OIL STATES INTERNATIONAL INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ______________ to __________________

Commission file number 1-16337

OIL STATES INTERNATIONAL, INC.
---------------

(Exact name of registrant as specified in its charter)

Delaware 76-0476605
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Three Allen Center, 333 Clay Street, Suite 3460,
Houston, Texas 77002
-------------- -----
(Address of principal executive offices) (Zip Code)

(713) 652-0582
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

None
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]

The Registrant had 48,397,666 shares of common stock outstanding as of August 9,
2002.

OIL STATES INTERNATIONAL, INC.

INDEX

2

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of
these financial statements.

3

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED, COMBINED AND PRO FORMA STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(1) See detailed pro forma statement of income and related footnotes on
pages 13 to 16 of this Form 10-Q.

The accompanying notes are an integral part of
these financial statements.

4

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

The accompanying notes are an integral part of
these financial statements.

5

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

The accompanying notes are an integral part of these
consolidated financial statements.

6

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED, COMBINED AND PRO FORMA
FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Oil States
International, Inc. (Oil States or the Company) and its consolidated
subsidiaries since February 14, 2001. On February 14, 2001, the Company acquired
the three companies (HWC Energy Services, Inc. - HWC; PTI Group, Inc. - PTI and
Sooner Inc. - Sooner) previously reported in the Combined and Pro Forma
financial statements presented herein. The combined financial statements include
the activities of Oil States, HWC and PTI, collectively the Controlled Group for
the period prior to February 14, 2001, utilizing reorganization accounting. The
reorganization accounting method, which yields results similar to the pooling of
interests method, has been used in the preparation of the combined financial
statements of the Controlled Group (entities under common control of SCF-III
L.P. (SCF-III), a private equity fund that focuses on investments in the energy
industry). Under this method of accounting, the historical financial statements
of HWC and PTI are combined with Oil States for the period until February 14,
2001 when Oil States, HWC and PTI merged and Oil States acquired Sooner in
exchange for its common stock. After February 14, 2001, the consolidated
financial statements of Oil States include the results of all its subsidiaries
including HWC, PTI and Sooner. The combined financial statements have been
adjusted to reflect minority interests in the Controlled Group. All significant
intercompany accounts and transactions between the consolidated entities have
been eliminated in the accompanying consolidated, combined and pro forma
financial statements.

The accompanying unaudited consolidated and combined financials statements
of the Company and its wholly-owned subsidiaries have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information in footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to these rules and regulations. The unaudited
financial statements included in this report reflect all the adjustments,
consisting of normal recurring adjustments, which the Company considers
necessary for a fair presentation of the results of operations for the interim
periods covered and for the financial condition of the Company at the date of
the interim balance sheet. Results for the interim periods are not necessarily
indicative of results for the year.

The financial statements included in this report should be read in
conjunction with Oil States' audited financial statements and accompanying notes
included in its 2001 Form 10-K, filed under the Securities Exchange Act of 1934,
as amended.

2. NEW ACCOUNTING PRONOUNCEMENT - GOODWILL AND OTHER INTANGIBLE ASSETS

Effective January 1, 2002, the Company adopted Financial Accounting
Standards Board (FASB) Statement No. 142 - "Goodwill and Other Intangible
Assets" (FAS No. 142). In connection with the adoption of FAS No. 142, the
Company ceased amortizing goodwill. Also, as required by this statement, the
Company has completed its evaluation of goodwill for potential impairment. No
provision for goodwill impairment was required based on the evaluation
performed.

7

Changes in the carrying amount of goodwill for the six months ended June 30,
2002, are as follows (in thousands):

The following tables present what reported income before extraordinary items
and net income per share would have been in all periods presented exclusive of
amortization expense recognized in those periods related to goodwill.

3. INITIAL PUBLIC OFFERING, MERGER TRANSACTIONS AND REFINANCING

On February 9, 2001, the Company began trading its common stock on the New
York Stock Exchange under the symbol "OIS" pursuant to completion of its initial
public offering (the Offering). On February 14, 2001, the Company closed the
business combination and the Offering thereby acquiring the minority interests
in PTI and HWC and 100% of the Sooner operations. The Company recorded
additional goodwill of $61.9 million as a result of the acquisition of these
minority interests.

Concurrent with the Offering, the Company acquired Sooner for $69.5 million.
The Company exchanged 7,597,152 shares of its common stock for all of the
outstanding common shares of Sooner. The Company accounted for the acquisition
using the purchase method of accounting and recorded approximately $40 million
in goodwill.

Concurrent with the closing of the Offering, the Company issued 4,275,555
shares of common stock to SCF-III and SCF-IV L.P. (SCF-IV) in exchange for
approximately $36.0 million of indebtedness of Oil States and Sooner which was
held by SCF-III and SCF-IV (the SCF Exchange).

With the proceeds received in the Offering, the Company repaid $43.7 million
of outstanding subordinated debt of the Controlled Group and Sooner, redeemed
$21.8 million of preferred stock of Oil States, paid accrued interest on
subordinated debt and accrued dividends on preferred stock aggregating $7.1
million, and repurchased common stock from non-accredited shareholders and
shareholders holding pre-emptive stock purchase rights for $1.6 million. The
balance of the proceeds were used to reduce amounts outstanding under bank lines
of credit.

On February 14, 2001, the Company entered into a $150 million senior secured
revolving credit facility. This new credit facility replaced existing bank
credit facilities.

In connection with the debt refinancing discussed above, the Company
incurred prepayment penalties and wrote-off unamortized debt issue costs
totaling $0.8 million which is reported as an extraordinary item.

9

4. DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

Additional information regarding selected balance sheet accounts is
presented below (in thousands):

5. SEGMENT AND RELATED INFORMATION

In accordance with SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," the Company has identified the following
reportable segments: Offshore Products and Wellsite Services and, since the
acquisition of Sooner, Tubular Services. The Company's reportable segments are
strategic business units that offer different products and services. They are
managed separately because each business requires different technology and
marketing strategies. Most of the businesses were acquired as a unit, and the
management at the time of the acquisition was retained.

