Acquisitions

On April 22, 2013 the Company entered into a Sale and Purchase Agreement (the “Agreement”) with ITS Tubular Services (Holdings) Limited, a company organized under the laws of Scotland and in administration proceedings under the laws thereof (the Seller) and others. Pursuant to the Agreement, we acquired International Tubular Services Limited and certain of its affiliates (collectively, ITS) and other related assets held by the Seller for an initial purchase price of $101 million paid at the closing of the transaction. An additional $24 million was deposited into an escrow account, which will either be paid to the Seller as additional consideration when certain consents are obtained or, in certain circumstances, released to us in accordance with the Agreement. The transaction was financed with a $125 million term loan. ITS provides drilling related equipment and services directly to oil companies, service companies and drilling contractors. ITS’s principal activities relate to the rental of drilling equipment and pressure control systems, provision of casing running systems and fishing services, together with machine shop support. ITS serves an extensive customer base of exploration & production (E&P) companies, drilling contractors and service companies from 22 operating facilities primarily located in the Middle East, Latin America, U.K. and Europe, and the Asia-Pacific region. The Company is still awaiting significant information relating to the fair value of the assets and liabilities of the acquired businesses in order to finalize purchase price allocations.

Our due diligence process with respect to the acquired business identified certain transactions that suggest its internal controls may have failed to prevent violations of potentially applicable international trade and anti-corruption laws, including those of the United Kingdom. As part of our integration process, we will continue our review of activities of the acquired business to identify potential violations of applicable international trade and anti-corruption laws and will promptly apply our system of internal controls, Code of Conduct, policies and procedures to the acquired business to help ensure the prevention of any such potential future violations. As appropriate, we will make any identified violations known to relevant authorities, cooperate with any resulting investigations and take proper remediation measures (including seeking any necessary government authorizations).

Debt Agreement

In connection with the acquisition of ITS described above, on April 18, 2013, the Company entered into a $125 million Term Loan, fully funded by Goldman Sachs Bank USA as Sole Lead Arranger and Administrative Agent. The Term Loan bears interest on the outstanding principal amount at a rate per annum equal to (a) for the period from April 18, 2013 to June 30, 2013 (or May 9, 2013, in the event certain marketing materials have not been provided by May 9, 2013) (the “Initial Step-Up Date”), 6.5%, (b) for the period from the Initial Step-Up Date to April 15, 2014, 7.5%, and (c) from April 15, 2014 to maturity, 8.5%. Quarterly interest payments are due on the last business day of each March, June, September, and December. The Term Loan is senior unsecured debt of the Company and has a maturity of April 18, 2018. We will look at various options for reducing the cost of the debt prior to its maturity.