BAYARD DRILLING TECHNOLOGIES INC, DEF 14A, 1998-04-13

BAYARD DRILLING TECHNOLOGIES INC
DEF 14A, 1998-04-13
OIL & GAS FIELD MACHINERY & EQUIPMENT

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

Bayard Drilling Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2
BAYARD DRILLING TECHNOLOGIES, INC.

4005 N.W. EXPRESSWAY, SUITE 550E

OKLAHOMA CITY, OKLAHOMA 73116
--------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1998
--------------------

TO THE STOCKHOLDERS:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Bayard Drilling Technologies, Inc., a Delaware corporation (the "Company"), will
be held at The Courtyard By Marriott, 1515 N. W. Expressway, Oklahoma City,
Oklahoma 73118, on Tuesday, May 19, 1998, at 2:00 p.m., for the following
purposes:

1. To elect six directors to the Board of Directors to serve
until the Company's 1999 Annual Meeting of Stockholders and
until their successors have been duly elected and qualified.

2. To ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for the fiscal year
ending December 31, 1998.

3. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.

Stockholders of record at the close of business on April 1, 1998 are
entitled to notice of and to vote at the Annual Meeting. A complete list of the
stockholders of the Company entitled to vote at the Annual Meeting will be
available for the examination of any stockholders for at least ten days prior to
the Annual Meeting at the Company's principal executive office located at 4005
N.W. Expressway, Suite 550E, Oklahoma City, Oklahoma 73116, and will also be
available for inspection at the Annual Meeting.

By Order of the Board of Directors

/s/ KIRK K. WAITE

Kirk K. Waite
Secretary

Oklahoma City, Oklahoma
April 10, 1998

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL PRIOR TO THE DATE OF
THE ANNUAL MEETING OF STOCKHOLDERS IN ORDER TO ASSURE REPRESENTATION OF YOUR
SHARES.

<PAGE> 3

BAYARD DRILLING TECHNOLOGIES, INC.

4005 N.W. EXPRESSWAY, SUITE 550E
OKLAHOMA CITY, OKLAHOMA 73116
--------------------

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1998
--------------------

APRIL 10, 1998

GENERAL

This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Bayard Drilling Technologies, Inc. (the
"Company") for use at its Annual Meeting of Stockholders (the "Annual Meeting")
to be held at The Courtyard By Marriott, 1515 N. W. Expressway, Oklahoma City,
Oklahoma 73118, on Tuesday, May 19, 1998 at 2:00 p.m., and at any and all
adjournments thereof. The Company's principal executive office is located at
4005 N.W. Expressway, Suite 550E, Oklahoma City, Oklahoma 73116. This Proxy
Statement and the enclosed form of proxy are being mailed to stockholders on or
about April 10, 1998.

A form of proxy is enclosed for use at the Annual Meeting. The proxy
must be signed and dated by you or your authorized agent. A proxy may be revoked
at any time before it is exercised by giving written notice of revocation to the
Secretary of the Company or by submitting, prior to the time of the Annual
Meeting, a properly executed proxy bearing a later date. It may also be revoked
by attendance at the Annual Meeting and election to vote thereat. Stockholders
having executed and returned a proxy, who attend the Annual Meeting and desire
to vote in person, are requested to so notify the Secretary of the Company prior
to the time of the Annual Meeting. Subject to such revocation, all shares
represented by a properly executed proxy received in time for the Annual Meeting
will be voted by the proxy holders in accordance with the instructions on the
proxy.

If no instructions are specified on the proxy, all shares represented
by valid proxies received pursuant to this solicitation (and not revoked before
they are voted) will be voted "FOR" the election of the nominees for director
set forth herein and "FOR" the ratification of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for the fiscal year ending December 31,
1998. As of the date hereof, management is not aware of any other matters to be
presented for action at the Annual Meeting. If, however, any other matters
properly are presented at the Annual Meeting, the proxy will be voted in
accordance with the best judgment and in the discretion of the proxy holders.
For purposes of determining whether a proposal has received the necessary votes
to be approved, abstentions from voting on any matter other than in the election
of directors will have the effect of a vote "AGAINST" the proposal.

If you hold your shares of Common Stock in "street name" and you fail
to instruct your broker or nominee as to how to vote such shares of Common
Stock, your broker or nominee may, in its discretion, vote your shares of Common
Stock "FOR" the election of the nominees for director set forth herein and "FOR"
ratification of the appointment of Coopers & Lybrand L.L.P. as the Company's
independent public accountants for the fiscal year ending December 31, 1998.

MATTERS TO BE CONSIDERED

The matters to be considered and voted upon at the Annual Meeting are:

1. Electing six directors to the Board of Directors to serve
until the Company's 1999 Annual Meeting of Stockholders and
until their successors have been duly elected and qualified.

<PAGE> 4

2. Ratifying the appointment of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for the fiscal year
ending December 31, 1998.

3. Transacting such other business as may properly come before
the Annual Meeting and at any and all adjournments thereof.