10

Financial information by industry segment for each of the three-month and
six-month periods ended June 30, 2002 and 2001 is summarized in the following
table (in thousands):

(1) EBITDA as defined consists of operating income (loss) before depreciation
and amortization expense. EBITDA as defined is not a measure of financial
performance under generally accepted accounting principles. You should not
consider it in isolation from or as a substitute for net income or cash
flow measures prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity. Additionally, our
EBITDA as defined calculation may not be comparable to other similarly
titled measures of other companies. We have included EBITDA as defined as a
supplemental disclosure because it may provide useful information regarding
our ability to service debt and to fund capital expenditures.

6. COMPREHENSIVE INCOME

Comprehensive income for the three and six month periods ended June 30, 2002
and 2001 was as follows (in thousands):

7. COMMITMENTS AND CONTINGENCIES

The Company is involved in various claims, lawsuits and other proceedings
relating to a wide variety of matters. While uncertainties are inherent in the
final outcome of such matters, and it is presently impossible to determine the
actual costs that ultimately may be incurred, management believes that the
resolution of such uncertainties and the incurrence of such costs will not have
a material adverse effect on the Company's consolidated financial position,
results of operations or liquidity.

The Company is aware that certain energy service companies that have in the
past used asbestos in connection with the manufacture of equipment or otherwise
in the operation of their business have become the subject of

11

increased asbestos related litigation. Certain subsidiaries of the Company are
currently named as defendants in two single plaintiff cases seeking damages,
including punitive damages, alleging that our subsidiaries have responsibility
for the individuals developing mesothelioma, asbestosis, lung cancer or other
lung diseases as a result of exposure to asbestos. Although these are the only
cases that management is aware that are pending or threatened against the
Company or its subsidiaries involving allegations relating to asbestos exposure,
additional asbestos related claims may be made. Based on management's
preliminary investigation, management does not believe that these cases or
future claims relating to asbestos exposure will have a material adverse effect
on the Company's consolidated financial position, results of operations, or
liquidity.

12

UNAUDITED PRO FORMA CONSOLIDATED AND COMBINED FINANCIAL STATEMENT

The consolidated financial statements of Oil States International, Inc.
reflect the Company's financial position, results of operations and changes in
stockholders' equity for periods subsequent to February 14, 2001, the date of
our initial public offering and the combination of Oil States International,
Inc. (Oil States), HWC Energy Services, Inc. (HWC) and PTI Group Inc. (PTI)
(collectively, the Controlled Group), among other things.

As more fully described below, and in footnotes that follow, the
combined financial statements reflect the financial position, results of
operations and changes in stockholders' equity of the predecessor entities that
now comprise Oil States International, Inc. based on reorganization accounting.
The pro forma financial information that follows reflect our historical
consolidated or combined statements of operations, depending upon the period
involved, and give effect to the pro forma transactions and adjustments more
fully described below.

The following tables set forth unaudited pro forma consolidated and
combined financial information for Oil States giving effect to:

o the combination of Oil States, HWC and PTI as entities under the
common control of SCF-III L.P. (SCF III), based upon
reorganization accounting, which yields results similar to
pooling of interest accounting, effective from the dates each of
these entities became controlled by SCF III;

o the conversion of the common stock held by the minority interests
of each entity in the Controlled Group into shares of our common
stock, based on the purchase method of accounting;

o the conversion of all of the outstanding common stock of Sooner
Inc. (Sooner) into shares of our common stock, based on the
purchase method of accounting; and

o the exchange of 4,275,555 shares of our common stock for $36.0
million of debt of Sooner and Oil States; and

o our sale of 10,000,000 shares of common stock in our initial
public offering (the Offering) and the application of the net
proceeds totaling $84.1 million. With the proceeds received in
the Offering, the Company repaid $43.7 million of outstanding
subordinated debt of the Controlled Group and Sooner, redeemed
$21.8 million of preferred stock of Oil States, paid accrued
interest on subordinated debt and accrued dividends on preferred
stock aggregating $7.1 million, and repurchased common stock from
non-accredited shareholders and shareholders holding pre-emptive
stock purchase rights for $1.6 million. The balance of the
proceeds was used to reduce amounts outstanding under bank lines
of credit.

The audited December 31, 2001 consolidated balance sheet reflects all of the
transactions discussed above, which were completed on February 14, 2001.

The unaudited pro forma consolidated and combined financial statements do
not purport to be indicative of the results that would have been obtained had
the transactions described above been completed on the indicated dates or that
may be obtained in the future. The unaudited pro forma combined financial
statements should be read in conjunction with the historical consolidated and
combined financial statements and notes thereto included in our Annual Report on
Form 10-K.

13

PRO FORMA CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2001
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

14

OIL STATES INTERNATIONAL, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED AND
COMBINED FINANCIAL STATEMENTS

Basis of Presentation

The purchase method of accounting has been used to reflect the
acquisition of the minority interests of each company in the Controlled Group
concurrent with the closing of the Offering. The purchase price is based on the
fair value of the shares owned by the minority interests, valued at the initial
public offering price of $9.00 per share. Under this accounting method, the
excess of the purchase price over the fair value of the assets and liabilities
allocable to the minority interests acquired has been reflected as goodwill.
Where book value of minority interests exceeded the purchase price, such excess
reduced property, plant and equipment. For purposes of the pro forma combined
financial statements, the goodwill recorded in connection with this transaction
is being amortized over 20 years using the straight-line method based on
management's evaluation of the nature and duration of customer relationships and
considering competitive and technological developments in the industry. Note,
however, that accounting for goodwill changed concurrent with the adoption of
new accounting pronouncements (See Note 3 to Consolidated and Combined Financial
Statements in the Company's Form 10-K for the year ended December 31, 2001).

