POOL ENERGY SERVICES CO, 10-Q, 1995-08-11

POOL ENERGY SERVICES CO
10-Q, 1995-08-11
OIL & GAS FIELD SERVICES, NEC

Previous: BLISS & LAUGHLIN INDUSTRIES INC /DE, 10-Q, 1995-08-11

Next: TECHNOLOGY FUNDING SECURED INVESTORS III, 10-Q, 1995-08-11

<PAGE> 1

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------

FORM 10-Q

/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 0-18437

---------

POOL ENERGY SERVICES CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

TEXAS 76-0263755
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

10375 RICHMOND AVENUE
HOUSTON, TEXAS 77042
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 954-3000

NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----

The number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 1995: Common stock, no par value - 14,062,358
shares

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

<PAGE> 2

PART I

ITEM 1. FINANCIAL STATEMENTS

POOL ENERGY SERVICES CO.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)

(IN THOUSANDS EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,805 $ 54,261
Earnings Attributable to Unconsolidated Affiliates . . . . . . . . . . . 643 1,233
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,448 55,494
----------- -----------
Costs and Expenses:
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 49,302 42,744
Selling, general and administrative expenses . . . . . . . . . . . . 9,661 8,700
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 3,489 3,475
GPC acquisition related costs . . . . . . . . . . . . . . . . . . . . 600 -
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,052 54,919
----------- -----------
Other Income (Expense) - Net . . . . . . . . . . . . . . . . . . . . . . 153 290
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 18
----------- -----------
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . 1,282 847
Income Tax Provision . . . . . . . . . . . . . . . . . . . . . . . . . . 727 27
----------- -----------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 555 $ 820
=========== ===========
Earnings Per Share of Common Stock . . . . . . . . . . . . . . . . . . . $ .04 $ .06
=========== ===========
Average Common Shares Outstanding . . . . . . . . . . . . . . . . . . . . 13,663,571 13,558,817
=========== ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE> 3

POOL ENERGY SERVICES CO.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)

(IN THOUSANDS EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 126,659 $ 110,237
Earnings Attributable to Unconsolidated Affiliates . . . . . . . . . . . 1,418 3,095
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,077 113,332
----------- -----------
Costs and Expenses:
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 100,626 86,782
Selling, general and administrative expenses . . . . . . . . . . . . 18,877 18,381
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 6,824 6,964
GPC acquisition related costs . . . . . . . . . . . . . . . . . . . . 600 -
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,927 112,127
----------- -----------
Other Income (Expense) - Net . . . . . . . . . . . . . . . . . . . . . . 634 604
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418 37
----------- -----------
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . 1,366 1,772
Income Tax Provision . . . . . . . . . . . . . . . . . . . . . . . . . . 596 278
----------- -----------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 770 $ 1,494
=========== ===========
Earnings Per Share of Common Stock . . . . . . . . . . . . . . . . . . . $ .06 $ .11
=========== ===========
Average Common Shares Outstanding . . . . . . . . . . . . . . . . . . . . 13,612,787 13,556,989
=========== ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE> 4

POOL ENERGY SERVICES CO.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)

(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
------------------------
1995 1994
-------- -------
<S> <C> <C>
Net Cash Flows Provided by Operating Activities . . . . . . . . . . . . . $ 3,283 $ 2,087
-------- -------
Investing Activities:
Property additions . . . . . . . . . . . . . . . . . . . . . . . . . (13,915) (4,462)
Expenditures for the acquisition of GPC, including acquisition costs,
less cash acquired . . . . . . . . . . . . . . . . . . . . . . . . (2,695) -
Expenditures for modification of Alaska Rig 428 . . . . . . . . . . . - (527)
Proceeds from disposition of property, plant and equipment . . . . . 1,010 7,875
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 257
-------- -------
Net Cash Flows Provided by (Used for) Investing Activities . . . (15,383) 3,143
-------- -------
Financing Activities:
Proceeds and repayments of short-term borrowings - net . . . . . . . 6,600 -
Proceeds from exercise of stock options . . . . . . . . . . . . . . . 51 39
Retirement of debt assumed in GPC acquisition . . . . . . . . . . . . (1,962) -
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . 10,000 -
Principal payments on long-term debt . . . . . . . . . . . . . . . . (937) -
-------- -------
Net Cash Flows Provided by Financing Activities . . . . . . . . . 13,752 39
-------- -------
Net Increase in Cash and Cash Equivalents . . . . . . . . . . . . . . . . 1,652 5,269
Cash and Cash Equivalents at January 1, . . . . . . . . . . . . . . . . . 2,560 4,603
-------- -------
Cash and Cash Equivalents at June 30, . . . . . . . . . . . . . . . . . . $ 4,212 $ 9,872
======== =======
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE> 5

POOL ENERGY SERVICES CO.
CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT NUMBER OF SHARES)

<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 4,212 $ 2,560
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 153
Accounts and notes receivable (net of allowance for doubtful accounts
of $1,454 and $1,622) . . . . . . . . . . . . . . . . . . . . . . . . . 55,616 50,038
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,221 10,571
Deferred income tax asset (net of $348 and $423 allowance) . . . . . . . 4,547 3,275
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 6,530 3,821
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 82,284 70,418
Property, Plant and Equipment-Net . . . . . . . . . . . . . . . . . . . . . . 121,346 101,536
Investment in and Noncurrent Receivables from Unconsolidated Affiliates . . . 27,031 26,042
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,487 -
Noncurrent Deferred Income Tax Asset (net of $7,753 and $8,483 allowance) . . 5,092 8,713
Noncurrent Receivables (net of allowance for doubtful accounts of
$2,884 and $3,667) and Other Assets . . . . . . . . . . . . . . . . . . . 2,625 1,972
Noncurrent Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . 1,056 1,137
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $249,921 $209,818
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,200 $ 1,600
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . 5,280 126
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 18,701 16,053
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . 22,466 19,609
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . 54,647 37,388
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,303 369
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,997 1,872
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,314 41,550
Shareholders' Equity:
Common stock, no par value:
25,000,000 shares authorized; 14,062,358 and 13,561,440 shares
issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . 134,428 130,177
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . (451) (1,221)
Cumulative foreign currency translation adjustments . . . . . . . . . . . (317) (317)
-------- --------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . 133,660 128,639
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $249,921 $209,818
======== ========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<PAGE> 6

POOL ENERGY SERVICES CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The condensed consolidated financial statements included in this report
are unaudited but in the opinion of management include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial information for the periods indicated. All
dollar amounts in the tabulations in the notes to the financial statements are
stated in thousands unless otherwise indicated. Certain reclassifications have
been made in the 1994 financial statements to conform with the 1995
presentation. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.

