ACQUISITION AGREEMENT

ARTICLE I

THE TRANSACTIONS

Section 1.1.   Sale by PSIL.   Upon the terms and subject to the conditions set forth herein, at the Closing (as hereinafter defined) PSIL will sell, transfer, assign, and convey to Newco good title in and to (a) the assets listed on Exhibit A (the “ Assets ”), free and clear of any lien, lease, or encumbrance, and (b) the tradename “ProDril Services” and any derivatives thereof, free and clear of any lien, lease, or encumbrance, pursuant to an assignment and assumption agreement in the form reasonably required by Newco.

Section 1.2.  The Licenses.  At or prior to the Closing, PSIL and CCORE shall terminate the CCORE License pursuant to a termination agreement in the form reasonably required by Newco (the “ Termination Agreement ”) and CCORE, CFLP, PSIL, ProDril Services Incorporated, and the Principal shall enter into (i) a license agreement with Newco in the form of Exhibit B (the “ New License Agreement ”), and (ii) an Assignment and Assumption Agreement in the form of Exhibit C (the “ Assignment ”).

Section 1.3.  The Sales Price.   At the Closing, as consideration for the sale and transfer of the Assets and the execution of the Termination Agreement, Newco will (a) execute and deliver to PSIL the royalty agreement set forth as Exhibit D (the “ Royalty Agreement ”), and (b) assume the payables and other liabilities of PSIL specifically listed on Exhibit E (the “ Assumed Liabilities ”), pursuant to an assignment and assumption agreement in the form reasonably required by Newco.  Except for the assumption of the Assumed Liabilities at the Closing as provided pursuant to this Section, neither Newco nor Parent shall assume or be deemed to have assumed any debts or obligations of PSIL.

Section 1.4.  Agreement Not To Compete .  At the Closing, the Principal and PSIL shall execute and deliver to Newco an Agreement Not To Compete in the form of Exhibit F.

Section 1.5.   Closing.  The closing (the “ Closing ”) of the transactions contemplated by this Agreement shall take place at the offices of Newco in Houston, Texas as promptly as practicable (but in any event within two business days) following the date on which the last of the conditions set forth in Article VII is fulfilled or waived, or at such other time and place as Newco and PSIL shall agree. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date .”  At the Closing, each of the parties hereto shall take such actions required to be taken by it pursuant to the terms hereof at or before Closing.  The Transactions will be effective as of 12:01 am on the Closing Date (the “ Effective Time ”).

Section 1.6.   Taking of Necessary Action; Further Action.   Each of Parent, PSIL and the Principal will take all such reasonable and lawful action as may be necessary or appropriate either before, at, or after the Closing in order to effectuate the transactions described in this Article (the “ Transactions ”) in accordance with this Agreement and as necessary or desirable to carry out the purposes of this Agreement and to vest Newco with full right, title and possession to the Assets and all rights intended to be conveyed by the New License Agreement or the

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Assignment.  Specifically, but not by way of limitation, PSIL shall deliver to Newco all files, data, records and other information set forth in tangible form (whether written or electronic) which relates to the technology subject to the New License Agreement or the Assignment.

Section 1.7.  The Original Acquisition Agreement .  The parties acknowledge and ratify the termination of the Original Acquisition Agreement, and hereby release each other from any liability or obligation pursuant to or relating to the Original Acquisition Agreement, including but not limited to the circumstances surrounding the termination thereof.

ARTICLE II

REPRESENTATIONS AND

WARRANTIES OF PARENT AND NEWCO

Parent and Newco each represent and warrant to PSIL as follows:

Section 2.1.   Organization and Qualification.  Parent is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas and Newco is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas and each of them has the requisite power and authority to own, lease and operate its respective assets and properties and to carry on its respective businesses as they are now being conducted.

Section 2.2.  Authority; Non-Contravention; Approvals.

(a)            Parent and Newco each have full limited liability company and corporate (as the case may be) power and authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby. This Agreement has been approved by the Managers of Parent and the Board of Director of Newco, and no other limited liability company or corporate proceedings on the part of Parent or Newco are necessary to authorize the execution and delivery of this Agreement or the consummation by Parent and Newco of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Parent and Newco, and, assuming the due authorization, execution and delivery hereof by Principal, PSIL, CCORE, and CFLP, constitutes a valid and legally binding agreement of each of Parent and Newco enforceable against each of them in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.