The purchase method of accounting also has been used to reflect the
acquisition of the outstanding common stock of Sooner concurrent with the
closing of the Offering. The purchase price is based on the fair value of the
shares of Sooner, valued at the initial public offering price of $9.00 per
share. The excess of the purchase price over the fair value of the assets and
liabilities of Sooner has been reflected as goodwill. For purposes of the pro
forma combined financial statements, the goodwill recorded in connection with
this transaction is being amortized over 15 years using the straight-line method
based on management's evaluation of the nature and duration of customer
relationships and considering competitive and technological developments in the
industry. Note, however, that accounting for goodwill changed concurrent with
the adoption of new accounting pronouncements (See Note 3 to Consolidated and
Combined Financial Statements in the Company's Form 10-K for the year ended
December 31, 2001). The unaudited pro forma statements of operations for the six
months ended June 30, 2001, include the historical financial statements of
Sooner, adjusted for the effects of purchase accounting, as presented below.

NOTE 1. COMBINING ADJUSTMENTS

Minority interest in (income) loss and related tax effect of the
Controlled Group are presented below (in thousands):

NOTE 2. ACQUISITION OF SOONER

To reflect the acquisition of all outstanding common shares of Sooner
in exchange for 7,597,152 shares of Oil States common stock valued at the
estimated offering price per share of $9.00 (in millions):

Purchase price............................................................................ $ 69.5 (1)
Less: fair value of net assets acquired................................................... 29.7
-------
Goodwill.................................................................................. $ 39.8
=======

Amortization for the period from January 1, 2001 to February 14, 2001..................... $ .33
=======

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(1) The purchase price for Sooner includes the estimated fair value of
Sooner stock options ($1.1 million) converted into Oil States stock
options.

Certain reclassifications have been made to conform the presentation of
Sooner's financial statements to the Controlled Group.

15

NOTE 3. ACQUISITION OF MINORITY INTERESTS

To reflect the acquisition of the minority interests of each company in
the Controlled Group in exchange for shares of Oil States common stock and
elimination of the historical amounts reflected for the combined group (in
millions, except share and per share information):

NOTE 4. OFFERING

(A) To adjust interest expense for debt repaid with Offering proceeds
and as a result of the exchange of shares for subordinated debt.

(B) To eliminate preferred stock dividends due to the redemption of the
preferred stock.

(C) To adjust income tax expense for the reduction of deferred taxes
due to the formation of the combined group.

16

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

You should read the following discussion and analysis together with our
Financial Statements and the notes to those statements included elsewhere in
this Quarterly Report on Form 10-Q. This discussion contains forward-looking
statements based on our current expectations, assumptions, estimates and
projections about us and our industry. These forward-looking statements involve
risks and uncertainties. Our actual results could differ materially from those
indicated in these forward-looking statements as a result of certain factors, as
more fully described under "Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities Litigation Reform Act of 1995" in
"Item 1, Business" and elsewhere in our Annual Report on Form 10-K. Except to
the extent required by law, we undertake no obligation to update publicly any
forward-looking statements, even if new information becomes available or other
events occur in the future.

Critical Accounting Policies

In our selection of critical accounting policies, our objective is to
properly reflect our financial position and results of operations in each
reporting period in a manner that will be understood by those who utilize our
financial statements. Often we must use our judgment about uncertainties. There
are several critical accounting policies that we have put into practice that
have an important effect on our reported financial results.

We have contingent liabilities and future claims for which we have made
estimates of the amount of the eventual cost to liquidate these liabilities or
claims. These liabilities and claims sometimes involve threatened or actual
litigation where we have made an assessment of our exposure and recorded a
provision in our accounts to cover an expected loss. Other claims or liabilities
have been estimated based on our experience in these matters and, when
appropriate, the advice of outside counsel or other outside experts. Upon the
ultimate resolution of these uncertainties, our future reported financial
results will be impacted by the difference between our estimates and the actual
amounts paid to settle a liability. Examples of areas where we have made
important estimates of future liabilities include litigation, taxes,
postretirement benefits, warranty claims and contract claims.

The determination of impairment on long-lived assets, including goodwill, is
conducted as indicators of impairment are present. If such indicators were
present, the determination of the amount of impairment would be based on our
judgments as to the future operating cash flows to be generated from these
assets throughout their estimated useful lives. Our industry is highly cyclical
and our estimates of the period over which future cash flows will be generated,
as well as the predictability of these cash flows, can have a significant impact
on the carrying value of these assets. In periods of prolonged down cycles,
these estimates may result in impairment charges.

We recognize revenue and profit as work progresses on long-term, fixed price
contracts using the percentage-of-completion method, which relies on estimates
of total expected contract revenue and costs. We follow this method since
reasonably dependable estimates of the revenue and costs applicable to various
stages of a contract can be made. Recognized revenues and profit are subject to
revisions as the contract progresses to completion. Revisions in profit
estimates are charged to income or expense in the period in which the facts that
give rise to the revision become known.

Our valuation allowances, especially related to potential bad debts in
accounts receivable and to obsolescence or market value declines of inventory,
involve reviews of underlying details of these assets, known trends in the
marketplace and the application of historical factors that provide us with a
basis for recording these allowances. If market conditions are less favorable
than those projected by management, or if our historical experience is
materially different from future experience, additional allowances may be
required. We record a valuation allowance to reduce our deferred tax assets to
the amount that is more likely than not to be realized. While we have considered
future taxable income and ongoing prudent and feasible tax planning strategies
in assessing the need for the valuation allowance, in the event we were to
determine that we would be able to realize our deferred tax assets in the future
in excess of our net recorded amount, an adjustment to the deferred tax asset
would increase income in the period such determination was made. Likewise, if we
determine that we would not be able to realize all or part of our net deferred
tax asset in the future, an adjustment to the deferred tax asset would be
charged to expense in the period such determination was made.

17

The selection of the useful lives of many of our assets requires the
judgments of our operating personnel as to the length of these useful lives. If
our estimates are too long or short, we might eventually report a
disproportionate number of losses or gains upon disposition or retirement of our
long-lived assets. We believe our estimates of useful lives are appropriate.