(2) UNCONSOLIDATED AFFILIATES

The following tables set forth certain summarized financial information of
the Company's unconsolidated affiliates as shown by the financial statements of
the affiliates.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-----------------------
1995 1994
------- -------
<S> <C> <C>
Revenues:
Pool Arabia, Ltd. . . . . . . . . . . . . . $14,764 $18,416
Pool Arctic Alaska . . . . . . . . . . . . -(2) 16,440
Intairdril Oman L.L.C. . . . . . . . . . . 265 822
Antah Drilling Sdn. Bhd. . . . . . . . . . 2,089 918
Pool Santana, Limited . . . . . . . . . . . 2,495 2,543
------- -------
Total . . . . . . . . . . . . . . . . . $19,613 $39,139
======= =======

Gross profit (1):
Pool Arabia, Ltd. . . . . . . . . . . . . . $ 5,461 $ 6,983
Pool Arctic Alaska . . . . . . . . . . . . -(2) 4,288
Intairdril Oman L.L.C. . . . . . . . . . . 150 537
Antah Drilling Sdn. Bhd. . . . . . . . . . 1,085 523
Pool Santana, Limited . . . . . . . . . . . 1,003 1,039
------- -------
Total . . . . . . . . . . . . . . . . . $ 7,699 $13,370
======= =======

Net income (loss):
Pool Arabia, Ltd. . . . . . . . . . . . . . $ 91 $ 1,003
Pool Arctic Alaska . . . . . . . . . . . . -(2) 2,059
Intairdril Oman L.L.C. . . . . . . . . . . (282) 196
Antah Drilling Sdn. Bhd. . . . . . . . . . (657) (443)
Pool Santana, Limited . . . . . . . . . . . 319 392
------- -------
Total . . . . . . . . . . . . . . . . . $ (529) $ 3,207
======= =======
</TABLE>
_____________

(1) Gross profit is computed as revenues less operating expenses (which exclude
depreciation and general and administrative expenses).

(2) On September 28, 1994, the Company acquired the 60.7% interest not already
owned by the Company in Pool Arctic Alaska, a partnership. The results of
Pool Arctic Alaska have been included in the accompanying consolidated
financial statements since the date of such acquisition.

<PAGE> 7

POOL ENERGY SERVICES CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

(3) ACQUISITION OF GOLDEN PACIFIC CORP.

On June 13, 1995, the Company purchased all of the outstanding capital
stock of Golden Pacific Corp. ("GPC"), a privately-owned corporation, for
approximately $18 million, consisting of long-term notes in the amount of $11.5
million, 493,543 shares of the Company's common stock valued at $4.2 million
and $2.3 million in cash. The cash paid in the transaction was provided by the
Company's existing syndicated bank line of credit. GPC is a California
well-servicing company with a fleet of approximately 155 rigs and related
equipment.

The acquisition was accounted for under the purchase method, and
accordingly the results of GPC have been included in the accompanying condensed
consolidated financial statements since the date of acquisition. The purchase
price was allocated on the basis of the estimated fair market value of the
assets acquired and the liabilities assumed as of the date of acquisition.
This allocation resulted in goodwill of approximately $10.5 million, which is
being amortized on a straight-line basis over 30 years. The purchase price
paid at closing is subject to certain adjustments, principally including
adjustments based on GPC's earnings subsequent to May 28, 1994. The purchase
price adjustment is expected to be finalized during 1995. The fair values of
the assets acquired and liabilities assumed were as follows:

<TABLE>
<S> <C>
Fair value of assets acquired, including $654 of cash and cash equivalents . . $ 36,987
Long-term notes issued for capital stock of GPC . . . . . . . . . . . . . . . . (11,500)
Company's common stock issued for capital stock of GPC . . . . . . . . . . . . (4,200)
Cash paid for capital stock of GPC . . . . . . . . . . . . . . . . . . . . . . (2,300)
Acquisition related expenditures . . . . . . . . . . . . . . . . . . . . . . . (1,049)
--------
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,938
========
</TABLE>

The following unaudited pro forma summary of financial information presents
the Company's consolidated results of operations as if the acquisition had
occurred at the beginning of the periods indicated, after including the impact
of certain adjustments, such as: additional depreciation expense, amortization
of goodwill, increased interest expense on the acquisition debt, decreased
insurance expense, elimination of certain transactions with affiliates of GPC
and related income tax effects.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
---------------------------------------
1995 1994
---------- ----------
(In thousands except earnings per share)
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $147,679 $132,432
======== ========
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,029 $ 2,199
======== ========
Earnings Per Share of Common Stock . . . . . . . . . . . . . $ .14 $ .16
======== ========
Average Shares Outstanding . . . . . . . . . . . . . . . . . 14,057 14,051
======== ========
</TABLE>

The above pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the operating results that
would have occurred if the acquisition had taken place at the beginning of the
periods presented, nor is it necessarily indicative of future operating
results.

<PAGE> 8

POOL ENERGY SERVICES CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

(4) LONG-TERM DEBT AND LINES OF CREDIT

In April 1995, the Company obtained a three-year term loan to refinance
$10 million of the purchase price for the 60.7% partnership interest in Pool
Arctic Alaska which was acquired in September 1994. This acquisition was
originally funded from the Company's cash resources and approximately $6.7
million borrowed under its syndicated bank line of credit. The term loan is
repayable in quarterly installments of $0.9 million through March 1996,
followed by quarterly installments of $0.6 million through December 1997 and a
final payment of $2.1 million on March 31, 1998. The term loan agreement
contains restrictive covenants similar to those pertaining to the Company's
syndicated bank line of credit and, in addition, includes a fixed charge
coverage ratio covenant. At the Company's option, interest accrues at a
floating rate based upon (i) the lenders' prime rate plus 0.5%, or (ii) the
London Interbank Offered Rate (LIBOR) plus 2.75%, with the Company's choice of
a one-, two-, three-, or six-month interest period. The applicable interest
rate on amounts outstanding at June 30, 1995 was 8.81%. The term loan is
cross-collateralized to the Company's syndicated bank line of credit.

In June 1995, as partial consideration for the acquisition of GPC, the
Company issued 10% subordinated notes aggregating $11.5 million which are due
in 2005. Required principal payments on the notes are as follows: $1.5
million in 1996, $0.6 million in each of the years 1997 through 2000 and $7.5
million thereafter. These notes are subordinate to the Company's syndicated
bank line of credit and $10 million term loan and are collateralized by (i) the
well-servicing rigs and related equipment of the acquired business, (ii) real
property of the acquired business and (iii) a $5 million letter of credit. The
agreement pertaining to the subordinated notes contains various restrictive
covenants, including covenants pertaining to the creation of certain
encumbrances, the transaction of certain mergers or sales of assets, the
creation of certain additional debt and other matters.

In connection with the two debt transactions discussed above, the
Company's syndicated bank line of credit was amended in the second quarter of
1995 to add as collateral the property owned by the Company's Alaska subsidiary
and the Company's 13 platform rigs located in the Gulf of Mexico and to make
certain changes with respect to the interest rate. Also, in June 1995 the
expiration date of this line of credit was extended from April 1996 to April
1997. The interest rate is a floating rate which is, at the Company's option,
(i) the lenders' prime rate plus 0.25%, or (ii) LIBOR plus 2.625%, with the
Company's choice of a one-, two-, three-, or six-month interest period.

In connection with the GPC acquisition the Company assumed a liability for
certain deferred compensation obligations of GPC. To evidence such
obligations, the Company issued 10% two-year promissory notes aggregating $1.5
million in principal amount to three employees of GPC. Such notes are secured
by the real property of the acquired business.

<PAGE> 9

POOL ENERGY SERVICES CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

(5) INCOME TAXES

In the second quarter of 1995, the Company determined that a valuation
allowance related to its U.S. federal net operating loss ("NOL") carryforwards
was no longer necessary. The elimination of this valuation allowance resulted
from management's belief that it is now more likely than not that the Company
will generate taxable income sufficient to realize the tax benefit of the NOL
carryforwards prior to their expiration. This belief is based upon, among
other factors, anticipated lower tax depreciation charges within the next one
to two years as a result of most existing property becoming fully depreciated
for U.S. tax purposes, the expected increase in taxable income associated with
the GPC acquisition and consideration of available tax planning strategies.