(b)            The execution and delivery of this Agreement by each of Parent and Newco and the consummation by each of Parent and Newco of the transactions contemplated hereby do not and will not violate or result in a breach of any provision of, or constitute a default (or an event which, with

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notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of Parent or the Newco under any of the terms, conditions or provisions of (i) the respective charters or bylaws of Parent or the Newco, (ii) any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of any court or governmental authority applicable to Parent or the Newco or any of their respective properties or assets, or (iii) any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any kind to which Parent or Newco is now a party or by which Parent or Newco or any of their respective properties or assets may be bound or affected.

(c)            No declaration, filing or registration with, or notice to, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the execution and delivery of this Agreement by Parent or Newco or the consummation by Parent or Newco of the transactions contemplated hereby.

Section 2.3.   Brokers and Finders.  Parent or Newco have not entered into any contract, arrangement or understanding with any person or firm which may result in the obligation of Parent or Newco to pay any finder’s fees, brokerage or agent commissions or other like payments in connection with the transactions contemplated hereby. There is no claim for payment by Parent or Newco of any investment banking fees, finder’s fees, brokerage or agent commissions or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby.

Section 2.4.   Financials of Newco.   The pro forma balance sheet as of June 30, 2003 of Newco has been prepared in accordance with generally accepted accounting principles, consistently applied (except for the absence of footnote disclosures and for the absence of normal year-end audit adjustments which are not material in the aggregate) and fairly present the financial condition and result of operations of Newco.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF PSIL AND THE SHAREHOLDER

PSIL and the Principal jointly and severally represent and warrant to Parent and Newco that:

Section 3.1.   Organization and Qualification.  PSIL is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Texas and has the requisite partnership power and authority to own, lease and operate its assets and properties and

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to carry on its business as it is now being conducted.  PSIL is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction in which the properties owned, leased, or operated by it or the nature of the business conducted by it makes such qualification necessary. True, accurate and complete copies of PSIL’s partnership agreement, as amended, as in effect on the date hereof, including all amendments thereto, have heretofore been delivered to Newco.

Section 3.2.   Subsidiaries.   PSIL does not own, any stock or other ownership interests in any other entity.

Section 3.3.   Authority; Non-Contravention; Approvals.

(a)            PSIL has full partnership power and authority to execute and deliver this Agreement and, to consummate the transactions contemplated hereby.  This Agreement has been approved by the general partner of PSIL, and other than the approval of the partners of PSIL no other partnership proceedings on the part of PSIL are necessary to authorize the execution and delivery of this Agreement or the consummation by PSIL of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by PSIL and the Principal, and, assuming the due authorization, execution and delivery hereof by Parent and Newco, constitutes a valid and legally binding agreement of PSIL and Principal, enforceable against PSIL and Principal in accordance with its terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (b) general equitable principles.  PSIL stipulates that it has not been subject to undue pressure or coercion in connection with the negotiation or execution of this Agreement.

(b)            Except as set forth in the Disclosure Schedule, the execution and delivery of this Agreement by PSIL and the Principal and the consummation by PSIL and the Principal of the transactions contemplated hereby do not and will not violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of PSIL under any of the terms, conditions or provisions of (i) the partnership agreement of PSIL, (ii) to the Knowledge of PSIL, any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of any court or governmental authority applicable to any of PSIL or any of its properties or assets, or (iii) any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, or any Operating Agreement (as

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defined in Section 5.23) to which PSIL is now a party or by which PSIL or its properties or assets may be bound or affected.

(c)            No declaration, filing or registration with, or notice to, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the execution and delivery of this Agreement by PSIL or the consummation by PSIL of the transactions contemplated hereby.

Section 3.4.   Financial Statements.  PSIL has furnished Parent and Newco with a balance sheet, income statement and statement of cash flow of PSIL as of August 31, 2003, (collectively, the “ Financial Statements ”).  The Financial Statements have been prepared in accordance with generally accepted accounting principles, consistently applied, and are accurate and complete (except for the absence of footnote disclosures and for the absence of normal year-end audit adjustments which are not material in the aggregate) and fairly present the financial condition and result of operations of PSIL.  The fiscal 2003 budget and capital budget with respect to PSIL previously furnished by PSIL to Parent (a) are true and complete copies of PSIL’s most recent internal budgets for fiscal 2003 and (b) were prepared by management of PSIL in good faith and on a reasonable basis.  The Disclosure Schedule lists all intercompany transactions between or among PSIL, CFLP, CCORE and/or the Principal since January 1, 2003.