Overview

We provide a broad range of products and services to the oil and gas
industry through our offshore products, well site services and tubular services
business segments. Demand for our products and services is cyclical and
substantially dependent upon activity levels in the oil and gas industry,
particularly our customers' willingness to spend capital on the exploration and
development of oil and gas reserves. Demand for our products and services by our
customers is highly sensitive to current and expected oil and natural gas
prices. Our offshore products segment provides highly engineered and technically
designed products for offshore oil and gas development and production systems
and facilities. Sales of our offshore products and services depend upon the
development of offshore production systems, repairs and upgrades of existing
drilling rigs and construction of new drilling rigs. In this segment, we are
particularly influenced by deepwater drilling and production activities. In our
well site services business segment, we provide hydraulic well control services,
drilling rigs, pressure control equipment and rental tools and workforce
accommodations, catering and logistics services. Demand for our well site
services depends upon the level of worldwide drilling and workover activity.
Through our tubular services division, we distribute premium tubing and casing.
Sales of tubular products and services depend upon the overall level of drilling
activity and the types of wells being drilled. Demand for tubular products is
positively impacted by increased drilling of deeper horizontal and offshore
wells that generally require premium tubulars and connectors, large diameter
pipe and longer and additional tubular and casing strings.

Energy and oilfield service activities are highly cyclical depending upon
crude oil and natural gas pricing, among other things. Beginning in late 1996
and continuing through the early part of 1998, stabilization of oil and gas
prices led to increases in drilling activity as well as the refurbishment and
new construction of drilling rigs. In the second half of 1998, crude oil prices
declined substantially and reached levels below $11 per barrel in early 1999.
With this decline in pricing, many of our customers substantially reduced their
capital spending and related activities. This industry downturn continued
through most of 1999. The price of crude oil and natural gas increased over 1999
levels in 2000 and 2001 due to improved demand for oil, supply reductions by
OPEC member countries and reductions in natural gas storage levels. However,
crude oil and natural gas prices decreased significantly from levels reached in
early 2001 by the end of 2001 and during the first half of 2002. The economic
slowdown in the United States and the rest of the world, moderate weather and
the resultant increased inventories of oil and gas, especially in the United
States, contributed to those price declines. With those price reductions, our
customers have responded with decreased drilling activity and spending on
exploration and development.

We have a diversified product and service offering which has exposure
throughout the oil and gas cycle. Demand for our tubular services and well site
services is highly correlated to movements in the rig count in the United
States. The table below sets forth a summary of North American rig activity, as
measured by Baker Hughes Incorporated, as of and for the periods indicated.

The rig count in the United States and Canada, as measured by Baker Hughes
Incorporated, fell from 1,481 rigs in February 1998 to 559 rigs in April 1999.
The downturn in activity in 1998 and 1999 had a material adverse effect on
demand for our products and services, and the results of our operations
decreased significantly. Our business benefited from the improvement in crude
oil and natural gas pricing in 2000 and 2001 and the resulting increases in the
rig count in 2000 and the first half of 2001. The U.S. rig count reached 1,293
in July 2001 but declined

18

thereafter, reaching 738 rigs on April 15, 2002, its lowest level since 1999.
The U.S. rig count has risen since then and totaled 843 as of June 30, 2002.

We believe that our offshore products segment lagged the general market
recovery in 2000 and 2001 because its sales primarily relate to offshore
construction and production facility development which generally occur later in
the exploration and development cycle. Worldwide offshore construction and
development activity is improving currently as the industry increasingly pursues
deeper water drilling and development projects. Backlog in our offshore products
segment increased from $53.9 million at June 30, 2001 to $98.3 million at June
30, 2002. We expect approximately 74% of our backlog as of June 30, 2002 to be
completed by December 31, 2002.

Management believes that fundamental oil and gas supply and demand factors
will lead to increased drilling activity in North America over time. However,
there can be no assurance that these expectations will be realized. Although the
diversified nature of our businesses is expected to moderate the impact of North
American drilling activity declines, we are expecting a 12-17% revenue decline
in 2002 compared to pro forma 2001 levels based upon our forecast of energy
prices and drilling activity levels.

The Combination

Prior to the Offering in February 2001, SCF-III, L.P. owned majority
interests in Oil States, HWC and PTI, and SCF-IV, L.P. owned a majority interest
in Sooner. L. E. Simmons & Associates, Incorporated is the ultimate general
partner of SCF-III, L.P. and SCF-IV, L.P. L.E. Simmons, the chairman of our
board of directors, is the sole shareholder of L.E. Simmons & Associates,
Incorporated. Concurrently with the closing of our initial public offering, the
Combination closed and HWC, PTI and Sooner merged with wholly owned subsidiaries
of Oil States. As a result, HWC, Sooner and PTI became our wholly owned
subsidiaries.

The financial results of Oil States, HWC and PTI have been combined for the
three years in the period ended December 31, 2000 as well as the beginning of
calendar 2001 until February 14, 2001 using reorganization accounting, which
yields results similar to the pooling of interests method. The combined results
of Oil States, HWC and PTI form the basis for the discussion of our results of
operations for those periods. The operations of Oil States, HWC and PTI
represent two of our business segments, offshore products and well site
services. Concurrent with the closing of our initial public offering on February
14, 2001, Oil States acquired Sooner, and the acquisition was accounted for
using the purchase method of accounting. The pro forma financial statements for
the six months ended June 30, 2001 reflect the acquisition of Sooner effective
as of January 1, 2001. Following the acquisition of Sooner, we reported under
three business segments.

19

RESULTS OF OPERATIONS (IN MILLIONS, EXCEPT MARGIN PERCENTAGES)

THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THREE MONTHS ENDED JUNE 30, 2001

Revenues. Revenues decreased $24.5 million, or 14.0%, to $150.8 million
during the quarter ended June 30, 2002 compared to revenues of $175.3 million
during the quarter ended June 30, 2001. Tubular Services revenues decreased
$33.0 million, or 38.2%, in the three months ended June 30, 2002 compared to the
three months ended June 30, 2001 as a result of reduced drilling activity in the
U.S. Well Site Services revenues declined $5.6 million, or 9.9%, while Offshore
Products revenues increased $14.1 million, or 43.5%, during the same period.
Well Site Services revenues declined compared to the prior year primarily due to
lower drilling and workover activity in North America. Offshore Products
revenues increased as a result of greater activity supporting offshore
production facility construction primarily in deepwater.