COSTS OF SOLICITATION OF PROXIES

The Company will bear the costs of this solicitation, including the
expense of preparing, assembling, printing and mailing this Proxy Statement and
the material used in this solicitation of proxies. It is contemplated that
proxies will be solicited principally through the mail, but directors, officers
and regular employees of the Company may solicit proxies personally or by
telephone. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for the reasonable expense in forwarding these proxy materials to their
principals. In addition, the Company may pay for and utilize the services of
individuals or companies not regularly employed by the Company in connection
with the solicitation of proxies if the Board of Directors of the Company
determines that this is advisable.

OUTSTANDING SHARES AND VOTING RIGHTS

There were 18,183,945 shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), issued and outstanding as of April 1, 1998,
the record date (the "Record Date") for the stockholders entitled to notice of
and to vote at the Annual Meeting. Each stockholder of record at the close of
business on the Record Date is entitled to one vote for each share of Common
Stock then held on each matter, or any adjournments thereof. The Company's
Restated Certificate of Incorporation ("Certificate of Incorporation") also
authorizes the issuance of up to 20,000,000 shares of preferred stock, par value
$0.01 per share, of which no shares are presently issued and outstanding.

A majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting must be present in person or represented by proxy at the
Annual Meeting in order to constitute a quorum for the transaction of business.
Abstentions and broker non-votes will be treated as shares present and entitled
to vote for purposes of determining the presence of a quorum.

The Company's Certificate of Incorporation does not authorize
cumulative voting. In the election of directors, the six candidates receiving
the highest number of votes will be elected. Ratification of the appointment of
Coopers & Lybrand L.L.P. as the Company's independent public accountants
requires the affirmative vote of a majority of the shares of the Common Stock
present at the Annual Meeting in person or by proxy and entitled to vote.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of Common Stock
of the Company as of the Record Date by (i) each person who is known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock; (ii) each director or nominee for director of the Company; (iii) the
Chief Executive Officer of the Company and each of the two other persons who
served as executive officers of the Company during the fiscal year ended
December 31, 1997 (the "Named Executive Officers"); and (iv) all directors and
Named Executive Officers as a group. Other than the Named Executive Officers, no
executive officer of the Company received a total annual salary and bonus from
the Company in excess of $100,000 during 1997.

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<PAGE> 5

<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED (1)(2)
----------------------------
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (3) SHARES CLASS (4)
------------- -------------
<S> <C> <C>
DLB Oil & Gas, Inc. (2)(5) 2,955,000 16.3%
Carl B. Anderson, III (6) 1,288,000 7.1%
Energy Spectrum LLC (7) 1,100,000 6.0%
James E. Brown (8) 313,000 1.7%
Edward S. Jacob, III (9) 10,000 *
David E. Grose (10) -- *
Mark Liddell
(2)(11) 2,955,000 16.3%
Merrill A. Miller, Jr. (12) -- *
Sidney L. Tassin (13) 1,100,000 6.0%
Lew O. Ward (14) 423,125 2.3%
Directors and officers as a group (8 persons) (15) 6,089,125 33.4%
</TABLE>

- ----------
* Less than 1%

(1) Except as indicated in footnotes to this table, to the Company's
knowledge, the stockholders named in this table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Shares shown as beneficially owned by any
person have been determined in accordance with the requirements of Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as
amended. Does not include options to purchase shares of Common Stock
scheduled to first become exercisable more than 60 days after the
Record Date.

(2) Does not reflect the consummation of the distribution (the "DLB
Distribution") of 2,955,000 shares of Common Stock owned by DLB Oil &
Gas, Inc., an Oklahoma corporation ("DLB"), in connection with the
merger of Chesapeake Merger Corp., an Oklahoma corporation and
indirect wholly owned subsidiary of Chesapeake Energy Corporation, an
Oklahoma corporation, with and into DLB, as described in the Company's
Registration Statement on Form S-1 (Registration No. 333-43535), which
was declared effective by the Securities and Exchange Commission on
March 30, 1998. Upon the consummation of the DLB Distribution, Charles
E. Davidson, the Chairman of the Board of DLB, and Mark Liddell, an
executive officer of DLB and a director of the Company, will hold, of
record and beneficially, approximately 1,707,887 and 291,456 shares of
Common Stock, respectively, representing approximately 9.4% and 1.6%,
respectively, of the shares of Common Stock outstanding on the Record
Date (assuming the exercise of options or warrants exercisable within
the next 60 days).

(3) Except as otherwise specified, the address for each of the beneficial
owners is in care of the Company: 4005 N.W. Expressway, Suite 550E,
Oklahoma City, Oklahoma 73116.

(4) Shares of Common Stock issuable upon exercise of stock options or
warrants exercisable within 60 days of the Record Date are deemed
outstanding for computing the percentage of the person or entity
holding such securities but are not deemed outstanding for computing
the percentage of any other person or entity.

(5) Represents shares of Common Stock held by DLB as a result of the
October 1997 acquisition by the Company of Bonray Drilling Corporation,
a former subsidiary of DLB. 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 deemed to have beneficial ownership of the
shares of common stock held by DLB. Mark Liddell and Mike Liddell, as
executive officers and significant stockholders of DLB, may also be
deemed to have beneficial ownership of these shares. The address for
DLB is 1601 N.W. Expressway, Suite 700, Oklahoma City, Oklahoma 73118.

