e425
Filed by Basic Energy Services, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Grey Wolf, Inc.
Commission File No. 1-08226
Subject Company: Horsepower Holdings, Inc.
Commission File No.
April 21, 2008
Fellow Basic Employees:
Last evening, the Boards of Directors of Basic Energy Services and
Houston-based Grey Wolf, Inc. announced that they have approved a
definitive agreement to merge the two companies. This begins a process
that requires regulatory approval, as well as approval by the stockholders
of each company. At this time, we expect the merger to be finalized
sometime during the third quarter of this year. The new company will be
called Grey Wolf, Inc. and will be headquartered in Houston. Tom Richards,
Grey Wolfs current Chairman, President and Chief Executive Officer will
serve as non-executive Chairman of the Board of the new Grey Wolf, Inc. I
will be its Chief Executive Officer.
Attached is a copy of the joint press release issued this morning. I
encourage you to read this release to learn more about this planned merger.
As indicated in the release, Tom and I both believe that the combination
of Grey Wolf and Basic will create a very strong company able to thrive in
its traditional domestic markets and grow its international business.
While the press release provides valuable information, it does not address
many of the questions you, the employees of Basic, are likely to have. I
wanted to take this opportunity to at least start the process of answering
your questions.
What change will this merger bring for Basics employees? For those of you
in our field operations, little will change. We plan to continue operating
each of our service lines separately, as Basic currently does with its
multiple service lines. We do expect to take advantage of each companys
existing relationships to create additional opportunities for the new Grey
Wolf, Inc.
For Basics corporate staff, the change will unfortunately be more
significant. Over the next several weeks our major task will be to design
the structure of and select the staff for Grey Wolf, Inc.s corporate
office in Houston. This inevitably means that some employees in Basics
current corporate office will either not be offered an ongoing position or
will choose not to accept an offered position. Subject to eligibility
requirements, these employees will qualify for severance benefits to help
them transition to new employment. We will also offer a significant
retention payment to employees who stay with the new company until their
job functions have been successfully transferred to other employees.
To help answer your questions, we have created the attached Employee
Questions and Answers document. It should address many of your questions.
If you have other questions, please send them to Jim Tyner, Basics Vice
President of Human Resources. As the merger process moves forward, I am
committed to keeping you informed of
decisions that affect you as those decisions are made. As appropriate,
updates to Employee Questions and Answers will be issued to accomplish
that end.
The dedicated service of its 4,600 employees has made Basic a leader in the
well services business. For that service I am genuinely grateful. As the
merger process proceeds, I ask you to stay focused on delivering the same
customer value you have always delivered, and to bring your questions
forward.
Sincerely,
/s/ KEN HUSEMAN
Ken
Huseman
President and CEO
Basic Energy Services
Forward Looking Statements and Additional Information
The Company may make statements herein that are forward-looking
statements as defined by the Securities and Exchange Commission (the
SEC). All statements, other than statements of historical fact, included
herein that address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future are
forward-looking statements. These forward-looking statements are subject
to risks and uncertainties that may cause actual results to differ
materially, including required approvals by stockholders and regulatory
agencies, the possibility that the anticipated benefits from the proposed
mergers cannot be fully realized, the possibility that costs or
difficulties related to integration of the two companies will be greater
than expected, the impact of competition and other risk factors included in
the reports filed with the SEC by Grey Wolf, Inc. (Grey Wolf) and Basic
Energy Services, Inc. (Basic Energy Services). Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak
only as of their dates. Except as required by law, the Company does not
intend to update or revise its forward-looking statements, whether as a
result of new information, future events or otherwise.
Additional Information and Where to Find It
In connection with the proposed mergers, a registration statement of
Horsepower Holdings, Inc. (Holdings), which will include proxy statements
of Basic Energy Services and Grey Wolf and other materials, will be filed
with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS
ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS REGARDING THE PROPOSED
TRANSACTION WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT BASIC ENERGY SERVICES, GREY WOLF, HOLDINGS AND THE
PROPOSED TRANSACTION. Investors and security holders may obtain a free copy
of the registration statement and the proxy statement/prospectus when they
are available and other documents containing information about Basic Energy
Services and Grey Wolf, without charge, at the SECs web site at
www.sec.gov, Basic Energy Services web site at
www.basicenergyservices.com, and Grey Wolfs web site at
www.gwdrilling.com. Copies of the registration statement and the proxy
statement/prospectus and the SEC filings that will be incorporated by
reference therein may also be obtained for free by directing a request to
either Investor Relations, Basic Energy Services, Inc., 432-620-5510 or to
Investor Relations, Grey Wolf, Inc., 713-435-6100.
Participants in the Solicitation
Basic Energy Services and Grey Wolf and their respective directors,
officers and certain other members of management may be deemed to be
participants in the solicitation of proxies from their respective
stockholders in respect of the mergers. Information about these persons can
be found Grey Wolfs proxy statement relating to its 2008 annual meetings
of stockholders as filed with the SEC on April 8, 2008. Information
concerning beneficial ownership of Basic Energy Services stock by its
directors and certain of its executive officers is included in its proxy
statement dated April 5, 2007 and subsequent statements of changes in
beneficial ownership on file with the SEC. Additional information about
the interests of such persons in the solicitation of proxies in respect of
the merger will be included in the registration statement and the joint
proxy statement/prospectus to be filed with the SEC in connection with the
proposed transaction.