Cost of Sales. Cost of sales decreased by $20.0 million, or 14.1%, to $121.6
million in the three months ended June 30, 2002 compared to $141.6 million in
the three month period ended June 30, 2001. Decreased Tubular Services activity
was the principal reason for the decrease in cost of sales during the period.
Tubular Services cost of sales decreased from $80.6 million in the second
quarter of 2001 to $50.4 million in the second quarter of 2002, a decrease of
$30.2 million, or 37.5%.

Gross Margin. Our gross margins, which we calculate before a deduction for
depreciation expense, decreased $4.5 million, or 13.4%, from $33.7 million in
the three months ended June 30, 2001 to $29.2 million in the three months ended
June 30, 2002. Well Site Services gross margins decreased $6.4 million, or
32.0%, to $13.6 million in the three months ended June 30, 2002. Within our Well
Site Services segment, shallow drilling and specialty rental tool businesses'
gross margins declined $1.7 million, or 56.1%, and $.9 million, or 18.4%,
respectively, as a result of lower utilization and pricing for our drilling and
rental tool assets. Also in Well Site Services, our workforce accommodations,
catering and logistics services and modular building construction services gross
margins decreased

20

by $2.2 million, or 39.4%, in the three months ended June 30, 2002 compared to
the three months ended June 30, 2001 because a greater mix of revenues was
generated from our lower-margin catering and modular building construction
activities and because of lower U.S. Gulf of Mexico rental revenues. Offshore
Products gross margins increased $4.4 million, or 54.4%, from $8.1 million in
the three months ended June 30, 2001 to $12.5 million in the three months ended
June 30, 2002 primarily due to increased revenues, a favorable mix of our
higher-margin connector products and increased cost absorption at our
facilities. Tubular Services gross margins declined to $3.1 million, or 5.8% of
Tubular Services revenues in the three months ended June 30, 2002 compared to
$5.8 million, or 6.7% of Tubular Services revenues, in the three months ended
June 30, 2001 as a result of decreased drilling activity which decreased demand
for our Tubular products and services.

Selling, General and Administrative Expenses. During the three months ended
June 30, 2002, selling, general and administrative expenses (SG&A) totaled $12.0
million compared to SG&A of $13.1 million for the three months ended June 30,
2001. The decrease of $1.1 million, or 8.4%, was due to cost containment
measures taken in light of lower activity levels in 2002 and the absence of
certain nonrecurring charges, totaling $0.3 million, in our workforce
accommodations business that were recorded during the three months ended June
30, 2001.

Depreciation and Amortization. Depreciation expense increased $0.6 million
in the second quarter 2002 compared to the second quarter 2001 due primarily to
capital expenditures made in our Well Site Services segment during 2001.
Amortization expense decreased from $2.0 million in the second quarter 2001 to
$.1 million in the second quarter 2002 due to the adoption of a new accounting
standard that discontinued goodwill amortization. See Note 2 to our Consolidated
and Combined Financial Statements included in this Form 10-Q.

Operating Income. Our operating income represents revenues less (i) cost of
sales, (ii) selling, general and administrative expenses and (iii) depreciation
and amortization expense plus other operating income (expense). Our operating
income decreased $2.1 million, or 15.6%, to $11.4 million for the three months
ended June 30, 2002 from $13.5 million in the three month period ended June 30,
2001. Well Site Services operating income decreased from $10.1 million during
the three months ended June 30, 2001 to $4.5 million for the three months ended
June 30, 2002. Offshore Products operating income increased from $2.4 million
during the three months ended June 30, 2001 to $7.1 million for the three months
ended June 30, 2002. Tubular Services operating income was $1.1 million for the
three months ended June 30, 2002 compared to operating income of $3.3 million
during 2001. The accounting change affecting goodwill amortization for our
company impacted "Corporate/Other" operating income and contributed to the
operating loss being reduced from $2.3 million in 2001 to an operating loss of
$1.3 million in the three months ended June 30, 2002.

Interest Expense. Interest expense decreased $1.5 million, or 60.0%, to $1.0
million for the quarter ended June 30, 2002 compared to $2.5 million for the
quarter ended June 30, 2001. Decreased interest expense is attributable to lower
debt levels and interest rates.

Income Tax Expense. Income tax expense totaled $2.3 million, or 22.0% of
pretax income, during the quarter ended June 30, 2002 compared with $0.3
million, or 3.1% of pretax income, during the quarter ended June 30, 2001.
Decreased amounts of net operating loss carryforwards available to offset
currently taxable income has resulted in a higher estimated annual effective tax
rate for the year 2002 compared to 2001.

SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO PRO FORMA SIX MONTHS ENDED
JUNE 30, 2001

Revenues. Revenues decreased $65.4 million, or 17.8%, to $301.4 million
during the six months ended June 30, 2002 compared to revenues of $366.8 million
during the six months ended June 30, 2001. Tubular Services revenues decreased
$74.6 million, or 41.6%, in the six months ended June 30, 2002 compared to pro
forma revenues in the six months ended June 30, 2001 as a result of reduced
drilling activity in the U.S. Well Site Services revenues declined $8.1 million,
or 6.4%, and Offshore Products revenues increased $17.3 million, or 27.9%,
during the same period. Well Site Services revenues declined compared to the
prior year primarily due to lower drilling and workover activity in North
America. Offshore Products revenues increased as a result of greater activity
supporting offshore production facility construction primarily in deepwater.

21

Cost of Sales. Cost of sales decreased by $53.1 million, or 18.0%, to $241.8
million in the six months ended June 30, 2002 compared to pro forma cost of
sales of $294.9 million in the six month period ended June 30, 2001. Decreased
Tubular Services activity was the principal reason for the decrease in cost of
sales during the period. Tubular Services cost of sales decreased from $167.0
million in the first half of 2001 to $99.4 million in the first half of 2002, a
decrease of $67.6 million, or 40.5%.