<PAGE> 10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GOLDEN PACIFIC CORP. ACQUISITION

On June 13, 1995, the Company acquired all of the outstanding capital
stock of Golden Pacific Corp. ("GPC"). GPC, which had annual revenues of
approximately $50 million, operated a fleet of approximately 155 land
well-servicing rigs in California. See Note 3 of Notes to Condensed
Consolidated Financial Statements for a discussion of this acquisition.

RESULTS OF OPERATIONS - QUARTERS ENDED JUNE 30, 1995 AND 1994

The Company had consolidated net income of $0.6 million for the quarter
ended June 30, 1995, which included a $0.4 million after-tax charge for costs
related to the GPC acquisition, compared to net income of $0.8 million for the
second quarter of 1994. The average price per barrel of West Texas
Intermediate crude oil was higher in the second quarter of 1995 compared to the
second quarter of 1994, although average natural gas prices were 19% lower.
Results from the Company's domestic operations improved primarily because of
increased activity onshore in the lower 48 states and offshore in the Gulf of
Mexico, offsetting reduced operating results in Alaska. The Company's domestic
onshore operation reported second quarter well-servicing rig hours 18% higher
than in the corresponding quarter of 1994; rig rates, however, were marginally
lower. Rig utilization for the Company's Gulf of Mexico rigs was 68% in the
second quarter of 1995 compared to 45% during the comparable period of 1994;
average rig rates, however, declined significantly, particularly for jackup
rigs. Earnings from the Company's Alaska operations decreased from the second
quarter of 1994 due to one of its three land drilling rigs being on standby
status in the second quarter of 1995, whereas it operated for part of the
second quarter of 1994 before going on standby status, and due to the
completion in late 1994 of a long-term offshore drilling rig contract.
Results from the Company's international operations decreased primarily due to
lower earnings from the Company's unconsolidated affiliate in Saudi Arabia,
reduced land drilling activity in Ecuador and the mid-1994 completion of two
rig contracts in Kuwait.

Revenues. Revenues were $63.8 million in the second quarter of 1995, an
increase of 18% compared with revenues of $54.3 million in the second quarter
of 1994. The increase was primarily attributable to higher levels of activity
by the Company's domestic onshore well-servicing and Gulf offshore rig fleets,
the inclusion of revenues from rigs and equipment previously owned by the Pool
Arctic Alaska partnership, $2.4 million of revenues from rigs and equipment
acquired in the GPC acquisition for the period June 14 through June 30, 1995
and greater rig activity in Oman and Pakistan, offset partly by reduced land
drilling rig activity in Ecuador and the mid-1994 completion of two rig
contracts in Kuwait.

In September 1994, the Company acquired the 60.7% partnership interest
not already owned by the Company in Pool Arctic Alaska and, accordingly,
revenues generated from Pool Arctic Alaska rigs and equipment have been
included in the Company's consolidated financial statements in the second
quarter of 1995. Prior to the date of acquisition, Pool Arctic Alaska was an
unconsolidated affiliate, and, accordingly, revenues for Alaska operations did
not include revenues from Pool Arctic Alaska. Revenues for Alaska operations
included in the Company's consolidated financial statements were $4.7 million
in the second quarter of 1995, compared to $1.9 million in the corresponding
quarter of 1994.

Domestic onshore well-servicing revenues increased $5.0 million or 18% in
the second quarter of 1995 from the corresponding quarter of 1994; in addition,
domestic production services revenues increased $0.3 million or 2% in the
second quarter of 1995 from the second quarter of 1994. Gulf offshore workover
and drilling revenues increased $1.6 million or 20% and international
operations revenues decreased $0.6 million or 11% from the second quarter of
1994. Revenues for international operations do not include revenues from the
Company's foreign joint ventures, which are unconsolidated affiliates.

<PAGE> 11

Earnings Attributable to Unconsolidated Affiliates. Earnings attributable
to unconsolidated affiliates were $0.6 million in the second quarter of 1995
compared to $1.2 million in the second quarter of 1994. Earnings attributable
to Pool Arabia, Ltd., the Company's Saudi Arabia affiliate, decreased $0.4
million from the second quarter of 1994 primarily as a result of the completion
in early 1995 of three land workover rig contracts in Kuwait and the completion
in March 1995 of a land drilling contract in Saudi Arabia. Earnings from Pool
Arctic Alaska were $0.2 million in the first six months of 1994. Earnings from
Pool Arctic Alaska ceased to be included in earnings attributable to
unconsolidated affiliates immediately following the Company's purchase of its
partner's interest in September 1994.

Costs and Expenses. The Company's costs and expenses were $63.1 million
in the second quarter of 1995, compared to $54.9 million in the corresponding
quarter of 1994. Such increase was attributable to higher levels of activity
in the Company's domestic onshore well-servicing and Gulf offshore service
lines, the inclusion in the Company's consolidated financial statements of
costs and expenses related to the rigs and equipment previously owned by the
Pool Arctic Alaska partnership, $2.1 million of operating expenses related to
the rigs and equipment purchased in the GPC acquisition for the period June 14
through June 30, 1995 and $0.6 million of expenses related to the GPC
acquisition, primarily for yard closings. At the beginning of the fourth
quarter of 1994, the Company revised its estimate of the remaining depreciable
lives of certain rigs and equipment to better reflect the remaining economic
lives of such assets. Such change increased net income for the second quarter
of 1995 (as compared to the second quarter of 1994), by approximately $0.5
million.

Interest Expense. Interest expense was $0.2 million higher in the second
quarter of 1995 than in the second quarter of 1994 due to the $10 million term
loan to refinance the acquisition of the 60.7% partnership interest in Pool
Arctic Alaska and the GPC acquisition debt incurred in the second quarter of
1995.

Income Taxes. The Company recorded income tax expense of $0.7 million in
the second quarter of 1995 on income before income taxes of $1.3 million,
compared to income tax expense of $27,000 on income before income taxes of $0.8
million in the second quarter of 1994. This increase of $0.7 million of net
deferred income tax expense was due to stronger domestic operating results in
the second quarter of 1995 plus the effect of certain amended U.S. federal tax
returns, partly offset by there ceasing to be a need for deferred foreign taxes
for 1990 income tax indemnities and the elimination of the Company's valuation
allowance related to its U.S. federal net operating loss carryforwards (see
Note 5 of Notes to Condensed Consolidated Financial Statements for further
discussion). Included with income tax expense for the second quarter of 1994
was a $0.2 million benefit related to certain prior years' foreign tax audits.
The Company's interim period tax expense is determined by utilizing the
aggregate of estimated annual effective tax rates for each of its domestic and
foreign locations.

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1995 AND 1994

The Company had consolidated net income of $0.8 million for the first six
months of 1995, which included a $0.4 million after-tax charge for costs
related to the GPC acquisition, compared to net income of $1.5 million for the
first six months of 1994. Results from the Company's domestic operations
improved primarily because of increased activity onshore in the lower 48
states, offsetting the effect of lower rates in the Gulf of Mexico and reduced
operating results in Alaska. The Company's domestic onshore operation reported
rig hours 14% higher for the first six months of 1995 than in the corresponding
period of 1994; rig rates, however, were marginally lower. The Company's
offshore operation in the Gulf of Mexico experienced rig utilization of 63% in
the first six months of 1995 compared to 52% in the corresponding period of
1994; average rig rates, however, declined significantly, particularly for
jackup rigs. Earnings from the Company's Alaska operations decreased from the
first six months of 1994 due to one of its three land drilling rigs being on
standby status during the first six months of 1995, whereas it operated for
four months during the corresponding period of 1994 before going on standby
status, and due to the completion in late 1994 of a long-term offshore drilling
rig contract. Results from the Company's international operations

<PAGE> 12

decreased primarily due to lower earnings from the Company's unconsolidated
affiliates in Saudi Arabia and Oman, reduced land drilling activity in Ecuador
and the mid-1994 completion of two rig contracts in Kuwait.

