mailing, if mailed, one
Business Day after delivery to the courier, if delivered by overnight courier
service, and upon receipt of an appropriate electronic confirmation, if by
telex or telecopier. Notices shall be delivered to the Company at the address
set forth below and to any other recipient at the address indicated on Schedule
7.11 hereto and to any subsequent holder of Stock subject to this Agreement at
such address as indicated by the Company's records, or at such address or to
the attention of such other Person as the recipient party has specified by
prior written notice to the sending party. The Company's address is:

Bayard Drilling Technologies, Inc.
4005 Northwest Expressway
Suite 550E
Oklahoma City, Oklahoma 73116
Telecopy: (405) 840-9553
Attention: President

SECTION 7.12 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law.

SECTION 7.13 Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement. This Agreement is intended to be a voting agreement among
stockholders as permitted by Section 218(c) of the Delaware General Corporation
Law.

SECTION 7.14 Construction. Where specific language is used to
clarify by example a general statement contained herein, such specific language
shall not be deemed to modify, limit or restrict in any manner the construction
of the general statement to which it relates. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be
applied against any party.

- 24 -
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have executed this
Second Amended and Restated Stockholders and Voting Agreement on the day and
year first above written.

THE COMPANY:

BAYARD DRILLING TECHNOLOGIES, INC.

By: /s/ JAMES E. BROWN
----------------------------------
James E. Brown
President

CONTINUING STOCKHOLDER PARTIES:

ANSON PARTNERS LIMITED PARTNERSHIP

By: /s/ CARL B. ANDERSON, III
--------------------------------
Name: CARL B. ANDERSON, III
--------------------------------
General Partner

/s/ CARL B. ANDERSON, III
-------------------------------
Carl B. Anderson, III

- 25 -
<PAGE> 29
ENERGY SPECTRUM PARTNERS LP

By: Energy Spectrum Capital LP, its General
Partner

By: Energy Spectrum LLC, its General
Partner

By: /s/ SIDNEY L. TASSIN
------------------------------------
Name: Sidney L. Tassin
-------------------------------
Title: President
------------------------------

DLB OIL AND GAS, INC.

By: /s/ MARK LIDDELL
------------------------------------
Name: Mark Lidell
-------------------------------
Title: President
------------------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

By: /s/ IVY DODES
------------------------------------
Name: Ivy Dodes
-------------------------------
Title:
------------------------------

DEPARTING STOCKHOLDER PARTIES:

CHESAPEAKE ENERGY CORPORATION

By: /s/ AUBREY K. MCCLENDON
------------------------------------
Name: Aubrey K. McClendon
-------------------------------
Title: CEO
------------------------------

<PAGE> 30
R.T. OLIVER DRILLING, INC.

By: /s/ ROY T. OLIVER
------------------------------------
Name: Roy T. Oliver
-------------------------------
Title: President
------------------------------

MIKE MULLEN ENERGY EQUIPMENT
RESOURCE, INC.

By: /s/ MIKE MULLEN
------------------------------------
Name: Mike Mullen
-------------------------------
Title: President
------------------------------

GRUPO DE HERCULES, LTD.

By: Mullen-Oliver Rig Investments Group, Inc.
General Partner

By: /s/ MIKE MULLEN
------------------------------------
Name: Mike Mullen
-------------------------------
Title: President
------------------------------

MULLEN-OLIVER PARTNERSHIP, LTD.

By: Mullen-Oliver Rig Investments Group, Inc.
General Partner

By: /s/ MIKE MULLEN
------------------------------------
Name: Mike Mullen
-------------------------------
Title: President
------------------------------

<PAGE> 31

/s/ JAMES E. BROWN
------------------------------------
James E. Brown

/s/ ED JACOB
------------------------------------
Ed Jacob

<PAGE> 32
SCHEDULE 7.11

CONTINUING STOCKHOLDER PARTIES ADDRESSES FOR NOTICE

AnSon Partners Limited Partnership
Lakepoint Towers
4005 Northwest Expressway
Suite 400E
Oklahoma City, Oklahoma 73116
Attention: Carl B. Anderson, III
(405) 879-3844
(405) 879-3847 (Fax)

Carl B. Anderson, III
c/o AnSon Partners Limited Partnership
Lakepoint Towers
4005 Northwest Expressway
Suite 400E
Oklahoma City, Oklahoma 73116
(405) 879-3844
(405) 879-3847 (Fax)

Energy Spectrum Partners LP
5956 Sherry Lane
Suite 600
Dallas, Texas 75225
Attention: Sidney L. Tassin
(214) 373-4080
(214) 373-4334 (Fax)

DLB Oil and Gas, Inc.
1601 Northwest Expressway
Suite 700
Oklahoma City, Oklahoma 73702
Attention: Mark Liddell
(405) 841-2500
(405) 848-9449 (Fax)

<PAGE> 33
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Anthony Lundy
(212) 892-3000
(212) 892-7272 (Fax)

<PAGE> 1

EXHIBIT 10.23

EMPLOYMENT AGREEMENT

This amended and restated Employment Agreement (this
"Agreement"), effective as of January 1, 1997, is entered into on the 9th day
of October, 1997, by and between Bayard Drilling Technologies, Inc., a Delaware
corporation (the "Company"), and Edward S. Jacob, a resident of Oklahoma City,
Oklahoma (the "Executive"), to amend and restate that certain Employment
Agreement previously entered into by such parties that was also made effective
as of January 1, 1997.

1. Introduction. The Company desires to employ
Executive and Executive desires to be employed by the Company. To this end,
the Executive and the Company believe that an agreement is necessary and
appropriate to outline the employment relationship that will exist between the
Company and the Executive. Therefore, the Company and the Executive intend by
this Agreement to specify the terms and conditions of the Executive's
employment relationship with the Company.

2. Employment. The Company hereby employs the Executive
and the Executive hereby accepts employment with the Company upon the terms and
subject to the conditions set forth herein.

3. Duties and Responsibilities.

(a) Subject to the power of the Board to elect and remove
officers, the Executive shall serve the Company as its Executive Vice President
- -- Operations & Marketing. As Executive Vice President -- Operations &
Marketing, the Executive shall (i) participate in the overall business planning
for the Company, (ii) develop and implement a marketing strategy for the
Company, and (iii) manage the day to day operations of the Company's drilling
rigs. The Executive shall perform, faithfully and diligently, the services and
functions relating to such office or otherwise reasonably incident to such
office as may be designated from time to time by the Board of Directors of the
Company (the "Board") or the President of the Company.

(b) The Executive shall, during the term of this
Agreement (or any extension thereof), devote such of his time, attention,
energies and business efforts to his duties as an executive of the Company as
are reasonably necessary to carry out the duties specified in Section 3(a).
The Executive shall not, during the term of this Agreement (or any extension
thereof), engage in any other business activity (regardless of whether such
business activity is pursued for gain, profit or other pecuniary advantage) if
such business activity would impair the Executive's ability to carry out his
duties hereunder. This Section 3(b), however, shall not be construed to
prevent the Executive from (i) investing his personal assets as a passive
investor in such form or manner as will not contravene the best interests of
the Company, (ii) participating in various charitable efforts, or (iii) serving
as a director or member of a committee of any charitable or civic organization;
provided, however,
<PAGE> 2
(c)Executive will not serve as a director or member of any committee
of an operating company unless such position has previously been approved in
writing by the Board.

4. Compensation and Other Employee Benefits. As
compensation for his services under the terms of this Agreement:

(a) The Executive shall be paid an annual salary during
the first year of this Agreement of not less than $105,000 and an annual salary
during the second year of this Agreement of not less than $115,000, payable in
accordance with the then current payroll policies of the Company. Such annual
salary is herein referred to as the "Base Salary." The Base Salary shall be
reviewed annually by the Board and shall be subject to adjustment in the sole
discretion of the Board based upon a review of the performance and
accomplishments of the Executive.

(b) If the Company's earnings before deducting interest,
taxes and depreciation during any full quarterly period (commencing with the
first quarter of 1997) equal or exceed the greater of (i) $1,500,000, or (ii)
five percent (5%) of the sum of the Company's stockholders' equity and long-
term debt (averaged on a daily basis throughout such quarterly period), then
the Executive shall be eligible to receive a quarterly bonus award of $5,000
(each, a "Quarterly Bonus"). Each earned Quarterly Bonus, if any, is payable
within 15 business days after the Company's unaudited financial statements for
such quarterly period become available.

(c) The Executive will be granted non-transferrable
options to purchase 25,000 shares of common stock of the Company, par value
$.01 per share (the "Common Stock"). The exercise price for the initial grant
of options will be $10.00 per share of Common Stock. The options will be
granted under a stock option and stock award plan (the "Stock Plan") proposed
to be adopted by the Board in the near future, which plan will require that the
Executive enter into an option agreement (the "Option Agreement). The Option
Agreement will provide, among things, that the options, when granted, will vest
in equal amounts on the first, second, third, fourth and fifth anniversary of
grant, subject to continued employment by the Executive. The Option Agreement
will restrict the transfer of shares of Common Stock issuable under the
options. The Executive agrees to become a party to that certain Stockholders'
and Voting Agreement, dated as of December 10, 1996, by and among the Company's
stockholders and the Company (the "Stockholders' Agreement"), and the Common
Stock issuable upon exercise of the options will be subject to the terms and
conditions of the Stockholders' Agreement.

(d) The Executive will be paid a $50,000 relocation
allowance on the effective date of this Agreement.

(e) Subject to the right of the Company to amend or
terminate any employee and/or group or executive benefit plan, the Executive
shall be entitled to receive the following employee benefits:

2
<PAGE> 3
(i) The Executive shall have the right to
participate in all current or future employee and/or group welfare
benefit plans of the Company that are available to its exempt salaried
employees generally (including, without limitation, disability,
accident, medical, life insurance and hospitalization plans) at the
same level and on the same basis as other officers of the Company
participate.

(ii) The Executive shall have the right to
participate in all future executive benefit plans of the Company,
including, without limitation, any pension or retirement plan that may
hereafter be established, all in accordance with the Company's regular
practices with respect to its officers.

(iii) The Executive shall be entitled to
reimbursement from the Company for reasonable out-of-pocket business
expenses incurred by him in the course of the performance of his
duties during the term of this Agreement, subject to receipt of
appropriate supporting documentation and approval of the Board or the
President of the Company.

(iv) The Executive shall be entitled to three
weeks vacation and such additional vacation, holidays and other paid
or unpaid leaves of absence as are consistent with the Company's
normal policies or as are otherwise approved by the Board.

(v) The Executive shall be entitled to the
exclusive use of a Company automobile, selected by the Company, and
the Company will pay all costs and expenses necessary to operate,
maintain and repair such automobile for business purposes. The
Executive will be responsible for all costs associated with personal
use of the automobile. The Executive will report all costs associated
with personal use of the automobile to the Company for tax purposes.
The automobile will at all times remain the property of the Company
and may not be sold, assigned, transferred or pledged by the
Executive. Upon termination of the Executive's employment for any
reason, the Executive agrees to immediately return the automobile to
the Company.

5. Term.

(a) Subject to the earlier termination pursuant to the
provisions of Section 7, the term of this Agreement shall commence on January
1, 1997 and shall end on December 31, 1998. The term of this Agreement is
referred to herein as the "Employment Term."

(b) The term of this Agreement may be extended for
additional one year periods by mutual consent of the Executive and the Board,
acting on behalf of the Company.

6. Competition and Confidentiality.

(a) If during the Employment Term (or any extension
thereof), (i) the employment of the Executive is terminated pursuant to Section
7(a) or (ii) the Executive voluntarily terminates

3
<PAGE> 4
his employment pursuant to Section 7(d), then for two years from the date of
such termination or nonrenewal, as the case may be, the Executive shall not,
without the prior written consent of the Board (which consent shall not be
unreasonably withheld), with respect to the States of Oklahoma, Texas, New
Mexico and Louisiana and any other state in which the Company owns, leases or
operates assets at the time of termination or nonrenewal:

(i) accept employment or render service to any person,
firm or corporation that is engaged in a business directly competitive
with the business then engaged in by the Company or any of its
affiliated companies in such states; or

(ii) directly or indirectly enter into or in any manner
take part in or lend his name, counsel or assistance to any venture,
enterprise, business or endeavor, either as proprietor, principal,
investor, partner, director, officer, employee, consultant, advisor,
agent, independent contractor, or in any other capacity whatsoever,
for any purpose that would be competitive with the business of the
Company or any of its affiliated companies in such states; or

(iii) directly or indirectly solicit, sell, call upon or
otherwise contact any customer of the Company or any of its affiliated
companies or any person who has been in contact with the Company or
such affiliated company with respect to the Company's or such
affiliate's business, for the purpose of selling or providing the same
or similar products or services provided or offered by the Company or
its affiliate to such customers or prospective customers; or

(iv) directly or indirectly solicit, entice, persuade or
induce any individual who presently is, or at any time during such
period shall be, an employee of the Company or any of its affiliated
companies or any of their respective successors, to terminate or
refrain from renewing or extending his or her employment with the
Company, any of its affiliated companies or any of their successors,
or to be employed by or enter into a contractual relationship with the
Executive or any other individual, person or entity, and Executive
shall not approach any employee for any such purpose or authorize or
knowingly cooperate with the taking of any action by any other
individual, person or entity.

(b) It is the desire and intent of each of the parties
that the provisions of Section 6(a) shall be enforced to the fullest extent
permissible under the laws and public policies applied in the State of
Oklahoma. Accordingly, if any particular portion of Section 6(a) shall be
adjudicated to be invalid or unenforceable, Section 6(a) shall be deemed
amended to (i) reform the particular portion to provide for such maximum
restrictions as will be valid and enforceable, or if that is not possible, then
(ii) delete the portion adjudicated to be invalid or unenforceable.

(c) During and after the Employment Term, the Executive
will not divulge or appropriate for his own use or for the use of others
(except during the Employment Term as required to fulfill the Executive's
duties hereunder) any secret or confidential information or secret or

4
<PAGE> 5
confidential knowledge pertaining to the business of the Company obtained by
the Executive in any way while he was employed by the Company. The Executive
shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company
or any of its affiliated companies, unless such information, knowledge or data
is or becomes public knowledge (other than by acts of the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it.

(d) The Executive acknowledges that Sections 6(a) and (c)
are expressly for the benefit of the Company, that the Company would be
irreparably injured by a violation of Section 6(a) or (c), and that the Company
would have no adequate remedy at law in the event of such violation.
Therefore, the Executive acknowledges and agrees that injunctive relief,
specific performance or any other appropriate equitable remedy (without any
bond or other security being required) are appropriate remedies to enforce
compliance by the Company with Sections 6(a) and (c).

7. Termination of Employment.

(a) For Due Cause. The Company may terminate the
Executive's employment for "Due Cause" (as hereinafter defined) at any time and
without prior notice, in which event this Agreement shall terminate and the
Executive shall be entitled to receive (i) his Base Salary on a pro rata basis
to the date of termination, and (ii) a cash payment equal to the amount of any
earned but unpaid Quarterly Bonus in respect of the quarterly period ended
prior to the quarter in which such termination occurs. In the event of such
termination for Due Cause, all other rights and benefits the Executive may have
under the employee and/or group or executive benefit plans and programs of the
Company, generally, shall be determined in accordance with the terms and
conditions of such plans and programs. The term "Due Cause" shall mean (i)
neglect of the Executive's duties or failure by the Executive to perform or
observe any obligation of employment that is not remedied within 30 days after
written notice thereof from the Board or the President of the Company, (ii) any
material breach of this Agreement, or (iii) the conviction of or a plea of
guilty or nolo contendere by the Executive to a felony or misdemeanor involving
fraud, embezzlement, theft or dishonesty or other criminal conduct.

(b) Due To Death. In the event of the death of the
Executive, this Agreement shall terminate on the date of death and the estate
of the Executive shall be entitled to (i) the Executive's Base Salary through
the date of death, and (ii) a cash payment equal to the amount of any earned
but unpaid Quarterly Bonus in respect of the quarterly period ended prior to
the quarter in which his death occurs. In the event of termination due to
death, all other rights and benefits the Executive (or his estate) may have
under the employee and/or group or executive benefit plans and programs of

5
<PAGE> 6
the Company, generally, shall be determined in accordance with the terms and
conditions of such plans and programs.

(c) Disability. In the event the Executive suffers a
"Disability" (as hereafter defined), the Company may terminate the Executive's
employment, in which event this Agreement shall terminate on "the date on which
the Disability occurs" (as hereafter defined) and the Executive shall be
entitled to (i) his Base Salary through the date on which the Disability
occurs, and (ii) a cash payment equal to the amount of any earned but unpaid
Quarterly Bonus in respect of the quarterly period ended prior to the quarter
in which the Disability occurs. In the event of such termination due to a
Disability, all other rights and benefits the Executive may have under the
employee and/or group or executive benefit plans and programs of the Company,
generally, shall continue to the extent permissible in accordance with the
terms and conditions of such plans and programs for a period of one year from
the date on which the Disability occurs. For purposes of this Agreement,
"Disability" shall mean the inability or incapacity of the Employee for three
months to perform the essential functions of the job or position with the
Company described in Section 3, even with reasonable accommodation, and "the
date on which the Disability occurs" shall mean the first day following such
three month period. Such inability or incapacity shall be documented to the
reasonable satisfaction of the Board by appropriate correspondence from
physicians who are reasonably satisfactory to the Board.

(d) Voluntary Termination. The Executive may voluntarily
terminate his employment under this Agreement at any time by providing at least
60 days' prior written notice to the Company. In such event, the Executive
shall be entitled to receive (i) his Base Salary on a pro rata basis to the
date of termination, and (ii) a cash payment equal to the amount of any earned
but unpaid Quarterly Bonus in respect of the quarterly period ended prior to
the quarter in which the termination occurs. All other rights and benefits the
Executive may have under the employee and/or group or executive benefit plans
and programs of the Company, generally, shall be determined in accordance with
the terms and conditions of such plans and programs.

(e) Other Termination. If the Company terminates the
employment of the Executive for any reason (other than pursuant to Sections
7(a), (c) or (f) hereof or if the Company elects not to renew this Agreement),
then the Executive shall be entitled to receive (i) his Base Salary until
termination of this Agreement pursuant to Section 5, payable at such times as
and in accordance with the Company's payroll practices, and (ii) a cash payment
equal to the amount of any earned but unpaid Quarterly Bonus in respect of the
quarterly period ended prior to the quarter in which the termination occurs.
All other rights and benefits the Executive may have under employee and/or
group or executive benefit plans and programs of the Company, generally, shall
continue to the extent permissible in accordance with the terms and conditions
of such plans and programs until termination of this Agreement pursuant to
Section 5.

(f) Change of Control. If in the event of and as a
result of a Change of Control (as defined in Section 8), the Executive is
terminated without Due Cause or the Executive voluntarily elects to terminate
this Agreement and his employment for any reason, then the

6
<PAGE> 7
Executive shall be entitled to receive (i) his Base Salary until termination of
this Agreement pursuant to Section 5, payable at such times as and in
accordance with the Company's payroll practices, and (ii) a cash payment equal
to the amount of any earned but unpaid Quarterly Bonus in respect of the
quarterly period ended prior to the quarter in which the termination occurs.
All other rights and benefits the Executive may have under employee and/or
group or executive benefit plans and programs of the Company, generally, shall
continue to the extent permissible in accordance with the terms and conditions
of such plans and programs until termination of this Agreement pursuant to
Section 5.

8. Definition of Change of Control. The term "Change of
Control" means the occurrence of one or more of the following events:

(a) In the event that the Company becomes subject to
reporting under the Securities Exchange Act of 1934, as amended (the
"Securities Act"), a change in control of a nature that would be required to be
reported in a response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Act, or any successor regulation of similar
import, whether or not the Company is then subject to such reporting
requirement;

(b) As a result of a transaction or series of
transactions, securities of the Company representing less than 50% of the
combined voting power of the Company's then outstanding securities are owned,
directly or indirectly, by Persons who were shareholders of the Company
immediately prior to such transaction or transactions;

"Person" shall have the same meaning as that term is given in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended,
whether or not the Company is then subject to the Securities Act.

9. Indemnification. The Company will indemnify the
Executive as provided for in the Company's Certificate of Incorporation or
Bylaws for officers of the Company.

10. Preservation of Business; Fiduciary Responsibility.
The Executive shall use his best efforts to preserve the business and
organization of the Company, to keep available to the Company the services of
present employees and to preserve the business relations of the Company with
suppliers, distributors, customers and others. The Executive shall not commit
any act, or in any way assist others to commit any act, that would injure the
Company. So long as the Executive is employed by the Company, the Executive
shall observe and fulfill proper standards of fiduciary responsibility
attendant upon his service and office.

11. Notices. All notices, requests, demands and other
communications given under or by reason of this Agreement shall be in writing
and shall be deemed given when delivered in

7
<PAGE> 8
person, or when confirmed if delivered by telecopy or when mailed, by certified
mail (return receipt requested), postage prepaid, addressed as follows (or to
such other address as a party may specify by notice pursuant to this Section
11):

(a) To the Company:

Bayard Drilling Technologies, Inc.
Suite 500E, Lakepoint Towers
4005 N. W. Expressway
Oklahoma City, Oklahoma 73116
Attn: Board of Directors
Facsimile: (405) 840-9550

(b) To the Executive:

Ed S. Jacob
6500 N. Grand Boulevard, #192
Oklahoma City, Oklahoma 73116

12. Controlling Law and Performability. The execution,
validity, interpretation and performance of this Agreement shall be governed by
and construed in accordance with the laws of the State of Oklahoma, excluding
conflicts of laws principles.

13. Arbitration. The Company and the Executive desire to
resolve certain disputes, controversies and claims arising out of this
Agreement without litigation. Accordingly, except in the case of a suit,
action or proceeding to compel either party to comply with the dispute
resolution procedures set forth in this Section 13, the parties agree that any
dispute or controversy arising under or in connection with this Agreement shall
be settled by arbitration in Oklahoma City, Oklahoma. In the proceeding, the
Executive shall select one arbitrator, the Company shall select one arbitrator
and the two arbitrators so selected shall select a third arbitrator. The
decision of a majority of the arbitrators shall be binding on the Executive and
the Company. Should one party fail to select an arbitrator within five days
after notice of the appointment of an arbitrator by the other party or should
the two arbitrators selected by the Executive and the Company fail to select an
arbitrator within ten days after the date of the appointment of the last of
such two arbitrators, any person sitting as a Judge of the United States
District Court for the Federal District of Oklahoma in which Oklahoma City is
then situated, upon application of the Executive or the Company, shall appoint
an arbitrator to fill such space with the same force and effect as though such
arbitrator had been appointed in accordance with the first sentence of this
Section 13. Any arbitration proceeding pursuant to this Section 13 shall be
conducted in accordance with the rules of the American Arbitration Association.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction.

8
<PAGE> 9
14. Additional Instruments. The Executive and the
Company shall execute and deliver any and all additional instruments and
agreements that may be necessary or proper to carry out the purposes of this
Agreement.

15. Entire Agreement and Amendments. This Agreement
(together with the Stock Plan and the Option Agreement, upon the effectiveness
thereof) contains the entire agreement of the Executive and the Company
relating to the matters contained herein and supersedes all prior agreements
and understandings, oral or written, between the Executive and the Company with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.

16. Separability. If any provision of this Agreement is
rendered or declared illegal or unenforceable by reason of any existing or
subsequently enacted legislation or by the decision of any arbitrator or by
decree of a court of last resort, the Executive and the Company shall promptly
meet and negotiate substitute provisions for those rendered or declared illegal
or unenforceable to preserve the original intent of this Agreement to the
extent legally possible, but all other provisions of this Agreement shall
remain in full force and effect.

17. Assignments. This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns. The
rights and obligations of the Executive under this Agreement are personal to
the Executive, and no such rights, benefits or obligations shall be subject to
voluntary or involuntary alienation, assignment or transfer. This Agreement
shall be binding upon the Executive and his heirs, executors, administrators,
legal representatives and assigns.

18. Execution. This Agreement may be executed in
multiple counterparts each of which shall be deemed an original and all of
which shall constitute one and the same instrument.

19. Waiver of Breach. The waiver by either party to this
Agreement of a breach of any provision of the Agreement by the other party
shall not operate or be construed as a waiver by such party of any subsequent
breach by such other party.

9
<PAGE> 10
IN WITNESS WHEREOF, the Executive and the Company have
executed this Agreement effective as of the date first above written.

"COMPANY"

BAYARD DRILLING TECHNOLOGIES, INC.

By:/s/ JAMES E. BROWN

---------------------------------------------------
James E. Brown
President

"EXECUTIVE"

/s/ EDWARD S. JACOB

------------------------------------------------------
Edward S. Jacob

<PAGE> 1
EXHIBIT 10.27

================================================================================

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

DLB OIL AND GAS, INC.,

BAYARD DRILLING TECHNOLOGIES, INC.,

BONRAY ACQUISITION CORP.

AND

BONRAY DRILLING CORPORATION

DATED AS OF OCTOBER 9, 1997

================================================================================
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II - THE CLOSING; POST-CLOSING ADJUSTMENT . . . . . . . . . . . . . . 3
2.1 Date and Place . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . 4

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY . 6
3.1 Existence and Qualification . . . . . . . . . . . . . . . . . 6
3.2 Capitalization; Ownership of Shares; Subsidiary . . . . . . . 6
3.3 Authority; Binding Effect . . . . . . . . . . . . . . . . . . 7
3.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Consents and Filings . . . . . . . . . . . . . . . . . . . . . 8
3.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 8
3.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . 9
3.9 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . 9
3.10 Assets, Properties, etc. . . . . . . . . . . . . . . . . . . . 9
3.11 Absence of Certain Changes and Events . . . . . . . . . . . . 10
3.12 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13 Overtime, Back Wages, Vacation and Minimum Wages . . . . . . . 13
3.14 Contracts, Agreements, Plans and Commitments . . . . . . . . . 13
3.15 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . 14
3.16 Employment Matters; Labor Relations . . . . . . . . . . . . . 17
3.17 Environmental Compliance . . . . . . . . . . . . . . . . . . . 18
3.18 Improper Payments . . . . . . . . . . . . . . . . . . . . . . 19
3.19 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . 19
3.20 Securities Law Matters . . . . . . . . . . . . . . . . . . . . 19
3.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER AND NEWCO . . . . . 20
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Authority; Binding Effect . . . . . . . . . . . . . . . . . . 21
4.3 Capitalization; Bayard Common Stock . . . . . . . . . . . . . 21
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . 21
4.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . 22
4.6 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . 22
4.7 Securities Law Matters . . . . . . . . . . . . . . . . . . . . 22
4.8 Consents and Filings . . . . . . . . . . . . . . . . . . . . . 23
4.9 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 24
4.13 Environmental Compliance . . . . . . . . . . . . . . . . . . . 24
4.14 Improper Payments . . . . . . . . . . . . . . . . . . . . . . 25

ARTICLE V - CERTAIN COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . 26
5.1 Access to Information . . . . . . . . . . . . . . . . . . . . 26
5.2 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . 26
5.3 Conduct of Business Pending Closing . . . . . . . . . . . . . 27
5.4 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.5 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.6 Return of Informational Material . . . . . . . . . . . . . . . 28
5.7 Confidentiality of Information . . . . . . . . . . . . . . . . 29
5.8 Employment Matters. . . . . . . . . . . . . . . . . . . . . . 29
5.9 Access to and Maintenance of Records . . . . . . . . . . . . . 29
5.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 29

ARTICLE VI - CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . 30
6.1. Conditions to the Obligations of Each of the Parties . . . . . 30
6.2. Conditions to the Obligations of the Buyer and Newco . . . . . 30
6.3 Conditions to the Obligations of the Seller . . . . . . . . . 31

ARTICLE VII - TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Liability for Taxes; Indemnification and Control of Contests . 33
7.4 Cooperation on Tax Matters . . . . . . . . . . . . . . . . . . 35
7.5 Tax Refunds . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>

ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
7.6 Carrybacks and Carryovers . . . . . . . . . . . . . . . . . . 36
7.7 Termination of Existing Tax Sharing Agreements . . . . . . . . 36
7.8 Tax Matter Dispute Resolution . . . . . . . . . . . . . . . . 36
7.9 Survival for Tax Matters . . . . . . . . . . . . . . . . . . . 36

ARTICLE VIII - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 37
8.1 Survival of Representations and Warranties . . . . . . . . . . 37
8.2 Indemnification by the Seller . . . . . . . . . . . . . . . . 37
8.3 Indemnification by the Buyer . . . . . . . . . . . . . . . . . 38
8.4 Indemnification for Third Party Claims . . . . . . . . . . . . 38

ARTICLE IX - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

ARTICLE X - DEFINITIONS AND MISCELLANEOUS . . . . . . . . . . . . . . . . . . 41
10.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.3 Binding Effect; Assignability . . . . . . . . . . . . . . . . 46
10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.5 Section Headings . . . . . . . . . . . . . . . . . . . . . . . 46
10.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 46
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 46
10.8 Costs of Enforcement. . . . . . . . . . . . . . . . . . . . . 47
10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>

iii
<PAGE> 5
EXHIBITS

Exhibit A - Form of Stockholders Agreement
Exhibit B - Form of Registration Rights Agreement

SCHEDULES

Schedule 3.2 - Certain Liens
Schedule 3.4 - Company Conflicts
Schedule 3.6 - Litigation
Schedule 3.7 - Company Compliance with Laws
Schedule 3.9 - Undisclosed Company Liabilities
Schedule 3.10 - Title to Property and Assets
Schedule 3.11 - Recent Changes
Schedule 3.12(c) - Liens for Taxes
Schedule 3.12(d) - Pending Audits, Disputes or Claims
Schedule 3.12(e) - Third-Party Tax Liability
Schedule 3.12(f) - Foreign Country Taxes
Schedule 3.12(g) - State Income Tax
Schedule 3.12(h) - State Sales or Use Tax
Schedule 3.12(i) - Tax Allocation Agreements
Schedule 3.12(m) - Requests for Tax Information
Schedule 3.13 - Unpaid Wages
Schedule 3.14 - Material Contracts
Schedule 3.15 - ERISA Matters
Schedule 3.16(a) - Employees
Schedule 4.3 - Capitalization
Schedule 4.5 - Undisclosed Buyer Liabilities
Schedule 4.10 - Buyer Conflicts
Schedule 8.2(c) - Limitation on Indemnification

iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered
into as of October 9, 1997, by and among DLB OIL AND GAS, INC., an Oklahoma
corporation (the "Seller"), BAYARD DRILLING TECHNOLOGIES, INC., a Delaware
corporation (the "Buyer"), BONRAY ACQUISITION CORP., a Delaware corporation and
wholly-owned subsidiary of Buyer ("Newco"), and BONRAY DRILLING CORPORATION, a
Delaware corporation (the "Company").