Section 3.5.   Absence of Undisclosed Liabilities.  Except as disclosed in the disclosure schedule delivered by PSIL to Newco (the “ Disclosure Schedule ”), PSIL has not incurred any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except liabilities or obligations (a) which are provided for in the Financial Statements or reflected in the notes thereto, or (b) liabilities or obligations under this Agreement.

Section 3.6.   Absence of Certain Changes or Events.  Except as disclosed in the Disclosure Schedule, since December 31, 2002, to the Knowledge of PSIL, the business of PSIL has been conducted in the ordinary course of business consistent with past practices, and there has not been any event, occurrence, development or state of circumstances or facts which has had, or could reasonably be anticipated to have, individually or in the aggregate, a Material Adverse Effect.  Specifically, but not by way of limitation, since December 31, 2002 PSIL has not engaged in any of the actions described in Section 5.1.  “ Material Adverse Effect ” means any event, occurrence, fact, condition, change, development or effect that is or could reasonably be anticipated to be materially adverse to the business, assets (including intangible assets), liabilities, financial condition, results of operations, properties (including intangible properties) or business prospects of PSIL, as applicable, taken as a whole, which is not reflected in the August 31, 2003 Financial Statements of PSIL.  “ Knowledge ” means the actual knowledge of PSIL after reasonable inquiry of officers of PSIL.

Section 3.7.   Tangible Assets.   PSIL does not own any real property.  PSIL leases the real property described in the Disclosure Schedule.  The Disclosure Schedule sets forth a list describing all trucks, automobiles, trailers, other titled vehicles, machinery, equipment, furniture, supplies, tools, and other tangible personal property (“ Personal Property ”) owned by PSIL (the “ Owned Assets ”).  The Disclosure Schedule also sets forth a description of all real property or

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personal property leased by PSIL or which is otherwise used by PSIL but which is not owned by PSIL (the “ Leased Assets ”).  Except as indicated in the Disclosure Schedule, the Owned Assets and the Leased Assets constitute all of the tangible property necessary for the conduct by PSIL of its business as now conducted.  PSIL has good and indefeasible title to all of the Owned Assets free and clear of all mortgages, liens, pledges, charges, or encumbrance of any nature whatsoever, except as indicated on the Disclosure Schedule.  All of the Owned Assets and the Leased Assets are in good, serviceable condition and fit for the particular purposes for which they are used in the business of PSIL, subject only to normal maintenance requirements and wear and tear reasonably expected in the ordinary course of business.

Section 3.8.   Intellectual Property.  Subject to the terms of the CCORE License:

(a)            The Disclosure Schedule sets forth all of the following that are owned, licensed, or used by PSIL (collectively, the “ Intellectual Property Rights ”): (i) patents, patent applications, and inventions and discoveries that may be patentable (collectively, “ Patents ”), (ii) all know-how, trade secrets, confidential and proprietary information, technical information, data, process technology, plans, drawings, and blue prints (collectively, “ Trade Secrets ”), and (iii) trademarks, service marks, and trade names, and copyrights.

(b)            PSIL has the right to freely use the Intellectual Property Rights and, except as indicated on the Disclosure Schedule, owns the Intellectual Property Rights, free of any lien or encumbrance.  The Disclosure Schedule describes any obligation of PSIL to pay royalties or other compensation to third parties in exchange for the right to use any of the Intellectual Property Rights.  Other than as provided in the Loan Technology Assignment, PSIL has not assigned, hypothecated or otherwise encumbered any of the Intellectual Property Rights.

(c)            PSIL may freely assign or transfer all licenses that it has with third parties with respect to the Intellectual Property Rights.

(d)            Except as indicated in the Disclosure Schedule, PSIL has no knowledge of any infringement by any other person of any of the Intellectual Property Rights, and PSIL has not entered into any agreement to indemnify any other party against any charge of infringement of any of the Intellectual Property Rights.  To the Knowledge of PSIL, PSIL has not and does not violate or infringe any intellectual property right of any other person, and PSIL has not received any communication alleging that it violates or infringes the intellectual property rights of any other person.  PSIL has not been sued for infringing any intellectual property right of another person.

