AMENDED AND RESTATED GUARANTY

Exhibit 10.2

AMENDED AND RESTATED GUARANTY

     THIS AMENDED AND RESTATED GUARANTY (this “ Guaranty ”), dated as of April 26, 2007, is made by each of the undersigned (individually, a “ Guarantor ” and collectively, the “ Guarantors ”), in favor of ROYAL BANK OF CANADA, as administrative agent for the Lenders (as defined below).

WITNESSETH :

     WHEREAS, Allis-Chalmers Energy Inc., a Delaware corporation (the “ Borrower ”), Royal Bank of Canada, individually and as administrative agent and collateral agent (in its capacity as administrative agent, the “ Administrative Agent ”) , and certain other lenders party thereto entered into a Credit Agreement, originally dated as of July 11, 2005, providing for an aggregate credit facility of up to $55,000,000 (as amended, the “ Original Credit Agreement ”) ; and

     WHEREAS, as a condition precedent to making advances under the Original Credit Agreement, each of AirComp, LLC, a Delaware limited liability company, Allis-Chalmers Production Services, Inc., a Texas corporation, formerly known as Capcoil Tubing Services, Inc. and successor by merger with Downhole Injection Systems, L.L.C., a Texas limited liability company, Allis-Chalmers Rental Services, Inc., a Texas corporation, formerly known as Allis-Chalmers Rental Tools, Inc. and prior to that formerly known as Safco-Oil Field Products, Inc., successor by merger with Specialty Rental Tools, Inc., a Louisiana corporation and with Delta Rental Services, Inc., a Louisiana corporation, Allis-Chalmers Tubular Services, Inc., a Texas corporation, formerly known as Jens’ Oil Field Service, Inc., successor by merger with Rogers Oil Tool Services, Inc., a Louisiana corporation, Mountain Compressed Air, Inc., a Texas corporation, OilQuip Rentals, Inc. and Strata Directional Technology, Inc., a Texas corporation, successor by merger with Target Energy, Inc. entered into a Guaranty dated July 11, 2005 in favor of the Administrative Agent guaranteeing payment of the indebtedness of the Borrower under the Original Credit Agreement; and

     WHEREAS, the Original Credit Agreement was amended and restated in its entirety by an Amended and Restated Credit Agreement dated January 18, 2006 among Borrower, Royal Bank of Canada, individually and as Administrative Agent and collateral agent , and certain other lenders party thereto, providing for a reduced aggregate credit facility of $25,000,000 (as amended, the “ Amended and Restated Credit Agreement ”); and

     WHEREAS, the Amended and Restated Credit Agreement was amended by a First Amendment to Amended and Restated Credit Agreement dated August 8, 2006 among Borrower, Royal Bank of Canada, individually and as Administrative Agent and collateral agent , and certain other lenders party thereto (the “ First Amendment ”) and;

     WHEREAS, as a condition precedent to the effectiveness of the First Amendment, each of Allis-Chalmers GP, LLC, a Delaware limited liability company, Allis-Chalmers LP, LLC, a Delaware limited liability company, and Allis-Chalmers Management, LP, a Texas limited partnership entered into a Guaranty dated August 8, 2006 in favor of the Administrative Agent guaranteeing payment of the indebtedness of the Borrower under the Amended and Restated Credit Agreement, as amended by the First Amendment; and

Amended and Restated Guaranty

     WHEREAS, the Amended and Restated Credit Agreement was amended and restated in its entirety by a Second Amended and Restated Credit Agreement of even date herewith among Borrower, Royal Bank of Canada, individually and as Administrative Agent and collateral agent , and certain other lenders party thereto, providing for an aggregate credit facility of $62,000,000 (the “ Second Amended and Restated Credit Agreement ”); and

     WHEREAS, each Guarantor is a wholly owned direct or indirect subsidiary of the Borrower; and

     WHEREAS, as a condition precedent to funding of Loans under the Second Amended and Restated Credit Agreement, each Guarantor is required to deliver this Guaranty pursuant to Section 6.13 of the Second Amended and Restated Credit Agreement; and

     WHEREAS, each Guarantor has duly authorized the execution, delivery and performance of this Guaranty; and

     WHEREAS, it is in the best interests of each Guarantor to execute this Guaranty inasmuch as each Guarantor will derive substantial direct and indirect benefits from the extensions of credit made from time to time to or for the account of the Borrower.

     NOW THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged, and in order to induce the Lenders to fund Loans to the Borrower pursuant to the Second Amended and Restated Credit Agreement by fulfilling the requirements of the Second Amended and Restated Credit Agreement, each Guarantor agrees, for the benefit of each Lender, as follows:

ARTICLE I

DEFINITIONS

      SECTION 1.1 Certain Terms . The following capitalized terms when used in this Guaranty, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

     “ Administrative Agent ” is defined in the first recital.

     “ Borrower ” is defined in the first recital.

     “ Commitments” means each Commitment as defined in the Second Amended and Restated Credit Agreement.

     “ Guarantor ” and “ Guarantors ” are defined in the preamble.

     “ Guaranty” is defined in the preamble.

     “ Lenders ” is defined in the first recital.

     “ Loans ” means each Loan as defined in the Second Amended and Restated Credit Agreement.