WITNESSETH:

WHEREAS, as of the date hereof, the Seller owns all of the
outstanding capital stock (the "Shares") of the Company; and

WHEREAS, subject to and in accordance with the terms and
conditions of this Agreement, (i) the respective boards of directors of the
Buyer, Seller, Newco and the Company and (ii) the respective stockholders of
the Company and Newco have approved the merger of Newco with and into the
Company (the "Merger"), and the Buyer, Seller, Newco and the Company desire to
consummate the Merger in accordance with the terms and conditions set forth
herein.

NOW, THEREFORE, in consideration of the premises, the terms and
conditions set forth herein and of the mutual covenants of the parties
hereinafter expressed, the parties hereby agree as follows:

ARTICLE I

THE MERGER

1.1 The Merger. Subject to and in accordance with the terms
and conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "General Corporation Law"), at the Effective Time (as
hereinafter defined), Newco shall be merged with and into the Company. The
name, identity, existence, rights, privileges, powers, properties and assets of
the Company shall continue unaffected and unimpaired by the Merger. As a
result of the Merger, the separate corporate existence of Newco shall cease and
the Company shall continue as the surviving corporation (sometimes referred to
herein as the "Surviving Corporation") and shall succeed to and assume all of
the rights and obligations of Newco in accordance with the General Corporation
Law.
<PAGE> 7
1.2 Consummation of the Merger. The Merger shall become
effective upon the date and time specified in a properly executed Certificate
of Merger filed with the Secretary of State of the State of Delaware as
provided in Section 251 of the General Corporation Law. When used in this
Agreement, the term "Effective Time" shall mean the date and time so specified
in such Certificate of Merger.

1.3 Certificate of Incorporation; Bylaws. The Certificate of
Incorporation of the Surviving Corporation shall be restated in its entirety as
attached to the Certificate of Merger and the bylaws of the Surviving
Corporation shall be the bylaws of the Company, as in effect immediately prior
to the Effective Time, and thereafter such Certificate of Incorporation and
bylaws shall continue to be the Surviving Corporation's Certificate of
Incorporation and bylaws until amended as provided therein and under the
General Corporation Law.

1.4 Directors and Officers. The directors of Newco
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate
of Incorporation and bylaws of the Surviving Corporation, and the officers of
Newco immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.

1.5 Conversion of Securities. Subject to the terms and
conditions of this Agreement, at the Effective Time, by virtue of the Merger
and without any action on the part of the Company, Newco or their respective
stockholders:

(a) Each share of the common stock, par value $0.001
per share, of the Company ("Bonray Common Stock") issued and outstanding
immediately prior to the Effective Time shall be canceled and be
converted into 30.15 shares of the common stock, par value $0.01 per
share, of the Buyer ("Bayard Common Stock"); provided, that if, after
the date hereof and prior to the Closing, Buyer shall have declared a
stock split (including a reverse stock split) of Bayard Common Stock or
a dividend payable in Bayard Common Stock to holders of Bayard Common
Stock with respect to their Bayard Common Stock, then the number of
shares of Bayard Common Stock into which the Bonray Common Stock shall
be converted shall be appropriately adjusted to reflect such stock split
or dividend or other distribution.

(b) Each share of Bonray Common Stock held in the
treasury of the Company, if any, shall be canceled and extinguished
without any conversion thereof.

2
<PAGE> 8
(c) Each share of common stock, par value $.01 per
share, of Newco issued and outstanding immediately prior to the
Effective Time shall automatically without any action on the part of the
holder thereof be converted into one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.

ARTICLE II

THE CLOSING;
POST-CLOSING ADJUSTMENT

2.1 Date and Place. The closing of the Merger (the "Closing")
shall be held at the offices of Baker & Botts, L.L.P., 2001 Ross Avenue,
Dallas, Texas, 75201 (or at such other place as the parties may mutually agree)
on October 13, 1997 (or, if the conditions to the obligations of the parties
set forth in Article VI hereof shall not be fulfilled as of such date, as
promptly as practicable after the fulfilment of such conditions). The date of
the Closing is hereinafter referred to as the "Closing Date."

2.2 Certain Actions. At the Closing, the parties hereto will
cause to be filed with the Secretary of State of the State of Delaware, as
provided in Section 251 of the General Corporation Law, a Certificate of
Merger.

2.3 Closing Deliveries.

(a) At the Closing, the Seller shall deliver the following to
the Buyer and Newco:

(i) stock certificates representing the Shares, free
and clear of any Liens;

(ii) the officer's certificate referred to in Section
6.2(c);

(iii) the opinions of counsel to the Seller referred to
in Section 6.2(d);

(iv) counterparts of the Stockholders Agreement (as
hereinafter defined) and the Registration Rights Agreement (as
hereinafter defined) each duly executed by the Seller and the Broker;
and

3
<PAGE> 9
(v) a letter executed by the Broker covering certain
customary investment representations.

(b) At the Closing, the Company shall deliver the following to
the Buyer and Newco:

(i) the officer's certificate referred to in Section
6.2(c).

(i) 3,015,000 shares of Bayard Common Stock (as
appropriately adjusted pursuant to Section 1.5) issued in the name of
the Seller or a wholly-owned subsidiary of the Seller, as designated by
the Seller at the Closing; provided, however, that 60,000 of such shares
shall be issued in the name of the Broker;

(ii) the officer's certificate referred to in Section
6.3(c);

(iii) the opinion of counsel to the Buyer referred to in
Section 6.3(d); and

(iv) duly executed counterparts of the Stockholders
Agreement and the Registration Rights Agreement.

(d) At the Closing, Newco shall deliver the following to the
Seller:

(i) the officer's certificate referred to in Section
6.3(c).

(e) At the Closing, the Seller shall deliver to the Buyer a
certified or official bank check or checks in New York Clearing House or other
similar next day funds in the amount of $1,000,000.

2.4 Post-Closing Adjustment.

(a) On the Post-Closing Adjustment Date (as hereinafter
defined), the Buyer shall pay to the Seller, or the Seller shall pay to the
Buyer, an amount in cash (the "Working Capital Adjustment Amount") equal to the
amount by which the sum of (i) any capital contributions from the Seller to the
Company made after June 30, 1997 but on or prior to the Closing Date plus (ii)
the current assets of the Company as of the Closing Date (such sum of (i) and
(ii) being the "Adjusted Current Assets") less (iii) the current liabilities of
the Company as of such date (the "Current Liabilities"), in each case
calculated in accordance with GAAP, is (x) greater than $1,000,000, in which
case the Buyer shall pay the

4
<PAGE> 10
Working Capital Adjustment Amount to the Seller, or (y) less than $1,000,000,
in which case the Seller shall pay the Working Capital Adjustment Amount to the
Buyer. The Working Capital Adjustment Amount shall be paid to the Buyer or the
Seller, as the case may be, by delivery of a certified or official bank check
or checks in New York Clearing House or other similar next day funds.

(b) The Buyer shall deliver to the Seller, within 40 days
after the Closing Date, a schedule (the "Working Capital Schedule") which sets
forth the amounts of the Adjusted Current Assets and Current Liabilities, sets
forth in reasonable detail how the Adjusted Current Assets and the Current
Liabilities were determined, and sets forth the resulting Working Capital
Adjustment Amount.

(c) If within ten days after the Buyer delivers the Working
Capital Schedule to the Seller (the "Objection Period"), the Seller notifies
the Buyer of any objections to the calculation of the Adjusted Current Assets,
the Current Liabilities or the Working Capital Adjustment Amount set forth on
the Working Capital Schedule, the Buyer and the Seller shall attempt in good
faith to agree by the day which is 60 days after the Closing Date upon the
Adjusted Current Assets, the Current Liabilities and the resulting Working
Capital Adjustment Amount.

(d) If the Buyer and the Seller agree by the day which is 60
days after the Closing Date to a Working Capital Adjustment Amount which is
different from that shown on the Working Capital Schedule, the payment
described in subparagraph (a) will be of the agreed upon amount.

(e) If the Seller objects to the calculation of the Adjusted
Current Assets, the Current Liabilities or the resulting Working Capital
Adjustment Amount during the Objection Period and the Buyer and the Seller do
not agree by the day which is 60 days after the Closing Date to a Working
Capital Adjustment Amount, the matters in dispute (but no other matters) will
be submitted to Coopers & Lybrand L.L.P., or, if that firm declines to act as
provided in this paragraph, another firm of independent certified accountants
mutually acceptable to the Buyer and the Seller (in either case, the
"Accounting Arbiter"), which firm will make a final and binding determination
as to the matters in dispute within 45 days after its appointment. The
Accounting Arbiter will send its written determination to the Buyer and the
Seller, together with a calculation of the Working Capital Adjustment Amount
which results from that determination, at which point the determination of the
Accounting Arbiter, and the resulting calculation of the Working Capital
Adjustment Amount, will be binding on the Buyer and the Seller, absent fraud or
manifest error. The fees and expenses of the Accounting Arbiter will be borne
equally by the Buyer and the Seller.

5
<PAGE> 11
(f) The date (the "Post-Closing Adjustment Date") upon which
the payment described in paragraph (a) is to be made shall be the day which is
three days after the earliest of (i) the day during the Objection Period when
the Buyer receives the Seller's written acceptance of the Working Capital
Adjustment Schedule, (ii) the last day of the Objection Period if the Buyer has
not received the Seller's written objection to any item on the Working Capital
Schedule, (iii) the day when the Buyer and the Seller agree upon the Working
Capital Adjustment Amount or (iv) the day on which the Accounting Arbiter
delivers its written determination to the Buyer and the Seller.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF
THE SELLER AND THE COMPANY

The Seller and the Company, jointly and severally, represent and
warrant to the Buyer as follows:

3.1 Existence and Qualification.

(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma and is
duly qualified to do business in each jurisdiction where it conducts business,
except where the failure to so qualify would not have a Seller Material Adverse
Effect. The Seller has all requisite corporate power and authority to own the
Shares, and to conduct its business and to own or lease its properties, as now
conducted, owned or leased.

(b) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business in each jurisdiction where it conducts business,
except where the failure to so qualify would not have a Company Material
Adverse Effect. The Company has all requisite corporate power and authority to
conduct its business and to own or lease its properties, as now conducted,
owned or leased.

3.2 Capitalization; Ownership of Shares; Subsidiary. The
authorized capital stock of the Company consists of 100,000 shares of Bonray
Common Stock, of which 100,000 shares are issued and outstanding. All of the
issued and outstanding shares of capital stock of the Company have been duly
authorized and are validly issued, fully paid and nonassessable. None of the
issued shares of capital stock have been issued in violation of preemptive or
similar rights. There are no outstanding subscriptions, convertible or
exchangeable securities, warrants, options, contracts, calls, or other rights
of any kind

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<PAGE> 12
committing or obligating the Company to issue or sell any issued or unissued
shares of its capital stock, or any securities or obligations of any kind
convertible into its capital stock. All of the Shares are owned beneficially
and of record by the Seller, free and clear of all Liens, except as set forth
in Schedule 3.2. The Company owns no interest in any corporation, partnership,
limited liability company or other incorporated or unincorporated entity.

3.3 Authority; Binding Effect.

(a) Seller has all necessary power and authority to enter into
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
have been duly and validly authorized by the Seller's Board of Directors, which
constitutes all necessary corporate action on the part of the Seller for such
authorization. No vote of the Seller's stockholders is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Seller and constitutes a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms. All
agreements required hereunder to be executed and delivered by the Seller at the
Closing, upon execution and delivery in accordance with the provisions hereof,
will constitute valid and binding agreements enforceable against the Seller in
accordance with their terms.

(b) The Company has all necessary power and authority to enter
into and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
have been duly and validly authorized by the Company's Board of Directors and
stockholder, which constitutes all necessary corporate action on the part of
the Company for such authorization. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms. All
agreements required hereunder to be executed and delivered by the Company at
the Closing, upon execution and delivery in accordance with the provisions
hereof, will constitute valid and binding agreements enforceable against the
Company in accordance with their terms.

3.4 No Conflicts. Except as set forth in Schedule 3.4 hereto,
the execution and delivery by the Seller and the Company of this Agreement, and
the performance by the Seller and the Company of the transactions contemplated
hereby, will not: (i) conflict with, or result in a violation or breach of,
any provision of the charter documents or by-laws of the Seller or the Company,
(ii) conflict with, or result in any violation or breach of, or constitute a
default under, any term or provision of any Material Agreement to which the
Seller or the Company is a party or by which their respective

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<PAGE> 13
properties or assets are bound, (iii) conflict with, or result in any violation
of, any law, ordinance, statute, rule or regulation of any Governmental
Authority or of any order, writ, injunction, judgment or decree of any court,
arbitrator or Governmental Authority applicable to the Seller or the Company,
except, in the case of clauses (ii) and (iii), for any conflicts, violations,
breaches or defaults that would not (a) reasonably be expected to have a
Company Material Adverse Effect or (b) prevent the Seller or the Company from
consummating the transactions contemplated by this Agreement.

3.5 Consents and Filings. There is no requirement applicable
to the Seller or the Company to obtain any consent, approval or authorization
of, or to make or effect any declaration, filing or registration with, any
Governmental Authority for the valid execution and delivery by the Seller and
the Company of this Agreement, the due performance by the Seller and the
Company of their respective obligations hereunder or the lawful consummation of
the transactions contemplated hereby, except filings required with respect to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and
except for consents, approvals, authorizations, filings and permits, which the
failure to obtain or make would not (i) reasonably be expected to have a
Company Material Adverse Effect or (ii) prevent the Seller or the Company from
consummating the transactions contemplated by this Agreement.

3.6 Litigation. Except as set forth on Schedule 3.6 hereto,
there are no actions, suits, inquiries, investigations or other proceedings
pending, or to the knowledge of the Seller, threatened against the Company or
its respective properties or assets which would be reasonably expected to (i)
have a Company Material Adverse Effect or (ii) question the validity of this
Agreement or any action taken or to be taken by the Seller or the Company in
connection herewith.

3.7 Compliance with Laws. Except as set forth on Schedule 3.7,
the Company is not in breach or violation of (i) any provision of its charter
documents or bylaws, (ii) any term or provision of any Material Agreement to
which it is a party or by which its properties or assets may be bound or (iii)
any law, ordinance, statute, rule or regulation of any Governmental Authority
or of any order, writ, injunction, judgment or decree of any court, arbitrator
or Governmental Authority applicable to it or its properties or assets, except,
in the case of clauses (ii) and (iii), for breaches, violations or defaults
which would not reasonably be expected to have a Company Material Adverse
Effect.

3.8 Financial Statements. The Seller has previously provided
the Buyer with (i) audited financial statements of the Company as of and for
the year ended December 31, 1996, consisting of balance sheets as of such date
and a statement of operations and a statement of cash flow for the year then
ended and accompanied by a report of Ernst & Young, L.L.P. with respect thereto
(the "Company Audited Financial Statements"), and (ii)

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<PAGE> 14
the unaudited financial statements of the Company as of and for the six months
ended June 30, 1997, which financial statements consist of a balance sheet as
of such date and a statement of operations and a statement of cash flows for
the six months then ended (the "Company Unaudited Financial Statements" and,
together with the Audited Financial Statements, the "Company Financial
Statements"). The Company Financial Statements have been prepared and
presented in accordance with GAAP applied on a consistent basis (except that
the Company Unaudited Financial Statements do not contain notes and may be
subject to normal audit adjustments), and the Company Financial Statements
present fairly the financial position and results of operations and changes in
cash flows of the Company as of the dates and for the periods indicated. The
income reflected in the Company Financial Statements consists of ordinary
operating profits and, except as noted in the Company Financial Statements none
of such income is due to a sale or transaction outside of the Company's
ordinary course of business (whether or not such sale or transaction would be
otherwise classified as an extraordinary event under GAAP).

3.9 Absence of Undisclosed Liabilities. The Company has no
debt or liability of any kind, whether accrued, absolute, contingent or
otherwise, including, without limitation, any debt or liability on account of
taxes or any governmental charges or penalty, interest or fines, except (i) as
set forth in Schedule 3.9 (which debt or liability will be fully and
unconditionally released on or before the Closing Date), (ii) as and to the
extent disclosed or reserved against in the Company Financial Statements or
(iii) for debts or liabilities which were incurred by the Company since the
date of the Company Unaudited Financial Statements in the ordinary course of
business consistent with past practice and would not, individually or in the
aggregate, be reasonably expected to result in a Company Material Adverse
Effect. As of the Closing Date, the Company will have no debt or liability of
any kind which would constitute or qualify as a "long term liability," as such
term is defined in accordance with GAAP.

3.10 Assets, Properties, etc.. The Company has good and
indefeasible title to all properties and assets, real, personal, tangible and
intangible, owned by it, free and clear of all Liens, except for Permitted
Liens. Except as set forth on Schedule 3.10, the Company has good and
indefeasible title to all properties and assets, real, personal, tangible and
intangible reflected in the Company Unaudited Financial Statements or acquired
after such date, except for properties and assets disposed of in the ordinary
course of business after June 30, 1997, and except for such deficiencies as
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.

3.11 Absence of Certain Changes and Events. Since June 30,
1997, except as set forth in Schedule 3.11, the Company has conducted its
business only in the ordinary course consistent with past practice and there
has not been any Company Material Adverse Effect or, to the knowledge of the
Seller, any event or occurrence or development that would

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<PAGE> 15
reasonably be expected to result in a Company Material Adverse Effect, and the
Company has not:

(a) amended its Certificate of Incorporation or bylaws;

(b) consolidated with, or merged with or into, any person;

(c) declared or set aside or paid any dividend or distribution
(whether in stock, cash or property) on shares of its capital stock;

(d) issued, sold or disposed of any shares of its capital
stock or any options, warrants, calls or other rights to acquire any shares of
its capital stock;

(e) changed its accounting methods or principles, except as
required by law or as a result of any mandatory change in accounting standards
that would be required to be disclosed in the Company Financial Statements
pursuant to GAAP;

(f) increased the compensation payable or to become payable to
the employees of the Company, increased benefits or benefit plan costs (other
than costs outside of the control of the Company), or increased any bonus,
insurance, pension, compensation or other benefit arrangement made for, with or
covering any directors, officers or employees, except in the ordinary course of
business;

(g) experienced any labor dispute, strike or lockout,
slowdown, stoppage, unfair labor practice complaint, grievance procedure or
employment arbitration proceeding;

(h) sold, assigned or transferred any material asset other
than in the ordinary course of business;

(i) borrowed money or incurred any material obligation, other
than in the ordinary course of business;

(j) made any material capital expenditure or committed to make
a material capital expenditure (exclusive of expenditures for repair or
maintenance of equipment) other than in the ordinary course of business; or

(k) canceled, terminated or substantively amended any Material
Agreement.

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<PAGE> 16
3.12 Tax Matters.

(a) All Tax Returns required to be filed on or before the
Closing Date by or on behalf of, or in which is required to be reported the
income, gains, losses, deductions, or credits of, the Company have been or will
be filed within the time prescribed by law (including extensions of time
permitted by the appropriate taxing authority).

(b) The Company has paid or will pay, on a timely basis
(including extensions), all Taxes of the Company that are due on or before the
Closing Date (including, but not limited to, Taxes shown to be due on the Tax
Returns described in the preceding paragraph), except those Taxes that are
being disputed in good faith. Adequate provision has been made in the Company
Financial Statements for all Tax liabilities of the Company which are
attributable to periods or partial periods ending prior to the Closing Date.

(c) Except as set forth on Schedule 3.12(c), there are no
liens (other than Permitted Liens) for Taxes upon any of the properties or
assets of the Company except liens for Taxes not yet due.

(d) Except as set forth on Schedule 3.12(d), there are no
pending audits, actions, proceedings, investigations, disputes or claims with
respect to any Taxes payable by or asserted against the Company. The Company
has not received written notice from any taxing authority of its intent to
examine or audit any Tax Returns of the Company.

(e) Except as set forth on Schedule 3.12(e), the Company does
not have any liability for the Taxes of any person other than the Company under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign tax law), as a transferee or successor, by contract, or otherwise.

(f) Schedule 3.12(f) hereto lists (i) each foreign country in
which the Company currently is, or has been, subject to foreign income Tax and
(ii) the taxable years or periods of the Company for which the applicable
periods of limitation for the assessment of foreign income Taxes are currently
open for each such foreign country.

(g) Schedule 3.12(g) hereto lists (i) each state in which the
Company is, or has been, subject to state income Tax and (ii) the taxable years
or periods of the Company for which the applicable periods of limitation for
the assessment of state income Taxes are currently open for each such state.

(h) Schedule 3.12(h) hereto lists each state in which the
Company currently is, or has been, subject to state sales or use Tax, or is
currently doing or has done business, within the three year period preceding
the Closing Date.

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<PAGE> 17
(i) Except as set forth in Schedule 3.12(i), no agreements
relating to the allocation or sharing of, or liability or indemnification for,
Taxes exist among the Company and any other person.

(j) All Taxes required by law to be withheld or collected by
the Company (including, but not limited to, Taxes required to be withheld with
respect to amounts paid or owing to any officer, employee, creditor,
stockholder, independent contractor or other person) have been timely withheld
or collected and, to the extent required by law, have been timely paid,
remitted or deposited to or with the relevant taxing authority.

(k) As of the Closing Date, (i) all material undisputed
assessments or asserted deficiencies made as a result of any examination of the
Company's Tax Returns have been paid or accrued, (ii) no material adjustments
or assessments for Taxes have been proposed in writing against the Company, and
(iii) to the knowledge of Seller, there does not exist any proper basis for any
material assessment or adjustment for Taxes against the Company which has not
yet been proposed in writing.

(l) No closing agreement or agreements pursuant to Section
7121 of the Code or any similar provision of any state, local or foreign law
has been entered into by or with respect to the Company which requires the
Company to include any item of income in, or exclude any item of deduction
from, any Tax Return for any taxable period ending after the Closing Date.

(m) Except as set forth in Schedule 3.12(m), there are no
requests for rulings, outstanding subpoenas or unsatisfied written requests
from any taxing authority for information with respect to Taxes of the Company
and, to the knowledge of the Company, there are no material proposed
reassessments (for property or ad valorem Tax purposes) of any assets or any
property owned (or leased in the case of leased property or assets with respect
to which the Company is responsible for the payment of property Taxes) by the
Company.

(n) There are no outstanding agreements or waivers that would
extend the statutory period in which a taxing authority may assess or collect a
Tax against the Company or for which the Company may be liable.

(o) The Company has not agreed to make any adjustment pursuant
to Section 481(a) of the Code (or any predecessor provision) by reason of any
change in any accounting method of the Company, and the Company does not have
any application pending with any taxing authority requesting permission for any
changes in any accounting method of the Company. Neither the IRS nor any other
taxing authority has proposed, and

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<PAGE> 18
the Company is not otherwise required to make, any such adjustment or change in
accounting method.

(p) The Company is not a foreign person within the meaning of
Section 1445 of the Code.

3.13 Overtime, Back Wages, Vacation and Minimum Wages. Except
as set forth on Schedule 3.13 hereto, and except for claims accrued as a
liability of the Company and included in the Company Financial Statements, to
the Seller's knowledge no present or former employee of the Company has any
material claim against the Company on account of or for (i) overtime pay, other
than overtime pay for the current payroll period, (ii) wages or salary for any
period other than the current payroll period, (iii) vacation, time off or pay
in lieu of vacation or time off other than that earned in respect of the
current year, or (iv) any violation of any statute, ordinance or regulation
relating to minimum wages or minimum hours of work.

3.14 Contracts, Agreements, Plans and Commitments. The Company
has not entered into any footage or turn-key contracts that are reasonably
expected to result in a loss. Schedule 3.14 hereto sets forth all Material
Agreements of the Company (including all amendments, modifications and
supplements thereto). Copies of each Material Agreement have been previously
provided to Buyer. The Company has complied with the material provisions of
all Material Agreements (including without limitation leases and right-of-way
grants) and no default or event of default (by the Company or any other person
or entity) exists under any of the Material Agreements and the Material
Agreements constitute valid and legally binding obligations of the Company and
of each other person or entity that is a party thereto enforceable against each
party in accordance with their terms. None of the Material Agreements limit
the freedom of the Company to compete in any line of business or with any
person or in any geographical area. The enforceability of the Material
Agreements and the ability of the Company to exercise its rights, privileges
and remedies thereunder will not be affected in any manner by the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated herein.

3.15 Employee Benefit Matters.

(a) Schedule 3.15 sets forth each "employee benefit plan," as
defined in section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and all other employee compensation and benefit
arrangements or payroll practices, including, without limitation, all 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,

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<PAGE> 19
hospitalization, medical insurance, life insurance, and scholarship plans or
programs maintained by, covering any employee of the Company or any subsidiary,
or to which the Company or any subsidiary is or has contributed or is or has
been obligated to contribute within the past six years (all such plans or
arrangements being hereinafter referred to as the "Employee Benefit Plans").
The Company has no commitment or obligation to establish or adopt any new or
additional Employee Benefit Plans or to materially increase the benefits under
any existing Employee Benefit Plan.

(b) Except as otherwise disclosed on Schedule 3.15, each
Employee Benefit Plan that is an "employee pension benefit plan," as defined in
section 3(2) of ERISA, (a "Pension Plan") is intended to qualify under section
401 of the Code and each trust maintained pursuant thereto is intended to be
exempt from federal income taxation under section 501 of the Code, and the
Company has received a determination letter from the Internal Revenue Service
with respect to each such Pension Plan and trust to the effect that such
Pension Plan and trust are so qualified and exempt. No such determination
letter has been revoked, and to the knowledge of the Company, revocation has
not been threatened and nothing has occurred with respect to the operation of
any such Pension Plan that could reasonably be expected to cause such
revocation. None of such Pension Plans have been amended since the effective
date of each respective determination letter in any respect that might
adversely affect its qualification, increase its cost or require security under
section 307 of ERISA.

(c) With respect to each Employee Benefit Plan, the Company
has delivered or made available to Buyer (i) a true, correct, and complete copy
of each Employee Benefit Plan, including, in the case of a Pension Plan, copies
of all amendments made since the most recent favorable determination letter,
or, in the case of any unwritten Employee Benefit Plan, descriptions thereof;
(ii) copies of the determination letters with respect to each Employee Benefit
Plan, as applicable; (iii) copies of the most recent Form 5500 filed with the
Service with respect to each Employee Benefit Plan for which such report is
required by applicable law; (iv) the most recent summary plan description for
each Employee Benefit Plan for which such a summary plan description is
required by applicable law; and (v) each trust agreement and insurance or
annuity contract relating to any Employee Benefit Plan.

(d) Except as disclosed on Schedule 3.15, neither the Company
nor any ERISA Affiliate has ever contributed to any plan subject to section 413
of the Code or multiple employer welfare arrangement, as defined in section
3(40) of ERISA. An "ERISA Affiliate" shall mean any trade or business (whether
or not incorporated) which is under common control, or which is treated as a
single employer, with the Company under section 414(b), (c), (m) or (o) of the
Code ("ERISA Affiliate").

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<PAGE> 20
(e) Except as disclosed on Schedule 3.15, (i) all
contributions to, and payments from, each Employee Benefit Plan that have been
required to be made in accordance with the terms of such plans and, when
applicable, section 302 of ERISA or section 412 of the Code, have been timely
made, (ii) there has been no application for or waiver of the minimum funding
standards of section 412 of the Code with respect to any Pension Plan or for
any "defined benefit plan," as defined in Section 3(35) of ERISA maintained or
contributed to by the Company or by any ERISA Affiliate (a "Defined Benefit
Plan") and (iii) none of the Defined Benefit Plans has an "accumulated funding
deficiency" within the meaning of section 412(a) of the Code as of the end of
the most recently completed plan year. All such contributions to, and payments
from any Employee Benefit Plan, except those payments to be made from a trust
exempt from taxation under section 501 of the Code, for any period ending
before the Closing Date that are not yet but will be required to be made will
be properly accrued and will be disclosed on Schedule 3.15. Except as
disclosed on Schedule 3.15, as of the most recent valuation date for each
Defined Benefit Plan, there was no amount of "unfunded benefit liability," as
defined in section 4001(a)(18) of ERISA under such Defined Benefit Plan, and
the Company is not aware of any facts or circumstances that could materially
adversely change the funded status of such Defined Benefit Plan. The Company
has furnished or made available to Buyer the most recent actuarial report or
valuation with respect to each Defined Benefit Plan and, as applicable,
Employee Benefit Plan and with a letter of the actuary which outlines such
plan's funded status, on both an ongoing and termination basis, as of the most
recent valuation date. The information supplied to the actuary by the Company
(or ERISA Affiliate) for use in preparing these reports was complete and
accurate in all respects and the Company (or ERISA Affiliate) has no reason to
believe that the conclusions expressed in the letter were inaccurate.