(6) Includes (i) 1,018,000 shares held of record by AnSon Partners Limited
Partnership ("APLP"), of which Mr. Anderson is managing general
partner, (ii) 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 (iii) 100,000 shares held of record and
beneficially by Mr. Anderson. Excludes 15,000 shares of Common Stock
that may be acquired upon exercise of options granted pursuant to the
Company's 1997 Non-Employee Directors' Stock Option Plan (the "Director
Stock Plan"). None of such options are exercisable within the next 60
days.

(7) 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 to purchase Common Stock) 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. James W. Spann, as Chief Investment Officer
and a member of Energy Spectrum

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<PAGE> 6

LLC, may be deemed to have beneficial ownership of these shares. Mr.
Spann disclaims beneficial ownership of such shares. The address for
Energy Spectrum LLC is 5956 Sherry Lane, Suite 600, Dallas, Texas
75225.

(8) Includes (i) 100,000 shares 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 1997
Stock Option and Stock Award Plan (the "Employee Stock Plan") that are
exercisable 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.

(9) Represents options to purchase 10,000 shares held by Mr. Jacob which
were granted pursuant to the Employee Stock Plan, subject to vesting
and other conditions contained in a stock option agreement, and which
are currently exercisable. Excludes options to purchase 180,000 shares
held by Mr. Jacob which were granted pursuant to the Employee Stock
Plan and are not exercisable within the next 60 days.

(10) Excludes options to purchase 60,000 shares held by Mr. Grose 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.

(11) Excludes 15,000 shares that may be acquired upon exercise of options
granted pursuant to the Director Stock Plan. None of such options are
exercisable within the next 60 days.

(12) Excludes 15,000 shares that may be acquired upon exercise of options
granted pursuant to the Director Stock Plan. None of such options are
exercisable within the next 60 days.

(13) 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, which is the ultimate
general partner of Energy Spectrum Partners LP. Mr. Tassin disclaims
beneficial ownership of such shares. See note (7) above. Excludes
15,000 shares that may be acquired upon exercise of options granted
pursuant to the Director Stock Plan. None of such options are
exercisable within the next 60 days.

(14) Includes (i) 253,725 shares held of record by Wil-Cas Investments,
L.P., a family limited partnership controlled by Ward Petroleum and
family trusts for the benefit of Mr. Ward's children, William C. Ward
and Casidy Ward, of which they act as trustees, and (ii) 169,400 shares
that may be acquired within the next 60 days upon the exercise of
outstanding warrants held by Wil-Cas Investments, L.P. Excludes 15,000
shares that may be acquired upon exercise of options granted pursuant
to the Director Stock Plan. None of such options are exercisable within
the next 60 days.

(15) 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 to Purchase Common Stock, (ii) 170,000 shares subject
to voting rights retained by Mr. Anderson, (iii) 100,000 shares of
restricted stock held by Mr. Brown, (iv) an aggregate of 50,000 shares
subject to options granted to Mr. Brown and Mr. Jacob pursuant to the
Employee Stock Plan that are currently exercisable and (v) 169,400
shares that may be acquired by Wil-Cas Investments, L.P. within the
next 60 days upon the exercise of outstanding warrants.

4
<PAGE> 7

DIRECTORS AND EXECUTIVE OFFICERS

ELECTION OF DIRECTORS

The Bylaws of the Company provide that the number of directors shall be
at least three but not more than 21, determined from time to time by the Board
of Directors of the Company (the "Board") or stockholders. The Board will be
elected at the Annual Meeting and each director will be elected to serve until
the next annual meeting or until his successor shall be elected and qualify. The
Board has established the number of directors at six persons. Three of the
Company's current directors were elected pursuant to the terms of the
Stockholders and Voting Agreement (as hereinafter defined). See "Certain
Relationships and Related Transactions - Stockholders and Voting Agreement."

The following table sets forth the current directors and officers of
the Company and the nominees for election to the Board at the Annual Meeting,
their ages and the positions currently held by each such person with the
Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
James E. Brown 45 Chairman of the Board, President, 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 (1) 42 Director
Mark Liddell 43 Director
Merrill A. Miller, Jr. (2) 47 Director
Sidney L. Tassin (1) (2) 41 Director
Lew O. Ward (2) 67 Director
</TABLE>

- ----------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.

NOMINEES FOR ELECTION AS DIRECTORS AT THE ANNUAL MEETING

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 ("Anadarko"). 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.

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.

Mark Liddell has served as a director of the Company since November
1997. Since 1991, Mr. Liddell has served in various capacities for DLB Oil &
Gas, Inc. ("DLB"), a publicly traded oil and gas company, including President
since October 1994 and Vice President from 1991 to 1994. Mr. Liddell is a
Director of DLB and Davidson Oil & Gas, Inc. From 1991 to May 1995, Mr. Liddell
served as a Director of TGX Corporation, a publicly traded oil and gas company,
and from 1989 to 1990, Mr. Liddell served as a Director of Kaneb Services, Inc.,
a publicly traded industrial services and pipeline transportation company.