Gross Margin. Our gross margins, which we calculate before a deduction for
depreciation expense, decreased $12.3 million, or 17.1%, from $71.9 million in
the six months ended June 30, 2001 to $59.6 million in the six months ended June
30, 2002. Well Site Services gross margins decreased $12.0 million, or 26.3%, to
$33.6 million in the six months ended June 30, 2002 compared to $45.6 million in
the six months ended June 30, 2001. Within our Well Site Services segment,
shallow drilling and specialty rental tool businesses' gross margins declined
$2.8 million, or 53.7%, and $1.7 million, or 18.8%, respectively, as a result of
lower utilization and pricing for our drilling and rental tool assets. Also in
Well Site Services, our workforce accommodations, catering and logistics
services and modular building construction services gross margins decreased by
$5.8 million, or 23.3%, because a greater mix of revenues was generated from our
lower-margin catering and modular building construction activities and because
of lower U.S. Gulf of Mexico rental revenues. Offshore Products gross margins
increased $6.3 million, or 43.8%, from $14.4 million in the six months ended
June 30, 2001 to $20.7 million in the six months ended June 30, 2002 primarily
due to increased revenues, a favorable mix of our higher-margin connector
products and increased cost absorption at our facilities. Tubular Services gross
margins declined to $5.3 million, or 5.1% of Tubular Services revenues in the
six months ended June 30, 2002 compared to $12.3 million, or 6.9% of Tubular
Services pro forma revenues, in the six months ended June 30, 2001 as a result
of decreased drilling activity which decreased demand for our Tubular products
and services.

Selling, General and Administrative Expenses. During the six months ended
June 30, 2002, selling, general and administrative expenses (SG&A) totaled $24.2
million compared to pro forma SG&A of $26.6 million for the six months ended
June 30, 2001. The decrease of $2.4 million, or 9.0%, was due to cost
containment measures taken in light of lower activity levels in 2002, partially
offset by the related severance costs associated with certain lay-offs made in
the first quarter.

Depreciation and Amortization. Depreciation expense increased $0.8 million
in the first half 2002 compared to the first half 2001 due primarily to capital
expenditures made in our Well Site Services segment during 2001. Amortization
expense decreased from $3.9 million in the first half 2001 to $.1 million in the
first half 2002 due to the adoption of a new accounting standard that
discontinued goodwill amortization. See Note 2 to our Consolidated and Combined
Financial Statements included in this Form 10-Q.

Operating Income. Our operating income represents revenues less (i) cost of
sales, (ii) selling, general and administrative expenses and (iii) depreciation
and amortization expense plus other operating income (expense). Our operating
income decreased $6.8 million, or 21.7%, to $24.6 million for the six months
ended June 30, 2002 from $31.4 million in the six month period ended June 30,
2001. Well Site Services operating income decreased from $26.0 million to $15.9
million during the period. Offshore Products operating income increased from
$2.6 million during the six months ended June 30, 2001 to $10.1 million for the
six months ended June 30, 2002. Tubular Services operating income was $1.1
million for the six months ended June 30, 2002 compared to $7.2 million during
2001, a decrease of $6.1 million, or 84.7%. The accounting change affecting
goodwill amortization for our company impacted "Corporate/Other" operating
income and contributed to the operating loss being reduced from $4.4 million in
2001 to an operating loss of $2.5 million in the six months ended June 30, 2002.

Interest Expense. Interest expense decreased $3.4 million, or 62.9%, to $2.0
million for the six months ended June 30, 2002 compared to $5.4 million for the
six months ended June 30, 2001. Decreased interest expense is attributable to
lower debt levels and interest rates.

Income Tax Expense. Income tax expense totaled $5.1 million, or 22.0% of
pretax income, in the six months ended June 30, 2002 compared with $0.6 million,
or 2.2% of pretax income, in the six months ended June 30, 2001. Decreased
amounts of net operating loss carryforwards available to offset currently
taxable income has resulted in a higher estimated annual effective tax rate for
the year 2002 compared to 2001.

22

CONSOLIDATED AND COMBINED RESULTS OF OPERATIONS

Prior to the Sooner acquisition in February 2001, we reported under two
business segments, Offshore Products and Well Sites Services. Information for
these two segments, which represent the combined results of Oil States, HWC and
PTI using reorganization accounting, is presented in our financial statements
included elsewhere in this Form 10-Q and in the discussion included in "Six
Months ended June 30, 2002 Compared to Pro Forma Six Months ended June 30, 2001"
above. Subsequent to the Combination, we reported under the three business
segments discussed above.

We believe that the pro forma results of operations discussed above reflect
the components of our current business operations and capital structure and
provide the most appropriate basis for comparison of our results of operations
for the indicated periods.

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity needs are to fund capital expenditures, such as
expanding and upgrading our manufacturing facilities and equipment, increasing
our rental tool and workover assets, increasing our accommodation units, funding
new product development and to fund general working capital needs. In addition,
capital is needed to fund strategic business acquisitions. Our primary sources
of funds have been cash flow from operations, proceeds from borrowings under our
bank facilities and private and public debt and equity offerings.

Cash was provided by operations during the six months ended June 30, 2002
and 2001 in the amounts of $56.5 million and $8.1 million, respectively. Cash
provided by operations in 2002 was generated by our net income and lower working
capital invested, primarily in our Tubular Services segment. During the six
months ended June 30, 2001, there were significant investments in working
capital made as a result of tubular inventory increases and increased activity
in our Well Site Services segment.

Cash was used by investing activities in the amount of $10.5 million during
the six months ended June 30, 2002 primarily as a result of capital expenditures
which totaled $9.9 million and one rental tool acquisition made in our Well Site
Services segment totaling $1.4 million, partially offset by cash proceeds from
asset sales.

Capital expenditures totaled $9.9 million and $12.5 million during the six
months ended June 30, 2002 and 2001, respectively. Capital expenditures during
both of these periods consisted principally of purchases of assets for our well
site services businesses. We currently expect to spend a total of approximately
$25.3 million during 2002, excluding acquisitions, to upgrade our equipment and
facilities and expand our product and service offerings. We expect to fund these
capital expenditures with internally generated funds.

Net cash of $47.3 million was used in financing activities during the six
months ended June 30, 2002, primarily as a result of elective debt repayments
under our bank credit facility.