(f) Except as disclosed on Schedule 3.15, neither the Company
nor an ERISA Affiliate has incurred any liability to a Defined Benefit Plan
(other than for contributions not yet due) that has not been fully paid as of
the date hereof and all premium payments due to the Pension Benefit Guaranty
Corporation pursuant to section 4007 of ERISA prior to the date hereof have
been timely paid.

(g) Except as disclosed on Schedule 3.15, the Employee Benefit
Plans have been maintained and administered, in all material respects, in
accordance with their terms and with all provisions of ERISA (including rules
and regulations thereunder), the Code, and other applicable Federal and state
law, and none of the Company, any ERISA Affiliate, any "party in interest" or
any "disqualified person" with respect to the Employee Benefit Plans has
engaged in a "prohibited transaction" within the meaning of section 4975 of the
Code or section 406 of ERISA with respect to the Employee Benefit Plans. No
event has occurred that could subject any Employee Benefit Plan, as applicable,
to tax under section 511 of the Code.

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<PAGE> 21
(h) Except as disclosed on Schedule 3.15, there is no
violation of ERISA, the Code or other applicable law with respect to the filing
of reports, returns, and other similar documents required to be filed with any
governmental agency with respect to any Employee Benefit Plan and all reports,
returns or similar documents required to be distributed to any Employee Benefit
Plan participant have been timely distributed.

(i) Except as disclosed on Schedule 3.15, none of the Company,
any trustee, administrator or other fiduciary of an Employee Benefit Plan has
engaged in any transaction or acted in a manner that could, or failed to act so
as to, subject the Company or any fiduciary to any liability for breach of
fiduciary duty under ERISA or other applicable law.

(j) Except as disclosed in Schedule 3.15, there has been no
"reportable event" as that term is defined in section 4043 of ERISA and the
regulations thereunder with respect to the Defined Benefit Plan subject to
Title IV of ERISA that would require the giving of notice or any event
requiring disclosure under section 4041(c)(3)(C) or 4063(a) of ERISA.

(k) Except as disclosed on Schedule 3.15, 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 the Company or of any ERISA Affiliate;
(ii) increase any benefits otherwise payable under any Employee Benefit Plan or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits. Except as disclosed on Schedule 3.15, there are no severance
agreements or employment agreements between the Company and any employee of the
Company. The Company has no leased employees, as defined in Section 414(n) of
the Code. Except as set forth on Schedule 3.15, the Company has no consulting
agreements or arrangement with any person for the provision of personal
services, except as are terminable upon one month's notice or less.

(l) Except as disclosed on Schedule 3.15, the Company and
all ERISA Affiliates have complied in all material respects with all
obligations imposed by Section 4980B of the Code and no employee or former
employee of the Company or any ERISA Affiliate is, by reason of such employee's
or former employee's employment, entitled to receive any benefits, including
without limitation, death or medical benefits (whether or not insured) beyond
retirement or other termination of employment, other than (i) death or
retirement benefits under a Pension Plan or (ii) continuation coverage pursuant
to section 4980B of the Code.

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<PAGE> 22
(m) Except as disclosed on Schedule 3.15, there are no
investigations by any governmental agency, other claims, suits or proceedings
against or involving any Company Pension Plan or Company Employee Benefit Plan,
and, to the knowledge of the Company, there is no basis for any such
investigation, legal action or proceeding.

3.16 Employment Matters; Labor Relations.

(a) Set forth on Schedule 3.16(a) is a list of all employees,
officers or managers of the Company, their current rates of compensation, their
length of service with the Company. Schedule 3.16 sets forth a true, complete
and accurate description of all practices, policies, understandings and
agreements with all such employees relating to their employment. All contracts
and arrangements with employees are in full force and effect, and neither the
Company nor, to the Company's knowledge, any other person or entity is in
default under any of them. In the conduct of its affairs and business, as of
the Closing Date the Company has complied with all applicable laws and
regulations relating to the employment of labor including those related to
wages, hours, discrimination, employee pension and welfare benefit plans,
collective bargaining, and the payment of Social Security or similar taxes, and
the Company has withheld and paid to the appropriate governmental authority all
amounts required by law or agreement to be withheld from wages or salaries of
such employees.

(b) There is no pending or, to the Seller's knowledge,
threatened labor dispute, strike or lockout, slowdown, stoppage, unfair labor
practice complaint, grievance procedure or arbitration proceeding relating to
the Company. No employees of the Company are subject to any collective
bargaining agreement or labor contracts. There are currently no efforts
underway respecting proposed union representation of the employees of the
Company and no collective bargaining agreement is currently being negotiated.

(c) The Seller has provided to the Buyer with copies of all
Occupational Safety and Health Administration ("OSHA") reports having to do
with the Company, its operations or its business and received by the Company
during the last three years. No other oral or written complaints or notices
have been received by the Company from OSHA or any other regulatory agencies or
offices having jurisdiction over health or safety matters relating to the
Company. All matters noticed in such reports have been resolved or cured as of
the Closing Date.

(d) Neither the Company nor any person with whom the Company
would be treated as an "employer" for purposes of the Worker Adjustment and
Retraining Notification Act or any similar state law ("WARN") has taken any
action or failed to take any action which could result in any liability or
obligation under WARN.

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<PAGE> 23
3.17 Environmental Compliance.

(a) The Company is and has been in compliance with all
applicable Environmental Laws, except where the failure to do so would not
reasonably be expected to have a Company Material Adverse Effect. The Company
has obtained and is and has been in material compliance with all permits
required under applicable Environmental Laws. Neither the Seller nor the
Company knows or has reason to suspect that there is any past or present event,
condition or circumstance that is likely to interfere with the conduct of the
business of the Seller in the manner now conducted or which would interfere in
any material respect with the Seller's compliance with Environmental Laws or
constitute a material violation thereof.

(b) Neither the Company nor any property previously owned by
the Company, is subject to any actual or, to the knowledge of the Seller,
potential action, claim, investigation, review or other proceeding by any third
party or before any governmental, judicial or regulatory body, under or based
upon any Environmental Law or exposure to hazardous or toxic substances.

(c) The facilities and property presently owned or leased by
the Company have been operated in material compliance with all applicable
Environmental Laws and are not (and would not be, if all relevant facts were
known to the applicable governmental authorities) subject to any removal,
clean-up, remediation, restoration or recordation obligations under such laws,
except such as would not reasonably be expected to have a Company Material
Adverse Effect. There are no underground or above-ground storage tanks or pits
on the real property now or previously owned or leased by the Company that
require (or that would require, if all relevant facts were known to the
applicable governmental authorities) removal, clean-up, remediation,
restoration, reporting, notification, recordation or any other action except as
would not reasonably be expected to have a Company Material Adverse Effect.

(d) No hazardous substances, solid wastes or other wastes
generated by the Company (or, to the knowledge of the Seller, from properties
previously owned by the Company) have been sent to a site which, pursuant to
any applicable Environmental Law, has been placed, or is proposed to be placed,
on the "National Priority List" or any similar state list of hazardous waste
sites or which is subject to a claim, administrative order or other request to
take any cleanup, removal or remedial action or to pay for any costs relating
to such site. All hazardous substances, solid wastes and other wastes
generated by the Company (or, to the knowledge of the Seller, any properties
previously owned by the Company) and requiring disposal have, to the extent
required by any Environmental Law, been transported only by authorized carriers
and been treated, stored and disposed of only at permitted facilities.

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(e) The Seller shall provide to the Buyer true and correct
copies of all environmental audits, assessments or other reports with respect
to the compliance by the Company with, or liability of the Company under,
Environmental Laws.

3.18 Improper Payments. Neither the Company, any officer,
agent or employee of the Company, nor, to the Company's knowledge, any
distributor or licensee of any of the foregoing, nor any other person or entity
(including, without limitation, any Affiliate of the Seller) acting on behalf
of the Company, in any case for which such action may be attributable to the
Company, has directly or indirectly, on behalf of or with respect to the
Company, (i) made any political contributions with funds of the Company, (ii)
made any payment which was not legal to make or which was not legal for the
payee to receive, (iii) received any payment which was not legal to receive or
which was not legal for the payor to make, (iv) executed any material
transaction or payment which is not properly booked in accordance with GAAP or
(v) had any off-book bank or cash accounts of which the Company was the
beneficial owner.

3.19 Brokers and Finders. The Seller has not incurred any
liability, contingent or otherwise, for brokers' or finders' fees in respect of
this transaction for which the Buyer shall have any responsibility whatsoever.

3.20 Securities Law Matters. The Seller hereby acknowledges
that the shares of Bayard Stock to be transferred to the Seller pursuant to
this Agreement will not be registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any applicable state securities laws. The
Seller represents and warrants to the Buyer that the Seller (i) has reviewed
such information as the Seller has deemed relevant in connection with the
acquisition of such securities, and (ii) is acquiring such securities for
investment purposes only and not with a view to, or in connection with, a
distribution.

3.21 Disclosure. Neither this Agreement nor any certificate,
instrument, or written statement or schedule furnished or to be furnished to
the Buyer by the Seller contains or will contain an untrue statement of
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading. There is no fact which the Seller has
not disclosed to the Buyer and of which the Seller has knowledge which
materially and adversely affects or which could reasonably be expected to
materially and adversely affect the business, condition (financial or
otherwise), prospects, operations, property or affairs of the Company as
proposed to be conducted or the ability of the Seller to perform its
obligations hereunder or under any agreement, document or instrument entered in
connection with the transactions contemplated hereby.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND NEWCO

The Buyer and Newco, jointly and severally, represent and warrant
to the Seller as follows:

4.1 Organization.

(a) The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business in each jurisdiction where it conducts business
except where the failure to so qualify would not have a Buyer Material Adverse
Effect. The Buyer has all requisite corporate power and authority to conduct
its business and to own or lease its properties, as now conducted, owned or
leased.

(b) Newco is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is qualified
to do business in each jurisdiction where it conducts business. Newco has all
requisite corporate power and authority to conduct its business and to own or
lease its properties, as now conducted, owned or leased.

4.2 Authority; Binding Effect.

(a) Buyer has all necessary power and authority to enter into
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
have been duly and validly authorized by the Buyer's Board of Directors, which
constitutes all necessary corporate action on the part of the Buyer for such
authorization. This Agreement has been duly executed and delivered by the
Buyer and constitutes a valid and binding agreement of the Buyer, enforceable
against the Buyer in accordance with its terms. All agreements required
hereunder to be executed and delivered by the Buyer at the Closing will, upon
execution and delivery in accordance with the provisions hereof, constitute
valid and binding agreements enforceable against the Buyer in accordance with
their terms.

(b) Newco has all necessary power and authority to enter into
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
have been duly and validly authorized by Newco's Board of Directors, which
constitutes all necessary corporate action on the part of Newco for such
authorization. This Agreement has been duly executed and delivered by Newco
and constitutes a valid and binding agreement of the Newco, enforceable against

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Newco in accordance with its terms. All agreements required hereunder to be
executed and delivered by Newco at the Closing will, upon execution and
delivery in accordance with the provisions hereof, constitute valid and binding
agreements enforceable against Newco in accordance with their terms.

4.3 Capitalization; Bayard Common Stock. The authorized
capital stock of the Buyer consists of (i) 100,000,000 shares of Bayard Common
Stock, of which 10,932,000 shares are issued and outstanding and (ii)
20,000,000 shares of preferred stock, par value $0.01 per share, of which no
shares are issued and outstanding. All of the issued and outstanding shares of
Bayard Common Stock are validly authorized and issued, fully paid and
nonassessable and have not been issued in violation of preemptive or similar
rights. Except as set forth on Schedule 4.3, there are no outstanding
subscriptions, convertible or exchangeable securities, warrants, options,
contracts, calls, or other rights of any kind committing or obligating the
Buyer to issue or sell any issued or unissued shares of its capital stock, or
any securities or obligations of any kind convertible into its capital stock.
The shares of Bayard Common Stock to be issued to the Seller in connection with
this transaction are duly authorized and, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.

4.4 Financial Statements. The Buyer has previously provided
the Seller with (i) audited financial statements of the Buyer as of and for
the year ended December 31, 1996, consisting of a balance sheet as of such date
and a statement of operations and statement of cash flow for the year then
ended and accompanied by a report of KPMG Peat Marwick, L.L.P. with respect
thereto, and (ii) unaudited financial statements of the Buyer as of and for the
six months ended June 30, 1997, which financial statements consist of a balance
sheet as of such date and a statement of operations and statement of cash flow
for the six months then ended (the "Buyer Financial Statements"). The Buyer
Financial Statements have been prepared and presented in accordance with GAAP
applied on a consistent basis (except that the unaudited financial statements
do not contain notes and may be subject to normal audit adjustments), and the
Buyer Financial Statements present fairly the financial position and results of
operations and changes in cash flows of the Buyer as of the dates and for the
periods indicated. The income reflected in the Buyer Financial Statements
consists of ordinary operating profits and, except as noted in the Buyer
Financial Statements, none of such income is due to a non-reoccurring sale or
transaction outside of the Buyer's ordinary course of business (whether or not
such sale or transaction would be otherwise classified as an extraordinary
event under GAAP).

4.5 Absence of Undisclosed Liabilities. The Buyer has no debt
or liability of any kind, whether accrued, absolute, contingent or otherwise,
including, without limitation, any debt or liability on account of taxes or any
governmental charges or penalty, interest or fines, except (i) as set forth in
Schedule 4.5, (ii) as and to the extent disclosed or

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reserved against in the Buyer Financial Statements or (iii) for debts or
liabilities which were incurred by the Buyer since June 30, 1997 in the
ordinary course of business consistent with past practice and would not,
individually or in the aggregate, be reasonably expected to result in a Buyer
Material Adverse Effect.

4.6 Brokers and Finders. The Buyer has incurred no liability,
contingent or otherwise, for brokers' or finders' fees in respect of this
transaction for which the Seller will have any responsibility whatsoever.

4.7 Securities Law Matters.

(a) The Buyer hereby acknowledges that the Shares will not be
registered under the Securities Act of 1933 or any applicable state securities
laws. The Buyer represents and warrants to the Seller that the Buyer (i) has
reviewed such information as the Buyer has deemed relevant in connection with
the Buyer's acquisition of such securities, and (ii) is acquiring such
securities for investment purposes only and not with a view to, or in
connection with, a distribution.

(b) The shares of Bayard Stock to be transferred to the Seller
pursuant to this Agreement will not be registered under the Securities Act or
any applicable state securities laws. Such securities will be issued to the
Seller in reliance upon the exemption from registration contained in Section
4(2) of the Securities Act and similar provisions of state securities laws.

4.8 Consents and Filings. There is no requirement applicable
to the Buyer or Newco to obtain any consent, approval or authorization of, or
to make or effect any declaration, filing or registration with, any
Governmental Authority for the valid execution and delivery by the Buyer or
Newco of this Agreement, the due performance by the Buyer or Newco of their
respective obligations hereunder or the lawful consummation of the transactions
contemplated hereby, except filings required with respect to the HSR Act and
except for consents, approvals, authorizations, filings and permits, which the
failure to obtain or make would not (i) reasonably be expected to have a Buyer
Material Adverse Effect or (ii) prevent the Buyer or Newco from consummating
the transactions contemplated by this Agreement.

4.9 No Litigation. There are no actions, suits, inquiries,
investigations or other proceedings pending, or, to the knowledge of Buyer, any
basis therefor or threat thereof, against Buyer, its properties or its assets,
which (i) question the validity of this Agreement or the ability of the Buyer
to consummate the transactions contemplated by this Agreement or (ii) would (a)
reasonably be expected to have a Buyer Material Adverse Effect

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or (b) prevent the Buyer or Newco from consummating the transactions
contemplated by this Agreement.

4.10 No Conflicts. Except as set forth in Schedule 4.10
hereto, the execution and delivery by the Buyer and Newco of this Agreement,
and the performance by the Buyer or Newco of the transactions contemplated
hereby, will not: (i) conflict with, or result in a violation or breach of,
any provision of the charter documents or by-laws of the Buyer or Newco, (ii)
conflict with, or result in any violation or breach of, or constitute a default
under, any term or provision of any material mortgage, indenture, deed of
trust, note, bond, lease, permit, license or other instrument, contract or
agreement to which the Buyer or Newco is a party or by which their respective
properties or assets are bound, (iii) conflict with, or result in any violation
of, any material law, ordinance, statute, rule or regulation of any
Governmental Authority or of any order, writ, injunction, judgment or decree of
any court, arbitrator or Governmental Authority applicable to the Buyer or
Newco except, in the case of clause (ii) and (iii), for any conflicts,
violations, breaches or defaults that would not reasonably be expected to have
a Buyer Material Adverse Effect.

4.11 Disclosure.

(a) Neither this Agreement nor any certificate, instrument, or
written statement or schedule furnished or to be furnished to the Seller on
behalf of the Buyer contains or will contain an untrue statement of material
fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading. There is no fact which the Buyer has not
disclosed to the Seller and of which the Buyer has knowledge which materially
and adversely affects or which could reasonably be expected to materially and
adversely affect the business, condition (financial or otherwise), prospects,
operations, property or affairs of the Buyer as proposed to be conducted or the
ability of the Buyer to perform its obligations hereunder or under any
agreement, document or instrument entered in connection with the transactions
contemplated hereby.

(b) The Registration Statement (as hereinafter defined)
previously provided to the Seller complies in all material respects with the
rules and regulations of the Securities and Exchange Commission and does not
and will not contain an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading. As
of the date hereof there is no fact or circumstance that has not been disclosed
to the Seller that would reasonably be expected to result in Buyer Material
Adverse Effect.

4.12 Compliance with Laws. The Buyer is not in breach or
violation of (i) any provision of its charter documents or bylaws, (ii) any
term or provision of any

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Material Agreement to which it is a party or by which its properties or assets
may be bound or (iii) any law, ordinance, statute, rule or regulation of any
Governmental Authority or of any order, writ, injunction, judgment or decree of
any court, arbitrator or Governmental Authority applicable to it or its
properties or assets, except, in the case of clauses (ii) and (iii), for
breaches, violations or defaults which would not reasonably be expected to have
a Buyer Material Adverse Effect.

4.13 Environmental Compliance.

(a) The Buyer is and has been in compliance with all
applicable Environmental Laws, except where the failure to do so would not
reasonably be expected to have a Buyer Material Adverse Effect. The Buyer has
obtained and is and has been in material compliance with all permits required
under applicable Environmental Laws. The Buyer does not know or have reason to
suspect that there is any past or present event, condition or circumstance that
is likely to interfere with the conduct of the business of the Buyer in the
manner now conducted or which would interfere in any material respect with the
Buyer's compliance with Environmental Laws or constitute a material violation
thereof.

(b) Neither the Buyer nor any property previously owned by the
Buyer, is subject to any actual or, to the knowledge of the Buyer, potential
action, claim, investigation, review or other proceeding by any third party or
before any governmental, judicial or regulatory body, under or based upon any
Environmental Law or exposure to hazardous or toxic substances.

(c) The facilities and property presently owned or leased by
the Buyer have been operated in material compliance with all applicable
Environmental Laws and are not (and would not be, if all relevant facts were
known to the applicable governmental authorities) subject to any removal,
clean-up, remediation, restoration or recordation obligations under such laws,
except such as would not reasonably be expected to have a Buyer Material
Adverse Effect. There are no underground or above-ground storage tanks or pits
on the real property now or previously owned or leased by the Buyer that
require (or that would require, if all relevant facts were known to the
applicable governmental authorities) removal, clean-up, remediation,
restoration, reporting, notification, recordation or any other action except as
would not reasonably be expected to have a Buyer Material Adverse Effect.

(d) No hazardous substances, solid wastes or other wastes
generated by the Buyer (or, to the knowledge of the Buyer, from properties
previously owned by the Buyer) have been sent to a site which, pursuant to any
applicable Environmental Law, has been placed, or is proposed to be placed, on
the "National Priority List" or any similar state list of hazardous waste sites
or which is subject to a claim, administrative order or other request to take
any cleanup, removal or remedial action or to pay for any costs relating to

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<PAGE> 30
such site. All hazardous substances, solid wastes and other wastes generated
by the Buyer (or, to the knowledge of the Buyer, any properties previously
owned by the Buyer) and requiring disposal have, to the extent required by any
Environmental Law, been transported only by authorized carriers and been
treated, stored and disposed of only at permitted facilities.

(e) The Buyer shall provide to the Seller true and correct
copies of all environmental audits, assessments or other reports with respect
to the compliance by the Buyer with, or liability of the Buyer under,
Environmental Laws.

4.14 Improper Payments. Neither the Buyer, any officer, agent
or employee of the Buyer, nor, to the Buyer's knowledge, any distributor or
licensee of any of the foregoing, nor any other person or entity (including,
without limitation, any Affiliate of the Buyer) acting on behalf of the Buyer,
in any case for which such action may be attributable to the Buyer, has
directly or indirectly, on behalf of or with respect to the Buyer, (i) made any
political contributions with funds of the Buyer, (ii) made any payment which
was not legal to make or which was not legal for the payee to receive, (iii)
received any payment which was not legal to receive or which was not legal for
the payor to make, (iv) executed any material transaction or payment which is
not properly booked in accordance with GAAP or (v) had any off-book bank or
cash accounts of which the Buyer was the beneficial owner.

ARTICLE V

CERTAIN COVENANTS AND AGREEMENTS

5.1 Access to Information.

(a) From the date hereof until the Closing Date, the Seller
and the Company shall grant to the Buyer and its agents and other
representatives, upon reasonable notice and during normal business hours,
access to the books and records, facilities, tangible assets and personnel of
the Company to the extent reasonably required to enable the Buyer to conduct
its due diligence review for purposes of the transactions contemplated by this
Agreement. All such information obtained by the Buyer and its agents and
representatives shall be subject to Section 5.7 of this Agreement.

(b) From the date hereof until the Closing Date, the Buyer
shall grant to the Seller and its agents and other representatives, upon
reasonable notice and during normal business hours, access to the books and
records, facilities, tangible assets and personnel of the Buyer to the extent
reasonably required to enable the Seller to conduct its due diligence

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<PAGE> 31
review for purposes of the transactions contemplated by this Agreement. All
such information obtained by the Seller and its agents and representatives
shall be subject to Section 5.7 of this Agreement.

5.2 Reasonable Best Efforts. Subject to the terms and
conditions hereof, each of the parties hereto shall use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things which are necessary, proper or advisable under applicable laws
and regulations or otherwise in order to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, each of the parties hereto shall execute and deliver, or
cause to be executed and delivered, all agreements, certificates and other
instruments and shall use its reasonable best efforts promptly to obtain all
waivers, permits, consents, approvals and other authorizations from, and to
effect all registrations, filings and notices with or to, any Governmental
Authorities or other Persons which are necessary or appropriate in connection
with said transactions or in order to fulfill all conditions to obligations of
the parties under this Agreement.

5.3 Conduct of Business Pending Closing.

(a) From the date hereof until the Closing, except as
permitted by this Agreement or as otherwise consented to by the Buyer in
writing, the Seller shall take all actions to cause the Company to, and the
Company shall, (a) conduct its business in the ordinary course and in a manner
consistent with past practice and to preserve its present business organization
and to maintain and preserve intact its present relationships with customers,
suppliers, insurers, lessors and licensees, (b) maintain its books, accounts
and records in the usual, regular and ordinary manner, consistent with past
practice, (c) comply in all material respects with all applicable laws and
regulations. Without limiting the generality of the foregoing, from the date
hereof until the Closing Date, except as permitted by this Agreement or as
otherwise consented to by the Buyer in writing, the Seller shall cause the
Company not to, and the Company shall not, (i) amend or modify its charter
documents or bylaws (ii) issue, sell or dispose of any shares of capital stock
of the Company or any options, warrants, calls or other rights to acquire any
shares of capital stock of the Company, (iii) consolidate or merge with any
person; (iv) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property) with respect to the capital stock of the
Company; (v) reclassify, combine split or subdivide any shares of capital stock
of the Company; (vi) change the accounting principles or methods of the
Company, except as required by law or as a result of any mandatory change in
accounting standards; (vii) mortgage, pledge or subject to any lien, claim or
encumbrance any of the assets of the Company, except for liens, claims or
encumbrances incurred in the ordinary course of business, consistent with past
practice, (viii) enter into, amend or terminate any Material Agreement, except
in the ordinary course of business; (ix) sell, assign, lease, transfer or

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<PAGE> 32
dispose of any properties or assets with a value, individually or in the
aggregate, in excess of $50,000; (x) borrow any funds, or prepay any debt
obligation; (xi) lend any funds to, or guarantee any obligations of, any person
or entity; (xii) enter any agreement or make any commitment which involves,
individually or in the aggregate, a capital expenditure of $50,000 or more; or
(xiii) grant any increase in compensation or pay or agree to pay or accrue any
bonus or like benefit to or for the benefit of any director, officer, employee
or other person, or increase benefits or benefit plan costs, or establish or
increase any bonus, insurance, pension, compensation or other Employee Benefit
Plan or Pension Plan made for or with or covering any directors, officers or
employees; provided, however, that nothing in this Section 5.3(a) shall
prohibit the Company from declaring, setting aside or paying any cash dividend
or other cash distribution with respect to the capital stock of the Company in
an amount which, after giving effect to such cash dividend or other cash
distribution, would, in the good faith estimate of the Seller, result in the
Working Capital Adjustment Amount being approximately zero; provided further,
that such cash dividend or other cash distribution shall be effected by the
Company solely for the purpose of ensuring that the Working Capital Adjustment
Amount will be approximately zero.

(b) From the date hereof until the Closing, the Buyer shall
not pay any dividend in cash or other assets of the Buyer to holders of Bayard
Common Stock.

5.4 Exclusivity. From the date hereof until the Closing, (i)
neither the Seller nor any of its Affiliates, agents or representatives shall,
directly or indirectly, solicit, encourage or accept any offer from, or
negotiate or engage in discussions with, any party with respect to the
transfer, sale, disposition or similar transaction involving the Company, or
provide any information to, any Person concerning such a transaction and (ii)
neither the Buyer nor any of its Affiliates, agents or representatives shall,
directly or indirectly, solicit, encourage or accept any offer from or
negotiate or engage in discussions with, any Person with respect to any
material acquisition transaction. Seller will promptly notify Buyer of any
inquiry (including the terms thereof and the identity of the Person making such
inquiry) which it may receive in respect of any such transaction.

5.5 Notice.

(a) The Seller and the Company shall give written notice to
the Buyer promptly after the Seller or the Company obtains knowledge of the
occurrence, or the alleged occurrence, of any event or omission which would
result in (i) any of the Seller's or the Company's representations or
warranties being or becoming inaccurate or misleading or (ii) any breach by the
Seller or the Company of this Agreement.

(b) The Buyer shall give written notice to the Seller promptly
after the Buyer obtains knowledge of the occurrence, or the alleged occurrence,
of any event or

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<PAGE> 33
omission which would result in (i) any of the Buyer's representations or
warranties being or becoming inaccurate or misleading or (ii) any breach by the
Buyer of this Agreement.

5.6 Return of Informational Material. If the transactions
contemplated by this Agreement are not consummated, the parties shall return to
each other all of the items of information which they have received from any
other party hereunder, including all copies of same made by the parties.

5.7 Confidentiality of Information.

(a) If the transactions contemplated by this Agreement are not
completed, Buyer (i) will keep the information furnished to it hereunder or in
contemplation hereof strictly confidential, except to the extent such
information (A) was already known to the Buyer, or (B) is furnished to the
Buyer by a third party independently of the Buyer's investigation in connection
with the transactions contemplated by this Agreement (and which such third
party is under no restriction prohibiting it from disclosing such information),
or (C) is required to be disclosed by law, provided, however, that if the Buyer
proposes to make any such disclosure required by law, the Buyer shall, at least
five business days prior to such disclosure, provide to the Seller the
information proposed to be disclosed, as well as the facts and circumstances
involved and the reason the Buyer is required to make such disclosure; and (ii)
will not use any of such information to the Buyer's financial advantage or in
competition with the Seller.

(b) From and after the Closing, the Seller shall not, directly
or indirectly, disclose or provide to any other person or entity any nonpublic
information of a confidential nature concerning the business or operations of
the Buyer (including any information related to the Company acquired pursuant
to this Agreement), except as may be required by law; provided, however, that
if the Seller proposes to make any such disclosure required by law, the Seller
shall, at least five business days prior to such disclosure, provide to the
Buyer the information proposed to be disclosed, as well as the facts and
circumstances involved and the reason the Seller is required to make such
disclosure.

5.8 Employment Matters. Except for the employment agreements
set forth on Schedule 3.16 hereto, Buyer is under no obligation to employ any
individual employed by the Company and, to the extent Buyer does employ any
such individual, such employment shall be at-will and Buyer shall be under no
obligation to provide compensation or benefits comparable to those provided to
such individual by the Company.

5.9 Access to and Maintenance of Records. For a period of
three years after the Closing Date, each of the Buyer and the Seller will
preserve and maintain the corporate, accounting, auditing, tax and other books
and records of the Company that are

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<PAGE> 34
held by it or transferred pursuant to this Agreement and will make such books
and records available to each other upon reasonable notice and at reasonable
times. The Buyer and the Seller shall be entitled to make copies of any such
books and records as they shall deem reasonably necessary for purposes of
making the same available to appropriate tax authorities or for other proper
purposes.

5.10 Publicity. Each of the parties hereto agrees that it
shall not and shall not permit its respective Affiliates to make any public
statement (whether written or oral) with respect to this Agreement or the
transactions contemplated herein without the prior written consent of the other
party hereto, unless such public statement is required by law, stock exchange
requirements or legal process, in which case the party required to make such
public statement shall afford the other party reasonable opportunity to review
and comment on such statement prior to dissemination.

