MUTUAL TERMINATION AND RELEASE AGREEMENT

     This Mutual Termination and Release Agreement, dated as of August 8, 2008 (this “Release Agreement”), is by and among ALLIS-CHALMERS ENERGY INC., a Delaware corporation (“Parent”), ELWAY MERGER SUB LLC, a Delaware limited liability company (formerly known as Elway Merger Sub, Inc.) and a direct, wholly owned subsidiary of Parent (“Merger Sub”), and BRONCO DRILLING COMPANY, INC., a Delaware corporation (the “Company”).

     WHEREAS, Parent, Merger Sub and the Company (each, a “Party,” and collectively, the “Parties”) entered into an Agreement and Plan of Merger dated as of January 23, 2008, as amended by the First Amendment to the Agreement and Plan of Merger dated as of June 1, 2008 (the “Merger Agreement”), providing for the merger of the Company with and into Merger Sub, with Merger Sub surviving (the “Merger”);

     WHEREAS, each Party has determined that (i) it is unlikely that the Merger Agreement will be adopted by the requisite vote of stockholders of the Company and (ii) that it is advisable and in the best interests of each Party to terminate the Merger Agreement and provide for the compromise and settlement of any and all potential claims among the Parties thereunder;

     NOW, THEREFORE, for and in consideration of the recitals and the mutual covenants and agreements set forth in this Release Agreement, the Parties agree as follows:

     Section 1.1   Defined Terms .  As used in this Release Agreement, capitalized terms shall have the meanings set forth below or shall have the meanings set forth for such terms in the sections of this Release Agreement referenced below:

     “Affiliate” means, with respect to any Person, each other Person that directly or indirectly Controls, is Controlled by, or is under common Control with such Person.

     “Claim” means any and all manner of claims, rights, actions, losses, judgments, damages, causes of action, suits, liens, obligations, accounts, debts, demands, agreements, promises, liabilities, controversies, costs, expenses and fees (including attorney’s, financial advisor’s, lender’s or other fees) whatsoever, whether arising in law or equity, whether based on any federal, state or foreign law or right of action, mature or unmature, contingent or fixed, liquidated or unliquidated, known or unknown, suspected or unsuspected, accrued or unaccrued, that now exist, may exist or heretofore have existed.

     “Company” has the meaning given to such term in the preamble.

     “Confidentiality Agreement” means the Amended and Restated Confidentiality Agreement, dated as of December 24, 2007, between the Company and Parent.

     “Control” (and related terms) means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of stock, by contract, credit arrangement or otherwise.

     “Effective Date” has the meaning given to such term in Section 2.4.

     “Merger” has the meaning given to such term in the Recitals.

     “Merger Sub” has the meaning given to such term in the preamble.

     “Parent” has the meaning given to such term in the preamble.

     “Parties” has the meaning given to such term in the Recitals.

     “Party” has the meaning given to such term in the Recitals.

     “Person” means any natural person, corporation, company, limited or general partnership, joint stock company, joint venture, association, limited liability company, trust, bank, trust company, land trust, business trust or other entity or organization, regardless of whether a Governmental Authority.

     “Release Agreement” has the meaning given to such term in the preamble.

     “Release Payment” has the meaning given to such term in Section 2.1.

     “Released Parties” has the meaning given to such term in Section 2.2(b).

     “Releasing Parties” has the meaning given to such term in Section 2.2(b).

     “Subject Matter” means any arrangement, contract, interest, right, matter, obligation, Claim or thing whatsoever from the beginning of the world to the Effective Date in connection with, arising as a result of or in any way relating, directly or indirectly, to the Merger Agreement and any other documents or transactions contemplated thereby or referred to therein (including without limitation the Merger) or any action taken, omitted to be taken, or attempted to be taken in connection therewith; provided, however , that “Subject Matter” shall not include the obligations of any Person arising solely under the Confidentiality Agreement.

     Section 1.2   References, Construction and Titles .

     (a)   All references in this Release Agreement to Exhibits, Schedules, Articles, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of or to this Release Agreement, unless expressly provided otherwise.  Titles appearing at the beginning of any Articles, Sections, subsections or other subdivisions of this Release Agreement are for convenience only, do not constitute any part of this Release Agreement, and shall be disregarded in construing the language hereof.  The words “this Release Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Release Agreement as a whole and not to any particular Article, Section, subsection or subdivision unless expressly so limited.  The words “this Article” and “this Section,” and words of similar import, refer only to the Article or Section hereof in which such words occur.

     (b)   The word “or” is not exclusive, and the word “including” (in its various forms) means including without limitation.  Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.

     Section 2.1   Release Payment .  Promptly after (and in any event on or before the first business day following) the execution and delivery of this Release Agreement, the Company shall pay to Parent an amount of cash equal to FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS (US $4,500,000.00) in the legal and lawful currency of the United States of America (the “Release Payment”) by wire transfer of immediately available funds in accordance with the wire transfer instructions provided by Parent to the Company.

     Section 2.2   Termination and Mutual Release .

     (a)   As of the Effective Date, the Merger Agreement and all agreements contemplated thereby (with the sole exception of the Confidentiality Agreement) shall be terminated, without any other action being required on the part of any Party, including without limitation, provisions of the Merger Agreement that by their terms would otherwise have survived the termination of the Merger Agreement.  Upon such termination, the Merger Agreement shall be null and the provisions thereof shall be void and shall have no force and effect whatsoever, and no Party shall have any rights or obligations thereunder.

     (b)   Each of the Parties, on behalf of itself and its present, future and former officers, directors, employees, managers, advisors, stockholders, members, managers, agents, representatives, trust beneficiaries, heirs, attorneys, parents, subsidiaries, Affiliates and financing sources and