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 oil field services company,

5
<PAGE> 8

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 Partners LP ("Energy
Spectrum"), an equity fund that invests in the energy industry. From 1980 to
1994, Mr. Tassin was associated with MESA Inc., serving in various financial
executive capacities, including Vice President-Finance form 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 is the immediate past Chairman of
the IPAA.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH
OF THE NOMINEES DESCRIBED ABOVE.

OFFICERS

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.

BOARD OF DIRECTORS

Board Composition. The Board is currently composed of six directors.
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." No Director attended fewer
than 75% of the aggregate of the total number of the meetings of the Board of
Directors and its committees held during fiscal 1997. Eight meetings of the
Board of Directors were held during the fiscal year ended December 31, 1997,
including one telephonic meeting and three written consents in lieu of a
meeting.

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's stock plans. One meeting was held by the
Compensation Committee during the fiscal year ended December 31, 1997. The
current members of the Audit Committee are Merrill A. Miller, Jr., 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

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<PAGE> 9

Committee or the Board. One meeting was held by the Audit Committee during the
fiscal year ended December 31, 1997. 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.
Non-employee directors of the Company 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 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
"Compensation and Other Information Concerning Directors and Officers - 1997
Non-Employee Directors' Stock Option Plan."

COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS

EXECUTIVE COMPENSATION

Summary Compensation. The following table sets forth the compensation
earned by the Named Executive Officers.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- -------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (1) OPTIONS
--------------------------- ---- -------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James E. Brown 1996 $ 9,167 -- $ 900 -- 200,000
President and Chief Executive Officer 1997 $111,816 $ 50,000 $ 2,568 100,000 400,000

Edward S. Jacob 1996 -- -- -- -- --
Vice President-Operations & Marketing 1997 $105,733 $ 25,000 $ 5,429 -- 150,000

David E. Grose (2) 1996 -- -- -- -- --
Vice President & Chief Financial Officer 1997 -- -- -- -- --
</TABLE>

(1) The dollar value of Mr. Brown's Restricted Stock Award is not set forth as
the Company's Common Stock was not publicly traded at the time of grant,
February 1997. Mr. Brown purchased such shares at a price of $2.50 per
share, which shares vest at a rate of 20% per year beginning on December
10, 1997. No dividends will be paid on such shares of Restricted Stock.

(2) In accordance with 402(a)(3) of Regulation S-K under the Securities Act of
1933, as amended (the "Securities Act"), information is not provided
because Mr. Grose's total annual salary and bonus in 1997 did not exceed
$100,000.

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. If the 1996 Brown Option was
fully exercisable and exercised on December 31, 1997, on which the closing price
of a share of Common Stock on the AMEX was $16 1/4, the realized value of the
option would have been $2.25 million. 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.

7
<PAGE> 10

The Company adopted the Employee Stock Plan in April 1997 and made the
terms thereof applicable to the 1996 Brown Option. Through December 31, 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 Messrs.
Brown, Jacob and Grose, options to purchase 200,000, 100,000 and 10,000 shares
of Common Stock, respectively, at an exercise price of $23 per share (the price
to the public at the time of the Company's initial public offering of Common
Stock (the "IPO") on November 4, 1997). None of such options has been exercised,
and all of such options remain outstanding, as of the date of this Proxy
Statement. 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.

Option Grants. The following table sets forth information concerning
stock options granted during the fiscal year ended December 31, 1997 under the
Employee Stock Plan:

8
<PAGE> 11

OPTION/SAR GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
% OF TOTAL PRESENT
NUMBER OF SHARES OPTIONS GRANTED VALUE OF
UNDERLYING TO EMPLOYEES IN EXERCISE EXPIRATION EACH GRANT
NAME OPTIONS GRANTED FISCAL YEAR PRICE ($/SH) DATE OF OPTION(1)
- -------------------- ---------------- --------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
James E. Brown 200,000 12.500% $ 23.00 11/04/03 $ 2,024,000
Edward S. Jacob, III 50,000 3.125% $ 5.00 01/01/03 $ 104,500
Edward S. Jacob, III 100,000 6.250% $ 23.00 11/04/03 $ 1,012,000
David E. Grose 50,000 3.125% $ 10.00 06/18/03 $ 179,500
David E. Grose 10,000 .625% $ 23.00 11/04/03 $ 101,200
</TABLE>

(1) 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 has not established a significant trading history,
the volatility used in the model was .40 for options granted through June 30,
1997 and .43 for options granted since July 1, 1997 based on volatility of the
stock price of a similar entity that has been publicly traded for several years.
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.

The following table sets forth certain information with respect to
exercises by the Named Executive Officers of stock options during fiscal year
1997 and the value of all unexercised employee stock options as of December 31,
1997 held by the Named Executive Officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS (3)
ACQUIRED -------------------------------- -----------------------------
NAME ON EXERCISE (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
James E. Brown -- 40,000 (2) 360,000 $ 450,000 $ 1,800,000
Edward S. Jacob, III -- -- 150,000 -- $ 562,500
David E. Grose -- -- 60,000 -- $ 312,500
</TABLE>

(1) None of the persons named in the Summary Compensation Table exercised
options during the fiscal year ended December 31, 1997.