ARTICLE VI

CONDITIONS TO CLOSING

6.1. Conditions to the Obligations of Each of the Parties. The
obligations of the Buyer, the Seller the Company and Newco to consummate the
transactions contemplated hereby at the Closing are subject to the fulfillment,
at or prior to the Closing, of the following conditions:

(a) there shall not be any injunction, writ, temporary
restraining order or any order issued by any court or governmental agency
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement; and

(b) all applicable waiting periods under the HSR Act shall
have terminated or expired and no objection shall have been made to the
transaction by either the Federal Trade Commission or the Department of
Justice.

(c) All Liens on the Shares shall have been removed, and the
Shares shall be free and clear of all Liens and the indebtedness of the Company
set forth on Schedule 3.9 hereto shall have been fully and unconditionally
released.

6.2. Conditions to the Obligations of the Buyer and Newco. The
obligation of the Buyer and Newco to consummate the transactions contemplated
hereby at the Closing is subject to the fulfillment, or waiver by the Buyer and
Newco, at or prior to the Closing, of the following conditions:

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(a) The representations and warranties of the Seller and the
Company contained in this Agreement shall be true and correct in all material
respects as of the Closing Date as if made on such date.

(b) The Seller and the Company shall have duly performed or
complied in all material respects with all of the agreements, covenants and
obligations to be performed or complied with by the Seller and the Company
under the terms of this Agreement on or prior to the Closing Date.

(c) The Buyer shall have received certificates, dated the
Closing Date, from the Seller and the Company, executed by the respective chief
executive officer and the chief financial officer of the Seller and the
Company, certifying that the conditions set forth in paragraphs (a) and (b)
above, have been fulfilled.

(d) Buyer shall have received opinions from (i) Michael
Blaschke, general counsel to the Company, (ii) Akin, Gump, Strauss, Hauer &
Feld, L.L.P., counsel to the Seller and the Company (solely as to matters
governed by Delaware law) and (iii) Fellers, Snider, Blankenship, Bailey &
Tippens, A Professional Corporation (solely as to the absence of any
requirement under Oklahoma law that a vote of the stockholders of the Seller be
obtained in order to consummate the transactions contemplated hereby), each
dated the Closing Date, and each in form and substance reasonably satisfactory
to the Buyer.

(e) Each of the Seller and the Broker shall have entered into
(i) the Second Amended and Restated Stockholder and Voting Agreement (the
"Stockholders Agreement") in the form attached as Exhibit A hereto and (ii) the
Registration Rights Agreement (the "Registration Rights Agreement") in the form
attached as Exhibit B hereto.

(f) Buyer shall have received the SAS 71 Review and such SAS
71 Review shall not have contained any material differences from the Company
Unaudited Financial Statements.

(g) Buyer shall have received an assignment of all of Seller's
interests under any contracts or documents relating to the Prior Acquisition
(as hereinafter defined).

6.3 Conditions to the Obligations of the Seller. The
obligation of the Seller and the Company to consummate the transactions
contemplated hereby at the Closing is subject to the fulfillment, or waiver by
the Seller and the Company, at or prior to the Closing, of the following
conditions:

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(a) The representations and warranties of the Buyer and Newco
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date as if made on such date.

(b) The Buyer and Newco shall have duly performed or complied
in all material respects with all of the agreements, covenants and obligations
to be performed or complied with by the Buyer and Newco under the terms of this
Agreement on or prior to the Closing Date.

(c) The Seller shall have received certificates, dated the
Closing Date, from the Buyer and Newco, executed by the respective chief
executive officer and the chief financial officer of the Buyer and Newco,
certifying that the conditions set forth in paragraphs (a) and (b) above, have
been fulfilled.

(d) The Seller shall have received an opinion from Baker &
Botts, L.L.P., counsel to the Buyer, dated the Closing Date, in form and
substance reasonably satisfactory to the Seller.

(e) The Buyer shall have entered into (i) the Stockholders
Agreement and (ii) the Registration Rights Agreement.

ARTICLE VII

TAX MATTERS

7.1 Tax Elections.

(a) Seller shall make a timely and effective election under
Section 338 of the Code (and any corresponding elections under state, local or
foreign tax law) with respect to Seller's acquisition of the Company pursuant
to its tender offer for the Bonray Common Stock on February 11, 1997 (the
"Prior Acquisition") and shall treat the transaction consistently with such
election for state, local and foreign income tax purposes to the extent allowed
by law (the "Section 338 Election"). For purposes of allocating the purchase
price paid by Seller in the Prior Acquisition among the assets of the Company
in accordance with the Treasury regulations promulgated under Section 338 of
the Code, Seller shall consult with, and adopt such allocations as are
reasonably requested by, Buyer. Seller shall (i) be responsible for the timely
and accurate filing of all income tax returns of the Company which are required
to include, or on which are required to be reported, any income, gain, loss, or
deduction attributable to, or resulting from, the Section 338 Election and (ii)
follow the allocations requested by Buyer (which are described in the preceding
sentence) for purposes

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<PAGE> 37
of reporting such income, gain, loss, and deduction. Seller shall pay, and
shall indemnify and hold Buyer harmless against, all liabilities for Taxes of
the Company which are attributable to, or result from, the Section 338
Election.

(b) Except as contemplated in (a) above and as is consistent
with past practice, without the prior written consent of Buyer, neither Seller
nor the Company nor any Affiliate of Seller shall, to the extent it may affect
or relate to the Company, make or change any election, change any annual tax
accounting period, adopt or change any tax accounting method, file any amended
return, enter into any closing agreement, settle any Tax claim or assessment,
surrender any right to claim a refund of Taxes, consent to any extension or
waiver of the limitation period applicable to any Tax claim or assessment, take
any other action or omit to take any action, if any such election, adoption,
change, amendment, agreement, settlement, surrender, consent or other action or
omission would have any adverse tax effects to the Buyer or to the Company for
any period beginning on or after the Closing Date.

7.2 Tax Returns. Seller shall, to the extent permitted by
applicable law, include the Company in its consolidated federal Income Tax
return, and in those state, local and foreign Income Tax returns that are filed
on a consolidated, combined or unitary basis, for the Seller's tax period that
includes the Closing Date. Such Tax Returns shall include, without limitation,
(i) any deferred income and gain taken into income by reason of Treasury
Regulation Section 1.1502-13 or any similar provision of state, local or
foreign law upon consummation of the Merger, (ii) any excess loss accounts
taken into income by reason of Treasury Regulation Section 1.1502-19 or any
similar provision of state, local or foreign law upon consummation of the
Merger, (iii) any cancellation of indebtedness income arising out of the
termination of Seller's and the Company's obligations to each other, and (iv)
all other items of income, gain, loss, deduction and credit of the Company for
the period up to and including the Closing Date, as determined by closing the
books of the Company as of the end of the Closing Date. Seller shall also be
responsible for the timely filing of those tax returns described in Section
7.1(a) hereof and all other Tax Returns of or which include the Company which
are due on or before the Closing Date. Buyer shall be responsible for the
filing of all Tax Returns of the Company which are due after the Closing Date,
other than those described in the first and third sentences of this Section
7.2.

7.3 Liability for Taxes; Indemnification and Control of
Contests.

(a) Seller shall be liable for (i) all Taxes that are required
to be reflected on or paid with, or that relate to or arise out of, the Tax
Returns that Seller is responsible for filing pursuant to Sections 7.1(a) and
7.2 hereof, including, without limitation, any increase in Taxes attributable
to any subsequent adjustments of such Tax Returns, except to the extent
attributable to any action of Buyer or the Company after its acquisition by
Buyer, (ii) a

32
<PAGE> 38
portion, determined as described below, of any ad valorem Taxes, excise Taxes,
in-lieu-of Taxes or similar Taxes that are imposed on or connected with the
Company and its assets for any taxable period beginning before and ending after
the Closing Date (a "Straddle Period"), and (iii) all other Taxes imposed on or
connected with the Company which are attributable to periods ending on or
before the Closing Date (except to the extent attributable to actions of Buyer
or the Company after its acquisition by Buyer). Buyer and the Company shall be
liable for all other Taxes imposed on or connected with the Company; provided,
however, Seller shall be liable for such Taxes only to the extent the aggregate
amount of such Taxes exceeds the amount accrued on the balance sheet in the
Company Unaudited Financial Statements in accordance with past accounting
practice. Should any ad valorem Taxes, excise Taxes, in-lieu-of Taxes or
similar Taxes be imposed on the Company or its assets for any Straddle Period,
Seller shall be liable for a portion of such Taxes that shall be determined by
pro-rating such Taxes for the Straddle Period on a daily basis.

(b) Seller shall indemnify Buyer and the Company, and Buyer
shall indemnify Seller in the manner described in the following paragraph,
against liability for any Taxes or other amounts for which the indemnifying
party (the "Tax Indemnitor") is liable pursuant to Section 7.2(a). The amount
of such indemnity shall also include (i) out-of-pocket costs and expenses
(including, without limitation, reasonable attorney fees, accountants fees and
outside consultant fees) incurred in investigating, defending, or contesting
the Taxes and/or claims for which indemnification is sought and (ii) any
additional amount reasonably necessary to indemnify the indemnified party (the
"Tax Indemnitee") against any additional liability for Taxes that such party
may incur as a result of the indemnity payment itself after taking into account
the Tax benefit to such party from having paid the amount for which the party
is being indemnified or Tax payments resulting from payments under this
Section.

(c) On or after payment of any Taxes or such other amounts by
the Tax Indemnitee, the Tax Indemnitee shall submit an invoice to the Tax
Indemnitor stating that such Taxes or such other amounts have been paid and
giving in reasonable detail the particulars relating thereto. Within 30 days
of receipt of such notice, the Tax Indemnitor shall remit payment for such
Taxes or other amounts to the Tax Indemnitee. Any payment required under this
Section 7.3 that is not made when due shall bear interest (from the date of
receipt of the written notice) at the rate per annum determined, from time to
time, under the provisions of Section 6621(a)(2) of the Code for each day until
paid.

(d) The Tax Indemnitee agrees to give prompt notice to the Tax
Indemnitor of the assertion or payment of any claim, or the commencement of any
suit, action or proceeding, in respect of which indemnity may be sought
hereunder and will give the Tax Indemnitor such information with respect
thereto as it may reasonably request. The failure of the Tax Indemnitee to
exercise promptness in such notification shall not amount

33
<PAGE> 39
to a waiver of such claim unless the resulting delay materially prejudices the
position of the Tax Indemnitor with respect to the claim. The Tax Indemnitor
may, at its own expense and upon notice to the Tax Indemnitee, (i) participate
in and (ii) except as provided in Section 7.3(e), assume the defense of any
such suit, action or proceeding (including any Tax audit); provided that (i)
the Tax Indemnitor's counsel is reasonably satisfactory to the Tax Indemnitee,
and (ii) the Tax Indemnitor shall thereafter consult with the Tax Indemnitee
upon the Tax Indemnitee's reasonable request for such consultation from time to
time with respect to such suit, action or proceeding (including any Tax audit).
If the Tax Indemnitor assumes such defense, (i) the Tax Indemnitee shall have
the right (but not the duty) to participate in the defense thereof and to
employ counsel, at its own expense, separate from the counsel employed by the
Tax Indemnitor and (ii) the Tax Indemnitor shall not assert that the loss, or
any portion thereof, with respect to which the Tax Indemnitee seeks indemnity
is not within the ambit of this Section. If the Tax Indemnitor elects not to
assume such defense, the Tax Indemnitee may pay, compromise or contest the Tax
at issue. Whether or not the Tax Indemnitor chooses to defend or prosecute any
claim, all of the parties hereto shall cooperate in the defense or prosection
thereof.

(e) Notwithstanding the foregoing, Buyer shall control the
defense of any Tax claim that relates to any Tax issue if the settlement of
such issue would be expected to have a greater potential aggregate cost
(determined on a present value basis using an 8% discount rate) to the Company
and to Buyer and its affiliates for any Tax period ending after the Closing
Date than the potential cost of such tax issue to Seller.

7.4 Cooperation on Tax Matters. Buyer and Seller shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the preparation and filing of any Tax Return, statement,
report or form, any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and naming employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Company, Buyer and Seller
agree (i) to retain all books and records with respect to Tax matters pertinent
to the Company relating to any tax period that includes, or ends on or prior
to, the Closing Date for at least six years after the Closing Date, and to
abide by all record retention agreements entered into with any Taxing Authority
and (ii) to give the other party reasonable written notice prior to destroying
or discarding any such books and records that relate directly to the Company's
operations and, if the other party so requests, the Company, Buyer or Seller,
as the case may be, shall allow the other party to take possession of such
books and records.

7.5 Tax Refunds. Buyer agrees to pay Seller that portion of
any refund of Taxes previously paid by the Company which is received by Buyer
or the Company to the

34
<PAGE> 40
extent such refund is attributable to any Tax for which Seller is responsible
under Section 7.3. Seller agrees to pay Buyer that portion of any refund of
Taxes previously paid by Buyer which is received by Seller or any of its
Affiliates to the extent such refund is attributable to any Tax for which Buyer
is responsible. Payments required under this Section 7.5 shall be made within
45 days after the receipt of such refund.

7.6 Carrybacks and Carryovers. Seller will not pay to the
Buyer any refund of Taxes or reduction in Seller's liability for Taxes
resulting from a carryback of a post-acquisition tax attribute of the Company
into the Seller Group's consolidated tax return, and Buyer and the Company
shall be permitted to waive the carryback of any such post-acquisition tax
attribute. Such payment shall be made promptly after such refund or reduction
is realized by the Seller Group. Seller will cooperate with the Company and
the Buyer in obtaining any such refund or reduction in Taxes, including through
the filing of amended tax returns or refund claims.

7.7 Termination of Existing Tax Sharing Agreements. The
Seller shall cause any and all existing Tax sharing agreements or arrangements,
written or unwritten, express or implied, binding the Company, including any
agreements or arrangements which afford any other Person the right to receive
any payment from the Company in respect of any Taxes or the benefit of any tax
attribute of the Company or require or permit the transfer or assignment of any
income, revenues, receipts or gains, to be terminated as of the Closing Date.
After the Closing Date, the Company shall not have any further rights or
obligations under any such agreements.

7.8 Tax Matter Dispute Resolution. To the extent provided in
this Article VI, any disputed items shall be resolved by a nationally
recognized accounting firm chosen by and mutually acceptable to both Buyer and
Seller. The selected accounting firm shall resolve any disputed items within
15 days of having the item referred to it pursuant to such procedures as it may
require. Such resolution shall be final and binding upon the parties hereto,
and shall constitute an arbitral award upon which judgment may be entered in
any court having jurisdiction thereof. The costs, fees and expenses of the
selected accounting firm shall be borne equally by Buyer and Seller.

7.9 Survival for Tax Matters. Notwithstanding anything in
this Agreement to the contrary, the provisions of this Article VII shall
survive for the full period of all statutes of limitations (giving effect to
any waiver, mitigation or extension thereof).

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<PAGE> 41
ARTICLE VIII

INDEMNIFICATION

8.1 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement shall survive until
the second anniversary the Closing Date, except for the representations and
warranties in Sections 3.12 and 3.15, which shall survive until the expiration
of the applicable statute of limitations (taking into account any waiver or
extension thereof).

8.2 Indemnification by the Seller. From and after the Closing
Date, the Seller shall indemnify and hold harmless Buyer, the Company, and each
of their respective directors, officers, stockholders and Affiliates against
any and all damages, losses, liabilities, costs or expenses, including legal
and other expenses reasonably incurred in investigating and defending against
the same (collectively, "Damages") incurred or sustained by such person
resulting from (i) the breach of any representation or warranty of the Seller
or the Company contained in this Agreement, or in any agreement, document or
instrument delivered in connection with the transactions contemplated by this
Agreement (a "Related Agreement"), (ii) any breach of any agreement or covenant
of the Seller or the Company (in the case of any agreement or covenant to be
performed by the Company prior to or at the Effective Time) contained in this
Agreement or in any Related Agreement and (iii) any claim relating to or
arising out of (A) the acquisition of the Shares by the Seller, including, but
not limited to, any appraisal or other action brought by the former
stockholders of the Company, or (B) any action, suit or proceeding identified
in Schedule 3.6 hereto.

The Buyer's rights to indemnification under this Section shall be
limited as follows:

(a) The amount of any Damages incurred by the Buyer shall be
reduced by the net amount the Buyer or the Company recovers (after deducting
all attorneys' fees, expenses and other costs of recovery) from any insurer or
other party liable for the Damages, and the Buyer shall use reasonable efforts
to effect any such recovery.

(b) The Buyer shall not be entitled to indemnification unless
and to the extent the aggregate amount of such Damages (reduced as provided in
paragraph (a) above) exceeds $1,000,000; provided, that for all Damages
incurred or sustained in respect of the matters referred to in subparagraph
(iii) of the first paragraph of Section 8.2, the Buyer shall be entitled to
full indemnification from the first dollar of damages, whether or not the
provisions of this Section 8.2(b) have been satisfied.

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<PAGE> 42
(c) In no event shall the Buyer be entitled to indemnification
pursuant to this Section 8.2 in respect of any Damages arising from a breach of
the representations and warranties set forth in Section 3.17, to the extent
that such breach arises from or is based upon events, conditions or
circumstances occurring or existing at, or arising out of the ownership of, the
property owned by the Company which is identified in Schedule 8.2(c) hereto (it
being understood that the limitation set forth in this paragraph (c) is granted
for and in consideration of the payment by the Seller to the Buyer referred to
in Section 2.3(e)).

(d) In no event shall the Buyer be entitled to indemnification
pursuant to this Section 8.2 for Damages in an aggregate amount exceeding
$60,000,000.

8.3 Indemnification by the Buyer. From and after the Closing
Date, the Buyer shall indemnify and hold harmless the Seller and its directors,
officers, stockholders and Affiliates against any and all Damages incurred or
sustained by such Person resulting from (i) the breach of any representation or
warranty of Buyer contained in this Agreement or in any Related Agreement and
(ii) any breach of any agreement or covenant of the Buyer contained in this
Agreement or in any Related Agreement.

The Seller's rights to indemnification under this Section shall
be limited as follows:

(a) The amount of any Damages incurred by the Seller shall be
reduced by the net amount the Seller recovers (after deducting all attorneys'
fees, expenses and other costs of recovery) from any insurer or other party
liable for the Damages, and the Seller shall use reasonable efforts to effect
any such recovery.

(b) The Seller shall not be entitled to indemnification unless
and to the extent the aggregate amount of such Damages (reduced as provided in
paragraph (a) above) exceeds $1,000,000.

(d) In no event shall the Seller be entitled to
indemnification pursuant to this Section 8.3 for Damages in an aggregate amount
exceeding $60,000,000.

8.4 Indemnification for Third Party Claims. The following
procedures shall be applicable with respect to indemnification for Damages made
or asserted by third parties ("Third Party Claims").

(a) Each Person entitled to indemnification under Section 8.2
or 8.3 hereof (each, an "Indemnified Party") shall give the party or parties
from whom it is seeking indemnification hereunder (collectively, the
"Indemnifying Party") written notice as promptly as reasonably practicable
after the written assertion of any Third-Party Claim or

37
<PAGE> 43
commencement of any action, suit or proceeding in respect thereof; provided,
however, that, if an Indemnified Party fails to give Indemnifying Party written
notice as provided herein, Indemnifying Party shall only be relieved of its
obligations under this Article VIII in respect of such Third-Party Claim if and
to the extent that the Indemnifying Party is materially prejudiced thereby
(whether as a result of the forfeiture of substantive defenses or otherwise).

(b) Promptly after receipt of written notice of a Third-Party
Claim as contemplated by Section 8.4(a), the Indemnifying Party may in its sole
discretion elect to assume the defense of such Third-Party Claim with counsel
reasonably satisfactory to the Indemnified Party; provided, however, that (i)
if the Indemnifying Party fails, within a reasonable time after receipt of
written notice of such Third-Party Claim, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party, the Indemnified Party
shall have the right to undertake the defense, compromise and settlement of
such Third-Party Claim on behalf of and for the account and risk of the
Indemnifying Party, subject to the right of the Indemnifying Party (upon
notifying the Indemnified Party of its election to do so) to assume the defense
of such Third-Party Claim with counsel reasonably satisfactory to the
Indemnified Party at any time prior to the settlement, compromise, judgment or
other final determination thereof, (ii) if in the reasonable judgment of the
Indemnified Party a direct or indirect conflict of interest exists between the
Indemnified Party and the Indemnifying Party in respect of the Third-Party
Claim that would prohibit the assumption of the defense by the Indemnified
Party under the applicable principles of legal ethics, the Indemnified Party
shall (upon written notice to the Indemnifying Party of its election to do so)
have the right to undertake the defense, compromise and settlement of such
Third-Party Claim on behalf of and for the account and risk of the Indemnifying
Party (it being understood and agreed that the Indemnifying Party shall not be
entitled to assume the defense of such Third-Party Claim), (iii) if the
Indemnified Party in its sole discretion so elects, it shall be entitled to
employ separate counsel and to participate in the defense of such Third-Party
Claim (and the Indemnifying Party shall cooperate with the Indemnified Party so
as to allow it to participate in the defense thereof), but the fees and
expenses of counsel so employed shall (except as otherwise contemplated by
clauses (i) and (ii) above) be borne solely by the Indemnified Party and (iv)
without the prior written consent of the Indemnified Party, the Indemnifying
Party shall not settle or compromise any Third-Party Claim, or consent to the
entry of any judgment relating thereto, that does not include as an
unconditional term thereof the grant by the claimant or plaintiff to each
Indemnified Party of a release from any and all liability in respect thereof.

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<PAGE> 44
ARTICLE IX

TERMINATION

9.1 Termination. This Agreement may be terminated:

(a) at any time prior to the Closing by mutual consent of the
Buyer and the Seller;

(b) by the Buyer upon notice to the Seller if any of the
conditions set forth in Sections 6.1 or 6.2 shall have become incapable of
fulfillment and shall not have been waived by the Buyer; provided however, that
Buyer has diligently and in good faith performed and complied in all material
respects with the agreements and covenants required to be performed by it
hereunder;

(c) by the Seller upon notice to the Buyer if any of the
conditions set forth in Sections 6.1 or 6.3 shall have become incapable of
fulfillment and shall not have been waived by the Seller; provided however,
that Seller has diligently and in good faith performed and complied in all
material respects with the agreements and covenants required to be performed by
it hereunder;

(d) by the Buyer, if the Closing shall not have taken place on
or before October 14, 1997, or such later date as the parties may have agreed
to in writing, provided that the nonoccurrence of the Closing is not
attributable to a breach of the terms hereof by the Buyer; or

(e) by the Seller, if the Closing shall not have taken place
on or before October 14, 1997, or such later date as the parties may have
agreed to in writing, provided that the nonoccurrence of the Closing is not
attributable to a breach of the terms hereof by the Seller or the Company.

9.2 Survival. In the event of termination pursuant to Section
9.1, no party shall have any further liability hereunder, except (i) with
respect to any willful breach of this Agreement prior to such termination and
(ii) Sections 5.7, 5.10 and 10.4 shall survive such termination and shall
remain in full force and effect.

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<PAGE> 45
ARTICLE X

DEFINITIONS AND MISCELLANEOUS

10.1 Definitions.

(a) As used in this Agreement, the terms set forth below shall
have the following respective meanings:

"Affiliate" means, with respect to any Person, any other Person
who, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. As used herein, the term "control" means
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

"Broker" means Donaldson, Lufkin & Jenrette Securities
Corporation.

"Buyer Material Adverse Effect" means a material adverse effect
on the business, properties, financial condition or results of operation of the
Buyer and its subsidiaries, taken as a whole.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company Material Adverse Effect" means a material adverse effect
on the business, properties, financial condition or results of operations of
the Company.

"Environmental Laws" shall mean laws (including, without
limitation, federal, state or local laws, ordinances, rules, regulations,
guidelines, interpretations and orders of courts or governmental agencies or
authorities) relating to health, safety, pollution or protection of the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface and subsurface strata), including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act of
1976, the Solid Waste Disposal Act, the Federal Clean Water Act, the Federal
Clean Air Act, the Hazardous Materials Transportation Act (all as amended), and
any common law or equitable doctrines (including, without limitation,
negligence, nuisance, trespass and strict liability) when applied to health,
safety or the environment.

"GAAP" means United States generally accepted accounting
principles as set forth in the opinions of the Accounting Principles Board of
the American Institute of

40
<PAGE> 46
Certified Public Accountants and in statements by the Financial Accounting
Standards Board.

"Governmental Authority" means any nation or government, any
state or political subdivision thereof, any federal or state court and any
other agency or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

"Income Tax" (and, with correlative meaning, "Income Taxes")
means (i) any Tax (including, without limitation, a franchise, withholding or
environmental Tax) imposed on or measured in whole or in part by income or a
taxable base in the nature of income (it being understood that (x) where a tax
is based on the greater of an amount measured by income and an amount measured
by one or more alternative bases, the whole amount of such tax shall be
considered an Income Tax and (y) where tax is the sum of an amount measured by
income and an amount measured by some other tax bases, only the amount of such
tax based on income shall be considered an Income Tax) together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the imposition of
any such Tax (a "Taxing Authority"), (ii) any liability of the Company for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated or combined group or being a party to any
agreement or arrangement whereby liability of the Company for payment of such
amounts is determined or taken into account with reference to the liability of
any other Person for any period and (iii) liability of the Company with respect
to the payment of any amounts of the type described in (i) or (ii) as a result
of any express or implied obligation to indemnify any other Person.

"Liens" means liens, security interests, options, rights of first
refusal, easements, mortgages, charges, debentures, indentures, deeds of trust,
rights-of-way, restrictions, agreements, encroachments, licenses, leases,
permits, security agreements, or any other encumbrances or other restrictions
or limitations on the use of real or personal property or irregularities in
title thereto.

"Material Agreement" means any agreement, mortgage, indenture,
deed of trust, note, bond, lease, permit, license, security agreement,
guarantee, drilling contracts, partnership or joint venture agreements or other
instrument or contract that involves a present or future obligation to deliver
goods or services or pay monies of an amount or value in excess of $20,000,
excluding agreements that are terminable without penalty or forfeiture upon not
more than 60 days notice and agreements with customers in the ordinary course
of business.

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<PAGE> 47
"Permitted Liens" are (i) Liens for Taxes or assessments not yet
due and payable or which are being contested in good faith and by appropriate
proceedings and (ii) mechanics, suppliers, carriers or other similar Liens
arising in the ordinary course of business.

"Person" means an individual, a partnership (whether general,
limited or limited liability), a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency or political
subdivision thereof.

"Registration Statement" means the Buyer's Registration Statement
on Form S-1 as filed with the Securities and Exchange Commission on August 27,
1997 and all amendments thereto.

"SAS 71 Review" means the review of the Company Unaudited
Financial Statements, to be performed by Coopers & Lybrand in accordance with
the American Institute of Certified Public Accountants, Inc.'s Statement on
Accounting Standards No. 71.

"Seller Group" means, with respect to Federal Income Taxes, the
affiliated group of corporations (as defined in Section 1504(a) of the Code) of
which Seller is a member, and with respect to state, local or foreign Income
Taxes, the combined, consolidated or unitary group of which Seller or any
Affiliate of Seller is a member.

"Seller Material Adverse Effect" means a material adverse effect
on the business, properties, financial condition or results of operations of
the Seller and its subsidiaries, taken as a whole.

"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed by or with respect to
the Company in respect of any Taxes, including, without limitation, (i) any
consolidated Federal Income Tax return of the Seller Group in which the Company
is included or (ii) any state, local or foreign Income Tax returns filed by the
Seller Group on a consolidated, combined or unitary basis (for purposes of
determining tax liability) in which the Company is included.

"Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means (i) any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, license, withholding on amounts paid to or by the Company, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with
any interest or any penalty, addition to tax or additional amount imposed by
any Taxing Authority, (ii) any

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<PAGE> 48
liability of the Company for the payment of any amounts of the type described
in (i) as a result of being a member of an affiliated or consolidated group, or
arrangement whereby liability of the Company for payment of such amounts was
determined or taken into account with reference to the liability of any other
person for any period and (iii) liability of the Company with respect to the
payment of any amounts of the type described in (i) or (ii) as a result of any
express or implied obligation to indemnity any other Person.

(b) Each of the terms set forth below has the meaning set
forth opposite such term in the following table:

<TABLE>
<CAPTION>
Term Provision
---- ---------
<S> <C>
Accounting Arbiter Section 2.4(e)
Agreement Preamble
Adjusted Current Assets Section 2.4(a)
Bayard Common Stock Section 1.5(a)
Bonray Common Stock Section 1.5(a)
Buyer Preamble
Buyer Financial Statements Section 4.4
Closing Section 2.1
Closing Date Section 2.1
Company Preamble
Company Audited Financial Statements Section 3.8
Company Financial Statements Section 3.8
Company Unaudited Financial Statements Section 3.8
Current Liabilities Section 2.4(a)
Damages Section 8.2
Defined Benefit Plan Section 3.15(e)
Effective Time Section 1.2
Employee Benefit Plans Section 3.15(a)
ERISA Section 3.15(a)
ERISA Affiliate Section 3.15(d)
General Corporation Law Section 1.1
HSR Act Section 3.5
Indemnified Party Section 8.4(a)
Indemnifying Party Section 8.4(a)
Merger Recitals
Newco Preamble
Objection Period Section 2.4(c)
</TABLE>

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<PAGE> 49
<TABLE>
<CAPTION>
Term Provision
---- ---------
<S> <C>
OSHA Section 3.16(c)
Pension Plan Section 3.15(b)
Post-Closing Adjustment Date Section 2.4(f)
Prior Acquisition Section 7.1(a)
Registration Rights Agreement Section 6.2(e)
Related Agreement Section 8.2
Section 338 Election Section 7.1(a)
Securities Act Section 3.20
Seller Preamble
Shares Recitals
Straddle Period Section 7.3(a)
Stockholders Agreement Section 6.2(e)
Surviving Corporation Section 1.1
Tax Indemnitee Section 7.3(b)
Tax Indemnitor Section 7.3(b)
Third Party Claims Section 8.4
WARN Section 3.16(d)
Working Capital Adjustment Amount Section 2.4(a)
Working Capital Schedule Section 2.4(b)
</TABLE>

10.2 Notices. All communications required or permitted to be
given under this Agreement shall be in writing and delivered, mailed or
transmitted to the parties at the addresses set out below. Notices shall be
deemed given when received except that notices given by facsimile transmission
on weekends, holidays or after 5:00 p.m. Central Time, shall be deemed received
on the next business day. If delivered by commercial delivery service or
mailed by registered or certified mail, the delivery receipt shall be evidence
of the date of receipt. Either party may, by written notice so delivered to
the other, change the address to which delivery shall thereafter be made.