As of June 30, 2002, we had $23.1 million outstanding under our bank credit
facility and an additional $7.3 million of outstanding letters of credit,
leaving $119.6 million available to be drawn under the facility. In addition, we
have another floating rate bank credit facility in the UK that had a balance of
$2.8 million at June 30, 2002. Our total debt represented 7.8% of our total
capitalization at June 30, 2002.

Subsequent to June 30, 2002, we closed various acquisitions requiring cash
in the amount of $26.0 million. One acquisition was made in our Offshore
Products segment and two were in our Well Site Services segment. Considering
these acquisitions, our total debt to total capitalization has increased to
approximately 13.5% subsequent to June 30, 2002. In addition, we have executed a
letter of intent of acquire certain assets of a competitor in our Offshore
Products segment. The transaction is estimated to cost approximately $18.5
million cash and is expected to close during the third quarter. If successfully
completed, our total debt to total capitalization would increase to
approximately 17.0%.

We believe that cash from operations and available borrowings under our
credit facility will be sufficient to meet our liquidity needs for the
foreseeable future. If our plans or assumptions change or are inaccurate, or we
make additional acquisitions, we may need to raise additional capital. However,
there is no assurance that we will be able to raise additional funds or be able
to raise such funds on favorable terms.

23

TAX MATTERS

For the year ended December 31, 2001, we had deferred tax assets, net of
deferred tax liabilities, of approximately $19.7 million for federal income tax
purposes before application of valuation allowances. Our primary deferred tax
assets are net operating loss carry forwards, or NOLs, which total approximately
$93.7 million. A valuation allowance is currently provided against the majority
of our NOLs. The NOLs expire over a period through 2020. Our NOLs are currently
limited under Section 382 of the Internal Revenue Code due to a change of
control that occurred during 1995. However in 2002, approximately $40 million of
NOLs are available for use currently if sufficient income is generated.

Our 2001 effective tax rate approximated 4%. This low effective tax rate was
due to the partial utilization of net operating losses which benefited the
consolidated group after the merger. We currently estimate our 2002 effective
tax rate will be approximately 22%.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards (SFAS) No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets (the Statements), effective for fiscal
years beginning after December 15, 2001. Under the new rules, goodwill and
intangible assets deemed to have indefinite lives will no longer be amortized
but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives.

The Company has applied the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statements is expected to result in an
increase in net income of approximately $8.0 million ($.16 per diluted share)
per year. During the first quarter of 2002, the Company performed the first of
the required impairment tests of goodwill and indefinite lived intangible assets
as of January 1, 2002. The Company has completed its evaluation of goodwill and
indefinite lived intangible assets and there was no impairment of assets
recorded.

In June of 2001, the Financial Accounting Standards Board issued SFAS No.
143, "Accounting for Asset Retirement Obligations." This Statement is effective
for fiscal years beginning after June 15, 2002 and the Company expects to adopt
the Statement effective January 1, 2003. It is expected that this Statement will
have an immaterial effect on the Company's consolidated financial statements.

In August of 2001 the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The
Company was required to adopt this Statement effective January 1, 2002 and it
did not have an impact on the consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. We have long-term debt and revolving lines of credit
subject to the risk of loss associated with movements in interest rates.

As of June 30, 2002, we had floating rate obligations totaling approximately
$25.9 million for amounts borrowed under our revolving lines of credit. These
floating-rate obligations expose us to the risk of increased interest expense in
the event of increases in short-term interest rates. If the floating interest
rate were to increase by 1% from June 30, 2002 levels, our combined interest
expense would increase by a total of approximately $0.3 million annually based
upon borrowing levels at June 30, 2002.

Foreign Currency Exchange Rate Risk. Our operations are conducted in various
countries around the world in a number of different currencies. As such, our
earnings are subject to change due to movements in foreign currency exchange
rates when transactions are denominated in currencies other than the U.S.
dollar, which is our functional currency. In order to mitigate the effects of
exchange rate risks, we generally pay a portion of our expenses in local
currencies and a substantial portion of our contracts provide for collections
from customers in U.S. dollars. As of June 30, 2002, we had Canadian
dollar-denominated debt totaling approximately $1.3 million. We had no interest
rate hedges or forward foreign exchange contracts at June 30, 2002.

24

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are a party to various pending or threatened claims, lawsuits and
administrative proceedings seeking damages or other remedies concerning our
commercial operations, products, employees and other matters, including claims
relating to matters occurring prior to our acquisition of businesses and also
relating to businesses we have sold. In certain cases, we are entitled to
indemnification from the sellers of businesses and in other cases, we have
indemnified the buyers of businesses from us. Although we can give no assurance
about the outcome of these or any other pending legal and administrative
proceedings and the effect such outcomes may have on us, we believe that any
ultimate liability resulting from the outcome of such proceedings, to the extent
not otherwise provided for or covered by insurance, will not have a material
adverse effect on our consolidated financial position, results of operations or
liquidity.

The Company is aware that certain energy service companies that have in the
past used asbestos in connection with the manufacture of equipment or otherwise
in the operation of their business have become the subject of increased asbestos
related litigation. Certain subsidiaries of the Company are currently named as
defendants in two single plaintiff cases seeking damages, including punitive
damages, alleging that our subsidiaries have responsibility for the individuals
developing mesothelioma, asbestosis, lung cancer or other lung diseases as a
result of exposure to asbestos. Although these are the only cases that
management is aware that are pending or threatened against the Company or its
subsidiaries involving allegations relating to asbestos exposure, additional
asbestos related claims may be made. Based on management's preliminary
investigation, management does not believe that these cases or future claims
relating to asbestos exposure will have a material adverse effect on the
Company's consolidated financial position, results of operations, or liquidity.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's Annual Meeting of Stockholders was held on May 15, 2002 (1) to
elect two Class I members of the Board of Directors to serve for three-year
terms, (2) to ratify the appointment of Ernst & Young LLP as independent
accountants for the year ended December 31, 2002 and (3) to approve the 2001
Equity Participation Plan, as amended and restated effective February 19, 2002.