(e)            All of the issued Patents relating to the dualjet technology are currently in compliance with formal legal requirements (including payment of filing,

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examination, and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the Closing Date.  No such Patent has been or is now involved in any interference, reissue, reexamination, or opposition Proceeding.  To the Knowledge of PSIL, there is no patent or patent application of any Third Party which potentially interferes with any such Patent.  To the Knowledge of PSIL, no such Patent is infringed or has been challenged or threatened in any way.

(f)             With respect to each Trade Secret, the documentation, if any, relating to such Trade Secret is current and accurate.  PSIL has taken all reasonable precautions to protect the secrecy, confidentiality, and value of all Trade Secret (including the enforcement by PSIL of a policy requiring each employee or contractor to execute proprietary information and confidentiality agreements substantially in the standard form of PSIL and all current and former employees and contractors of PSIL have executed such an agreement).  To PSIL’s Knowledge, PSIL has good title and an absolute right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature, and, to the Knowledge of PSIL, have not been used, divulged, or appropriated either for the benefit of any person (other than PSIL) or to the detriment of PSIL.  To the Knowledge of PSIL, no Trade Secret is subject to any adverse claim or has been challenged or threatened in any way or infringes any intellectual property right of any other person.

Section 3.9.   Employee Benefits.   The Disclosure Schedule contains a complete list of “employee welfare plans” (as that term is defined in Section 3(1) of the Employee Retirement Income Security Act of 1974 (“ ERISA ”)) currently maintained by PSIL or any person or trade or business under common control with PSIL, or in which active or former employees of PSIL (collectively, the “ Affected Employees ”) currently participate (which plans are hereinafter referred to as “ Welfare Plans ”).  The Disclosure Schedule also contains a complete list of “employee pension benefit plans” as that term is defined in Section 3(2) of ERISA maintained by PSIL or any person or trade or business under common control with PSIL, or in which any such entity currently contributes or is required to contribute or in which Affected Employees currently participate (which plans are hereinafter referred to as “ Pension Plans ”).  Neither PSIL nor any of the Affected Employees participate or have ever participated in any “multiemployer plan” (as that term is defined in Section 3(37) of ERISA).  The Welfare Plans and Pension Plans, and any other plans of the type described in the first two sentences of this Section previously applicable at any time to PSIL, are collectively referred to as “ Company Plans ”.  PSIL Plan is or was in compliance with the provisions of all applicable laws, rules and regulations, including, without limitation, ERISA and the Code.  None of the Pension Plans has incurred any “accumulated funding deficiency” (as defined in Section 412(a) of the Code).  PSIL has not incurred any liability to the Pension Benefit Guaranty Corporation under Section 4062, 4063 or 4064 of ERISA, or any withdrawal liability under Title IV of ERISA with respect to any multiemployer plan.  The Disclosure Schedule describes all bonuses and other compensation

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which will be payable to any of the employees of PSIL as a result of the consummation of the Transactions, and any obligation to pay severance payments.

Section 3.10.   Litigation.   Except as described in the Disclosure Schedule, there are no claims, suits, actions, or proceedings (a “ Proceeding ”) pending or, to the Knowledge of PSIL, threatened against or relating to PSIL, before any court, governmental department, commission, agency, instrumentality or authority, or any arbitrator, including but not limited to any Proceeding relating to a claim or allegation that there has been any violation of applicable federal or state securities laws (“ Securities Law ”). Except as described in the Disclosure Schedule, PSIL is not subject to any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or authority, or any arbitrator.  The Disclosure Schedule sets forth a complete description of any prior Proceeding relating to PSIL that has been settled, dismissed, or otherwise terminated.

Section 3.11.   No Violation of Law.  Except as indicated in the Disclosure Schedule, PSIL is not in violation of and has not been given notice or been charged with any violation of, any law, statute, order, rule, regulation, ordinance or judgment (including, without limitation, any applicable Securities Law or Environmental Law) of any governmental or regulatory body or authority.  Except as disclosed in the Disclosure Schedule, as of the date of this Agreement, no investigation or review by any governmental or regulatory body or authority with respect to PSIL is pending or to the Knowledge of PSIL contemplated or threatened, nor has any governmental or regulatory body or authority indicated an intention to conduct the same. PSIL has all permits (including without limitation Environmental Permits (as defined in Section 3.15)), licenses, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals necessary to conduct their businesses as presently conducted (collectively, the “ Company Permits ”). PSIL is not in violation of the terms of any Company Permit.