(a) Notices to the Buyer or Newco:

Bayard Drilling Technologies, Inc.
4005 N.W. Expressway, Suite 400E
P.O. Box 268867
Oklahoma City, OK 73126-8867
Attention: James E. Brown, President
Fax No. (405) 879-3847

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<PAGE> 50
(b) Notices to the Seller or the Company:

DLB Oil and Gas, Inc.
1601 Northwest Expressway, Suite 700
Oklahoma City, Oklahoma 73702
Attention: Mark Liddell, President
Fax No. (405) 848-9449

10.3 Binding Effect; Assignability. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. The Buyer shall be entitled to assign this
Agreement or any of its rights hereunder so long as it remains liable to
perform its obligations hereunder.

10.4 Expenses. Each party hereto will bear and pay its own
expenses of negotiating and consummating the transactions contemplated hereby.

10.5 Section Headings. The section headings contained in this
Agreement are for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Agreement.

10.6 Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto and the certificates, opinions and documents delivered in
accordance with the provisions hereof) constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
written or oral agreements and understandings and all contemporaneous oral
agreements and understandings among the parties or any of them with respect to
the subject matter hereof. All Exhibits and Schedules hereto and certificates,
opinions and other documents delivered in accordance with the provisions hereof
are expressly made a part of this Agreement.

10.7 Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed entirely therein.

10.8 Costs of Enforcement. The prevailing party in any
litigation initiated to enforce rights under or collect damages for breach of
this Agreement shall be entitled to reimbursement from the nonprevailing party
of all costs and expenses, including attorneys' fees, incurred by the
prevailing party in connection with such litigation.

10.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

45
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

SELLER:

DLB OIL AND GAS, INC.

By: /s/ MARK LIDDELL
-----------------------------------------
Mark Liddell
President

BUYER:

BAYARD DRILLING TECHNOLOGIES, INC.

By: /s/ JAMES E. BROWN
-----------------------------------------
James E. Brown
President

NEWCO:

BONRAY ACQUISITION CORP.

By: /s/ JAMES E. BROWN
-----------------------------------------
James E. Brown
President

COMPANY:

BONRAY DRILLING CORPORATION

By: /s/ MARK LIDDELL
-----------------------------------------
Mark Liddell
Vice President

<PAGE> 1

EXHIBIT 10.28

BAYARD DRILLING TECHNOLOGIES, INC.

1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1

SCOPE AND PURPOSE OF THE PLAN
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2

GENERAL DEFINITIONS
2.1 General Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 3

SHARES OF COMMON STOCK SUBJECT TO THE PLAN
3.1 Maximum Amount of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Limitation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 4

ADMINISTRATION OF THE PLAN
4.1 The Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Registration and Listing of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE 5

ELIGIBILITY AND PARTICIPATION
5.1 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE 6

STOCK OPTIONS
6.1 Automatic Annual Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.2 Retainer Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.3 Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.4 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.5 Nontransferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.6 Individual Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 7

FORFEITURE AND EXPIRATION OF STOCK OPTIONS DUE TO RESIGNATION OR REMOVAL
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE 8

ADJUSTMENT PROVISIONS
8.1 Common Stock Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.2 Corporate Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.3 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 9

GENERAL PROVISIONS
9.1 No Right to Board Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.2 Securities Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.3 No Right to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.4 Company's Right to Purchase Common Stock: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 10

AMENDMENT AND TERMINATION
10.1 Amendments; Suspensions; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 11

EFFECTIVE DATE OF PLAN AND DURATION OF PLAN
11.1 Effective Date and Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>

ii
<PAGE> 4
ARTICLE 1

SCOPE AND PURPOSE OF THE PLAN

1.1 Purpose. The purpose of the Bayard Drilling
Technologies, Inc. 1997 Non-Employee Directors' Stock Option Plan (the "Plan")
is to strengthen the ability of Bayard Drilling Technologies, Inc. (the
"Company") and its Subsidiaries to attract and retain experienced and
knowledgeable independent individuals who act as non-employee directors of the
Company and to encourage these directors to have a proprietary interest in the
Company, in the best interests of the Company's shareholders. In furtherance
of that purpose, the Company's non-employee directors shall receive
non-qualified Stock Options pursuant to the terms and provisions of this Plan.

ARTICLE 2

GENERAL DEFINITIONS

2.1 General Definitions. As used in this Plan, the
following terms shall have the meanings set forth in this Section 2.1, unless a
clearly different meaning is required by the context in which the word or
phrase is used:

(a) "Agreement" -- the written instrument
evidencing the grant to a Participant of a Stock Option. Each
Participant may be issued one or more Agreements from time to time,
containing one or more Stock Options.

(b) "Annual Retainer" -- the compensation to
which a Non-Employee Director is entitled as a retainer for his or her
services as a member of the Board during the Plan Year. "Annual
Retainer" shall not include (i) fees paid for attending Board meetings
or meetings of Board committees, (ii) any other amounts paid to a
Non-Employee Director by the Company on a per-meeting basis or (iii)
amounts paid by the Company or a subsidiary for services rendered to
the Company or the subsidiary in a capacity other than as a
Non-Employee Director.

(d) "Change of Control" -- the occurrence of one
or more of the following events:

(a) In the event that the Company
becomes subject to reporting under the Exchange Act, a change
of control of a nature that would be required to be reported
in a response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act, or any successor
regulation of similar import, whether or not the Company is
then subject to such reporting requirement;

<PAGE> 5
(b) After the date the Board adopts this
Plan, a change in ownership of the Company through a
transaction or series of transactions, such that any Person
(as described in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the Beneficial Owner (as described in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities;

(c) After the effective date of adoption
of this Plan, as determined by the Committee pursuant to
Article Eleven, a change in identity of a majority of the
members of the Board within any twelve month period;

(d) The approval by the Board (or by the
shareholders if shareholder approval is required by applicable
law or under the terms of any relevant agreement) of an
agreement for the sale or disposition of all or substantially
all of the Company's assets or a sale/leaseback of all or
substantially all of the Company's assets (with or without a
purchase option);

(e) A transfer of all or substantially
all of the Company's assets pursuant to a partnership or joint
venture agreement where the Company's resulting interest is or
becomes fifty percent (50%) or less; or

(f) The execution or approval by the
Board of any agreement, the consummation of which would result
in one of the foregoing.

(e) "Code" -- the Internal Revenue Code of 1986,
as amended from time to time.

(f) "Committee" -- the Committee that the Board
appoints to administer the Plan, which shall be composed of at least
two directors who are not employees, former employees, or officers (as
defined in Section 240.16a-1(f) of the Exchange Act regulations) of
the Company or a Subsidiary, and who (i) do not directly or indirectly
receive compensation from the Company or a Subsidiary in any capacity
other than as a director, except for amounts not exceeding that amount
for which disclosure would be required pursuant to Item 404(a) of
Regulation S-K promulgated by the Securities and Exchange Commission,
(ii) do not possess an interest in any transaction with the Company or
a Subsidiary for which disclosure would be required under Item 404(a)
of Regulation S-K, or (iii) are not engaged in a business relationship
for which disclosure would be required pursuant to Item 404(b) of
Regulation S-K.

(g) "Common Stock" -- the common shares of the
capital stock of the Company as described in the Company's Certificate
of Incorporation, or such other stock as shall be substituted
therefore as provided in Article 8. Shares of Common Stock issued
pursuant to Stock Option exercise are subject to restrictions as set
forth in this Plan, and to

2
<PAGE> 6
each Agreement pursuant to which a Participant receives or could
receive Common Stock pursuant to the Plan.

(h) "Company" -- Bayard Drilling Technologies,
Inc., or any successor thereto.

(i) "Date of Grant" -- the date on which the
grant of a Stock Option is made by action of the Board or Committee
unless another date is specified by the Committee or by a provision in
this Plan applicable to the Stock Option.

(j) "Exchange Act" - the Securities Exchange Act
of 1934, as amended.

(k) "Exercise Price" -- the price specified in
Article 6 to be paid per share upon exercise of a Stock Option under
this Plan.

(l) "Fair Market Value" -- if the Common Stock
is publicly traded, then "Fair Market Value" means the closing price
per share of such Common Stock on the principal stock exchange or
quotation system on which the Common Stock is quoted or listed on the
Date of Grant or other specified measuring date, or, if there shall
have been no such price so reported or listed on that date, on the
last preceding date on which a price was so quoted or listed. If the
Common Stock is not publicly traded, then "Fair Market Value" shall
mean the value of a share of Common Stock, as determined by the
Committee, in its sole and absolute discretion, no less frequently
than annually.

(m) "Non-Employee Director" -- an individual who
is not an employee of the Company or a Subsidiary and who is a member
of the Board of Directors of the Company.

(n) "Participant" -- each Non-Employee Director
of the Company; provided, however, that a Non-Employee Director who
does not retain the Annual Retainer as personal compensation, but who,
rather, transfers the Annual Retainer to his or her regular employer,
shall not be eligible to participate in this Plan but shall be
eligible for appointment to the Committee.

(o) "Plan" -- the Bayard Drilling Technologies,
Inc. 1997 Non-Employee Directors' Stock Option Plan, as set forth in
this document, and as it may be amended from time to time.

(p) "Plan Year" -- the twelve (12) consecutive
month period beginning January 1 and ending December 31.

(q) "Stock Option" -- a right granted to a
Participant under Article 6 to purchase Common Stock at a specified
price during specified time periods. A Stock Option

3
<PAGE> 7
granted under this Plan shall not constitute an "incentive stock
option" as described in Section 422 of the Code.

(r) "Subsidiary" - a "subsidiary corporation", as
defined in Section 424(f) of the Code, that is subsidiary to the
Company.

2.2 Construction. The singular may include the plural,
unless the context clearly indicates to the contrary. The term "delivered to
the Committee," as used in the Plan shall include delivery to a person or
persons designated by the Committee for the disbursement and receipt of
administrative forms, elections or other communications. Delivery shall be
deemed to have occurred only when the form or other communication is actually
received. Headings and subheadings used in this Plan document are for the
purpose of reference only and are not to be considered in the construction of
the Plan. Unless the context clearly indicates to the contrary, Article and
Section references herein shall be deemed to refer to Articles and Sections of
the Plan. All of the provisions of the Plan shall be construed according to
the laws of the State of Texas.

ARTICLE 3

SHARES OF COMMON STOCK SUBJECT TO THE PLAN

3.1 Maximum Amount of Shares. Subject to the provisions
of Section 3.2 and Article 8 of this Plan, the aggregate number of shares of
Common Stock that may be issued, transferred or exercised pursuant to Stock
Options under the Plan (the "Authorized Shares") shall not exceed 200,000
shares; provided, however, that if the total number of issued and outstanding
shares of Common Stock shall increase after the effective date of the Plan
(other than any increase due to issuances of Common Stock in connection with
awards of Stock Options under the Plan), then the number of Authorized Shares
shall be increased one time per year, commencing January 1, 1998 and occurring
each January 1 thereafter during the existence of the Plan, by a sufficient
number of shares of Common Stock such that the number of Authorized Shares
reserved and available for issuance under the Plan shall equal 1.2% of the
total number of shares of issued and outstanding Common Stock. At the
discretion of the Board or the Committee, the shares to be delivered under the
Plan shall be made available either from (i) authorized but unissued shares of
Common Stock, (ii) Common Stock held in the treasury of the Company, or (iii)
previously issued shares of Common Stock reacquired by the Company, including
shares purchased on the open market, or through some combination thereof.

3.2 Limitation of Shares. For purposes of the limitation
specified in Section 3.1, the following principles shall apply:

(a) shares of Common Stock subject to outstanding
or exercised Stock Options shall count against and decrease the number
of shares of Common Stock that may be issued for purposes of Section
3.1;

4
<PAGE> 8
(b) shares of Common Stock with respect to which
Stock Options expire, are canceled, or otherwise terminate without
being exercised, converted, or vested, as applicable shall be added
back to the number of shares of Common Stock that may be issued for
purposes of Section 3.1;

(c) shares of Common Stock that are transferred
by a holder of a Stock Option (or withheld by the Company) as full or
partial payment to the Company of the purchase price of shares of
Common Stock subject to a Stock Option or the Company's or any
Subsidiary's tax withholding obligations shall not be added back to
the number of shares of Common Stock that may be issued for purposes
of Section 3.1 and shall not again be subject to Stock Options.

ARTICLE 4

ADMINISTRATION OF THE PLAN

4.1 The Committee. The Committee shall administer the
Plan. The Committee shall consist of two or more Non-employee Directors of the
Board elected to the Committee by a majority of the Board. The members of the
Committee shall serve at the discretion of the Board. The Board shall have the
power, at any time and from time to time, to remove members from or add members
to the Committee. Any individual serving as a member of the Committee shall
have the right to resign from membership in the Committee by written notice to
the Board. The Board, other than the remaining members of the Committee, shall
have the power and authority to fill vacancies on the Committee, however
caused. No member of the Board or the Committee shall be liable for any action
or determination made in good faith by the Board or the Committee with respect
to the Plan or any Stock Option. The Committee may, in its discretion, and to
the extent permitted pursuant to Rule 16b-3 under the Exchange Act, section
162(m) of the Code and applicable law, delegate its duties under the Plan to
such agents as it may appoint from time to time. In the event that the Plan
becomes subject to Section 16 of the Exchange Act, the Committee shall not be
able to delegate its duties with respect to Participants subject to Section 16
of the Exchange Act.

4.2 Powers. The Committee may exercise such powers and
authority as may be necessary for the Committee to carry out its functions as
described in the Plan. The Committee shall have the discretion to determine
the terms and provisions of the Agreements in a manner, however, consistent
with the Plan and to make all other determinations necessary for Plan
administration. The Committee shall not have the discretion or authority to
disregard or change any of the terms and conditions under which Stock Options
are granted to Participants or may be exercised under the Plan. Grants of
Stock Options shall be automatic as described in Article 6. The Committee has
authority to interpret the Plan and the Agreements thereunder and the authority
to prescribe, amend and rescind any rules relating to the Plan. All Committee
interpretations, determinations and actions shall be binding on all parties. A
majority of the Committee shall constitute a quorum. Acts of a majority of the
members present at any meeting at which a quorum is present or acts approved in
writing by a majority of the Committee shall deemed to be the acts of the
Committee.

5
<PAGE> 9
4.3 Agreements. Stock Options shall be evidenced by a
written instrument and may include any terms and conditions consistent with the
Plan, as the Committee may determine.

4.4 Registration and Listing of Shares. From time to
time, the Board of Directors and appropriate officers of the Company shall and
are authorized to take whatever actions are necessary to file required
documents with governmental authorities and stock exchanges to make shares of
Common Stock available for issuance pursuant to exercised Stock Options.

ARTICLE 5

ELIGIBILITY AND PARTICIPATION

5.1 Participation. All Non-Employee Directors shall be
Participants in this Plan; provided, however, that a Non-Employee Director who
does not retain his or her Annual Retainer as personal compensation, but who,
rather, transfers the Annual Retainer to his or her regular employer, shall not
be eligible to participate in this Plan, but shall remain eligible for
appointment to the Committee. A new Non-Employee Director shall become a
Participant on the date on which he or she becomes a Non-Employee Director.

ARTICLE 6

STOCK OPTIONS

6.1 Automatic Annual Awards. As of the date on which a
Non-Employee Director first becomes a Participant, or the effective date of
adoption of this Plan determined pursuant to Article Eleven, whichever date
shall last occur, such Non-Employee Director shall be granted a Stock Option to
acquire fifteen thousand (15,000) shares of Common Stock of the Company. Such
Stock Option shall be exercisable only on and after the Common Stock is first
listed or quoted on a public stock exchange or quotation system, as determined
by the Committee.

In each Plan Year succeeding the year of initial grant, as
described above, the Participant shall be granted an additional Stock Option to
acquire five thousand (5,000) shares of Common Stock of the Company. Such
grant shall be made as of the date of the Company's regular annual meeting of
shareholders for such Plan Year and shall be immediately exercisable. No such
grant of Stock Options shall be made to a Participant who ceased to be a
Non-Employee Director immediately following the regular annual meeting of
shareholders of the Company for such Plan Year. No Stock Option issued
pursuant to this Section 6.1 shall be exercisable, and such a Stock Option
shall lapse, after the tenth (10th) anniversary of the Date of Grant, subject
to Article 7.

6.2 Retainer Options. In addition to the Stock Options
described in Section 6.1, a Participant may make an election to receive, in
lieu of any or all of the Annual Retainer he would otherwise receive in cash
during the succeeding Plan Year, Stock Options that provide for the purchase of
a number of shares of Common Stock (rounded up to the nearest whole number)
equal

6
<PAGE> 10
to the amount of the Annual Retainer so forgone by the Participant divided by
the Fair Market Value of the Common Stock on the Date of Grant. Each annual
election made by a Participant pursuant to this Section 6.2: (i) shall take
the form of a written document signed by such Participant and filed with the
Secretary of the Company; (ii) shall designate the dollar amount of the Annual
Retainer the Participant elects to forego in the next Plan Year in exchange for
Stock Options; and (iii) shall be filed with the Secretary before the first day
of the Plan Year with respect to which such election is effective. The Date of
Grant of Stock Options granted under this Section 6.2 shall be July 1 of the
Plan Year for which such election was made.

6.3 Exercise Price. The per share Exercise Price of
Stock Options shall be equal to the Fair Market Value of a share of Common
Stock as of the Date of Grant. Such price shall be payable in cash or, in the
discretion of the Committee, by assigning and delivering to the Company shares
of Common Stock equal in value to the Exercise Price, or in a combination of
cash and such shares equal in value to the Exercise Price. Any shares so
assigned and delivered to the Company in payment or partial payment of the
Excise Price shall be valued at Fair Market Value on the exercise date. No
fractional shares shall be issued pursuant to the exercise of a Stock Option
and no payment shall be made in lieu of fractional shares.

6.4 Payment of Taxes. The Committee may, in its
discretion, require a Participant to pay to the Company, at the time of
exercise of a Stock Option, the amount that the Committee deems necessary to
satisfy the Company's or Subsidiary's current or future obligation to withhold
any federal, state or local income or other taxes that the Participant incurs
in connection with such Stock Option. The Participant may (i) direct the
Company to withhold from the shares of Common Stock (if any) to be issued to
the Participant the number of shares necessary to satisfy the Company's
obligation to withhold taxes, such determination to be based on Fair Market
Value of such shares as of the date on which tax withholding is to be made,
(ii) deliver to the Company sufficient shares of Common Stock (based upon the
Fair Market Value at the date of withholding) to satisfy the Company's
withholding obligations, or (iii) deliver to the Company sufficient cash to
satisfy the Company's withholding obligation. Participants who elect to use
the stock withholding feature may make the election at the time and in the
manner prescribed by the Committee. The Committee may, in its sole discretion,
deny any Participant's request to satisfy withholding obligations through
Common Stock withholding instead of payment by cash. In the event the
Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Common Stock withheld as payment of any tax
withholding obligation is insufficient to discharge that tax withholding
obligation, then the Participant shall pay to the Company or Subsidiary the
amount of that deficiency immediately upon the Company's request.

6.5 Nontransferability. Except as determined by the
Committee and set forth in the Agreement, no Stock Option or other benefit
under this Plan constituting a derivative security under Rule 16a-1(c) under
the Exchange Act shall be assignable or subject to any sale, transfer,
encumbrance, gift, donation, pledge, hypothecation, or other disposition,
whether similar or dissimilar to those previously enumerated, whether voluntary
or involuntary, and whether during the Participant's lifetime or upon or after
his or her death, including, but not limited to, any disposition

7
<PAGE> 11
by operation of law, by court order, by judicial process, or by foreclosure,
levy, or attachment; provided that a Stock Option may be subject to a qualified
domestic relations order as defined in section 414(q) of the Code, or the
regulations thereunder, by will or beneficiary designation (pursuant to such
rules as may be established by the Committee, including rules designed to
satisfy the conditions of an available exemption pursuant to Rule 16b-3 under
the Exchange Act) upon the death of the Participant, or pursuant to the laws of
descent or distribution. If a beneficiary is the executor or administrator of
the estate of the Participant, any rights with respect to such Stock Option may
be transferred to the person or persons or entity (including a trust) entitled
thereto under the will of the holder of such Stock Option. If no beneficiary
is designated, the Participant's legal representative shall be the beneficiary.
Any attempted disposition in violation of this Section 6.5 shall be void and
ineffective for all purposes.

6.6 Individual Limits. Notwithstanding anything to the
contrary in this Plan, no Participant may be issued a Stock Option to acquire
more than fifteen thousand (15,000) shares of Common Stock in any Plan Year.

ARTICLE 7

FORFEITURE AND EXPIRATION OF STOCK OPTIONS
DUE TO RESIGNATION OR REMOVAL

7.1 Termination. Except to the extent that the
Committee provides otherwise in the Agreement evidencing a Stock Option issued
pursuant to this Plan, the Stock Option, whether then exercisable or not, shall
expire and be forfeited upon the date of resignation or removal of the
Participant from the Board, except in the event of resignation or removal as a
result of permanent and total disability of the Participant, resignation upon
or after the attainment of sixty-five (65) years, or upon the death of the
Participant. In any of such events, such Stock Option shall remain exercisable
and effective for a period of six (6) months following the date of the event
causing the Participant to cease membership of the Board.

ARTICLE 8

ADJUSTMENT PROVISIONS

8.1 Common Stock Adjustments. Subject to Section 3.1, if
the outstanding shares of Common Stock of the Company are exchanged for a
different number or kind of shares or other securities, or if additional, new
or different shares or other securities are distributed with respect to such
shares of Common Stock or other securities through merger, consolidation, sale
of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or
other securities, an appropriate adjustment shall be made in (i) the maximum
number and kind of shares provided in Section 3.1, (ii) the number and kind of
shares or other securities subject to each outstanding Stock Option, and (iii)
the price for each share or other unit of any other

8
<PAGE> 12
securities subject to then outstanding Stock Options, without changing the
aggregate purchase price or value as to which such Stock Options remain
exercisable or subject to restrictions. Adjustments under this Section 8.1
shall be made by the Committee, and its determination as to what adjustments
shall be made and the extent thereof shall be final, binding and conclusive.
No fractional interest shall be issued under the Plan on account of any such
adjustments.

8.2 Corporate Changes. Upon: (i) the dissolution or
liquidation of the Company; (ii) a reorganization, merger or consolidation
(other than a merger or consolidation primarily to effect a reincorporation of
the Company in another state or any other merger or consolidation in which the
shareholders of the surviving corporation and their proportionate interests
therein immediately after the merger or consolidation are substantially
identical to the shareholders of the Company and their proportionate interests
therein immediately prior to the merger or consolidation) of the Company with
one or more corporations, following which the Company is not the surviving
corporation (or survives only as a subsidiary of another corporation in a
transaction in which the shareholders of the parent of the Company and their
proportionate interests therein immediately after the transaction are
substantially identical to the shareholders of the Company and their
proportionate interests therein immediately prior to the transaction); (iii)
the sale of all or substantially all of the assets of the Company; or (iv) the
occurrence of any event described in Section 8.3, subject to the terms of any
applicable Agreement, the Committee may, to the extent permitted in Section 3.1
of this Plan, in its discretion, without obtaining shareholder approval, take
any one or more of the following actions: (i) determine that all or some Stock
Options then outstanding under this Plan shall be fully vested and exercisable
or convertible, as applicable; or (ii) determine that there shall be
substitution of new Stock Options by such successor employer corporation or a
parent or subsidiary company thereof, with appropriate adjustments as to the
number and kind of shares or units subject to such awards and prices; or (iii)
cancel such Stock Options and pay the Participants or their beneficiaries, as
applicable, the difference between the exercise price described in the
respective Agreements and the Fair Market Value of shares subject to the
Agreement as of the date determined by the Committee to be the date of any such
corporate change.

8.3 Change of Control. In the event of a "Change of
Control" of the Company, the Committee may, in its discretion, without
obtaining shareholder approval, take any one or more of the following actions,
with respect to any Participant:

(a) Accelerate the exercise dates of any or all
outstanding Stock Options or make some or all such Stock Options
immediately fully vested and exercisable; or

(b) Pay cash to any or all holders of Stock
Options in exchange for the cancellation of their outstanding Stock
Options.

9
<PAGE> 13
ARTICLE 9

GENERAL PROVISIONS

9.1 No Right to Board Membership. Nothing in the Plan or
in any Agreement executed pursuant to the Plan shall confer upon any
Participant any right to continue as a member of the Board of the Company or
any Subsidiary or affect the Board's right to remove the Participant at any
time with or without cause, pursuant to the Company's Certificate of
Incorporation or Bylaws.

9.2 Securities Requirements. As determined by the
Committee, no shares of Common Stock shall be issued or transferred pursuant to
a Stock Option unless all applicable requirements imposed by federal and state
securities laws, regulatory agencies, and stock exchanges or quotation systems
upon which the Common Stock may be listed or quoted, if any, have been fully
met. As a condition precedent to the issuance of shares pursuant to the grant
or exercise of a Stock Option, the Company may require the Participant to take
any reasonable action the Committee determines necessary to meet such
requirements.

9.3 No Right to Stock. No Participant and no beneficiary
or other person claiming under or through such Participant shall have any
right, title or interest in any shares of Common Stock allocated or reserved
under the Plan or subject to any Stock Option except as to such shares of
Common Stock, if any, that are subject to an outstanding Stock Option.

9.4 Company's Right to Purchase Common Stock: Until the
Common Stock is first listed or quoted on an exchange or quotation system, any
Common Stock obtained pursuant to a Stock Option shall be subject to the
Company's right of first purchase. By virtue of that right,

(a) If a Participant intends to transfer shares
of Common Stock obtained pursuant to a Stock Option, he or she shall
give written notice to the Company of his or her intention to so
transfer. The notice, in addition to stating the fact of the
intention to transfer shares, shall state (i) the number of shares to
be transferred; (ii) the name, business and residence address of the
proposed transferee; (iii) whether or not the transfer is for a
valuable consideration and (iv) if so, the amount of the consideration
and the other terms of the sale.

(b) Within thirty (30) days of the Company's
receipt of the notice described in (a) above, the Company may exercise
an option to purchase all or any portion of the shares of Common Stock
proposed to be transferred for the price and upon the other terms
provided in the Agreement. The Company shall exercise this option by
providing the Participant with written notice of its intent to do so.

(c) If the Company does not exercise its option
to purchase the shares of Common Stock proposed to be transferred,
such shares may be transferred by the Participant in accordance with
the notice provided in (a) above within ten (10) days after the
expiration of the thirty (30) day option period granted by (b) above.
Upon transfer, such shares shall

10
<PAGE> 14
continue to be bound by any terms and conditions of the Stock Option
as shall continue to apply on transfer.

ARTICLE 10

AMENDMENT AND TERMINATION

10.1 Amendments; Suspensions; Termination. Subject to
shareholder approval where expressly required by law, the Board shall have the
power to amend, suspend or terminate this Plan at any time. No amendment,
unless approved by the holders of a majority of the outstanding shares of
voting stock of the Company will be effective where such approval is necessary
to preserve qualification of the Plan under Rule 16b-3 under the Exchange Act
or will:

(a) Change the class of persons eligible to
receive Stock Options under this Plan,

(b) Materially increase the benefits accruing to
Participants under this Plan;

(c) Increase by more than 10% the number of
shares of Common Stock subject to this Plan; except as provided in
Article 8;

(d) Transfer the administration of this Plan to
any person who is not a Non-Employee Director under Rule 16b-3 under
the Exchange Act.

Except as otherwise provided in this Plan, the Committee may
not, without the Participant's consent, modify the terms and conditions of any
issued Stock Option or Agreement. No amendment, suspension or termination of
the Plan shall, without the Participant's consent, alter, terminate or impair
any right or obligation under any Stock Option previously granted under this
Plan.

ARTICLE 11

EFFECTIVE DATE OF PLAN AND DURATION OF PLAN

11.1 Effective Date and Duration. This Plan and any Stock
Option granted hereunder shall take effect not earlier than upon adoption by
the Board but shall be contingent upon approval of this Plan by the majority
vote of the outstanding shares of equity securities of the Company. Unless
previously terminated, the Plan shall terminate and no more Stock Options may
be granted on the expiration of ten (10) years after adoption of the Plan by
the Board. The Plan shall continue in effect with respect to Stock Options
granted before termination of the Plan and until such Stock Options have been
settled, terminated or forfeited.

IN WITNESS WHEREOF, this Plan is hereby adopted as of this 9th
day of October, 1997.

BAYARD DRILLING TECHNOLOGIES, INC.

By: /S/ JAMES E. BROWN
-----------------------------------
James E. Brown
President

ATTEST:

/s/ KIRK K. WHITE
- -----------------------------
Kirk K. Waite
Secretary

<PAGE> 1
EXHIBIT 10.29

NONQUALIFIED OPTION AGREEMENT dated as of
_______________, between Bayard Drilling
Technologies, Inc., a Delaware corporation
(the "Company"), and ______________________,
a non-employee member of the Board of
Directors of the Company (the "Director").