Revenues. Revenues for the first six months of 1995 were $126.7 million,
an increase of 15% compared with revenues of $110.2 million for the first six
months of 1994. This increase was attributable to a higher level of activity
by the Company's domestic onshore well-servicing rig fleet, the inclusion of
revenues from rigs and equipment previously owned by the Pool Arctic Alaska
partnership, $2.4 million of revenues from rigs and equipment acquired in the
GPC acquisition for the period June 14 through June 30, 1995, greater rig
activity in Tunisia, Oman and Pakistan, and increased domestic production
services activity in the first half of 1995, offset partly by lower rig rates
for the Company's Gulf offshore rig fleet, the mid-1994 completion of two rig
contracts in Kuwait and reduced land drilling rig activity in Ecuador.

In September 1994, the Company acquired the 60.7% partnership interest not
already owned by the Company in Pool Arctic Alaska, and accordingly revenues
generated from Pool Arctic Alaska rigs and equipment have been included in the
Company's consolidated financial statements in the first six months of 1995.
Prior to the date of acquisition, Pool Arctic Alaska was an unconsolidated
affiliate, and, accordingly, revenues for Alaska operations did not include
revenues from Pool Arctic Alaska. Revenues for Alaska operations included in
the Company's consolidated financial statements were $11.1 million in the first
six months of 1995, compared to $3.8 million in the corresponding period of
1994.

Domestic onshore well-servicing revenues increased $7.4 million or 13% in
the first six months of 1995 from the corresponding period of 1994; in
addition, domestic production services revenues increased $1.5 million or 8% in
the first six months of 1995 from the first six months of 1994. Gulf offshore
workover and drilling revenues decreased $1.1 million or 6% and international
operations revenues increased $0.9 million or 8% from the first six months of
1994. Revenues for international operations do not include revenues from the
Company's foreign joint ventures, which are unconsolidated affiliates.

Earnings Attributable to Unconsolidated Affiliates. Earnings attributable
to unconsolidated affiliates were $1.4 million in the first six months of 1995
compared to $3.1 million in the first six months of 1994. Earnings from Pool
Arctic Alaska were $0.7 million in the first six months of 1994. Earnings from
Pool Arctic Alaska ceased to be included in earnings attributable to
unconsolidated affiliates immediately following the Company's purchase of its
partner's interest in September 1994. Earnings attributable to Pool Arabia,
Ltd. decreased $0.6 million from the first six months of 1994 primarily as a
result of the completion in early 1995 of three land workover rig contracts in
Kuwait. Earnings attributable to Intairdril Oman L.L.C. decreased $0.2 million
from the first six months of 1994 due to lower rig activity.

Costs and Expenses. The Company's costs and expenses were $126.9 million
in the first six months of 1995, compared to $112.1 million in the
corresponding period of 1994. Such increase was attributable to higher levels
of activity in the Company's domestic onshore well-servicing line and in
Tunisia, Oman and Pakistan, the inclusion in the Company's consolidated
financial statements of costs and expenses related to the rigs and equipment
previously owned by the Pool Arctic Alaska partnership, $2.1 million of
operating expenses related to the rigs and equipment purchased in the GPC
acquisition for the period June 14 through June 30, 1995 and $0.6 million of
expenses related to the GPC acquisition, primarily for yard closings, offset
partly by lower repair and maintenance expenses for the Company's Gulf offshore
fleet. At the beginning of the fourth quarter of 1994, the Company revised its
estimate of the remaining depreciable lives of certain rigs and equipment to
better reflect the remaining economic lives of such assets. Such change
increased net income for the first six months of 1995 (as compared to the first
six months of 1994), by approximately $1 million.

Interest Expense. Interest expense was $0.4 million higher in the first
six months of 1995 than in corresponding period of 1994 due primarily to the
$10 million term loan to refinance the acquisition of the 60.7% partnership
interest in Pool Arctic Alaska and the GPC acquisition debt incurred in the
second quarter of 1995.

<PAGE> 13

Income Taxes. The Company recorded income tax expense of $0.6 million on
income before income taxes of $1.4 million in the first six months of 1995,
compared to income tax expense of $0.3 million on income before income taxes of
$1.8 million in the first six months of 1994. This increase of $0.3 million of
net deferred income tax expense was due to stronger domestic operating results
in the first six months of 1995 plus the effect of certain amended U.S. federal
tax returns, partly offset by there ceasing to be a need for deferred foreign
taxes for 1990 income tax indemnities and the elimination of the Company's
valuation allowance related to its U.S. federal net operating loss
carryforwards (see Note 5 of Notes to Condensed Consolidated Financial
Statements for further discussion). The Company's interim period tax expense
is determined by utilizing the aggregate of estimated annual effective tax
rates for each of its domestic and foreign locations.

FINANCIAL CONDITION AND LIQUIDITY

Cash Flows. The Company had cash and cash equivalents of $4.2 million at
June 30, 1995 compared to $2.6 million at December 31, 1994. Working capital
was $27.6 million and $33.0 million at June 30, 1995 and December 31, 1994,
respectively. The Company used a net $15.4 million for investing activities in
the first six months of 1995, primarily for capital expenditures of $13.9
million, including $6.4 million for the construction of a new platform workover
rig which is due to begin operating offshore Australia in the third quarter of
1995 and $2.7 million, net of cash acquired, as partial consideration for the
acquisition of GPC and the related direct acquisition costs, offset partly by
$1.0 million of proceeds from disposition of equipment. Investing activities
provided $3.1 million in the first six months of 1994, including $7.0 million
of proceeds from the sale and lease back of three offshore jackup rigs and $0.9
million of proceeds from the sale of other equipment, offset partly by $4.5
million of capital expenditures and $0.5 million for the final payments related
to construction expenditures for an Alaska rig which was sold to a customer in
1993. The Company anticipates that 1995 capital expenditures (excluding the
GPC acquisition) will consist of (i) approximately $19 million for capital
additions and improvements to its existing rig fleet and (ii) approximately
$7.2 million for the new platform workover rig for Australia. It is
anticipated that the $19 million of capital expenditures will be financed
chiefly through internally generated funds, although the Company will avail
itself of borrowings as needed. The Company plans to obtain project financing
to fund the cost of the new platform workover rig.

Acquisition of GPC. On June 13, 1995, the Company acquired all of the
outstanding capital stock of GPC for approximately $18 million, consisting of
$11.5 million in subordinated long-term notes due in 2005, 493,543 shares of
the Company's common stock valued at $4.2 million and $2.3 million in cash.
See Note 3 of Notes to Condensed Consolidated Financial Statements for further
discussion.

Also in connection with the GPC acquisition the Company assumed a
liability for certain deferred compensation obligations of GPC. To evidence
such obligations, the Company issued notes aggregating $1.5 million in
principal amount to three employees of GPC. See Note 4 of Notes to Condensed
Consolidated Financial Statements for further discussion.