The two Class I directors who were so elected were L. E. Simmons and Douglas
E. Swanson. The number of affirmative votes and the number of votes withheld for
the directors so elected were:

The number of affirmative votes, the number of negative votes and the number
of abstentions with respect to the ratification of the appointment of Ernst &
Young LLP were as follows:

25

The number of affirmative votes, the number of negative votes and the number
of abstentions with respect to the reapproval of the 2001 Equity Participation
Plan, as amended and restated effective February 19, 2002 were as follows:

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

INDEX OF EXHIBITS

EXHIBIT NO. DESCRIPTION

3.1 -- Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2000, as filed with the Commission on
March 30, 2001).

3.2 -- Amended and Restated Bylaws (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2000, as
filed with the Commission on March 30, 2001).

3.3 -- Certificate of Designations of Special Preferred
Voting Stock of Oil States International, Inc.
(incorporated by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2000, as filed with the Commission on
March 30, 2001).

4.1 -- Form of common stock certificate (incorporated by
reference to Exhibit 4.1 of Oil States' Registration
Statement No. 333-43400 on Form S-1).

4.2 -- Amended and Restated Registration Rights Agreement
(incorporated by reference to Exhibit 4.2 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2000, as filed with the Commission on
March 30, 2001).

10.1 -- Combination Agreement dated as of July 31, 2000 by
and among Oil States International, Inc., HWC Energy
Services, Inc., Merger Sub-HWC, Inc., Sooner Inc.,
Merger Sub-Sooner, Inc. and PTI Group Inc.
(incorporated by reference to Exhibit 10.1 of Oil
States' Registration Statement No. 333-43400 on Form
S-1).

10.2 -- Plan of Arrangement of PTI Group Inc. (incorporated
by reference to Exhibit 10.2 to the Company's Annual
Report on Form 10-K for the year ended December 31,
2000, as filed with the Commission on March 30, 2001).

10.3 -- Support Agreement between Oil States International,
Inc. and PTI Holdco (incorporated by reference to
Exhibit 10.3 to the Company's Annual Report on Form
10-K for the year ended December 31, 2000, as filed
with the Commission on March 30, 2001).

10.4 -- Voting and Exchange Trust Agreement by and among Oil
States International, Inc., PTI Holdco and Montreal
Trust Company of Canada (incorporated by reference to
Exhibit 10.4 to the Company's Annual Report on Form
10-K for the year ended December 31, 2000, as filed
with the Commission on March 30, 2001).

26

10.5** -- 2001 Equity Participation Plan (incorporated by
reference to Exhibit 10.5 to the Company's Annual
Report on Form 10-K for the year ended December 31,
2000, as filed with the Commission on March 30, 2001).

10.6** -- Form of Deferred Compensation Plan (incorporated by
reference to Exhibit 10.6 of Oil States' Registration
Statement No. 333-43400 on Form S-1).

10.7** -- Annual Incentive Compensation Plan (incorporated by
reference to Exhibit 10.7 to the Company's Annual
Report on Form 10-K for the year ended December 31,
2000, as filed with the Commission on March 30, 2001).

10.8** -- Executive Agreement between Oil States
International, Inc. and Douglas E. Swanson
(incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2000, as filed with the Commission on
March 30, 2001).

10.9** -- Executive Agreement between Oil States
International, Inc. and Cindy B. Taylor (incorporated
by reference to Exhibit 10.9 to the Company's Annual
Report on Form 10-K for the year ended December 31,
2000, as filed with the Commission on March 30, 2001).

10.10** -- Form of Executive Agreement between Oil States
International, Inc. and other Named Executive Officers
(Messrs. Hughes and Chaddick) (incorporated by
reference to Exhibit 10.10 of Oil States' Registration
Statement No. 333-43400 on Form S-1).

10.11** -- Form of Change of Control Severance Plan for
Selected Members of Management (incorporated by
reference to Exhibit 10.11 of Oil States' Registration
Statement No. 333-43400 on Form S-1).

10.12 -- Credit Agreement among Oil States International,
Inc., PTI Group Inc., the Lenders named therein, Credit
Suisse First Boston, Credit Suisse First Boston Canada,
Hibernia National Bank and Royal Bank of Canada
(incorporated by reference to Exhibit 10.12 of Oil
States' Registration Statement No. 333-43400 on Form
S-1).

10.13A** -- Restricted Stock Agreement, dated February 8, 2001,
between Oil States International, Inc. and Douglas E.
Swanson.

10.13B** -- Restricted Stock Agreement, dated February 22, 2001,
between Oil States International, Inc. and Douglas E.
Swanson.

10.14** -- Form of Indemnification Agreement (incorporated by
reference to Exhibit 10.14 of Oil States' Registration
Statement No. 333-43400 on Form S-1).

10.15** -- Form of Executive Agreement between Oil States
International, Inc. And named Executive Officer (Mr.
Slator) (Incorporated by Reference to Exhibit 10.16 to
the Company's Annual Report On Form 10K for the year
ended December 31, 2001, as filed With the Commission
on March 4, 2002.

10.16** -- Form of Executive Agreement between Oil States
International, Inc. and named executive officer (Mr.
Trahan). (Incorporated by reference to Exhibit 10.16 to
the Company's quarterly report on Form 10-Q for the
three months ended March 31, 2002, as filed with the
Commission on May 15, 2002).

16.1 -- Letter Regarding Change in Certifying Accountant
(incorporated by reference to Exhibit 16.1 of Oil
States' Registration Statement No. 333-43400 on Form
S-1).

21.1 -- List of subsidiaries of the Company (incorporated by
reference to Exhibit 21.1 of Oil States' Registration
Statement No. 333-43400 on Form S-1).

27

- ----------
* Filed herewith
** Management contracts or compensatory plans or arrangements.

(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the period
covered by this report.

28

SIGNATURES

Pursuant to the requirements of the Securities Exchanges Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

OIL STATES INTERNATIONAL, INC.

Date: August 13, 2002 By /s/ CINDY B. TAYLOR
------------------- -------------------------------------------
Cindy B. Taylor
Senior Vice President, Chief Financial
Officer and Treasurer (Principal
Financial Officer)

Date: August 13, 2002 By /s/ ROBERT W. HAMPTON
------------------- -------------------------------------------
Robert W. Hampton
Vice President -- Finance and Accounting
and Secretary (Principal Accounting Officer)

29