     “ Loan Documents ” means the Loan Documents as defined in the Second Amended and Restated Credit Agreement.

     “ Note ” means each Note as defined in the Second Amended and Restated Credit Agreement.

     “ Obligations ” means the Obligations as defined in the Second Amended and Restated Credit Agreement.

     “ Obligor ” means the Borrower or any other Person (other than the Administrative Agent or any Lender) obligated under any Loan Document.

     “ Required Lenders ” means the Required Lenders as defined in the Second Amended and Restated Credit Agreement.

     “ Subsidiary Guarantors ” means Subsidiaries of Borrower that have guaranteed all or any part of the Obligations.

     “ Taxes ” is defined in clause (a) of Section 2.7 .

     “ UCC ” means the Uniform Commercial Code as in effect in the State of Texas.

      SECTION 1.2 Second Amended and Restated Credit Agreement Definitions . Unless otherwise defined herein or the context otherwise requires, capitalized terms used in this Guaranty, including its preamble and recitals, have the meanings provided in the Second Amended and Restated Credit Agreement.

      SECTION 1.3 UCC Definitions . Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Guaranty, including its preamble and recitals, with such meanings.

ARTICLE II

GUARANTY PROVISIONS

      SECTION 2.1 Guaranty . Each Guarantor hereby absolutely, unconditionally, and irrevocably (1) guarantees the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations of the Borrower and each other Obligor now or hereafter existing under each of the Second Amended and Restated Credit Agreement, the Notes and each other Loan Document to which the Borrower or such other Obligor is or may become a party, whether for principal, interest, fees, expenses or otherwise (including all such amounts which would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b ) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. §502(b) and §506(b)), and (2) indemnifies and holds harmless each Lender and each holder of a Note for any and all costs and expenses (including reasonable attorney’s fees and expenses) incurred by such Lender or such holder, as the case may be, in enforcing any rights under this Guaranty; provided however, that each Guarantor shall be liable under this Guaranty for the maximum amount of such liability that can be hereby incurred without rendering this Guaranty, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent

transfer, and not for any greater amount. This Guaranty constitutes a guaranty of payment when due and not of collection, and each Guarantor specifically agrees that it shall not be necessary or required that any Lender or any holder of any Note exercise any right, assert any claim or demand or enforce any remedy whatsoever against the Borrower or any other Obligor (or any other Person) before or as a condition to the obligations of such Guarantor hereunder.

      SECTION 2.2 Acceleration of Guaranty . Each Guarantor agrees that, in the event of the occurrence of any event of the type described in Section 8.01(f ) or Section 8.01(g) of the Second Amended and Restated Credit Agreement, with respect to the Borrower, any other Obligor or any other Guarantor, and if such event shall occur at a time when any of the Obligations may not then be due and payable, such Guarantor will pay to the Lenders forthwith the full amount which would be payable hereunder by such Guarantor if all such Obligations were then due and payable.

      SECTION 2.3 Guaranty Absolute, etc . This Guaranty shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Obligations of the Borrower and each other Obligor have been paid in full, all obligations of the Guarantors hereunder shall have been paid in full, all Commitments shall have terminated and, except as provided in Section 10.01(e) of the Second Amended and Restated Credit Agreement, all Lender Hedging Agreements have terminated. No Guarantor may rescind or revoke its obligations hereunder. Each Guarantor guarantees that the Obligations of the Borrower and each other Obligor will be paid strictly in accordance with the terms of the Second Amended and Restated Credit Agreement and each other Loan Document and each Lender Hedging Agreement under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Lender or any holder of any Note with respect thereto. The liability of each Guarantor under this Guaranty shall be absolute, unconditional and irrevocable irrespective of: (1) any lack of validity, legality or enforceability of the Second Amended and Restated Credit Agreement, any Note or any other Loan Document or any Lender Hedging Agreement; (2) the failure of any Lender or any holder of any Note (a) to assert any claim or demand or to enforce any right or remedy against the Borrower, any other Obligor or any other Person (including any other guarantor) under the provisions of the Second Amended and Restated Credit Agreement, any Note, any other Loan Document, any Lender Hedging Agreement or otherwise, or (b) to exercise any right or remedy against any other guarantor of, or collateral securing, any Obligations of the Borrower or any other Obligor; (3) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of the Borrower or any other Obligor, or any other extension, compromise or renewal of any Obligations of the Borrower or any other Obligor; (4) any reduction, limitation, impairment or termination of any Obligations of the Borrower or any other Obligor for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations of the Borrower, any other Obligor or otherwise; (5) any amendment to, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of the Second Amended and Restated Credit Agreement, any Note or any other Loan Document or any Lender Hedging Agreement; (6) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to departure from, any other guaranty, held by any Lender or any holder of any Note securing any of the Obligations of the Borrower or any other Obligor; (7) the insolvency or bankruptcy of, or similar event affecting, the Borrower or any other Obligor; or (8) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, the Borrower, any other Obligor, any surety or any guarantor. Each Guarantor

waives all rights and defenses which may arise with respect to any of the foregoing, and each Guarantor waives any right to revoke this Guaranty with respect to future indebtedness. Each Guarantor waives all rights or defenses under (1) Section 34.01 et seq . of the Texas Business and Commerce Code , as amended