As part of the acquisition of GPC, the Company assumed $2 million of GPC's
debt, all of which was retired in June 1995.

Credit Facilities and Long-Term Debt. The Company has available a
syndicated bank line of credit (the "Line of Credit") to finance temporary
working capital requirements and to support the issuance of letters of credit.
In June 1995, expiration of the Line of Credit was extended from April 1996 to
April 1997. The maximum availability is the lesser of (i) $30 million, or (ii)
a calculated amount based upon a percentage of domestic receivables meeting
certain criteria. At June 30, 1995, the maximum availability was approximately
$28.2 million, of which $8.2 million had been drawn in cash and $13.7 million
was being utilized to support the issuance of letters of credit, including $5.9
million in letters of credit issued in connection with the GPC acquisition as
security for the acquisition debt and for obligations to GPC's insurers.

<PAGE> 14

In April 1995, the Company obtained a three-year term loan (the "Term
Loan") to refinance $10 million of the purchase price for the 60.7% partnership
interest in Pool Arctic Alaska it acquired in September 1994. This acquisition
was originally funded from the Company's cash resources and approximately $6.7
million borrowed under its syndicated bank line of credit. See Note 4 of Notes
to Condensed Consolidated Financial Statements for further discussion.

In connection with obtaining the Term Loan in April 1995 and the Company's
purchase of GPC in June 1995, the Line of Credit was amended to add as
collateral all the property of the Company's wholly-owned Alaska subsidiary and
the Company's 13 platform rigs located in the Gulf of Mexico and to make
certain changes with respect to the interest rate. The Line of Credit was
previously secured by certain accounts receivable, certain deposit accounts,
and stock of subsidiary companies. The interest rate is a floating rate which
is, at the Company's option, (i) the lenders' prime rate plus 0.25%, or (ii)
LIBOR plus 2.625%, with the Company's choice of a one-, two-, three-, or
six-month interest period.

There were no short-term borrowings or long-term financing activities in
the first six months of 1994, except by unconsolidated affiliates.

<PAGE> 15

PART II

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Company's annual meeting of shareholders held on May 4, 1995 was
adjourned until May 23, 1995 for the purpose of voting on a proposal to amend
the Company's Articles of Incorporation to increase the Company's authorized
Common Stock from 25 million to 40 million shares. The proposal received
8,728,714 affirmative votes, 4,034,270 negative votes, and there were 21,693
abstentions and 101,084 broker non-votes; the number of affirmative votes cast
was insufficient to attain the required majority (two-thirds of outstanding
shares) for such proposal to be approved.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
----------- --------
<S> <C>
10.1(*) - Third Amendment and Waiver to 1994 Restated Credit Agreement, and First Amendment
and Waiver to 1995 Term Loan Agreement
10.2(*) - Fourth Amendment to 1994 Restated Credit Agreement
27(*) - Financial Data Schedule
</TABLE>
_______________

(*) Filed herewith

(b) Reports on Form 8-K - The Registrant filed a Current Report on Form 8-K
dated June 27, 1995 (Date of event: June 13, 1995), in respect of the
purchase by the Registrant of all the outstanding capital stock of Golden
Pacific Corp. The items reported in such Current Report were Item 2,
Acquisition or Disposition of Assets, and Item 7, Financial Statements and
Exhibits.

<PAGE> 16

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

POOL ENERGY SERVICES CO.
(Registrant)

AUGUST 11, 1995 /S/ E. J. SPILLARD
- --------------- ------------------------------
(Date) E. J. Spillard
Senior Vice President, Finance
(principal financial officer)

AUGUST 11, 1995 /S/ B. G. GORDON
- --------------- ------------------------------
(Date) B. G. Gordon
Controller
(principal accounting officer)

<PAGE> 17

POOL ENERGY SERVICES CO.
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT
- ------- --------
<S> <C>
10.1 - Third Amendment and Waiver to 1994 Restated Credit Agreement, and First Amendment
and Waiver to 1995 Term Loan Agreement
10.2 - Fourth Amendment to 1994 Restated Credit Agreement
27 - Financial Data Schedule
</TABLE>

<PAGE> 1

Exhibit 10.1

As of June 13, 1995

Pool Company
10375 Richmond Avenue
Houston, Texas 77042

Attention: R. A. Johannsen, Treasurer

Re: Third Amendment and Waiver to 1994 Restated Credit Agreement,
and First Amendment and Waiver to 1995 Term Loan Agreement

Gentlemen:

Reference is made to (a) the Restated Credit Agreement dated as of
August 15, 1994 (as amended by the First Amendment thereto dated as of February
28, 1995, and the Second Amendment thereto dated as of April 21, 1995, the
"CREDIT AGREEMENT"), among Pool Company ("BORROWER"), NationsBank of Texas,
N.A., and National Bank of Canada ("LENDERS"), and NationsBank of Texas, N.A.,
as Agent ("AGENT"), and (b) the Term Loan Agreement dated as of April 21, 1995
(the "TERM LOAN AGREEMENT"), among Borrower, Lenders, and Agent. Unless
otherwise indicated, all capitalized terms herein are used as defined in the
Credit Agreement and the Term Loan Agreement.

Borrower has advised Agent and Lenders that it wishes to purchase the
stock of Golden Pacific Corp., a California corporation ("GPC"), for
consideration in the approximate amount of $18,000,000 (comprised of $2,300,000
in cash, $11,500,000 in Borrower's 10% Subordinated Notes, and approximately
$4,200,000 of PESCO common stock). Therefore, for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Borrower, Agent and Lenders agree as follows:

1. Notes, Payments. SECTION 2.1 of the Term Loan Agreement is
hereby amended by deleting the second sentence thereof in its entirety and
replacing it with the following two sentences:

Commencing June 30, 1995 and quarterly thereafter on the last Business
Day of September and December of 1995 and March of 1996, the Loan shall
be repaid in principal installments in the amount of $875,000 each.
Thereafter, the Loan shall be repaid in principal installments in the
amount of $625,000 each, due and payable on the last Business Day of
each calendar quarter, commencing June 30, 1996, and continuing through
the Termination Date.

2. Collateral. SECTION 4.2 of the Credit Agreement is hereby
amended by adding a new subsection f as follows:

f. Thirteen platform rigs presently operating in the
Gulf of Mexico.

3. Cash Collateral Account. Notwithstanding the provisions of
SECTION 4.3 of the Credit Agreement, GPC and its Subsidiaries may continue to
maintain the existing bank accounts listed on Exhibit A to Borrower's letter to
Agent dated May 16, 1995; provided that all accounts receivable and proceeds
therefrom included in the Borrowing Base are transferred the following Business
Day via an automated clearing house (or other similar transfer method) to the
Obligors' cash collateral account at NationsBank.

<PAGE> 2

4. Purpose of Credit. SECTION 5.10 of the Credit Agreement is
hereby amended by deleting the word "and" before clause (b)(ii) and adding the
following at the end of such section:

, and (iii) such other purposes as may be approved by Lenders.