(2) None of Mr. Brown's options may be exercised until May of 1998 due to a
"lock-up" agreement signed in connection with the Company's IPO.

(3) The value of the Unexercised In-the-Money Options is based upon the $16.25
per share closing price of the Company's Common Stock on the American
Stock Exchange on December 31, 1997.

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 base
salaries for all three executive officers (taken as a group) was $375,000 for
the fiscal year ended December 31, 1997.

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

<PAGE> 12

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. Currently,
Mr. Brown's annual salary is $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-transferable 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.
Currently, Mr. Jacob's annual salary is $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. Currently, Mr. Grose's salary is $105,000. 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 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-transferable 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 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.

10
<PAGE> 13

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.

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. As of January 1, 1998, an
aggregate of 1,818,394 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, commencing
January 1, 1998, 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 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 Internal
Revenue Code of 1986 (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 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

11
<PAGE> 14

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 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

12
<PAGE> 15

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
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.

13
<PAGE> 16
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.
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 non-employee director. Except as otherwise provided in
the Employee Stock Plan, the Committee may not, without the applicable
Participant's consent, modify the terms and conditions of such Participant's
Incentive Award. No amendment, suspension, or termination of the Employee Stock
Plan may, without the applicable 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.

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 Director Plan 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. As of January 1, 1998, an
aggregate of 218,207 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 IPO (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

14
<PAGE> 17
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 Company's IPO on November 4, 1997, each person who was then a
non-employee director received, 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 each, (an
"Initial Award"), which shall be exercisable on or after November 4, 1998,
except for the Initial Award granted to Mark Liddell, which shall be exercisable
on or after November 24, 1998. 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.

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: (a) determine that all or some Options then outstanding will
be fully vested and exercisable, (b) 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 (c) 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 Options as
of the date of such corporate change.

15
<PAGE> 18

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is composed of Carl B. Anderson, III and
Sidney L. Tassin, neither of whom are employees or current or former officers of
the Company. 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."

PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return on
Common Stock, including reinvestment of dividends, since November 4, 1997 with
the cumulative total return of the Standard & Poor's 500 Stock Index and the
American Stock Exchange Market Index assuming an investment of $100 on November
4, 1997.

THE FOLLOWING GRAPH IS PRESENTED IN ACCORDANCE WITH SEC REQUIREMENTS.
STOCKHOLDERS ARE CAUTIONED AGAINST DRAWING ANY CONCLUSIONS FROM THE DATA
CONTAINED THEREIN, AS PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE
PERFORMANCE. THIS GRAPH IN NO WAY REFLECTS THE COMPANY'S FORECAST OF FUTURE
FINANCIAL PERFORMANCE.

CUMULATIVE TOTAL RETURN ON COMMON STOCK

[GRAPH]

COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG BAYARD DRILLING TECHNOLOGIES, INC.,
AMEX MARKET INDEX AND SIC CODE INDEX

<TABLE>
<CAPTION>
11/04/97 12/31/97
-------- --------
<S> <C> <C>
Bayard Drilling Technologies, Inc. 100.00 59.14
SIC Code Index 100.00 81.10
AMEX Market Index 100.00 101.63
</TABLE>

ASSUMES $100 INVESTED ON NOV. 4, 1997
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997

16
<PAGE> 19

THE 1997 BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION

COMPENSATION PHILOSOPHY REGARDING EXECUTIVE OFFICERS

The Compensation Committee, which is comprised entirely of non-employee
directors, is responsible for the establishment and administration of the
compensation programs for the Company's executive officers, including the Chief
Executive Officer. The Compensation Committee met one time in 1997 to address
items related to the compensation and benefits of the Company's executive
officers.

The fundamental philosophy of the Company's compensation program is to
offer compensation opportunities for all employees which are based on the
individual's contribution and personal performance. Consideration is also given
to a person's potential for future responsibility and promotion.

In designing and administering the individual elements of the executive
compensation program, the Compensation Committee strives to balance short and
long-term incentive objectives and employ prudent judgment in establishing
performance criteria, evaluating performance and determining actual incentive
payments. Essentially, the executive compensation program of the Company has
been designed to:

o support a pay for performance policy that differentiates in
compensation amounts based on corporate performance;

o motivate key executive officers to achieve strategic business
initiatives and reward them for their achievement;

o provide compensation opportunities which are comparable to
those offered by other leading companies in the contract
drilling industry, thus allowing the Company to compete for
and retain talented executives who are critical to the
Company's long-term success; and

o align the interest of executives with the long-term interest
of stockholders through award opportunities that can result in
bonuses and ownership of common stock.

RELATIONSHIP OF PERFORMANCE UNDER THE COMPENSATION PROGRAM

The compensation program supports the Company's internal culture and
human resource values which are to foster career opportunities and develop the
best people at all levels and to encourage and reward actions which put the
interests of the Company as a whole ahead of functional specialties and
individual considerations.

