Allis-Chalmers Announces Restatement of Fiscal 2010 Annual Financial Statements

Allis-Chalmers Energy Inc., a wholly owned subsidiary of Archer Limited (Oslo: Archer), today reported that Allis-Chalmers will restate its financial results for the year ended December 31, 2010 and its Form 10-K for such period to reflect the establishment of a valuation allowance on deferred income tax assets and foreign tax credits. The expected impact will be to increase the net loss from continuing operations by $37.4 million, and to increase the valuation allowance accordingly. Allis-Chalmers plans to file the restated financial statements as promptly as practicable.

The restatement is necessitated by the Company’s determination that positive evidence available at year end 2010 was not sufficient to overcome the negative evidence around the deferred tax assets and to justify not booking a valuation allowance against federal income tax assets and foreign tax credits.

“The accounting treatment for deferred income tax assets is complex and requires a great deal of judgment,” noted Jorgen-Peter Rasmussen, Allis-Chalmers’ Chief Executive Officer. “While it is unfortunate to have to amend previously announced financial results for Allis-Chalmers, it is important to note that this correction involves creating a non-cash income tax valuation allowance in a period prior to the merger of Allis-Chalmers and Archer (formerly known as Seawell). Although this entry will trigger an adjustment to Archer’s purchase accounting for the acquisition of Allis-Chalmers, we believe that the combined entities will be able to recover part if not all of the accumulated prior year losses.”

Additional information regarding the restatement will be included in a Form 8-K being filed today by the Company with the U.S. Securities and Exchange Commission.

Forward-Looking Statements

This press release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding Allis-Chalmers' and Archer’s business, financial condition, results of operations and prospects. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this press release.

Although forward-looking statements in this press release reflect the good faith judgment of the respective management teams, such statements can only be based on facts and factors that the respective management teams currently know. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements.

We urge readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Allis-Chalmers and Archer undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this press release.