5. Material Agreements. SECTION 5.12 of the Credit Agreement and
SECTION 5.12 of the Term Loan Agreement are hereby amended by inserting the
following parenthetical phrase after each reference to SCHEDULE 5.12 in each
such section:

(or as hereafter disclosed to Lenders in writing)

6. Debt. SECTION 7.11 of the Credit Agreement and SECTION 7.11
of the Term Loan Agreement are hereby amended by deleting the word "and" before
clause (k) and before clause (l) and adding the following at the end of each
such section:

(m) $11,500,000 of Borrower's 10% Subordinated Notes issued to the
Sellers pursuant to the Payment Agreement, a guaranty by PESCO of such
Notes, and a nonrecourse guaranty by CPS of such Notes, (n) notes in
respect of deferred compensation obligations of approximately
$1,600,000 to certain key employees of GPC during the period ending
three years after the closing under the Stock Purchase Agreement, and
(o) guarantees by CPS of up to $400,000 (in the aggregate outstanding
at any time) with respect to leases by its employees of light vehicles.

7. Capital Expenditures. SECTION 7.13 of the Credit Agreement
and SECTION 7.13 of the Term Loan Agreement are hereby amended by deleting the
word "and" before clause (b) and adding the following at the end of each such
section:

, and (c) an expenditure of approximately $18,000,000 to
purchase 100% of the stock of GPC.

8. Liens. SECTION 7.14 of the Credit Agreement and SECTION 7.14
of the Term Loan Agreement are hereby amended by restating the parenthetical
phrase in clause (b) of each such section to read in its entirety as follows:

(other than existing arrangements or agreements, the Loan
Papers, and the negative pledge agreement in Section 3.3 of
the Payment Agreement regarding the assets of GPC and CPS,
including Borrower's California assets that are transferred to
CPS at or after the closing under the Stock Purchase
Agreement)

9. Acquisitions, Mergers, and Dissolutions. Notwithstanding the
provisions of SECTION 7.15 of the Credit Agreement and SECTION 7.15 of the Term
Loan Agreement, Borrower may (a) acquire 100% of the stock of GPC pursuant to
the Stock Purchase Agreement, (b) dissolve GPC or merge it into Borrower, (c)
change the name of CPS to "Pool California Production Service, Inc.," and (d)
dissolve the following CPS Subsidiaries: Arrow Petroleum Services, Inc., Burk
Well Services, Inc., Snowburst Corporation, K & L Oil Tool Corporation, and
Westex Production Service, Inc.

10. Loans, Advances, and Investments. Notwithstanding the
provisions of SECTION 7.16 of the Credit Agreement and SECTION 7.16 of the Term
Loan Agreement, (a) Borrower may acquire 100% of the stock of GPC pursuant to
the Stock Purchase Agreement, (b) GPC and its Subsidiaries may continue an
aggregate investment of approximately $2,700,000 in Horizon Prime Fund during
the period ending 30 days after the closing under the Stock Purchase Agreement,
(c) CPS may acquire the real estate in Ventura, California, currently leased to
CPS by Plymouth Investment Partnership in return for the forgiveness by CPS of
its existing loan to Plymouth Investment Partnership of approximately $200,000,
and (d) CPS may continue its existing long-term advances associated with
split-dollar life insurance plans for former CPS employees Jeff Hyatt and Tom
See in the aggregate amount of approximately $345,000.

<PAGE> 3

11. Subsidiaries. Notwithstanding the provisions of SECTION 4
and SECTION 7.29 of the Credit Agreement, and SECTION 4 and SECTION 7.28 of the
Term Loan Agreement, Borrower may, for a period not to exceed 30 days after the
closing under the Stock Purchase Agreement, maintain the existence of GPC and
the following CPS Subsidiaries: Arrow Petroleum Services, Inc., Burk Well
Services, Inc., Snowburst Corporation, K&L Oil Tool Corporation, and Westex
Production Service, Inc., without the execution and delivery of Guarantees,
Security Agreements, Financing Statements, and Stock Powers for such entities,
subject to the covenant set forth in paragraph 18(c) below.

12. Other Definitions. SECTION 10.3 of the Credit Agreement and
SECTION 10.3 of the Term Loan Agreement are hereby amended by adding the
following definitions:

BIG 10 means Big 10 Fishing Tool Company, Inc., a California
corporation and an indirect wholly-owned subsidiary of CPS.

CPS means California Production Service, Inc., a California
corporation and a wholly-owned Subsidiary of GPC.

GPC means Golden Pacific Corp., a California corporation.

PAYMENT AGREEMENT means the Agreement Regarding Deferred
Payment of Purchase Price dated June 13, 1995, among the Sellers and
Borrower.

SELLERS means the holders of all of the issued and outstanding
stock of GPC at the time of the closing under the Stock Purchase
Agreement: Robert D. Hillman, Barbara A. Hillman, Richard H. Hillman,
and Robert D. Hillman, Jr.

STOCK PURCHASE AGREEMENT means the Stock Purchase Agreement
dated as of June 13, 1995, among the Sellers, GPC, Borrower, and PESCO.

SUBORDINATION AGREEMENT means the Subordination Agreement
dated as of June 13, 1995, among Borrower, the Sellers, the Lenders,
and Agent.

13. LIBOR Rate. SECTION 10.3 of the Credit Agreement is hereby
further amended by restating the definition of "LIBOR Rate" in its entirety as
follows:

LIBOR RATE means an annual interest rate (rounded upward, if
necessary, to the nearest 0.01%) equal to the sum of (a) 2.625%, plus
(b) the quotient obtained by dividing (i) the rate that deposits in
United States dollars are offered by Agent to other major banks in the
London interbank market at approximately 11:00 a.m. (London time) two
Business Days before the commencement of the relevant Interest Period
in an amount comparable to the principal amount of the Advance then
outstanding and having a maturity approximately equal to such Interest
Period; by (ii) one minus the Reserve Percentage (expressed as a
decimal) applicable to such Interest Period.

14. Material Obligors. SECTION 10.3 of the Credit Agreement and
SECTION 10.3 of the Term Loan Agreement are hereby further amended by adding the
following at the end thereof:

, and CPS, Big 10, and (until their dissolution or merger
into another Material Obligor) GPC and Arrow Petroleum
Services, Inc.

15. Obligors. SECTION 10.3 of the Credit Agreement and SECTION
10.3 of the Term Loan Agreement are hereby further amended by adding the
following at the end of the definition of "OBLIGOR" in each such section:

<PAGE> 4

, including, without limitation, CPS, Big 10, and (until
their dissolution or merger into another Obligor) GPC, Arrow
Petroleum Services, Inc., Burk Well Service, Inc., Snowburst
Corporation, K&L Oil Tool Corporation, and Westex Petroleum
Service, Inc.

16. Permitted Liens. SECTION 10.3 of the Credit Agreement and
SECTION 10.3 of the Term Loan Agreement are hereby further amended by deleting
the word "and" before clause (n) of the definition of "PERMITTED LIENS" in each
such section and adding the following clauses (o) through (q) at the end of such
definitions:

(o) Liens in favor of the Sellers on the rigs and equipment
described in the CPS Nonrecourse Guaranty and Security
Agreement attached as Exhibit D to the Payment Agreement and
the real property described in the three CPS Deeds of Trust
attached as Exhibit E to the Payment Agreement, in each case
securing Borrower's obligations under its 10% Subordinated
Notes issued to the Sellers, (p) Liens on the real property of
CPS securing notes in respect of the deferred compensation
obligations described in SECTION 7.11(n), and (q) the
installation from time to time of equipment such as engines,
transmissions, handling tools, etc., on rigs subject to the
Liens in favor of the Sellers described in clause (o) above,
so long as the net diminution in value (if any) of the
aggregate equipment of the Obligors subject to this
Agreement's restriction on Liens is not material in amount.

