Wexford cites reasons for voting against merger of Bronco Drilling, Allis-Chalmers

By Lisa Kerner

Charlotte, N.C., July 30 - Wexford Capital LLC reiterated its opposition to the proposed merger of Bronco Drilling Co. and Allis-Chalmers Energy, Inc. in a July 29 letter to Bronco's board and chief executive officer D. Frank Harrison.

In the letter, Wexford, with a 12.85% ownership interest in Bronco, said it intends to vote against the merger at the upcoming shareholder meeting. The letter was included in a schedule 13D filed with the Securities and Exchange Commission.

Wexford noted it founded Bronco, oversaw its growth and took it public in 2005.

According to Wexford, the merger is not in the best interests of Bronco and its shareholders because:

• The merger significantly undervalues Bronco;

• Bronco should be worth between $25 and $30 per share; and

• The merger was negotiated at a time when land rig market conditions were not as strong.

Wexford said it expects Bronco's 2009 EBITDA to approach $150 million, substantially above the consensus estimate of approximately $110 million.

On Jan. 24, Allis-Chalmers agreed to acquire Bronco Drilling in a cash and stock deal valued at $437.8 million.

Bronco Drilling, located in Edmond, Okla., provides contract land drilling and workover services to oil and gas exploration companies.

Houston-based Allis-Chalmers provides services and equipment to oil and natural gas exploration and development companies.

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