Section 3.12.   Insurance Policies.   The Disclosure Schedule sets forth a true and accurate list and summary of current insurance coverage or information concerning any self insurance program with respect to PSIL.  Except as indicated in the Disclosure Schedule, insurance policies providing such coverage will be outstanding and in full force and effect through the Closing Date.  Except as indicated in the Disclosure Schedule, PSIL has not received notice from any current insurance carrier of the intention of such carrier (a) to discontinue any material insurance coverage afforded to PSIL; or (b) to materially increase the premium costs of such insurance.  The types of insurance policies maintained by PSIL and the coverage afforded by such policies with respect to the operations of PSIL are, in the opinion of PSIL, reasonable in light of the nature of the businesses conducted and the risks associated with such businesses.  No application by PSIL for insurance or any bond has been denied for any reason.

Section 3.13.  Taxes.   All returns and reports, including, without limitation, information and withholding returns and reports (“ Tax Returns ”), of or relating to any foreign, federal, state or local tax, assessment or other governmental charge (“ Taxes ”) that are required to be filed on or before the Closing by or with respect to PSIL has been or will be duly and timely filed.  All such tax returns were correct and complete in all respects and all Taxes, including interest and penalties, owed by PSIL (as shown on such Tax Returns) have been paid.  PSIL has not agreed

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to extend the statute of limitations for the collection of any Taxes.  There is no unpaid pending claim against PSIL with respect to any Taxes, and no assessment, deficiency or adjustment has been asserted or proposed with respect to any Tax Return of or with respect to PSIL.  The total amounts set up as liabilities for current and deferred Taxes in the Financial Statements have been prepared in accordance with generally accepted accounting principles and are sufficient to cover the payment of all Taxes, including any penalties or interest thereon and whether or not assessed or disputed, that are, or are hereafter found to be, or to have been, due with respect to the operations of PSIL through the periods covered thereby or the current life or use of their respective assets.  PSIL has (and as of the Closing Date will have) made all deposits (including estimated tax payments for taxable years for which the consolidated federal income tax return is not yet due) required with respect to Taxes.  No waiver or extension of any statute of limitation as to any federal, local or foreign Tax matter has been given by or requested from PSIL.

Section 3.14.   Labor Matters.  The Disclosure Schedule sets forth a list of the employees of PSIL, or the employees of affiliated entities whose services are utilized by PSIL, and indicates the compensation paid or payable to such employees with respect to the calendar year of 2003.  Except as set forth in the Disclosure Schedule, (a) there are no material controversies pending or, to the Knowledge of PSIL, threatened between PSIL or any of its affiliates on the one hand and any of its employees on the other, and (b) neither PSIL nor any of its affiliates is a party to a collective bargaining agreement of other labor union contract applicable to any such employees, nor does PSIL have any Knowledge of any activities or proceedings of any labor union to organize any such employees.

Section 3.15.   Environmental Matters.  Except as set forth in the Disclosure Schedule:

(a)                                   no notice, demand, request for information, citation, summons or order has been received, no complaint has been served, no penalty has been assessed, and no investigation, action, claim, suit, proceeding or review is pending or, to the Knowledge of PSIL, is threatened by any governmental entity or other person with respect to PSIL relating to or arising out of any Environmental Law (as defined below);

(b)                                  To the Knowledge of PSIL, PSIL is and has been in compliance with all Environmental Laws and Environmental Permits (as defined below); and

(c)                                   there are no liabilities of or relating to PSIL of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, arising under or relating to any Environmental Law and there are no facts, conditions, situations or set of circumstances which could reasonably be expected to result in or be the basis for any such liability.

For purposes of this Section, “PSIL” shall include any entity which is, in whole or in part, a predecessor of PSIL.  For purposes of this Agreement, (i) “ Environmental Laws ” means any and all laws, statutes, ordinances, rules, regulations, orders or determinations of any Governmental Authority (as defined below) pertaining to health or the environment currently in effect in any

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and all jurisdictions in which PSIL owns property or conducts business, including without limita