17. Conditions. This instrument shall not be effective until it
has been duly executed and delivered by all parties named below, and Agent has
received from Borrower any documentation that Agent may reasonably request
related hereto, including, without limitation, the following:

(a) True and complete copies of the Stock Purchase
Agreement, the Payment Agreement, and the Subordination Agreement
(which Borrower hereby designates as "Material Agreements" for purposes
of the Credit Agreement and the Term Loan Agreement);

(b) Guarantees from CPS and Big 10 in accordance with
SECTION 7.29(a) of the Credit Agreement and SECTION 7.28(a) of the Term
Loan Agreement;

(c) A Security Agreement substantially in the form of
EXHIBIT F to the Credit Agreement with a Financing Statement and Stock
Powers from GPC covering the stock of CPS in accordance with SECTIONS
4.2 and 7.29(a) of the Credit Agreement and SECTIONS 4.2 and 7.28(a) of
the Term Loan Agreement;

(d) A Security Agreement substantially in the form of
EXHIBIT F to the Credit Agreement with a Financing Statement and Stock
Powers from CPS covering the stock of Big 10 and the accounts of CPS in
accordance with SECTIONS 4.2 and 7.29(a) of the Credit Agreement and
SECTIONS 4.2 and 7.28(a) of the Term Loan Agreement;

(e) A Security Agreement substantially in the form of
EXHIBIT F to the Credit Agreement and a Financing Statement from Big 10
covering the accounts of Big 10 in accordance with SECTIONS 4.2 and
7.29(a) of the Credit Agreement and SECTIONS 4.2 and 7.28(a) of the
Term Loan Agreement;

(f) Releases from Bank of America covering all of its
Liens on property of GPC or its Subsidiaries;

(g) Five-year financial projections for Borrower's
California operations (based upon PESCO's December 31, 1994, Financial
Statements and GPC's January 8, 1995, Financial Statements);

(h) Appraisals of the following categories of assets of
GPC and its Subsidiaries: (i) fishing tools and light trucks, (ii)
other equipment, and (iii) real estate; and

<PAGE> 5

(i) Payment of an amendment fee equal to $25,000, payable
to Agent for the ratable account of Lenders.

18. Covenants.

(a) Borrower shall, or shall cause GPC to, pay the
$775,000 of Debt owed to Barbara B. Hillman described in paragraph 6
above on or before the 30th day following the closing under the Stock
Purchase Agreement;

(b) Borrower shall, or shall cause its Subsidiaries to,
transfer the funds in the existing bank accounts as described in
paragraph 3 above;

(c) Within 30 days after the closing under the Stock
Purchase Agreement, Borrower shall either (i) dissolve GPC or merge it
into Borrower and dissolve Arrow Petroleum Services, Inc., Burk Well
Service, Inc., Snowburst Corporation, K&L Oil Tool Corporation, and
Westex Production Service, Inc., or (ii) cause each such Obligor
remaining in existence on such 30th day to execute and deliver to Agent
the Guarantees, Security Agreements, Financing Statements, and Stock
Powers required by SECTIONS 4.2 and 7.29(a) of the Credit Agreement and
SECTIONS 4.2 and 7.28(a) of the Term Loan Agreement;

(d) On or before July 13, 1995, Borrower shall execute
and deliver to Agent security documents satisfactory to Agent in form
and substance creating first and prior Lender Liens on 13 platform rigs
presently operating in the Gulf of Mexico; and

(e) Within five Business Days after any change in the
corporate name of CPS or any other Obligor, Borrower shall notify Agent
of such change and execute and deliver any Financing Statement
amendments or other documentation reasonably requested by Agent in
connection with such change.

Any failure or refusal of Borrower to punctually and properly perform, observe,
and comply with each of the foregoing covenants shall constitute a "Default"
under SECTION 8 of the Credit Agreement and SECTION 8 of the Term Loan
Agreement.

19. Representations and Warranties. Borrower represents and
warrants that it possesses all requisite power and authority to execute, deliver
and comply with the terms of this instrument, which has been duly authorized and
approved by all necessary corporate action and for which no consent of any
person is required, and agrees to furnish Agent with evidence of such
authorization and approval upon request.

20. Fees and Expenses. Borrower agrees to pay the reasonable fees
and expenses of counsel to Agent for services rendered in connection with the
preparation, negotiation and execution of this instrument.

21. Loan Paper; Effect. This instrument is a Loan Paper and,
therefore, is subject to the applicable provisions of SECTION 12 of the Credit
Agreement and SECTION 12 of the Term Loan Agreement, all of which are
incorporated herein by reference the same as if set forth herein verbatim.
Except as amended in this instrument, the Loan Papers are and shall be unchanged
and shall remain in full force and effect. In the event of any inconsistency
between the terms of the Credit Agreement and the Term Loan Agreement as hereby
modified (the "Amended Agreements") and any other Loan Papers, the terms of the
Amended Agreements shall control and such other document shall be deemed to be
amended hereby to conform to the terms of the Amended Agreements. BORROWER
HEREBY RELEASES AGENT AND LENDERS FROM ANY LIABILITY FOR ACTIONS OR FAILURES TO
ACT IN CONNECTION WITH THE LOAN PAPERS PRIOR TO THE DATE HEREOF.

22. No Waiver of Defaults. This instrument does not constitute a
waiver of Lenders' right to insist upon future compliance with each term,
covenant, condition and provision of the Loan Papers, and the

<PAGE> 6

Loan Papers shall continue to be binding upon, and inure to the benefit of,
Borrower, Guarantors, Lenders, Agent, and their respective successors and
assigns.

23. Multiple Counterparts. This instrument may be executed in
more than one counterpart, each of which shall be deemed an original, but all of
which when taken together shall constitute one instrument.

24. Final Agreement. THE LOAN PAPERS, AS AMENDED HEREBY,
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.

If the foregoing terms and conditions are acceptable to Borrower,
Borrower should indicate its acceptance by signing in the space provided below,
whereupon this letter shall become an agreement binding upon and inuring to the
benefit of Agent, Lenders and Borrower and their respective successors and
assigns.

Very truly yours,

NATIONSBANK OF TEXAS, N.A., NATIONAL BANK OF CANADA,
as Agent and a Lender as a Lender

By /S/ JAMES R. ALLRED By /S/ LARRY L. SEARS
----------------------- -----------------------
James R. Allred Larry L. Sears
Vice President Group Vice President

By /S/ DOUGLAS G. CLARK
-----------------------
Douglas G. Clark
Vice President

Accepted and agreed to as of the day and year first set forth in the
foregoing letter.

POOL COMPANY

By /S/ J. T. JONGEBLOED
--------------------------------
J. T. Jongebloed
President

By /S/ R. A. JOHANNSEN
--------------------------------
R. A. Johannsen
Treasurer

<PAGE> 7

GUARANTORS' CONSENT AND AGREEMENT

As an inducement to Agent and Lenders to execute, and in consideration
of Agent's and Lenders' execution of the foregoing, the undersigned hereby
consent thereto and agree that the same shall in no way release, diminish,
impair, reduce or otherwise adversely affect the respective obligations and
liabilities of each of the undersigned under the Guaranty dated as of April 25,
1990, executed by the undersigned, or any agreements, documents or instruments
executed by any of the undersigned to create liens, security interests or
charges to secure any of the indebtedness under the Loan Papers, all of which
obligations and liabilities are, and shall continue to be, in full force and
effect. This consent and agreement shall be binding upon the undersigned, and
the respective successors and assigns of each, and shall inure to the benefit of
Agent and Lenders, and respective successors and assigns of each.