During 1997, the compensation program for all senior executives is
comprised of three elements:

o Base salary and benefits typically offered to executives by
comparable corporations.

o Stock option grants to tie the executive's financial future to
that of the Company in a form which reflects a long-term
ownership interest in the Company.

o An executive bonus plan to reward executives promptly and
significantly for achievement of annual corporate goals.

1997 Compensation Committee
Carl B. Anderson, III
Sidney L. Tassin

17
<PAGE> 20

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following discussion identifies certain of the Company's
relationships and related transactions since the beginning of the last fiscal
year as well as those that are currently proposed in which any director or
executive officer of the Company, any nominee for election as director 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. Transactions
involving any former directors of the Company that occurred during the last
fiscal year are also included. Energy Spectrum and APLP are each record or
beneficial owners of over 5% of the Common Stock. Prior to the IPO, Chesapeake
and certain companies affiliated with Roy T. Oliver and/or Mike Mullen
(collectively, the "Oliver Companies") were record or beneficial owners of over
5% of the Common Stock. 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. Edward S. Jacob, III and David E.
Grose are each executive officers of the Company. 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 Energy
Spectrum, APLP, the Oliver Companies and certain of their affiliates, Ward and
certain of its transferees, Carl B. Anderson, III, James E. Brown, Edward S.
Jacob, III, David E. Grose and certain other persons. As of December 31, 1997,
4,062,725 outstanding shares of Common Stock and 1,021,400 Common Stock
Equivalents (610,000 of which remain subject to further vesting pursuant to the
Employee Stock Plan) were subject to the Registration Rights Agreement.
Additionally, any shares issued by the Company upon conversion of certain
subordinated notes held by Energy Spectrum, due May 1, 2003, in the principal
amount of $2.52 million (the "Subordinated Notes") will be subject to the
Registration Rights Agreement.

The Registration Rights Agreement provides, among other things, that,
at any time after 180 days following the IPO (subject to customary "black-out"
periods) certain 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 owned by
such holders, 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.

18
<PAGE> 21

In connection with the acquisition (the "Bonray Acquisition") by the
Company of Bonray Drilling Corporation ("Bonray") on October 16, 1997, 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 IPO) DLB may request
the Company to register the distribution (the "DLB Distribution") by DLB of
2,955,000 shares of Common Stock to the shareholders of DLB.

Pursuant to the DLB Registration Rights Agreement, on December 31,
1997, the Company filed with the Securities and Exchange Commission (the
"Commission") its Registration Statement on Form S-1 (Registration No.
333-43535) relating to the registration of the DLB Distribution. On March 30,
1998, such Registration Statement was declared effective by the Commission.

The DLB Registration Rights Agreement requires the Company to pay
expenses associated with the DLB Distribution. In addition, the DLB Registration
Rights Agreement 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.

STOCKHOLDERS AND VOTING AGREEMENT

The Company is party to a Stockholders and Voting Agreement (the
"Stockholders and Voting Agreement") among DLB, Energy Spectrum, APLP and Carl
B. Anderson, III 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 consummation of the DLB Distribution, DLB will no longer be a
party to the Stockholders and Voting Agreement, Mark Liddell, Mike Liddell and
Charles E. Davidson (the "DLB Group") will become parties to the Stockholders
and Voting Agreement and the remaining original parties thereto, together with
the DLB Group, will beneficially own approximately 4,682,647 shares of Common
Stock, representing 25.8% of the outstanding shares of Common Stock. The
Stockholders and Voting Agreement will terminate on November 4, 2007.

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, certain stockholders who are
party thereto have the right to designate a specified number of persons to be
nominated for election as directors. Each of Energy Spectrum, Anadarko and the
DLB Group (to the extent the DLB Group elects to be bound thereby) have the
right to designate one nominee for director as follows: (i) Energy Spectrum has
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 or (c) 600,000 shares of Common Stock, (ii) Anadarko
has 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) the DLB Group has the right to designate one nominee for
director as long as the DLB Group owns at least 5% of the outstanding Common
Stock of the Company. The parties to the Stockholders and Voting Agreement (the
"Bound Stockholders") are obligated to vote all of their voting securities
(including certain Common Stock Equivalents) of the Company for these designees.

Certain Transfer Restrictions. In accordance with the Stockholders and
Voting Agreement and in connection with the IPO, the Bound Stockholders agreed
to a "lock-up" period of up to 180 days, during which such stockholders will not
transfer (other than pursuant to the DLB Distribution) 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. The
Bound Stockholders have agreed that any such Bound Stockholder holding 5% or
more

<PAGE> 22
'
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.

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 of the Company, (i) APLP contributed ten drilling rigs, including two
rigs requiring refurbishment, for 2,000,000 shares of Common Stock, (ii) Roy T.
Oliver and related entities (the "Oliver Companies") exchanged six drilling rigs
requiring refurbishment for 1,600,000 shares of Common Stock, (iii) Energy
Spectrum acquired 2,000,000 shares of Common Stock for $10 million, and (iv)
Chesapeake Energy Corporation ("Chesapeake") entered into drilling contracts
(the "Chesapeake Drilling Agreements") with two-year terms for six of the
Company's rigs in consideration for an option (the "Chesapeake Option") to
purchase shares of Common Stock ((i) through (iv) together, the "Formation
Transactions"). 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, who was a director of the Company prior to the IPO), the
Oliver Companies (including Roy T. Oliver and Mike Mullen, who were directors of
the Company prior to the IPO) and Chesapeake (including Aubrey McClendon, who
was a director of the Company prior to the IPO), 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 extended 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."