On this date the Company granted to the Director the option
hereinafter described pursuant to, and subject to and upon the terms and
conditions set forth in, the Bayard Drilling Technologies, Inc. 1997
Non-Employee Directors' Stock Option Plan (the "Plan"), and promptly thereafter
notified the Director of the grant of such option.

The Company and the Director desire to enter into this Option
Agreement pursuant to paragraph 6 of the Plan.

NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the
parties hereto hereby agree as follows:

1. On this date, the Company irrevocably granted to the
Director, as a matter of separate agreement and not in lieu of any
compensation for services, the right and option to purchase all or any part of
an aggregate of ____ shares of its Common Stock, par value $0.01 per share (the
"Common Stock"), on the terms and conditions herein set forth (the "Option").

2. The purchase price of the shares of Common Stock
subject to the Option shall be $_____ per share.

-1-
<PAGE> 2
3. Subject to the provisions of paragraphs 5 and 6 of
this Option Agreement and the Plan, the Option shall become exercisable as to
the following aggregate number of shares covered by the Option on and after
each of the following dates during the terms of the Option:

Date Number of Shares
---- ----------------

The Option shall be exercisable in whole at any time or in
part from time to time during the term of the Option as to all or any of the
shares then purchasable under the Option. The term of the Option shall be 10
years from the date hereof or such shorter period as is prescribed in
paragraphs 5 and 6.

Except as provided in paragraphs 5 and 6, the Option shall not
be exercisable unless the Director shall, at the time of exercise, be a member
of the Board of Directors of the Company. The holder of the Option shall have
none of the rights of a stockholder with respect to the shares subject to the
Option until such shares are transferred to the holder upon the exercise of the
Option.

4. (a) Except as provided in subparagraph 4(b)
below, (i) the Option shall not be transferable by the Director
otherwise than by will or the laws of descent and distribution and
(ii) subject to paragraph 6 the Option is exercisable, during the
Director's lifetime, only by the Director. The designation of a
beneficiary by an option holder shall not constitute a transfer. In
the event of any attempted assignment, transfer, pledge, encumbrance
or other disposition of the Option contrary to the provisions hereof,
or the levy of any attachment or similar process upon the Option, the
Option shall be null and void and of no further effect.

- 2 -
<PAGE> 3
(b) Notwithstanding the general prohibition
against assignment in paragraph 4(a), a Director shall be permitted to
transfer all or any portion of an Option to (i) the Director's spouse,
children or grandchildren or (ii) a trust or trusts for the exclusive
benefit any such individual, provided that (x) there shall be no
consideration for any such transfer and (y) subsequent transfers of
any transferred Option shall be prohibited except as provided in
paragraph 4(a). Following the transfer of an Option pursuant to this
paragraph 4(b), the Option shall continue to be subject to the same
terms and conditions as were applicable immediately prior to the
transfer, except that the terms "Director" and "holder" shall be
deemed to refer to the transferee. The events of termination referred
to in paragraphs 5 and 6 shall continue to be applied with respect to
the Director, following which events the option shall be exercisable
by the transferee only to the extent and for the periods specified
herein.

5. If the Director's term in office is concluded prior
to the complete exercise of the Option, then such Option shall thereafter be
exercisable solely to the extent provided herein; provided, however, that (a)
no Option may be exercised after the scheduled expiration date of such Option;
(b) if the Director's term in office is concluded by reason of death or
Disability (as defined in the Plan) or retirement after age 65, the Option
shall remain exercisable for a period of six months following such conclusion
(but not later than the scheduled expiration of such Option) and (c) if the
Director's term in office is concluded for any other reason, the option shall
remain exercisable for a period of three months following such conclusion (but
in no event later than the scheduled expiration of such option).

If the Company is subject to a Change of Control (as defined
in the Plan) all outstanding Options granted hereunder shall immediately become
exercisable in full in respect of the aggregate number of shares covered
thereby.

6. If the Director shall die, be subject to Disability
(as defined in the Plan) while a member of the Board of Directors of the
Company or retire after attainment of age 65, the Option (unless previously
terminated pursuant to paragraph 5) may be exercised in full for the aggregate

- 3 -
<PAGE> 4
number of shares covered thereby (a) in the case of death, by the legatee or
legatees of the Option under the Director's last will, or by the personal
representatives or distributees of the Director, at any time within a period of
six months after the Director's death, but in no event after the expiration of
the Option set forth in paragraph 3 or after the expiration of 10 years from
the date hereof and (b) in the case of Disability or retirement after age 65,
by the Director or by the personal representatives of the Director if the
Director is unable to act for himself, at any time within a period of six
months after the Director ceases to be a member of the Board of Directors of
the Company, but in no event after the expiration of the Option set forth in
paragraph 3 herein.

7. If all or any portion of the Option is exercised
subsequent to any stock dividend, stock split, recapitalization, combination,
exchange of shares, merger, consolidation, liquidation, split-up, split-off,
spin-off or other similar change in capitalization, any distribution to common
stockholders, including a rights offering, other than cash dividends, or any
like change, the Company shall make such appropriate adjustments in the
purchase price paid upon exercise of the Option and the aggregate number and
class of shares or other securities or property issuable upon any such exercise
as the Company shall, in its sole discretion, determine. In any such event, no
fractional share shall be issued upon any such exercise, and the aggregate
price paid shall be appropriately reduced on account of any fractional share
not issued; further, the minimum number of full shares which may be purchased
upon any such exercise shall be the minimum number specified in paragraph 3
adjusted proportionately.

8. Payment of the purchase price of the shares of Common
Stock subject to the Option may be made in any combination of cash or whole
shares of Common Stock already owned by the Director. Subject to the terms and
conditions of this Option Agreement, the Option may be exercised by written
notice to the Company at its principal office, attention of the Secretary.
Such notice shall (a) state the election to exercise the Option, the number of
shares in respect of which it is being exercised and the manner of payment for
such shares and (b) be signed by the person or persons so exercising the Option
and, in the event the Option is being exercised pursuant to paragraph 4(b), 5
or 6 by any person or persons other than the Director, accompanied by
appropriate proof of

- 4 -
<PAGE> 5
the right of such person or persons to exercise the Option. Such notice shall
either (i) be accompanied by payment of the full purchase price of such shares,
in which event the Company shall issue and deliver a certificate or
certificates representing such shares as soon as practicable after the notice
is received, or (ii) fix a date (not more than 10 business days from the date
of such notice) for the payment of the full purchase price of such shares at
the Company's principal office, against delivery of a certificate or
certificates representing such shares. Cash payments of such purchase price
shall, in either case, be made by cash or check payable to the order of the
Company. Common Stock payments (valued at Fair Market Value (as defined in the
Plan) on the date of exercise) shall be made by delivery of stock certificates
in negotiable form. All cash and Common Stock payments shall, in either case,
be delivered to the Company at its principal office, attention of the
Secretary. If certificates representing Common Stock are used to pay all or
part of the purchase price of the Option, a replacement certificate shall be
delivered by the Company representing the same number of shares so used, and an
additional certificate shall be delivered representing the additional shares to
which the holder of the Option is entitled as a result of the exercise of the
Option. The certificate or certificates for the shares as to which the Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Option and shall be delivered as aforesaid to or upon
the written order of the person or persons exercising the Option. All shares
issued as provided herein will be fully paid and nonassessable.

9. The Company shall at all times during the terms of
the Option reserve and keep available such number of shares of Common Stock as
will be sufficient to satisfy the requirements of this Option Agreement, shall
pay all fees and expenses necessarily incurred by the Company in connection
with the issuance of shares pursuant hereto and will use its best efforts to
comply with all laws and regulations which, in the opinion of counsel for the
Company, shall be applicable thereto.

10. This Option Agreement has been entered into pursuant
to paragraph 6 of the Plan.

- 5 -
<PAGE> 6

11. This Option Agreement has been entered into pursuant
to and shall be governed by the laws of the State of Delaware.

12. With respect to persons subject to Section 16 of the
Securities Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Securities Act.
To the extent any provision of the Plan or action by the Company fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Company.

IN WITNESS WHEREOF, the Company has caused this Option
Agreement to be duly executed by its officer thereunto duly authorized, and the
Director has hereunto set his or her hand and seal, all as of the day and year
first have written.

BAYARD DRILLING TECHNOLOGIES, INC.

By:
------------------------------------------
[Title]

------------------------------------------
Director

- 6 -

<PAGE> 1

EXHIBIT 10.30

================================================================================

REGISTRATION RIGHTS AGREEMENT

BY AND AMONG

BAYARD DRILLING TECHNOLOGIES, INC.,

DLB OIL AND GAS, INC.

AND

DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION

OCTOBER 16, 1997

================================================================================

<PAGE> 2

REGISTRATION RIGHTS AGREEMENT

BAYARD DRILLING TECHNOLOGIES, INC.

This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of October 16, 1997, is made by and among Bayard Drilling Technologies,
Inc., a Delaware corporation (the "Company"), DLB Oil and Gas, Inc., an
Oklahoma corporation ("DLB"), and Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ").

WITNESSETH:

WHEREAS, DLB, the Company, Bonray Acquisition Corp. ("Newco")
and Bonray Drilling Corporation ("Bonray") have entered into that certain
Agreement and Plan of Merger, dated as of October 9, 1997 (the "Merger
Agreement");

WHEREAS, upon the terms and conditions set forth in the Merger
Agreement, (i) Newco will be merged with and into Bonray and (ii) the
outstanding capital stock of Bonray will be converted into an aggregate of
3,015,000 shares (the "Acquired Shares") of common stock, par value $0.01 per
share ("Common Stock"), of the Company, all of which shares will initially be
issued to and held by DLB (as the former holder of all of the outstanding
capital stock of Bonray);

WHEREAS, immediately after the consummation of the
transactions contemplated by the Merger Agreement, DLB intends to transfer
60,000 of the Acquired Shares (the "DLJ Shares") to DLJ; and

WHEREAS, the Merger Agreement provides that the Company will
enter into this Agreement in order to grant certain registration rights to DLB
and DLJ;

SECTION 1. Definitions. For purposes of this Agreement,
the terms set forth below shall have the following respective meanings:

<PAGE> 3
"Acquired Shares" has the meaning set forth in the Recitals
hereto.

"Bonray" has the meaning set forth in the Recitals hereto.

"Commission" means the Securities and Exchange Commission.

"Common Stock" has the meaning set forth in the Recitals
hereto.

"Company" has the meaning set forth in the Preamble hereto.

"Demand Registration" has the meaning set forth in Section
3(b) hereof.

"Demand Registration Request" has the meaning set forth in
Section 3(a) hereof.

"Demand Registration Request Initiator" has the meaning set
forth in Section 3(a) hereof.

"Distributing Party" means DLB or, if applicable, the DLB
Successor.

"DLB Distribution" means (i) the distribution by the
Distributing Party of the Registrable Shares held by it to the DLB Shareholders
(whether in the form of a dividend payable on shares of capital stock of the
Distributing Party or in any other form not involving the payment of any cash
consideration or any other consideration whatsoever, other than (if applicable)
the surrender, exchange or cancellation of shares of capital stock of the
Distributing Party) or (ii) any other transaction resulting directly or
indirectly in the distribution or transfer of the Registrable Shares to the DLB
Shareholders which has been approved by the Company, acting through its Board
of Directors (it being understood that the Company shall consider in good faith
the approval of any distribution or transfer referred to in clause (ii) above
and the Company, DLB and the Distributing Party shall endeavor in good faith to
structure such distribution or transfer in such a way as to meet the business
objectives of each of the parties).

"Distribution Registration Effective Date" has the meaning set
forth in Section 2(b) hereof.

2
<PAGE> 4
"Distribution Registration Initiator" has the meaning set
forth in Section 2(a) hereof.

"Distribution Registration Notice" has the meaning set forth
in Section 2(b) hereof.

"Distribution Registration Period" has the meaning set forth
in Section 2(b) hereof.

"Distribution Registration Statement" has the meaning set
forth in Section 2(a) hereof.

"DLB" has the meaning set forth in the Preamble hereto.

"DLB Group" means the holders of 51% or more of the
Registrable Shares owned of record by the group comprised of DLB, DLJ and all
DLB Permitted Transferees.

"DLB Permitted Transferee" means (i) Michael Liddell, (ii)
Mark Liddell or (iii) Charles E. Davidson or (iv) any other Person to whom DLB
or a DLB Permitted Transferee has transferred Acquired Shares which represent
51% or more of the Acquired Shares, so long as such Person identified in any of
clauses (i) through (iv) executes a counterpart to this Agreement, agreeing to
be bound by the terms hereof.

"DLB Shareholders" means (i) if the Distributing Party is DLB,
the shareholders of DLB or (ii) if the Distributing Party is the DLB Successor,
the Persons who were shareholders of DLB immediately prior to the merger,
transfer of assets or other transaction in which the DLB Successor acquired 51%
or more of the Registrable Shares.

"DLB Successor" means any Person who is a successor to DLB
(whether as result of a merger, transfer of assets or any other transaction)
and, as such, acquires 51% or more of the Registrable Shares, so long as (i)
the only Persons who have any right to receive a distribution of such
Registrable Shares from such successor or have any other beneficial interest in
such Registrable Shares are the DLB Shareholders and (ii) such successor
executes a counterpart to this Agreement, agreeing to be bound by the terms
hereof.

3
<PAGE> 5
"DLJ" has the meaning set forth in the Preamble hereto.

"DLJ Shares" has the meaning set forth in the Recitals hereto.

"Holdback Agreements" has the meaning set forth in Section 5
hereof.

"Included Securities" has the meaning set forth in Section 7
hereof.

"Indemnified Party" has the meaning set forth in Section 8(c)
hereof.

"IPO Date" means the date of consummation of a Qualified IPO.

"Issuer Indemnified Party" has the meaning set forth in
Section 8(c) hereof.

"Merger Agreement" has the meaning set forth in the Recitals
hereto.

"Participating Holders" has the meaning set forth in Section 7
hereof.

"Person" means an individual, partnership, corporation,
limited liability company, association, joint stock company, trust, joint
venture, unincorporated organization or governmental entity or any department,
agency or political subdivision thereof.

"Piggyback Registration" has the meaning set forth in Section
3(a) hereof.

"Qualified IPO" means (i) one or more underwritten public
offerings of Common Stock pursuant to one or more effective registration
statements filed under the Securities Act, resulting in an aggregate of at
least $25 million of net proceeds, after deducting underwriting discounts and
commission and other expenses, to the Company or (ii) any merger, consolidation
or other business combination transaction that results in any equity securities
of the Company being registered under Section 12 of the Securities Exchange
Act.

"Registrable Shares" means the Acquired Shares and any
securities of the Company issued or issuable with respect to any Acquired
Shares by way of stock dividend or stock split or in connection with a
combination or subdivision of

4
<PAGE> 6
shares, recapitalization, reorganization or otherwise; provided, however, that
Registrable Shares shall not include any shares (i) the sale of which has been
registered pursuant to a registration statement filed under the Securities Act
which has been declared effective or (ii) which may be otherwise transferred
without restriction (including volume restrictions) under Rule 144 or any
similar successor rule or provision then in force.

"Registration Expenses" has the meaning set forth in Section 7
hereto.

"Requesting Holders" has the meaning set forth in Section 3(a)
hereto.

"Securities Act" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations promulgated
thereunder, all as the same may be in effect from time to time.

"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, or any successor federal statute, and the rules and
regulations promulgated thereunder, all as the same may be in effect from time
to time.

"Selling Holder" means a holder who is selling Registrable
Shares which are registered pursuant to the Securities Act as contemplated by
this Agreement.

"Selling Indemnified Party" has the meaning set forth in
Section 7(a) hereto.

"Share Value" means (i) prior to a Qualified IPO, the book
value per share of Common Stock, as determined by dividing Total Equity as of
the date of the most recent quarterly or year-end financial statements of the
Company by the total number of shares of Common Stock issued and outstanding as
of the date of such financial statements, assuming the exercise of all options,
rights, warrants and other securities convertible into or exchangeable or
exercisable for shares of Common Stock and (ii) after a Qualified IPO, the
average market price per share of Common Stock on the principal national
securities exchange or quotation system on which the Common Stock is then
traded or quoted for the ten day trading period ending on the day prior to the
determination date.

"Total Equity" means the sum of the par value, capital surplus
and retained earnings attributable to the Common Stock, other than shares of
Common Stock

5
<PAGE> 7
held in treasury of the Company, as determined in accordance with United States
generally accepted accounting principles plus the paid in value of any
preferred stock or other security that is convertible into Common Stock.

SECTION 2. Distribution Registration.

(a) Request for Distribution Registration.
Subject to the limitations set forth in this Section 2, at any time DLB, the
DLB Successor, or any of the Persons identified in clause (i), (ii) or (iii) of
the definition of the term "DLB Permitted Transferee" on behalf of the DLB
Successor (the "Distribution Registration Initiator"), shall have the right to
require the Company to file with the Commission (i) a "shelf" registration
statement on an appropriate form filed pursuant to Rule 415 under the
Securities Act or (ii) a registration statement on an appropriate form (not
filed pursuant to Rule 415 under the Securities Act) which is acceptable to the
Company and the Distribution Registration Initiator (the "Distribution
Registration Statement") solely for the purposes of registering the Registrable
Shares held by the Distributing Party (other than any Registrable Shares held
by DLJ) in connection with the Distribution.

(b) Registration by the Company. If the
Distribution Registration Initiator gives written notice (the "Distribution
Registration Notice") to the Company of the exercise of the registration rights
granted pursuant to this Section 2, the Company shall (i) file the Distribution
Registration Statement with the Commission within 45 days of the date of
receipt of the Distribution Registration Notice, (ii) use its reasonable best
efforts to cause the Distribution Registration Statement to be declared
effective under the Securities Act as promptly as practicable after the filing
thereof and (iii) use its reasonable best efforts to keep the Distribution
Registration Statement effective for a period (the "Distribution Registration
Period") terminating on the date which is the earlier of (x) the date which is
four months after the date on which the Distribution Registration Statement is
declared effective (the "Distribution Registration Effective Date") or (y) the
date on which the Distribution has been completed; provided, however, that in
the event it is necessary for the Company to file a post-effective amendment to
the Distribution Registration Statement during the Distribution Registration
Period in order to comply with applicable provisions of the Securities Act, it
shall not constitute a violation of this paragraph (b) if, as a result of the
filing of such amendment, the Distribution Registration Statement is not
available to effect the Distribution until such time as such amendment is

6
<PAGE> 8
declared effective by the Commission (it being understood that the Company
shall use its reasonable best efforts to cause such amendment to be declared
effective under the Securities Act as promptly as practicable after the filing
thereof).

(c) Plan of Distribution. The Company further
agrees that, at the request of Demand Registration Initiator, it will
supplement or amend the Distribution Registration Statement as promptly as
reasonably practicable in order to update from time to time any information
with respect to the manner in which the Distribution will be effected by the
Distributing Party.

(d) Distribution Registration Limitations. The
registration rights set forth in this Section 2 may be exercised only in
accordance with the following limitations:

(i) The Company shall not be obligated
to effect any registration pursuant to this Section 2 if the
Company's counsel delivers an opinion to the Distributing
Party, which opinion is reasonably satisfactory to counsel for
the Distributing Party to the effect that the Distribution may
be effected as planned by the Distributing Party without
registration thereof.

(ii) If (A) in the good faith
judgment of the Board of Directors of the Company, a
registration pursuant to this Section 2 would be seriously
detrimental to the Company (or any proposed acquisition or
disposition of assets or properties) and the Board of
Directors of the Company concludes, as a result, that it is
essential to defer the filing of the Distribution Registration
Statement at such time, and (B) the Company shall furnish to
the Distributing Party a certificate signed by the President
of the Company stating that, in the good faith judgment of the
Board of Directors of the Company, it would be seriously
detrimental to the Company for the Distribution Registration
Statement to be filed in the near future and that it is,
therefore, essential to defer the filing of such registration
statement, then the Company shall have the right to defer such
filing for the period during which such disclosure would be
seriously detrimental; provided, however, that the Company may
not exercise its right to defer the filing of the Distribution
Registration Statement in accordance with this subparagraph
(ii) until the expiration of the 120-day period after the IPO
Date and, after the expiration of such period, may

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<PAGE> 9
not defer the filing of such registration statement for more
than 60 days (in the case of a deferral during the first year
after the IPO Date) or 120 days (in the case of a deferral at
any time after the first anniversary of the IPO Date) after
receipt of the Distribution Registration Notice; and provided
further, that the Company shall give written notice to the
Distributing Party immediately after the reason for deferring
the filing of the registration statement has ceased to exist.

(iii) The Distribution
Registration Notice shall not be delivered by the Distribution
Registration Initiator prior to the IPO Date.

(iv) In no event shall the
Company be required to file more than one Distribution
Registration Statement pursuant to this Section 2.

SECTION 3. Demand Registration.

(a) Requests for Registration. Subject to the
limitations set forth in this Section 3, at any time the DLB Group may request
the Company to register under the Securities Act, on the number of occasions
specified in clause (iv) of Section 3(c), all or any part of the Registrable
Shares held by the DLB Group (a "Demand Registration Request"). Within 10 days
of receipt by the Company of a Demand Registration Request, the Company shall
give written notice of such request to all other holders of Registrable Shares.
Such holders shall have the right to join the Demand Registration Request by
delivery of written notice to the Company of such intention, which notice shall
include the number of Registrable Shares that each such additional holder
intends to have the Company register in response thereto. The Person or group
of Persons making the Demand Registration Request shall be referred to herein
as the "Demand Registration Request Initiator." All holders of Registrable
Shares that request to participate in any such demand registration shall be
referred to herein as "Requesting Holders."

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<PAGE> 10
a "Demand Registration"); provided, however, that if (i) in the good faith
judgment of the Board of Directors of the Company, such registration would be
seriously detrimental to the Company (or any proposed acquisition or
disposition of assets or properties) and the Board of Directors of the Company
concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (ii) the Company shall furnish all
Requesting Holders a certificate signed by the President of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company for such registration statement
to be filed in the near future and that it is, therefore, essential to defer
the filing of such registration statement, then the Company shall have the
right to defer such filing for the period during which such disclosure would be
seriously detrimental; provided, however, that the Company may not defer the
filing of a registration statement for a period of more than 120 days after
receipt of the Demand Registration Request of the Requesting Holders, and,
provided further, that the Company shall not defer its obligation in this
manner more than once in any twelve-month period and shall give written notice
to the Requesting Holders immediately after the reason for deferring the filing
of the registration statement has ceased to exist. The Company shall not be
required to register any Registrable Shares during any period in which it has
exercised its deferral right as aforesaid.

(c) Demand Registration Limitations. The demand
registration rights set forth in this Section 3 may be exercised only in
accordance with the following limitations:

(i) The DLB Group shall have the right
to exercise demand registration rights under this Section 3
only after the earlier to occur of (x) 180 days after the IPO
Date or (y) the first anniversary of the date of this
Agreement.

(ii) The holders of Registrable Shares
shall not have any right to exercise demand registration
rights under this Section 3 at any time after the third
anniversary of the IPO Date.

(iii) The Company shall not be required
to make any Demand Registrations pursuant to this Section 3
unless the aggregate Share Value of all Registrable Shares
proposed to be registered in connection therewith shall equal
or exceed $20 million.

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<PAGE> 11
(iv) The DLB Group shall have the right
to require the Company to file up to two Demand Registrations
with the Commission; provided, however, that the Company shall
be required to effect not more than one Demand Registration
pursuant to this clause (iv) unless and until it is qualified
to register the Registrable Shares on Form S-3 promulgated
under the Securities Act.

(v) Provided the Company is actively
employing in good faith all reasonable efforts to cause such
registration statements to become effective, the Company shall
not be required to make any Demand Registration pursuant to
this Section 3 during the period ending 90 days after the
effective date of any registration under the Securities Act by
the Company of shares of Common Stock or other equity
securities, other than in connection with an employee benefit
plan, dividend reinvestment plan or merger, consolidation or
other business combination.

(d) Priority on Demand Registrations. The
registration statement filed pursuant to the Demand Registration Request of the
Requesting Holders may, subject to the limitations set forth below, include
other securities of the Company, with respect to which registration rights have
been granted, and may include securities of the Company being sold for the
account of the Company. If a Demand Registration is an underwritten public
offering and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Shares and other securities requested
to be included exceeds the number of Registrable Shares and other securities
which can be sold in such offering, the Company shall include in such
registration, prior to the inclusion of any securities to be sold by the
Company or any other securities which are not Registrable Shares, (i) first,
the number of Registrable Shares requested to be included by the Demand
Registration Request Initiator and (ii) second, the number of Registrable
Shares requested to be included, pro rata among the Requesting Holders other
than the Demand Registration Request Initiator on the basis of the number of
Registrable Shares owned by such Requesting Holders.

(e) Underwriters. The managing underwriter or
underwriters for any Demand Registration shall be selected by the holders of a
majority of the Registrable Shares to be included in such Demand Registration,
which managing underwriter or underwriters shall be reasonably acceptable to
the Company.

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<PAGE> 12
SECTION 4. Piggyback Registration.

(a) Right to Piggyback. If at any time the
Company proposes to file a registration statement under the Securities Act with
respect to any underwritten offering of any securities of the Company, other
than (i) a registration statement on Form S-4 or S-8 (or any substitute form
for comparable purposes that may be adopted by the Commission), (ii) a
registration statement filed in connection with an exchange offer or an
offering of securities solely to the Company's existing security holders or
(iii) the Distribution Registration Statement, the Company shall in each case
give written notice (a "Piggyback Registration Notice") of such proposed filing
of such registration statement (a "Piggyback Registration") to all holders of
Registrable Shares as soon as practicable, but in no event less than 20 days
before the anticipated filing date, and shall, subject to Section 4(b) hereof,
include in such registration statement all Registrable Shares with respect to
which the Company has received written requests for inclusion therein within 15
days after the Piggyback Registration Notice is received by all such holders.

(b) Priority in Piggyback Registrations. If the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in a registration exceeds the
number which can be sold in such offering, the Company shall include in such
registration (i) first, the securities of the Company proposed to be registered
as described in the Piggyback Registration Notice and (ii) second, the
Registrable Shares requested to be included in such registration, pro rata
among the holders of all such Registrable Shares and other securities requested
to be included on the basis of the then number of Registrable Shares and other
securities requested to be included by each such holder.

(c) Right to Withdraw. Notwithstanding anything
to the contrary, neither the delivery of a Piggyback Registration Notice by the
Company nor of the request by the holder of Registrable Shares shall in any way
obligate the Company to file, or the holder of Registrable Shares to have such
shares included in, a registration statement under this Section 4 and,
notwithstanding such filing, the Company may, at any time prior to the
effective date thereof, in its sole discretion, determine not to offer the
securities to which the registration statement relates without liability to any
of the holders of the Registrable Shares,

11
<PAGE> 13
and any holder may determine not to include its Registrable Shares therein
without liability.

(d) Selection of Underwriters. The managing
underwriter or underwriters for any Piggyback Registration shall be selected by
the Company, by action of the Board of Directors.

SECTION 5. Holdback Agreements. In the event that
Registrable Shares are registered by the Company pursuant to Section 3 or 4
hereof, the holders of any such Registrable Shares shall enter into such
agreements, including underwriting agreements and lock-up agreements, as the
managing underwriter of any underwritten public offering registered under the
Securities Act shall reasonably request (collectively, "Holdback Agreements");
provided, however, that (i) with respect to an initial public offering of
shares of Common Stock, such Holdback Agreements shall not exceed a period of
14 calendar days prior to, and 180 calendar days after, the effective date of
such registration, and (ii) with respect to any subsequent registrations, such
Holdback Agreements shall not exceed a period of 14 calendar days prior to, and
120 calendar days after, the effective date of such registration.