POOL ENERGY SERVICES CO.
POOL ENERGY HOLDING, INC.
POOL COMPANY (HOUSTON) INC.
POOL COMPANY (TEXAS) INC.
ASSOCIATED PETROLEUM SERVICES, INC.
POOL PRODUCTION SERVICES, INC.
POOL ALASKA, INC.
POOL AMERICAS, INC.
POOL INTERNATIONAL, INC.
POOL-AUSTRALIA, INC.
THE INTERNATIONAL AIR DRILLING COMPANY
POOL HORIZONTAL DRILLING SERVICES CO.

By /S/ J. T. JONGEBLOED
-----------------------------------
J. T. Jongebloed
President of each Obligor

By /S/ R. A. JOHANNSEN
-----------------------------------
R. A. Johannsen
Treasurer of each Obligor

<PAGE> 1

Exhibit 10.2

As of June 30, 1995

Pool Company
10375 Richmond Avenue
Houston, Texas 77042

Attn: R.A. Johannsen, Treasurer

RE: Fourth Amendment to 1994 Restated Credit Agreement

Gentlemen:

Reference is made to the Restated Credit Agreement dated as of August
15, 1994 (as modified and amended, the "CREDIT AGREEMENT"), among Pool Company
("BORROWER"), NationsBank of Texas, N.A., and National Bank of Canada
("LENDERS"), and NationsBank of Texas, N.A., as Agent ("AGENT"). Unless
otherwise indicated, all capitalized terms herein are used as defined in the
Credit Agreement.

Borrower, Agent and Lenders desire to amend the Credit Agreement by
extending the Termination Date to April 7, 1997 as hereinafter described.
Therefore, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Borrower, Agent and Lenders agree as follows:

1. Termination Date. SECTION 10.3 of the Credit Agreement
("Other Definitions"), is hereby amended by amending the definition of
"TERMINATION DATE" to read in its entirety as follows:

TERMINATION DATE means 12:00 Noon on the earlier of either (a)
April 7, 1997, or (b) the date Lenders' Commitments are terminated in
accordance with this Agreement.

2. Cash Collateral Account. Paragraph 3 of the Third Amendment
and Waiver to 1994 Restated Credit Agreement dated as of June 13, 1995 (the
"THIRD AMENDMENT"), regarding the Cash Collateral Account, is hereby amended by
deleting the reference to "bank accounts listed on Exhibit A to Borrower's
letter to Agent dated May 16, 1995" in its entirety, and inserting in lieu
thereof the following:

"bank account with Bank of America, N.T. & S.A., account number
12336-20584"

3. Obligors. Paragraph 15 of the Third Amendment, regarding
Obligors, is hereby amended by deleting the reference to "Westex Petroleum
Service, Inc." in its entirety, and inserting in lieu thereof "Westex Production
Service, Inc."

4. Conditions. This Amendment shall not be effective until it
has been duly executed and delivered by all parties named below, and Agent has
received from Borrower any documentation that Agent may reasonably request
related hereto.

5. Representations and Warranties. Borrower represents and
warrants that it possesses all requisite power and authority to execute, deliver
and comply with the terms of this instrument, which has been duly authorized and
approved by all necessary corporate action and for which no consent of any
person is required, and agrees to furnish Agent with evidence of such
authorization and approval upon request.

<PAGE> 2

6. Fees and Expenses. Borrower agrees to pay the reasonable fees
and expenses of counsel to Agent for services rendered in connection with the
preparation, negotiation and execution of this instrument.

7. Loan Paper; Effect. This instrument is a Loan Paper and,
therefore, is subject to the applicable provisions of Section 12 of the Credit
Agreement, all of which are incorporated herein by reference the same as if set
forth herein verbatim. Except as amended in this instrument, the Loan Papers are
and shall be unchanged and shall remain in full force and effect. In the event
of any inconsistency between the terms of the Credit Agreement as hereby
modified (the "AMENDED AGREEMENT") and any other Loan Papers, the terms of the
Amended Agreement shall control and such other document shall be deemed to be
amended hereby to conform to the terms of the Amended Agreement. Borrower hereby
releases Agent and Lenders from any liability for actions or failures to act in
connection with the Loan Papers prior to the date hereof.

8. No Waiver of Defaults. This instrument does not constitute a
waiver of Lenders' right to insist upon future compliance with each term,
covenant, condition and provision of the Loan Papers, and the Loan Papers shall
continue to be binding upon, and inure to the benefit of, Borrower, Guarantors,
Lenders, Agent, and their respective successors and assigns.

9. Multiple Counterparts. This instrument may be executed in
more than one counterpart, each of which shall be deemed an original, but all of
which when taken together shall constitute one instrument.

10. Final Agreement. THE LOAN PAPERS, AS AMENDED HEREBY,
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.

Very truly yours,

NATIONSBANK OF TEXAS, N.A., NATIONAL BANK OF CANADA,
as Agent and a Lender as a Lender

By /S/ JAMES R. ALLRED By /S/ LARRY L. SEARS
------------------------ --------------------------------
James R. Allred Larry L. Sears
Vice President Group Vice President

By /S/ DOUGLAS G. CLARK
--------------------------------
Douglas G. Clark
Vice President

Accepted and agreed to as of the day and year first set forth in the
foregoing letter.

POOL COMPANY

By /S/ E. J. SPILLARD
--------------------------------
E.J. Spillard
Senior Vice President of Finance

<PAGE> 3

By /S/ R. A. JOHANNSEN

R.A. Johannsen
Treasurer

GUARANTORS' CONSENT AND AGREEMENT

As an inducement to Agent and Lenders to execute, and in consideration
of Agent's and Lenders' execution of the foregoing, the undersigned hereby
consent thereto and agree that the same shall in no way release, diminish,
impair, reduce or otherwise adversely affect the respective obligations and
liabilities of each of the undersigned under the Guaranty executed by the
undersigned, or any agreements, documents or instruments executed by any of the
undersigned to create liens, security interests or charges to secure any of the
indebtedness under the Loan Papers, all of which obligations and liabilities
are, and shall continue to be, in full force and effect. This consent and
agreement shall be binding upon the undersigned, and the respective successors
and assigns of each, and shall inure to the benefit of Agent and Lenders, and
respective successors and assigns of each.

By /S/ E. J. SPILLARD
--------------------------------
E. J. Spillard
Senior Vice President, Finance,
of each Obligor

By /S/ R. A. JOHANNSEN
--------------------------------
R. A. Johannsen
Treasurer of each Obligor

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,212
<SECURITIES> 0
<RECEIVABLES> 48,697
<ALLOWANCES> 1,454
<INVENTORY> 11,221
<CURRENT-ASSETS> 82,284
<PP&E> 192,269
<DEPRECIATION> 70,923
<TOTAL-ASSETS> 249,921
<CURRENT-LIABILITIES> 54,647
<BONDS> 17,303
<COMMON> 134,428
0
0
<OTHER-SE> (768)
<TOTAL-LIABILITY-AND-EQUITY> 249,921
<SALES> 0
<TOTAL-REVENUES> 126,659
<CGS> 0
<TOTAL-COSTS> 100,626
<OTHER-EXPENSES> 600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 418
<INCOME-PRETAX> 1,366
<INCOME-TAX> 596
<INCOME-CONTINUING> 770
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 770
<EPS-PRIMARY> .06
<EPS-DILUTED> .06

</TABLE>