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 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. For
the year ended December 31, 1997, the Company recognized aggregate revenues of
approximately $10.9 million from the Chesapeake Drilling Agreements.

20
<PAGE> 23

Under the terms of the Chesapeake Drilling Agreements, the standard day
rates were 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 were required to consider such adjustment
each November during the term of the applicable Chesapeake Drilling Agreement
and if no agreement could be timely reached as to the appropriate rate
adjustment, the Company had the option to terminate the contract for such rig at
the conclusion of operations at the well then being drilled. In December 1997,
the Company and Chesapeake were unable to agree on an appropriate rate
adjustment, so the Company exercised its option to terminate the Chesapeake
Drilling Agreements. At March 31, 1998, three of the Company's six rigs formerly
covered by the Chesapeake Drilling Agreements remained under contract with
Chesapeake on a well-to-well basis.

In addition to the Chesapeake Drilling Agreements, during the year
ended December 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 $7.1 million from such contracts over that period. The
Company recognized aggregate revenues of $18 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 terminated upon consummation of the IPO.

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 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 acquisition (the "Ward
Acquisition") of Ward Drilling Company, Inc. ("Ward") 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 was satisfied by the IPO), 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. For the year ended December 31, 1997,
the Company paid an aggregate of $338,000 under the Ward Transportation
Agreement.

21
<PAGE> 24

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 is entitled to designate one Board
nominee as long as DLB owns at least 5% of the Common Stock of the Company. Upon
the consummation of the DLB Distribution, DLB will no longer be a party to the
Stockholders and Voting Agreement, the members of the DLB Group will become
parties to the Stockholders and Voting Agreement and such members of the DLB
Group, rather than DLB, will be entitled to designate one Board nominee as long
as the DLB Group owns at least 5% 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., an affiliate entity of Roy T. Oliver, and the
other was issued to Mike Mullen, who was a director of the Company prior to the
IPO. 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 "May Securities Purchase Agreement"),
and the Subordinated Notes and Series A Warrants and Series B Warrants which
were issued pursuant thereto.

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 the
Subordinated Notes due May 1, 2003 in the original principal amounts of $18
million and $2.52 million 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
IPO), 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. Upon consummation of the
IPO, the Company redeemed in full the $18 million principal amount of
Subordinated Notes issued to Chesapeake in consideration for the payment by the
Company to Chesapeake of $18.2 million in cash, based on the price to the public
in the Initial Public 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. In
April 1998, the Company redeemed in full the $2.52 million principal amount of
Subordinated Notes issued to Energy Spectrum and accrued interest of $47,740.
In connection therewith, Energy Spectrum waived its right to require the
Company to redeem the Subordinated Notes at 110% of par value.

22
<PAGE> 25

Warrants. In the May Financing, the Company also issued certain Series
A Warrants and Series B Warrants to purchase Common Stock (collectively, the
"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 IPO), 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
$18.2 million which was paid from the proceeds of the IPO. Also in connection
with the Chesapeake Transactions, the Company waived its right under the May
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 transferable 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 evaluation, negotiation and closing of the
acquisition of Trend Drilling Co. and its 14 drilling rigs for $18 million and
250,000 shares of Common Stock, for assistance in the arrangement of alternative
financing sources, and for structuring, negotiating and closing certain amended
credit agreements and financing arrangements with The CIT Group/Equipment
Financing, Inc. and Fleet Capital Corporation. The Company also reimbursed ESC
for expenses incurred in connection with the rendering of such services.

Fees Paid to Energy Spectrum Advisors. The Company has engaged Energy
Spectrum Advisors Inc. ("ESA") to provide financial advisory and investment
banking services to the Company in connection with a possible restructuring or
refinancing of the Company's existing funded debt. As compensation for such
services, the Company has agreed to pay ESA an initial fee of $50,000 and an
additional fee of $25,000 per month through the term of the engagement. The
engagement letter expires on May 31, 1998 and may be terminated at the Company's
option at any time after March 1, 1998. To date the Company has paid $75,000 in
fees to ESA in connection with

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this arrangement. ESA is an affiliate of Energy Spectrum, which is the
beneficial owner of approximately 6% of the Common Stock. Sidney L. Tassin, a
director of the Company designated to serve on the Board by Energy Spectrum
pursuant to the Stockholders and Voting Agreement, has a right under certain
circumstances to acquire, and as a result may be deemed to beneficially own, a
minority equity interest in ESA.

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 (resignation in
August 1997) and control person of certain of the Oliver Companies. From
December 1996 through December 31, 1997, the Company paid U.S. Rig & Equipment,
Inc. an aggregate of $5 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. Additionally, in November 1997, the
Company agreed to acquire six rigs and related drilling equipment from R. T.
Oliver Drilling, Inc. for approximately $14 million. In connection therewith,
the Company made a cash down payment of $3.5 million in November 1997 and closed
the transaction in January 1998. Such rigs will require additional refurbishment
prior to placement into service.