SECTION 6. Registration Procedures. Whenever the holders
of Registrable Shares have requested that any Registrable Shares be registered
pursuant to this Agreement, the Company shall use its best efforts to effect
the registration and the sale of such Registrable Shares in accordance with the
intended method of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:

(a) prepare and file with the Commission a
registration statement with respect to such Registrable Shares and use its best
efforts to cause such registration statement to become and remain effective for
such period as may be reasonably necessary to effect the sale of such
securities, in any case not to exceed six months (or, in the case of a
Distribution Registration Statement, for such period as is specified in Section
2 hereof);

(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not more than six months (or, in the case
of a Distribution Registration Statement, for such period as is specified in
Section 2 hereof) and comply with the provisions of the Securities Act with
respect to the disposition of all securities

12
<PAGE> 14
covered by such registration statement during such period in accordance with
the intended methods of disposition by the Selling Holders set forth in such
registration statement;

(c) furnish, without charge, to each Selling
Holder and the underwriters of the securities being registered such number of
copies of such registration statement, each amendment and supplement thereto,
in each case including all exhibits, the prospectus included in such
registration statement, including each preliminary prospectus, and such other
documents as each such Selling Holder or underwriters may reasonably request in
order to facilitate the disposition of the Registrable Shares owned by each
such Selling Holder or the sale of such securities by such underwriters;

(d) use its best efforts to register or qualify
such Registrable Shares under the securities or blue sky laws of such
jurisdictions as each Selling Holder shall reasonably request and do any and
all other acts and things which may be reasonably necessary or advisable to
enable each such Selling Holder to consummate the disposition in such
jurisdictions of the Registrable Shares owned by such Selling Holder, provided,
however, that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 6(d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction;

(e) (i) cause all such Registrable Shares covered
by such registration statement to be listed on the principal securities
exchange on which shares of Common Stock are then listed, if any, if the
listing of such Registrable Shares is then permitted under the rules of such
exchange, or (ii) if shares of Common Stock are not then so listed, cause all
such Registrable Shares to be listed on a national securities exchange or,
failing that, secure designation of all such Registrable Shares as a Nasdaq
Stock Market "national market system security" within the meaning of Rule
11Aa2-1 of the Commission or, failing that, secure Nasdaq Stock Market
authorization for such shares and, without limiting the generality of the
foregoing, take all actions that may be required by the Company as the issuer
of such Registrable Shares in order to facilitate the managing underwriter's
arranging for the registration of at least two market makers as such with
respect to such shares with the National Association of Securities Dealers,
Inc.;

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<PAGE> 15
(f) provide and cause to be maintained a transfer
agent and registrar for all such Registrable Shares not later than the
effective date of such registration statement;

(g) enter into such customary agreements,
including underwriting agreements in customary form, and take all such other
actions as the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares;

(h) upon receipt of such confidentiality
agreements as the Company may reasonably request, make reasonably available for
inspection by the Selling Holders, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such Selling Holders or underwriter,
all financial and other records, pertinent corporate documents and properties
of the Company, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such Selling Holder, underwriter, attorney, accountant or agent in connection
with such registration statement;

(i) promptly notify each Selling Holder, (i) of
the time when the registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed and, with respect to the
registration statement or any post-effective amendment, when the same has
become effective and (ii) of the receipt by the Company of any notification
with respect to the suspension of the qualification of any Registrable Shares
for sale under the securities or blue sky laws of any jurisdiction or the
initiation of any proceeding for such purpose;

(j) notify each Selling Holder of any requests by
the Commission for the amending or supplementing of such registration statement
or prospectus or for additional information;

(k) prepare and file with the Commission,
promptly upon the request of any Selling Holder, any amendments or supplements
to such registration statement or prospectus which, in the opinion of counsel
selected by the holders of a majority of the Registrable Shares being
registered, is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of Registrable Shares by such
Selling Holder;

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<PAGE> 16
(l) prepare and promptly file with the
Commission, and promptly notify each Selling Holder of the filing of, such
amendments or supplements to such registration statement or prospectus as may
be necessary to correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be delivered under the
Securities Act, any event shall have occurred as the result of which any such
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading;

(m) advise each Selling Holder, promptly after
the Company shall receive notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
such purpose and promptly use all reasonable efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be issued;

(n) provide notice within a reasonable amount of
time prior to the filing of any registration statement or prospectus of any
amendment or supplement to such registration statement or prospectus, furnish a
copy thereof to each Selling Holder and refrain from filing any such
registration statement, prospectus, amendment or supplement to which counsel
selected by the holders of a majority of the Registrable Shares being
registered shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act or the rules and regulations thereunder, unless, in the case
of an amendment or supplement, the Company reasonably believes the filing of
such amendment or supplement is reasonably necessary to protect the Company
from any liabilities under any applicable federal or state law;

(o) at the request of any Selling Holder in
connection with an underwritten offering, furnish on the date or dates provided
for in the underwriting agreement: (i) an opinion of counsel, addressed to the
underwriters and the Selling Holders, covering such matters as such
underwriters may reasonably request, including, without limiting the generality
of the foregoing, opinions to the effect that (A) such registration statement
has become effective under the Securities Act; (B) to the best of such
counsel's knowledge, no stop order suspending the effectiveness thereof has
been issued and no proceedings for

15
<PAGE> 17
that purpose have been instituted or are pending or contemplated under the
Securities Act; (C) the registration statement, the prospectus, and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Securities Act and the applicable rules and regulations
of the Commission thereunder, except that such counsel need express no opinion
as to financial statements or other financial or statistical data contained
therein; and (ii) a "cold comfort" letter or letters from the independent
certified public accountants of the Company addressed to the underwriters and
the Selling Holders, covering such matters as such underwriters may reasonably
request, in which letters such accountants shall state, without limiting the
generality of the foregoing, that they are independent certified public
accountants within the meaning of the Securities Act and that in the opinion of
such accountants the financial statements and other financial data of the
Company included in the registration statement, the prospectus, or any
amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act;

(p) deliver promptly to each Selling Holder and
each underwriter, if any, copies of all correspondence between the Commission
and the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the registration
statement, other than those portions of any such correspondence and memoranda
which contain information subject to attorney-client privilege with respect to
the Company;

(q) provide a CUSIP number for all Registrable
Shares, not later than the effective date of the registration statement;

(r) make reasonably available its employees and
personnel and otherwise provide reasonable assistance to the underwriters,
taking into account the needs of the Company's business and the requirements of
the marketing process, in the marketing of Registrable Shares in any
underwritten offering;

(s) promptly prior to the filing of any document
which is to be incorporated by reference into the registration statement or the
prospectus, after the initial filing of such registration statement, provide
copies of such document to counsel to the Selling Holders of Registrable Shares
and to the managing underwriter, if any, and make the Company's representatives
reasonably available for discussion of such document and make such changes in
such document prior

16
<PAGE> 18
to the filing thereof as counsel for such Selling Holders or underwriters may
reasonably request;

(t) furnish to each Selling Holder and the
managing underwriter, without charge, at least one signed copy of the
registration statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits, including those incorporated by reference;

(u) comply with all applicable rules and
regulations of the Commission, and make generally available to its security
holders, as soon as reasonably practicable after the effective date of the
registration statement, and in any event within 16 months thereafter, an
earnings statement (which need not be audited) covering the period of at least
12 consecutive months beginning with the first day of the Company's first
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder; and

(v) take all such other commercially reasonable
actions as are necessary or advisable in order to expedite or facilitate the
disposition of such Registrable Shares.

SECTION 7. Registration Expenses.

(a) Except as otherwise expressly provided
herein, all expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation, all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws,
including a blue sky survey and the related fees and expenses of counsel,
printing expenses, messenger and delivery expenses, and fees and disbursements
of counsel for the Company and its independent certified public accountants,
and other Persons (including experts) retained by the Company, and all other
fees and disbursements of underwriters customarily paid by issuers or sellers
of securities (all such expenses being herein called "Registration Expenses")
shall be paid as follows:

(i) In the case of a registration
effected by the filing of a Distribution Registration
Statement pursuant to Section 2 hereof, by the Company;
provided, however, that any Registration Expenses incurred in

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<PAGE> 19
connection with or pursuant to the Company's obligation to keep
the Distribution Registration Statement effective or to
supplement or amend the Distribution Registration Statement
pursuant to Section 2(c) hereof shall be paid by the
Distributing Party.

(ii) In the case of a Demand Registration
pursuant to Section 3 hereof, by the Selling Holders and all
other holders (collectively, the "Participating Holders") of
Registrable Shares and other securities, if any (collectively,
the "Included Securities"), being sold pursuant to a
registration statement filed as contemplated thereby (or, if
satisfactory arrangements for the reimbursement thereof shall
be agreed to in advance by the Company and such holders, shall
be paid by the Company and reimbursed by the Participating
Holders), pro rata among the Participating Holders on the
basis of the number of the Included Securities being sold by
each of them; provided, however, that to the extent that any
Included Securities are not sold and the Participating Holder
who owns such Included Securities does not receive any
proceeds, directly or indirectly, then such Participating
Holder shall not be obligated to reimburse the Company for
such Participating Holder's pro rata share of the Registration
Expenses. In addition, each Participating Holder shall pay
all underwriting discounts, commissions or similar charges
attributable to the sale of Included Securities.

(b) The Company shall pay its internal expenses,
including without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties, the expense of any annual
audit or quarterly review, the expense of any liability insurance obtained by
the Company and the expenses and fees for listing the securities so registered
on each securities exchange on which any shares of common stock are then
listed or on the Nasdaq Stock Market.

SECTION 8. Indemnification and Contribution.

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<PAGE> 20
15 of the Act or Section 20 of the Securities Exchange Act (collectively, the
"Selling Indemnified Parties" and, individually, a "Selling Indemnified
Party"), from and against any and all losses, claims, damages, whether in
contract, tort or otherwise, liabilities, expenses, actions and proceedings,
whether commenced or threatened, in respect thereof, including reasonable costs
of investigation, counsel fees and amounts paid in settlement, whatsoever (as
incurred or suffered) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or preliminary, final or summary prospectus relating to the
Registrable Shares or in any amendment or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon information furnished in writing to the
Company by such Selling Holder or on such Selling Holder's behalf expressly for
use therein. The Company shall also indemnify any underwriters of the
Registrable Shares, their officers, partners and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Selling Indemnified Parties provided in this Section 8
or to provide such other indemnification customarily obtained by underwriters
at the time of offering.

(b) Conduct of Indemnification Proceedings. If
any action or proceeding, including any governmental investigation, shall be
brought or asserted against any Selling Indemnified Party in respect of which
indemnity may be sought from the Company, the Company shall, at its expense,
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Selling Indemnified Party. Such Selling Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Selling Indemnified Party unless (i) the
Company has agreed to pay such fees and expenses, (ii) the Company fails to
diligently defend the action or proceeding within 20 days after receiving
notice from the Selling Indemnified Party that the Selling Indemnified Party
believes the Company has so failed or (iii) the named parties to any such
action or proceeding, including any impleaded parties, include both such
Selling Indemnified Party and the Company, and such Selling Indemnified Party
shall have been advised by counsel that there may be a conflict of interest
between any of the parties, or that representation of the

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<PAGE> 21
Selling Indemnified Party and the Company is otherwise inappropriate under
applicable standards of professional conduct, or one or more legal defenses are
available to such Selling Indemnified Party which are different from or
additional to those available to the Company; in which case, if such Selling
Indemnified Party notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not have the
right to assume the defense of such action or proceeding on behalf of such
Selling Indemnified Party; it being understood, however, that the Company shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all such Selling
Indemnified Parties, which firm shall be designated in writing by a majority of
the Selling Indemnified Parties. The Company shall not be liable for any
settlement of any such action or proceeding effected without the Company's
written consent, but if settled with its written consent, which consent shall
not be unreasonably withheld or delayed, or if there be a final judgment no
longer subject to appeal for the plaintiff in any such action or proceeding,
the Company agrees to indemnify and hold harmless such Selling Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.

(c) Indemnification by Holders of Registrable
Shares. Each Selling Holder shall severally, but not jointly, indemnify and
hold harmless the Company, its directors, officers, fiduciaries, stockholders
and agents and each person, if any, who controls the Company within the meaning
of either Section 15 of the Act or Section 20 of the Securities Exchange Act
(collectively, the "Issuer Indemnified Parties" and, individually, an "Issuer
Indemnified Party" and, together with a Selling Indemnified Party an
"Indemnified Party"), to the same extent as the foregoing indemnity from the
Company to such Selling Holder, but only with respect to information furnished
in writing by such Selling Holder or on such Selling Holder's behalf expressly
for use in any registration statement or prospectus relating to the Registrable
Shares, or any amendment or supplement thereto, or any preliminary prospectus;
provided, however, that to the extent that this indemnity arises from any
untrue statement or alleged untrue statement or omission or alleged omission
contained in any registration statement (other than the Distribution
Registration Statement) or in any prospectus relating to the Registrable Shares
(other than a prospectus used in connection with the

20
<PAGE> 22
Distribution) or in any amendment or supplement thereto, the liability of each
Selling Holder shall be limited to the amount of the gross proceeds received by
such Selling Holder from the offering. In case any action or proceeding shall
be brought against an Issuer Indemnified Party, in respect of which indemnity
may be sought against such Selling Holder, such Selling Holder shall have the
rights and duties given to the Company, and the Issuer Indemnified Parties
shall have the rights and duties given to such Selling Holder, by the preceding
Section 8(b)hereof. Each Selling Holder shall also severally, but not jointly,
indemnify and hold harmless underwriters of the Registrable Shares, their
officers, directors, fiduciaries, stockholders and agents and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 8.

(d) Contribution. If the indemnification
provided for in this Section 8 is unavailable to any Indemnified Party in
respect of any losses, claims, damages, liabilities, expenses, actions or
proceedings referred to herein, then each such indemnifying party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages,
liabilities, expenses, actions and proceedings (i) as between the Issuer
Indemnified Parties and the Selling Indemnified Parties on the one hand and the
underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Issuer Indemnified Parties and the Selling
Indemnified Parties on the one hand and the underwriters on the other from the
offering of the Registrable Shares, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Issuer Indemnified Parties
and the Selling Indemnified Parties on the one hand and of the underwriters on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities, expenses actions or proceedings, as well
as any other relevant equitable considerations and (ii) as between the Issuer
Indemnified Parties, on the one hand, and each Selling Indemnified Party on the
other, in such proportion as is appropriate to reflect the relative fault of
the Issuer Indemnified Parties and of each Selling Indemnified Party in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Issuer
Indemnified Parties and the Selling Indemnified Parties on the one hand and the
underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering, net of underwriting discounts and commissions

21
<PAGE> 23
but before deducting expenses, received by the Issuer Indemnified Parties and
the Selling Indemnified Parties bear to the total underwriting discounts and
commissions received by the underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Issuer
Indemnified Parties and the Selling Indemnified Parties on the one hand and of
the underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Issuer Indemnified Parties and the Selling
Indemnified Parties or by the underwriters. The relative fault of the Issuer
Indemnified Parties on the one hand and of each Selling Indemnified Party on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

The Company and the Selling Holders hereby agree that
it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation, even if the underwriters were
treated as one entity for such purpose, or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages, liabilities, expenses,
actions or proceedings referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no Selling Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Shares of such Selling Holder were offered to
the public exceeds the amount of any damages which such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent

22
<PAGE> 24
misrepresentation, within the meaning of Section 11(f) of the Securities Act,
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Each Selling Holder's obligation to contribute
is several in the proportion that the proceeds of the offering received by such
Selling Holder bears to the total proceeds of the offering, and not joint.

(e) Settlement or Compromise. No indemnifying
party shall without the written consent of the Indemnified Party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder, whether or not the
Indemnified Party is an actual or potential party to such action or claim,
unless such settlement, compromise or judgment (i) includes an unconditional
release of the Indemnified Party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any Indemnified Party.

(f) Rights not Exclusive. The indemnity
agreements contained in this Section 8 shall be in addition to any other rights
to indemnification or contribution which any Indemnified Party may have
pursuant to law or contract and shall remain operative and in full force and
effect regardless of any investigation made or omitted by or on behalf of any
indemnified party and shall survive the transfer of the Registrable Shares by
any such party.

SECTION 9. Compliance with Rule 144. When it is first
legally required to do so, the Company shall register a class of securities
under Section 12 of the Securities Exchange Act, and commence to file reports
under Section 13 or 15(d) of the Securities Exchange Act. Thereafter at the
request of any holder who proposes to sell securities in compliance with Rule
144 promulgated by the Commission under the Securities Act, the Company shall
(i) forthwith furnish to such holder a written statement of compliance with the
filing requirements of the Commission as set forth in Rule 144 as such rule may
be amended from time to time and (ii) timely file and make available to the
public and such holders such reports and other information as will enable the
holders to make sales pursuant to Rule 144.

23
<PAGE> 25
arrangements approved by the Person or Persons entitled hereunder to approve
such arrangements, (b) provides all such information as is reasonably required
to effect such registration and completes and executes all undertakings,
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements or applicable laws, and (c) complies with all other reasonable
requests of the managing underwriter and with the Company and complies with all
other reasonable requests related to such registration.

SECTION 11. Remedies. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages caused by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.

SECTION 12. Amendments and Waivers. Except as otherwise
expressly provided herein, the provisions of this Agreement may be amended or
waived at any time only by the written agreement of the Company and the holders
of a majority of the Registrable Shares. Any waiver, permit, consent or
approval of any kind or character on the part of any such holders of any
provision or condition of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in writing.

SECTION 13. Successors and Assigns. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto,
whether so expressed or not.

SECTION 14. Final Agreement. This Agreement constitutes the
final agreement of the parties hereto concerning the matters referred to
herein, and supersedes all prior agreements and understandings with respect to
the subject matter hereof.

SECTION 15. Severability. Whenever possible, each provision
of this Agreement shall 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.

SECTION 16. Descriptive Headings. The descriptive headings
of this Agreement are inserted for convenience of reference only and do not
constitute a part of and shall not be utilized in interpreting this Agreement.

24
<PAGE> 26
SECTION 17. Notices. Any notices required or permitted to be sent
hereunder shall be delivered by hand, by telex or telecopier, or by certified
or registered mail, postage prepaid and return receipt requested, or delivered
by overnight courier service to the following addresses, or such other
addresses as shall be given by notice delivered hereunder. Notices shall be
deemed to have been given upon delivery, if delivered by hand, three business
days after mailing, if mailed, or one business day after delivery to the
courier, if delivered by overnight courier service, and upon receipt of an
appropriate electronic confirmation, if by telex or telecopier:

If to the holders of Registrable Shares, to the addresses set
forth on the stock record books of the Company.

If to the Company, to:

Bayard Drilling Technologies, Inc.
4005 Northwest Expressway
Suite 550E
Oklahoma City, Oklahoma 73116
Telecopy: (405) 840-9553
Attention: President

SECTION 18. Governing Law. The validity, meaning and effect
of this Agreement shall be determined in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed in that state.

SECTION 19. Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it and the Company.

25
<PAGE> 27
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.

BAYARD DRILLING TECHNOLOGIES, INC.

By: /s/ JAMES E. BROWN
--------------------------------------------
James E. Brown
President

DLB OIL & GAS, INC.

By: /s/ MARK LIDDELL
--------------------------------------------
Name: Mark Liddell
-----------------------------------------
Title: President
-----------------------------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

By: /s/ IVY DODES
-------------------------------------------
Name: Ivy Dodes
------------------------------------------
Title:
-----------------------------------------

<PAGE> 1
EXHIBIT 10.31

BAYARD DRILLING TECHNOLOGIES, INC.
4005 NORTHWEST EXPRESSWAY, SUITE 550E
OKLAHOMA CITY, OKLAHOMA 73116

October 3, 1997

The CIT Group/Equipment Financing, Inc.
1211 Avenue of the Americas
New York, New York 10036

Attention: Steven McClure

Gentlemen:

This letter (this "Letter"), when executed and delivered by
The CIT Group/Equipment Financing, Inc. ("CIT" or "you") will constitute a
binding agreement between CIT and Bayard Drilling Technologies, Inc. ("Bayard")
to consummate the transactions hereinafter described.

1. Exercise of Warrant. At the Closing (as hereinafter
defined), CIT shall exercise in full the Warrant issued to CIT on December 13,
1996 representing the current right to purchase up to 300,000 shares of Common
Stock, par value $.01 per share ("Common Stock"), of Bayard at a purchase price
per share of $8.00. Notwithstanding any provisions of the Warrant to the
contrary, at the Closing, in order to exercise the Warrant in full, CIT shall
surrender to Bayard the original instrument representing the Warrant, together
with the completed subscription form attached thereto, and, in consideration
therefor, Bayard shall deliver to CIT certificates representing an aggregate of
150,000 shares of Common Stock (the "Warrant Shares").

2. Sale of Warrant Shares in IPO. CIT hereby agrees to
sell, and Bayard hereby agrees to include, all of the Warrant Shares in any
registration by Bayard of an initial public offering of shares of Common Stock
in which any other holders of Common Stock of Bayard sell shares of Common
Stock (an "IPO"). CIT hereby agrees to enter into appropriate custody
arrangements and to grant appropriate powers of attorney as are customary in
connection with offerings by stockholders of companies registering shares of
capital stock for sale to the public. Notwithstanding anything to the contrary
set forth in this Letter, if the initial public offering price in the IPO is
less than $14.00 per share, CIT may, in its sole discretion, elect to not sell
its shares in the IPO.

3. Cash Payment Based on IPO Price. In order to account
for any difference in the value of (a) the number of shares of Common Stock
that would have been received by CIT upon exercise of the Warrant under the
"net exercise" provisions thereof based on a "current market value" per share
value equal to the initial public offering price in the IPO, net of underwriting
discounts and commissions (the "IPO Price"), and (b) the number of shares of
Common Stock actually received by CIT upon exercise of the Warrant pursuant to
this Letter, immediately upon the consummation of the first IPO in which CIT is
entitled to sell the Warrant Shares, Bayard shall make a cash payment to
<PAGE> 2
The CIT Group/Equipment
Financing, Inc. Page 2 October 3, 1997

CIT (if the IPO Price exceeds $16.00 per share), or CIT shall make a cash
payment to Bayard (if the IPO Price is less than $16.00 per share), in an
amount equal to the "Value Differential" in accordance with this paragraph 2.
The "Value Differential" shall be an amount equal to the product obtained by
multiplying (i) 150,000 by (ii) the absolute value of the difference between
the IPO Price and $16.00. Unless otherwise agreed in writing by Bayard and
CIT, such amount shall be paid to the recipient by wire transfer of immediately
available funds to an account designated in writing by the recipient.

4. The Closing. The closing of the exercise contemplated
by paragraph 1 of this Letter (the "Closing") shall be held at 10:00 a.m. on the
business day next following the date of acceptance hereof by CIT, at the offices
of Baker & Botts, L.L.P., 2001 Ross Avenue, Dallas, Texas 75201, or at such
other time, date or place as Bayard and CIT shall mutually agree.

5. Survival of Registration Rights. Notwithstanding the
surrender of the Warrant by CIT at the Closing, in the event that the initial
public offering price in the IPO is less than $14.00 per share and CIT elects
not to sell the Warrant Shares in the IPO, then the registration rights
provisions contained in Section 4 of the Warrant shall continue to apply to the
Warrant Shares and Bayard and CIT shall retain all rights and comply with all
obligations provided by such Section 4 with respect to the registration of the
Warrant Shares.

6. Amendments. The provisions of this Letter shall not
be amended or waived except by the written agreement of CIT and Bayard.

7. Governing Law. This Letter shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to any choice of law principles that would require the application of
the laws of any other jurisdiction.

8. Counterparts. This Letter may be executed in
multiple counterparts, each of which when so executed and delivered shall be
deemed to be an original, and all of which together shall constitute one and
the same instrument.
<PAGE> 3
The CIT Group/Equipment
Financing, Inc. Page 3 October 3, 1997

If you agree with the foregoing, please execute and return one
copy of this Letter.

Very truly yours,

BAYARD DRILLING TECHNOLOGIES, INC.

By: /s/ JAMES E. BROWN
------------------------------------
James E. Brown
President

<PAGE> 4
The CIT Group/Equipment
Financing, Inc. Page 4 October 3, 1997

Accepted and agreed this
9th day of October, 1997:

THE CIT GROUP/EQUIPMENT FINANCING, INC.

By: /s/ STEVEN MCCLURE
----------------------------------------
Name: S. L. McClure
-----------------------------------
Title: Executive Vice President
----------------------------------

<PAGE> 1
EXHIBIT 10.32

================================================================================

SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

BY AND AMONG

BAYARD DRILLING TECHNOLOGIES, INC.

AND

THE STOCKHOLDERS

THAT ARE SIGNATORIES HERETO

OCTOBER __, 1997

================================================================================

<PAGE> 2

SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

BAYARD DRILLING TECHNOLOGIES, INC.

This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT (this "Agreement"), dated as of October __, 1997, is made by and
among, Bayard Drilling Technologies, Inc., a Delaware corporation (the
"Company"), and the stockholders and employee option holders of the Company
that are signatories hereto (the "Stockholders").

WITNESSETH:

WHEREAS, as of December 10, 1996, the Company and certain of
its stockholders entered into that certain Registration Rights Agreement (the
"Original Registration Rights Agreement"), pursuant to which the parties
thereto set forth certain agreements by and among the stockholders of the
Company party thereto and the Company with respect to certain registration
rights regarding shares of common stock, par value $.01 per share ("Common
Stock"), of the Company, owned by such stockholders of the Company; and

WHEREAS, as of April 30, 1997, the Company and certain of its
stockholders entered into that certain Amended and Restated Registration Rights
Agreement (as amended, the "First Amended and Restated Registration Rights
Agreement"), pursuant to which the parties thereto amended and restated the
Original Registration Rights Agreement in its entirety; and

WHEREAS, the Company and the other parties hereto desire to
amend and restate the First Amended and Restated Registration Rights Agreement
in its entirety;

SECTION 1. Definitions. As used herein, the following
terms shall have the following meanings:

"AnSon Group" means the holders of 51% or more of the
Registrable Shares owned of record by the group comprised of AnSon
Partners Limited Partnership and Carl B.
Anderson, III.

"Commission" means the Securities and Exchange Commission.

<PAGE> 3

"Common Stock" has the meaning set forth in the Recitals
hereto.

"Common Stock Equivalent" means securities convertible into,
or exchangeable or exercisable for, shares of Common Stock, including
without limitation (i) the Series B Warrant held by Energy Spectrum
and (ii) any options granted by the Company to employees of the
Company; but not including the Subordinated Notes unless and until
they are converted into Common Stock.

"Company" has the meaning set forth in the Preamble hereto.

"Demand Registration" has the meaning set forth in Section
3(b) hereof.

"Demand Registration Request" has the meaning set forth in
Section 3(a) hereof.

"Demand Registration Request Initiator" has the meaning set
forth in Section 3(a) hereof.

"Distribution Registration Statement" has the meaning set
forth in the DLB Registration Rights Agreement.

"DLB Registration Rights Agreement" means that certain
Registration Rights Agreement, dated as of October 15, 1997, by and
among the Company, DLB Oil & Gas, Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation.

"Energy Spectrum" means Energy Spectrum Partners LP, a
Delaware limited partnership.

"Holdback Agreements" has the meaning set forth in Section 5
hereof.

"Included Securities" has the meaning set forth in Section 7
hereof.

"Indemnified Party" has the meaning set forth in Section 8(a)
hereof.

"IPO Date" means the date of effectiveness of the Initial
Public Offering.

"Issuer Indemnified Party" has the meaning set forth in
Section 8(c) hereof.

"Oliver Group" means the holders of 51% or more of the
Registrable Shares owned

2
<PAGE> 4

of record by the group comprised of R.T. Oliver, R.T. Oliver Drilling,
Inc., RR&T, Inc., Oliver Family Trust, Mullen-Oliver Partnership, Ltd.,
Grupo de Hercules, Ltd., Mike Mullen Energy Equipment Resource, Inc.
and Mike Mullen.

"Participating Holders" has the meaning set forth in Section 7
hereof.

"Person" means an individual, partnership, corporation,
limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity or
any department, agency or political subdivision thereof.

"Piggyback Registration" has the meaning set forth in Section
4 hereof.

"Piggyback Registration Notice" has the meaning set forth in
Section 4 hereof.

"Registrable Shares" means at any time any shares of Common
Stock owned by the Stockholders, whether acquired on the date hereof
or hereafter acquired, including without limitation, any shares of
Common Stock issuable upon the conversion, exchange or exercise of
Common Stock Equivalents owned by the Stockholders; provided, however,
that Registrable Shares shall not include any shares (i) the sale of
which has been registered pursuant to a registration statement filed
under the Securities Act which has been declared effective or (ii)
which may be otherwise transferred without restriction (including
volume restrictions) under Rule 144 or any similar successor rule or
provision then in force.

"Registration Expenses" has the meaning set forth in Section 6
hereof.

"Requesting Holders" has the meaning set forth in Section 3(a)
hereof.

"Securities Act" means the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and
regulations promulgated thereunder, all as the same may be in effect
from time to time.

"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the rules
and regulations promulgated thereunder, all as the same may be in
effect from time to time.

"Selling Holder" means a holder who is selling Registrable
Shares which are registered pursuant to the Securities Act as
contemplated by this Agreement.

"Selling Indemnified Party" has the meaning set forth in
Section 8(a) hereof.

"Series B Warrant" means that certain Series B Warrant,
exercisable for 66,000 shares

3
<PAGE> 5

of Common Stock at an exercise price of $7.50 per share, issued by the
Company to Energy Spectrum as of April 30, 1997.

"Share Value" means the average market price per share of
Common Stock on the principal national securities exchange or
quotation system on which the Common Stock is then traded or quoted
for the ten day trading period ending on the day prior to the
determination date.

"Stockholders" has the meaning set forth in the Preamble
hereto.

"Subordinated Notes" means that certain subordinated note of
the Company, issued to Energy Spectrum, due May 1, 2003, in the
original principal amount of $2,520,000, and any additional
subordinated notes of the Company which are issued as interest
thereon.

"Ward Group" means the holders of 51% or more of the
Registrable Shares owned of record by the group comprised of Ward
Drilling, Inc., L.O. Ward, Wil-Cas Investments, A. Brad Curtis,
Richard Tozzi, Claude Jackson, Larry Currier, Tim Higgins, Gary
Shelite, George White, Floyd R. Bundy, Ray Brewer, David Porter, Merl
Smith, Jim Russell and N. Mark Garrison.

SECTION 2. Effectiveness; Amended and Restated Agreement.
This Agreement shall become effective, and the First Amended and Restated
Registration Rights Agreement shall be amended and restated in its entirety as
set forth herein, upon the later of (i) the execution and delivery of this
Agreement by the Company and the stockholders of the Company who are parties to
the First Amended and Restated Registration Rights Agreement and who hold more
than 50% of the Registrable Shares and (ii) the IPO Date.

SECTION 3. Demand Registration.

(a) Requests for Registration. Subject to the
limitations set forth in this Section 3, at any time Energy Spectrum,
the AnSon Group, the Oliver Group or the Ward Group may request the
Company to register under the Securities Act, on the number of
occasions specified in clause (iv) of Section 3(c), all or any part of
the Registrable Shares held by Energy Spectrum, the AnSon Group, the
Oliver Group or the Ward Group, as applicable (a "Demand Registration
Request"). Within 10 days of receipt by the Company of a Demand
Registration Request, the Company shall give written notice of such
request to all other holders of Registrable Shares. Such holders shall
have the right to join the Demand Registration Request by delivery of
written notice to the Company of such intention, which notice shall
include the number of Registrable Shares that each such additional
holder intends to have the Company register in response thereto. The
Person or group of Persons making the Demand Registration Request
shall be referred to herein as the "Demand Registration Request
Initiator." All holders of Registrable Shares that

4
<PAGE> 6

participate in any such demand registration shall be referred to herein
as "Requesting Holders."

(b) Registration by the Company. Unless the Company
has the right to refuse registration pursuant to Section 3(c) hereof,
the Company shall file a registration statement under the Securities
Act covering the Registrable Shares which are the subject of any
Demand Registration Request as soon as practicable after receipt by
the Company of any such Demand Registration Request (each, a "Demand
Registration"); provided, however, that if (i) in the good faith
judgment of the Board of Directors of the Company, such registration
would be seriously detrimental to the Company (or any proposed
acquisition or disposition of assets or properties) and the Board of
Directors of the Company concludes, as a result, that it is essential
to defer the filing of such registration statement at such time, and
(ii) the Company shall furnish all Requesting Holders a certificate
signed by the President of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company for such registration statement
to be filed in the near future and that it is, therefore, essential to
defer the filing of such registration statement, then the Company
shall have the right to defer such filing for the period during which
such disclosure would be seriously detrimental; provided, however,
that the Company may not defer the filing of a registration statement
for a period of more than 120 days after receipt of the Demand
Registration Request of the Requesting Holders, and, provided further,
that the Company shall not defer its obligation in this manner more
than once in any twelve-month period and shall give written notice to
the Requesting Holders immediately after the reason for deferring the
filing of the registration statement has ceased to exist. The Company
shall not be required to register any Registrable Shares during any
period in which it has exercised its deferral right as aforesaid.

(c) Demand Registration Limitations. The demand
registration rights set forth in this Section 3 may be exercised only
in accordance with the following limitations:

(i) The holders of Registrable Shares shall
have the right to exercise demand registration rights under
this Section 3 only after the 180th day after the IPO Date.

(ii) The holders of Registrable Shares
shall not have any right to exercise demand registration
rights under this Section 3 at any time after the third
anniversary of the IPO Date.

(iii) The Company shall not be required to
make any Demand Registrations pursuant to this Section 3
unless the aggregate Share Value of all Registrable Shares
proposed to be registered in connection therewith shall equal
or exceed $20 million.

5
<PAGE> 7

(iv) Each of Energy Spectrum, the AnSon
Group, the Oliver Group and the Ward Group shall have the
right to require the Company to file up to two Demand
Registrations with the Commission; provided, however, that
the Company shall be required to effect not more than one
Demand Registration pursuant to this clause (iv) unless and
until it is qualified to register the Registrable Shares on
Form S-3 promulgated under the Securities Act.

(v) Provided the Company is actively
employing in good faith all reasonable efforts to cause such
registration statements to become effective, the Company
shall not be required to make any Demand Registration
pursuant to this Section 3 during the period ending 90 days
after the effective date of any registration under the
Securities Act by the Company of shares of Common Stock or
other equity securities, other than in connection with an
employee benefit plan, dividend reinvestment plan or merger,
consolidation or other business combination.

(d) Priority on Demand Registrations. The
registration statement filed pursuant to the Demand Registration
Request of the Requesting Holders may, subject to the limitations set
forth below, include other securities of the Company, with respect to
which registration rights have been granted, and may include
securities of the Company being sold for the account of the Company.
If a Demand Registration is an underwritten public offering and the
managing underwriters advise the Company in writing that in their
opinion the number of Registrable Shares and other securities
requested to be included exceeds the number of Registrable Shares and
other securities which can be sold in such offering, the Company shall
include in such registration, prior to the inclusion of any securities
to be sold by the Company or any other securities which are not
Registrable Shares, (i) first the number of Registrable Shares
requested to be included by the Demand Registration Request Initiator
and (ii) second, the number of Registrable Shares requested to be
included, pro rata among the Requesting Holders other than the Demand
Registration Request Initiator on the basis of the number of
Registrable Shares owned by such Requesting Holders.

(e) Underwriters. The managing underwriter or
underwriters for any Demand Registration shall be selected by the
holders of a majority of the Registrable Shares to be included in such
Demand Registration, which managing underwriter or underwriters shall
be reasonably acceptable to the Company.

6
<PAGE> 8

SECTION 4. Piggyback Registration.

(a) Right to Piggyback. If at any time the Company
proposes to file a registration statement under the Securities Act
with respect to any underwritten offering of any securities of the
Company, other than (i) a registration statement on Form S-4 or S-8
(or any substitute form for comparable purposes that may be adopted by
the Commission), (ii) a registration statement filed in connection
with an exchange offer or an offering of securities solely to the
Company's existing security holders or (iii) the Distribution
Registration Statement, the Company shall in each case give written
notice (a "Piggyback Registration Notice") of such proposed filing of
such registration statement (a "Piggyback Registration") to all
holders of Registrable Shares as soon as practicable, but in no event
less than 20 days before the anticipated filing date, and shall,
subject to Section 4(b) hereof, include in such registration statement
all Registrable Shares with respect to which the Company has received
written requests for inclusion therein within 15 days after the
Piggyback Registration Notice is received by all such holders.

(b) Priority in Piggyback Registrations. If the
managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in a
registration exceeds the number which can be sold in such offering,
the Company shall include in such registration (i) first, the
securities of the Company proposed to be registered as described in
the Piggyback Registration Notice and (ii) second, the Registrable
Shares and other securities requested to be included in such
registration, pro rata among the holders of all such Registrable
Shares and other securities requested to be included on the basis of
the then number of Registrable Shares and other securities requested
to be included by each such holder.

(c) Right to Withdraw. Notwithstanding anything to
the contrary, neither the delivery of a Piggyback Registration Notice
by the Company nor of the request by the holder of the Registrable
Shares shall in any way obligate the Company to file, or the holder of
the Registrable Shares to have such shares included in, a registration
statement under this Section 4 and notwithstanding such filing, the
Company may, at any time prior to the effective date thereof, in its
sole discretion, determine not to offer the securities to which the
registration statement relates without liability to any of the holders
of the Registrable Shares, and any holder may determine not to include
its Registrable Shares therein without liability.

(d) Selection of Underwriters. The managing
underwriter or underwriters for any Piggyback Registration shall be
selected by the Company, by action of the Board of Directors.

SECTION 5. Holdback Agreements. In the event that
Registrable Shares are registered by the Company pursuant to Section 3
or 4 hereof, the holders of any such Registrable

7
<PAGE> 9

Shares shall enter into such agreements, including underwriting agreements and
lock-up agreements, as the managing underwriter of any underwritten public
offering registered under the Securities Act shall reasonably request
(collectively, "Holdback Agreements"); provided, however, that (i) with respect
to an initial public offering of shares of Common Stock, such Holdback
Agreements shall not exceed a period of 14 calendar days prior to, and 180
calendar days after, the effective date of such registration, and (ii) with
respect to any subsequent registrations, such Holdback Agreements shall not
exceed a period of 14 calendar days prior to, and 120 calendar days after, the
effective date of such registration.

SECTION 6. Registration Procedures. Whenever the
holders of Registrable Shares have requested that any Registrable Shares be
registered pursuant to this Agreement, the Company shall use its best efforts to
effect the registration and the sale of such Registrable Shares in accordance
with the intended method of disposition thereof, and pursuant thereto the
Company shall as expeditiously as possible:

(a) prepare and file with the Commission a
registration statement with respect to such Registrable Shares and use
its best efforts to cause such registration statement to become and
remain effective for such period as may be reasonably necessary to
effect the sale of such securities, in any case not to exceed six
months;

(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a period of not more than
six months and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the Selling Holders set forth in
such registration statement;

(c) furnish, without charge, to each Selling Holder
and the underwriters of the securities being registered such number of
copies of such registration statement, each amendment and supplement
thereto, in each case including all exhibits, the prospectus included
in such registration statement, including each preliminary prospectus,
and such other documents as each such Selling Holder or underwriters
may reasonably request in order to facilitate the disposition of the
Registrable Shares owned by each such Selling Holder or the sale of
such securities by such underwriters;

8
<PAGE> 10

any jurisdiction where it would not otherwise be required to qualify
but for this Section 6(d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any
such jurisdiction;

(e) (i) cause all such Registrable Shares covered by
such registration statement to be listed on the principal securities
exchange on which shares of Common Stock are then listed, if any, if
the listing of such Registrable Shares is then permitted under the
rules of such exchange, or (ii) if shares of Common Stock are not then
so listed, cause all such Registrable Shares to be listed on a
national securities exchange or, failing that, secure designation of
all such Registrable Shares as a Nasdaq Stock Market "national market
system security" within the meaning of Rule 1lAa2-1 of the Commission
or, failing that, secure Nasdaq Stock Market authorization for such
shares and, without limiting the generality of the foregoing, take all
actions that may be required by the Company as the issuer of such
Registrable Shares in order to facilitate the managing underwriter's
arranging for the registration of at least two market makers as such
with respect to such shares with the National Association of
Securities Dealers, Inc.;

(f) provide and cause to be maintained a transfer
agent and registrar for all such Registrable Shares not later than the
effective date of such registration statement;

(g) enter into such customary agreements, including
underwriting agreements in customary form, and take all such other
actions as the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Shares;

(h) upon receipt of such confidentiality agreements
as the Company may reasonably request, make reasonably available for
inspection by the Selling Holders, any underwriter participating in
any disposition pursuant to such registration statement, and any
attorney, accountant or other agent retained by any such Selling
Holders or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such Selling
Holder, underwriter, attorney, accountant or agent in connection with
such registration statement;

(i) promptly notify each Selling Holder, (i) of the
time when the registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or
post-effective amendment to the registration statement has been filed
and, with respect to the registration statement or any post-effective
amendment, when the same has become effective and (ii) of the receipt
by the Company of any notification with respect to the suspension of
the qualification of any Registrable Shares for sale under the
securities or blue sky laws of any jurisdiction or the initiation of
any proceeding for such purpose;

9
<PAGE> 11

(j) notify each Selling Holder of any requests by the
Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;

(k) prepare and file with the Commission, promptly
upon the request of any Selling Holder, any amendments or supplements
to such registration statement or prospectus which, in the opinion of
counsel selected by the holders of a majority of the Registrable
Shares being registered, is required under the Securities Act or the
rules and regulations thereunder in connection with the distribution
of Registrable Shares by such Selling Holder;

(l) prepare and promptly file with the Commission,
and promptly notify each Selling Holder of the filing of, such
amendments or supplements to such registration statement or prospectus
as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have occurred as
the result of which any such prospectus as then in effect would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading;

(m) advise each Selling Holder, promptly after the
Company shall receive notice or obtain knowledge thereof, of the
issuance of any stop order by the Commission suspending the
effectiveness of such registration statement or the initiation or
threatening of any proceeding for such purpose and promptly use all
reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;

(n) provide notice within a reasonable amount of
time prior to the filing of any registration statement or prospectus
of any amendment or supplement to such registration statement or
prospectus, furnish a copy thereof to each Selling Holder and refrain
from filing any such registration statement, prospectus, amendment or
supplement to which counsel selected by the holders of a majority of
the Registrable Shares being registered shall have reasonably objected
on the grounds that such amendment or supplement does not comply in
all material respects with the requirements of the Securities Act or
the rules and regulations thereunder, unless, in the case of an
amendment or supplement, the Company reasonably believes the filing of
such amendment or supplement is reasonably necessary to protect the
Company from any liabilities under any applicable federal or state
law;

10
<PAGE> 12

Holders, covering such matters as such underwriters may reasonably
request, including, without limiting the generality of the foregoing,
opinions to the effect that (A) such registration statement has become
effective under the Securities Act; (B) to the best of such counsel's
knowledge no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act; (C) the registration
statement, the prospectus, and each amendment or supplement thereto
comply as to form in all material respects with the requirements of
the Securities Act and the applicable rules and regulations of the
Commission thereunder, except that such counsel need express no
opinion as to financial statements or other financial or statistical
data contained therein; and (ii) a "cold comfort" letter or letters
from the independent certified public accountants of the Company
addressed to the underwriters and the Selling Holders, covering such
matters as such underwriters may reasonably request, in which letters
such accountants shall state, without limiting the generality of the
foregoing, that they are independent certified public accountants
within the meaning of the Securities Act and that in the opinion of
such accountants the financial statements and other financial data of
the Company included in the registration statement, the prospectus, or
any amendment or supplement thereto comply in all material respects
with the applicable accounting requirements of the Securities Act;

(p) deliver promptly to each Selling Holder and each
underwriter, if any, copies of all correspondence between the
Commission and the Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect
to the registration statement, other than those portions of any such
correspondence and memoranda which contain information subject to
attorney-client privilege with respect to the Company;

(q) provide a CUSIP number for all Registrable
Shares, not later than the effective date of the registration
statement;

(r) make reasonably available its employees and
personnel and otherwise provide reasonable assistance to the
underwriters, taking into account the needs of the Company's business
and the requirements of the marketing process, in the marketing of
Registrable Shares in any underwritten offering;

(s) promptly prior to the filing of any document
which is to be incorporated by reference into the registration
statement or the prospectus, after the initial filing of such
registration statement, provide copies of such document to counsel to
the Selling Holders of Registrable Shares and to the managing
underwriter, if any, and make the Company's representatives reasonably
available for discussion of such document and make such changes in
such document prior to the filing thereof as counsel for such Selling
Holders or underwriters may reasonably request;

11
<PAGE> 13

(t) furnish to each Selling Holder and the managing
underwriter, without charge, at least one signed copy of the
registration statement and any post-effective amendments thereto,
including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, including those
incorporated by reference;

(u) comply with all applicable rules and regulations
of the Commission, and make generally available to its security
holders, as soon as reasonably practicable after the effective date of
the registration statement, and in any event within 16 months
thereafter, an earnings statement (which need not be audited) covering
the period of at least 12 consecutive months beginning with the first
day of the Company's first calendar quarter after the effective date
of the registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; and

(v) take all such other commercially reasonable
actions as are necessary or advisable in order to expedite or
facilitate the disposition of such Registrable Shares.

SECTION 7. Registration Expenses. Except as otherwise
expressly provided herein, all expenses incident to the Company's performance
of or compliance with this Agreement, including without limitation, all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws, including a blue sky survey and the related fees and expenses
of counsel, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and its independent certified public
accountants, and other Persons (including experts) retained by the Company, and
all other fees and disbursements of underwriters customarily paid by issuers or
sellers of securities (all such expenses being herein called "Registration
Expenses"), shall be paid as follows:

(a) In the case of a Demand Registration pursuant to
Section 3 hereof, by the Selling Holders and all other holders
(collectively, the "Participating Holders") of Registrable Shares and
other securities, if any (collectively, the "Included Securities"),
being sold pursuant to a registration statement filed as contemplated
thereby (or, if satisfactory arrangements for the reimbursement
thereof shall be agreed to in advance by the Company and such holders,
shall be paid by the Company and reimbursed by the Participating
Holders), pro rata among the Participating Holders on the basis of the
number of the Included Securities being sold by each of them;
provided, however, that to the extent that any Included Securities are
not sold and the Participating Holder who owns such Included
Securities does not receive any proceeds, directly or indirectly, then
such Participating Holder shall not be obligated to reimburse the
Company for such Participating Holder's pro rata share of the
Registration Expenses. In addition, each Participating Holder shall
pay all underwriting discounts, commissions or similar charges
attributable to the sale of Included Securities.

12
<PAGE> 14

(b) In the case of a Piggyback Registration pursuant
to Section 4 hereof, by the Company, provided, however, that each
Participating Holder shall pay all underwriting discounts, commissions
or similar charges attributable to the sale of Included Securities.

(c) The Company shall pay its internal expenses,
including without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties, the
expense of any annual audit or quarterly review, the expense of any
liability insurance obtained by the Company and the expenses and fees
for listing the securities so registered on each securities exchange
on which any shares of common stock are then listed or on the Nasdaq
Stock Market.

SECTION 8. Indemnification and Contribution.

(a) Indemnification by the Company. The Company
shall indemnify and hold harmless to the fullest extent permitted by
law each Selling Holder, its officers, directors, fiduciaries,
stockholders, partners (and the directors, officers, employees and
stockholders thereof) and agents and each person, if any, who controls
such Selling Holder within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act (collectively, the "Selling
Indemnified Parties" and, individually, a "Selling Indemnified
Party"), from and against any and all losses, claims, damages, whether
in contract, tort or otherwise, liabilities, expenses, actions and
proceedings, whether commenced or threatened, in respect thereof,
including reasonable costs of investigation, counsel fees and amounts
paid in settlement, whatsoever (as incurred or suffered) arising out
of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or preliminary,
final or summary prospectus relating to the Registrable Shares or in
any amendment or supplement thereto, or arising out of or based upon
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of, or are based upon, any
such untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by such Selling Holder
or on such Selling Holder's behalf expressly for use therein. The
Company shall also indemnify any underwriters of the Registrable
Shares, their officers, partners and directors and each person who
controls such underwriters on substantially the same basis as that of
the indemnification of the Selling Indemnified Parties provided in
this Section 8 or to provide such other indemnification customarily
obtained by underwriters at the time of offering.

<PAGE> 15

Selling Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of
such Selling Indemnified Party unless (i) the Company has agreed to
pay such fees and expenses, (ii) the Company fails to diligently
defend the action or proceeding within 20 days after receiving notice
from the Selling Indemnified Party that the Selling Indemnified Party
believes the Company has so failed or (iii) the named parties to any
such action or proceeding, including any impleaded parties, include
both such Selling Indemnified Party and the Company, and such Selling
Indemnified Party shall have been advised by counsel that there may be
a conflict of interest between any of the parties, or that
representation of the Selling Indemnified Party and the Company is
otherwise inappropriate under applicable standards of professional
conduct, or one or more legal defenses are available to such Selling
Indemnified Party which are different from or additional to those
available to the Company; in which case, if such Selling Indemnified
Party notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not
have the right to assume the defense of such action or proceeding on
behalf of such Selling Indemnified Party; it being understood,
however, that the Company shall not, in connection with any one such
action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such Selling
Indemnified Parties, which firm shall be designated in writing by a
majority of the Selling Indemnified Parties. The Company shall not be
liable for any settlement of any such action or proceeding effected
without the Company's written consent, but if settled with its written
consent, which consent shall not be unreasonably withheld or delayed,
or if there be a final judgment no longer subject to appeal for the
plaintiff in any such action or proceeding, the Company agrees to
indemnify and hold harmless such Selling Indemnified Parties from and
against any loss or liability (to the extent stated above) by reason
of such settlement or judgment.

(c) Indemnification by Holders of Registrable
Shares. Each Selling Holder shall severally, but not jointly,
indemnify and hold harmless the Company, its directors, officers,
fiduciaries, stockholders and agents and each person, if any, who
controls the Company within the meaning of either Section 15 of the
Act or Section 20 of the Securities Exchange Act (collectively, the
"Issuer Indemnified Parties" and, individually, an "Issuer Indemnified
Party" and, together with a Selling Indemnified Party an "Indemnified
Party"), to the same extent as the foregoing indemnity from the
Company to such Selling Holder, but only with respect to information
furnished in writing by such Selling Holder or on such Selling
Holder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Shares, or any amendment or
supplement thereto, or any preliminary prospectus; provided, however,
that to the extent that this indemnity arises from any untrue
statement or alleged untrue statement or omission or alleged omission
contained in any registration statement or in any prospectus

<PAGE> 16

relating to the Registrable Shares or in any amendment or supplement
thereto, the liability of each Selling Holder shall be limited to the
amount of the gross proceeds received by such Selling Holder from the
offering. In case any action or proceeding shall be brought against an
Issuer Indemnified Party, in respect of which indemnity may be sought
against such Selling Holder, such Selling Holder shall have the rights
and duties given to the Company, and the Issuer Indemnified Parties
shall have the rights and duties given to such Selling Holder, by the
preceding Section 8(b) hereof. Each Selling Holder shall also
severally, but not jointly, indemnify and hold harmless underwriters
of the Registrable Shares, their officers, directors, fiduciaries,
stockholders and agents and each person who controls such underwriters
on substantially the same basis as that of the indemnification of the
Company provided in this Section 8.

(d) Contribution. If the indemnification provided
for in this Section 8 is unavailable to any Indemnified Party in
respect of any losses, claims, damages, liabilities, expenses, actions
or proceedings referred to herein, then each such indemnifying party,
in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party as a result of
such losses, claims, damages, liabilities, expenses, actions and
proceedings (i) as between the Issuer Indemnified Parties and the
Selling Indemnified Parties on the one hand and the underwriters on
the other, in such proportion as is appropriate to reflect the
relative benefits received by the Issuer Indemnified Parties and the
Selling Indemnified Parties on the one hand and the underwriters on
the other from the offering of the Registrable Shares, or if such
allocation is not permitted by applicable law, in such proportion as
is appropriate to reflect not only such relative benefits but also the
relative fault of the Issuer Indemnified Parties and the Selling
Indemnified Parties on the one hand and of the underwriters on the
other in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities, expenses actions or
proceedings, as well as any other relevant equitable considerations
and (ii) as between the Issuer Indemnified Parties, on the one hand,
and each Selling Indemnified Party on the other, in such proportion as
is appropriate to reflect the relative fault of the Issuer Indemnified
Parties and of each Selling Indemnified Party in connection with such
statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Issuer
Indemnified Parties and the Selling Indemnified Parties on the one
hand and the underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering, net of
underwriting discounts and commissions but before deducting expenses,
received by the Issuer Indemnified Parties and the Selling Indemnified
Parties bear to the total underwriting discounts and commissions
received by the underwriters, in each case as set forth in the table
on the cover page of the prospectus. The relative fault of the Issuer
Indemnified Parties and the Selling Indemnified Parties on the one
hand and of the underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by

15
<PAGE> 17

the Issuer Indemnified Parties and the Selling Indemnified Parties or
by the underwriters. The relative fault of the Issuer Indemnified
Parties on the one hand and of each Selling Indemnified Party on the
other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.

The Company and the Selling Holders hereby agree
that it would not be just and equitable if contribution pursuant to
this Section 8(d) were determined by pro rata allocation, even if the
underwriters were treated as one entity for such purpose, or by any
other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages, liabilities, expenses, actions
or proceedings referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
8(d), no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Shares underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, and no Selling
Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Shares of
such Selling Holder were offered to the public exceeds the amount of
any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation,
within the meaning of Section 11(f) of the Securities Act, shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Each Selling Holder's obligation to
contribute is several in the proportion that the proceeds of the
offering received by such Selling Holder bears to the total proceeds
of the offering, and not joint.

(e) Settlement or Compromise. No indemnifying party
shall without the written consent of the Indemnified Party, effect the
settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder,
whether or not the Indemnified Party is an actual or potential party
to such action or claim, unless such settlement, compromise or
judgment (i) includes an unconditional release of the Indemnified
Party from all liability arising out of such action or claim and (ii)
does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any Indemnified
Party.

16
<PAGE> 18

(f) Rights not Exclusive. The indemnity agreements
contained in this Section 8 shall be in addition to any other rights
to indemnification or contribution which any Indemnified Party may
have pursuant to law or contract and shall remain operative and in
full force and effect regardless of any investigation made or omitted
by or on behalf of any indemnified party and shall survive the
transfer of the Registrable Shares by any such party.

SECTION 9. Compliance with Rule 144. When it is first legally
required to do so, the Company shall register a class of securities under
Section 12 of the Securities Exchange Act, and commence to file reports under
Section 13 or 15(d) of the Securities Exchange Act. Thereafter at the request
of any holder who proposes to sell securities in compliance with Rule 144
promulgated by the Commission under the Securities Act, the Company shall (i)
forthwith furnish to such holder a written statement of compliance with the
filing requirements of the Commission as set forth in Rule 144 as such rule may
be amended from time to time and (ii) timely file and make available to the
public and such holders such reports and other information as will enable the
holders to make sales pursuant to Rule 144.

SECTION 10. Participation in Underwritten Registrations. No
Person may participate in any registration hereunder which is underwritten
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person or Persons
entitled hereunder to approve such arrangements, (b) provides all such
information as is reasonably required to effect such registration and completes
and executes all undertakings, questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements or applicable laws, and (c) complies with all
other reasonable requests of the managing underwriter and with the Company and
complies with all other reasonable requests related to such registration.

17
<PAGE> 19

SECTION 14. Final Agreement. This Agreement constitutes
the final agreement of the parties hereto concerning the matters referred to
herein, and supersedes all prior agreements and understandings with respect to
the subject matter hereof.

SECTION 15. Severability. Whenever possible, each
provision of this Agreement shall 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.

SECTION 16. Descriptive Headings. The descriptive
headings of this Agreement are inserted for convenience of reference only and do
not constitute a part of and shall not be utilized in interpreting this
Agreement.

SECTION 17. Notices. Any notices required or permitted to
be sent hereunder shall be delivered by hand, by telex or telecopier, or by
certified or registered mail, postage prepaid and return receipt requested, or
delivered by overnight courier service to the following addresses, or such other
addresses as shall be given by notice delivered hereunder. Notices shall be
deemed to have been given upon delivery, if delivered by hand, three business
days after mailing, if mailed, or one business day after delivery to the
courier, if delivered by overnight courier service, and upon receipt of an
appropriate electronic confirmation, if by telex or telecopier:

If to the holders of Registrable Shares, to the addresses set
forth on the stock record books of the Company.

If to the Company, to:

Bayard Drilling Technologies, Inc.
4005 Northwest Expressway
Suite 550E
Oklahoma City, Oklahoma 73116
Telecopy: (405) 840-9553
Attention: President

SECTION 18. Governing Law. The validity, meaning and
effect of this Agreement shall be determined in accordance with the laws of the
State of Delaware applicable to contracts made and to be performed in that
state.

SECTION 19. Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute one
instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it and the Company.

19
<PAGE> 20

IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.

THE COMPANY:

BAYARD DRILLING TECHNOLOGIES, INC.

By:
--------------------------------
James E. Brown
President

THE STOCKHOLDERS:

ANSON LIMITED PARTNERSHIP

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Carl B. Anderson, III

ENERGY SPECTRUM PARTNERS LP

By: Energy Spectrum Capital LP,
its General Partner

By: Energy Spectrum LLC,
its General Partner

By:
-------------------------
Name:
-----------------------
Title:
----------------------

<PAGE> 21

MIKE MULLEN ENERGY EQUIPMENT
RESOURCE, INC.

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

GRUPO DE HERCULES, LTD.

By: Mullen-Oliver Rig Investments Group, Inc.
General Partner

By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------

MULLEN-OLIVER PARTNERSHIP, LTD.

By: Mullen-Oliver Rig Investments Group, Inc.
General Partner

By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------

RR & T, INC.

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

R.T. OLIVER DRILLING, INC.

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 22
-----------------------------------
Roy T. Oliver

-----------------------------------
Mike Mullen

OLIVER FAMILY TRUST

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

CHESAPEAKE ENERGY CORPORATION

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

CONTINENTAL ILLINOIS PROPERTY
CORPORATION #3

By:
--------------------------------
Name:
------------------------------
Title:
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Harold G. Hamm, as Trustee of the
Harold G. Hamm Revocable Inter
Vivos Trust dated April 23, 1984

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L. O. Ward

WIL-CAS INVESTMENTS, L.P.

By:
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General Partner

EMPLOYEE OPTION HOLDERS:

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James E. Brown

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Edward S. Jacob

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David E. Grose

<PAGE> 1
EXHIBIT 21.1

SUBSIDIARIES OF BAYARD DRILLING TECHNOLOGIES, INC.

Trend Drilling Co.
WD Equipment, L.L.C.
Bonray Drilling Corporation

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 (File
No. 333-34451) of our report dated August 22, 1997, on our audit of the
financial statements of Ward Drilling Company, Inc. We also consent to the
reference to our firm under the caption "Independent Public Accountants."

/s/ COOPERS & LYBRAND L.L.P.

Coopers & Lybrand, L.L.P.

Oklahoma City, OK
October 16, 1997

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 (File
No. 333-34451) of our report dated April 28, 1997, on our audits of the
financial statements of Trend Drilling Company. We also consent to the
references to our firm under the caption "Independent Public Accountants."

/s/ COOPERS & LYBRAND L.L.P.

Coopers & Lybrand L.L.P.

Oklahoma City, OK
October 16, 1997

<PAGE> 1
EXHIBIT 23.3

CONSENT OF INDEPENDENT CERTIFIED ACCOUNTANTS

We have issued our report dated January 20, 1997, accompanying the
financial statements of Bayard Drilling Technologies, Inc. contained in the
Registration Statement on Form S-1 (Registration No. 333-34451) and Prospectus.
We consent to the use of the aforementioned report in the Registration Statement
and Prospectus and to the use of our name as it appears under the captions
"Independent Public Accountants" and "Selected Consolidated Financial and
Operating Data."

/s/ GRANT THORNTON LLP

GRANT THORNTON LLP

Oklahoma City, Oklahoma
October 16, 1997

<PAGE> 1
EXHIBIT 23.4

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Independent Public
Accountants" and to the use of our report dated April 17, 1997, with respect to
the financial statements of Bonray Drilling Corporation included in the
Registration Statement (Form S-1 No. 333-34451) and related Prospectus of
Bayard Drilling Technologies, Inc. for the registration of 9,200,000 shares of
its common stock.

/s/ ERNST & YOUNG LLP

ERNST & YOUNG LLP

Oklahoma City, Oklahoma
October 9, 1997

<PAGE> 1
EXHIBIT 23.6

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 (File
No. 333-34451) of our report dated October 3, 1997, on our audit of the
financial statements of Bayard Drilling Technologies, Inc. as of June 30, 1997,
and the six months then ended. We also consent to the references to our firm
under the captions "Independent Public Accountants."

/s/ COOPERS & LYBRAND, L.L.P.

Coopers & Lybrand, L.L.P.

Oklahoma City, OK
October 16, 1997