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. For the year ended December 31, 1997, the Company paid
such affiliates of APLP approximately $1.7 million in consideration for such
trucking services.

APLP Administrative Services. 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, for the
year ended December 31, 1997, the Company had reimbursed APLP approximately
$236,000.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of the Common Stock, to file reports of ownership and changes in
ownership with the Commission. Executive officers, directors and greater than
ten-percent stockholders are required by Commission regulations to furnish the
Company with copies of all Section 16 (a) forms they file.

Based on its review of the copies of such filings received by it with
respect to the fiscal year ended December 31, 1997 and written representations
from certain reporting persons, the Company believes that all reporting persons
complied with all Section 16 (a) filing requirements in 1997, with the exception
of the following: (i) Mark Liddell was late in filing his Initial Statement of
Beneficial Ownership of Securities on Form 3 to reflect his ownership of the
Company's securities as of November 24, 1997, the date he became a director of
the Company and (ii) James E. Brown was late in filing his Statement of Changes
in Beneficial Ownership on Form 4 to reflect his purchase on November 4, 1997,
the date of the IPO, of 1,000 shares of Common Stock. Mr. Liddell's Form 3 was
filed on January 12, 1998 and Mr. Brown's Form 4 was filed on February 17, 1998.

RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board has appointed Coopers & Lybrand L.L.P. ("Coopers & Lybrand")
as the Company's independent public accountants for the fiscal year ending
December 31, 1998, and stockholders are being asked to ratify the appointment.
The appointment was recommended by the Audit Committee. Coopers & Lybrand, the
Company's accountants for the fiscal year ended December 31, 1997, performed
audit services for fiscal 1997 which included the examination of the
consolidated financial statements and services related to filings with the
Commission. All professional services rendered by Coopers & Lybrand during
fiscal 1997 were furnished at customary rates and terms. Representatives of
Coopers & Lybrand will be present at the Annual Meeting and will be available to
respond to appropriate questions from stockholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.

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ANNUAL REPORT

Together with this Proxy Statement, the Company has distributed to each
of its stockholders an annual report for the fiscal year ended December 31,
1997. The annual report contains consolidated financial statements of the
Company and its subsidiaries and the reports thereon of Coopers & Lybrand, the
Company's independent public accountants.

UPON WRITTEN REQUEST OF ANY PERSON ENTITLED TO VOTE AT THE ANNUAL
MEETING, ADDRESSED TO INVESTOR RELATIONS, BAYARD DRILLING TECHNOLOGIES, INC.,
4005 N.W. EXPRESSWAY, SUITE 550E, OKLAHOMA CITY, OKLAHOMA 73116, THE COMPANY
WILL PROVIDE WITHOUT CHARGE AN ADDITIONAL COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR 1997, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FILED
WITH THE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934.

OTHER BUSINESS

The Board of Directors knows of no other business which will be
presented for consideration at the Annual Meeting other than as stated in the
Notice of Annual Meeting. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
form of proxy to vote the shares represented thereby in accordance with their
best judgment and in their discretion, and authority to do so is included in the
proxy.

By Order of the Board of Directors

/s/ KIRK K. WAITE

Kirk K. Waite
Secretary

Oklahoma City, Oklahoma
April 10, 1998

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BAYARD DRILLING TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 19, 1998

The undersigned stockholder of Bayard Drilling Technologies, Inc. hereby
constitutes and appoints James E. Brown and David E. Grose and each of them,
proxies, with full power of substitution, for and on behalf of the undersigned
to vote, as designated below, according the number of shares of the Company's
common stock, $0.01 par value, held of record by the undersigned on April 1,
1998, and as fully as the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company to be held at The
Courtyard By Marriott, 1515 N.W. Expressway, Oklahoma City, OK 73118, on May 19,
1998, at 2:00 p.m. local time, and at any and all postponements, continuations
and adjournments thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF PROPERLY EXECUTED AND NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF PROPOSED NOMINEES TO THE BOARD OF
DIRECTORS OF THE COMPANY AND FOR EACH OTHER PROPOSAL.

1. Proposal to elect the following nominees to the Board of Directors:

<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote all nominees listed below
</TABLE>

James E. Brown Carl B. Anderson, III Mark Liddell Merrill A. Miller,
Jr. Sidney L. Tassin Lew O. Ward

(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below:)

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2. Proposal for ratification of selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the year ending December 31, 1998:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In the discretion of such proxies, upon such other business as may properly
come before the Meeting or any and all postponements, continuations or
adjournments thereof.

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<PAGE> 29

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The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders dated April 10, 1998 and the Proxy Statement furnished therewith.

Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. Executors, administrators, trustees and other
fiduciaries, and persons signing on behalf of corporations or partnerships,
should so indicate.

Dated: , 1998

-------------------------------
Authorized Signature

-------------------------------
Title

-------------------------------
Authorized Signature

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Title

Please mark boxes [X] in ink.
Sign, date and return this
Proxy Card promptly using the
enclosed envelope.

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