BASiC Energy Services Confidentiality Notice:
The information in this email is confidential. It is intended solely for the addressee. Access to
this email by anyone else is unauthorized. If you are not the intended recipient, any disclosure,
copying, distribution or any action taken or omitted to be taken in reliance on it, is prohibited
and may be unlawful.
Employee Questions and Answers
April 21, 2008
1) |
|
Q. What is the business justification for a merger between Grey Wolf and Basic Energy
Services? |
|
A. |
|
The new Grey Wolf, Inc. will be a larger, more diversified company with the size and
scope to compete for opportunities anywhere in the world. |
2) |
|
Q. What will be the new companys name? |
|
A. |
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The new company will be called Grey Wolf, Inc. The Grey Wolf name has a long history
dating back to 1919 when William Gray and Roger Wolfe formed a drilling company in South
Louisiana. |
3) |
|
Q. In what lines of business and geographic areas does Grey Wolf work? |
|
A. |
|
Grey Wolf is a leading provider of turnkey and contract oil and gas land drilling
services in the United States. It has 103 drilling rigs operating in south Texas, the Gulf
Coast, the Ark-La-Tex, Mississippi/Alabama, Mid-Continent and Rocky Mountain areas, as well
as 2 drilling rigs in Mexico. Grey Wolf is primarily focused on drilling deep natural gas
wells. |
4) |
|
Q. How large is Grey Wolf? |
|
A. |
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In 2007 Grey Wolf generated $169.9 million in net income on revenue of $906.6 million.
It currently has approximately 2,700 employees. |
5) |
|
Q. In what lines of business and geographic areas does Basic work? |
|
A. |
|
Basic provides well servicing, fluid hauling and disposal, pressure pumping, wireline,
rental and fishing tool, well site construction, and contract drilling services. It
operates out of more than 110 service points in 11 states from the Mexican border in South
Texas to the Williston Basin on the Canadian border. |
6) |
|
Q. How large is Basic? |
|
A. |
|
In 2007 Basic had net income of $87.7 million on revenue of $877.2 million. It currently
has approximately 4,600 employees. |
7) |
|
Q. When will the merger be finalized? |
|
A. |
|
We expect final close to occur sometime during the 3rd quarter. |
8) |
|
Q. What current executive positions for Grey Wolf, Inc. have been filled? |
|
A. |
|
Ken Huseman, current President and Chief Executive Officer of Basic, will be CEO.
David Crowley, current Executive Vice President and Chief Operating Officer of Grey Wolf,
will be President and COO. Alan Krenek, currently Senior VP and Chief Financial Officer of
Basic, will be Executive VP and CFO. Bob Proffit, Grey Wolfs current Senior VP of Human
Resources, will assume the role of Senior Vice President, Administration. Spencer Armour,
Basics VP of Corporate Development, will remain in the same role for the new company. |
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Tom Richards, Chairman, President and CEO of Grey Wolf, will be non-executive Chairman of
the Board of Grey Wolf, Inc. |
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Operating level officers for both companies will remain in their roles. |
9) |
|
Q. Where will Grey Wolf, Inc.s corporate headquarters be? |
|
A. |
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The corporate headquarters will be in Houston. |
Page 1 of 4
10) |
|
Q. Will the companys corporate office continue to be at Grey Wolfs current Houston office
address? |
|
A. |
|
We have no immediate plan to move from Grey Wolfs current Houston office. However, the
consolidation and growth of the corporate office could warrant an office expansion or move
within the Houston area at some point in time. |
11) |
|
Q. Will the new company be eliminating jobs in its field operations? |
|
A. |
|
In their field operations, Grey Wolf and Basic have little overlap of business
segments. The new company will operate each if its service lines separately, as Basic
currently does with its multiple service lines. As a result, we do not expect job
eliminations in field operations. |
|
|
|
|
Grey Wolf and Basics one point of operational overlap is each companys Permian Basin
drilling group. These separate operations will be combined to ensure adequate coordination
of effort. As we get closer to the merger date, these two groups will begin planning their
consolidation. |
12) |
|
Q. Will the new company be eliminating jobs in its Houston and/or Midland offices? |
|
A. |
|
Yes. The consolidation of corporate functions into Grey Wolf, Inc.s Houston
headquarters will result in some job eliminations. The groups most likely to be affected
are those that perform an essentially corporate function. Specific decisions regarding job
eliminations have not been made at this time. Once decisions have been made, we will
discuss those decisions with the affected employees. |
13) |
|
Q. Will Basics Midland office employees be given consideration for positions in the Houston
corporate office? |
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A. |
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Yes. We expect the Houston office ultimately to have some employees from both Basics
Midland office and Grey Wolfs Houston office. |
14) |
|
Q. When does the company expect to know which jobs will be eliminated? |
|
A. |
|
One of the major tasks between now and the actual merger date will be to configure the
new companys corporate departments and make staffing decisions. We have formed an
Integration Steering Committee consisting of Alan Krenek; Bob Proffit; Kent Cauley, Grey
Wolfs Vice-President and Controller; and Jim Tyner, Basics VP of Human Resources. This
group is charged with developing a corporate structure and establishing guidelines for
making staffing decisions. Once those tasks are completed, the various department heads
will begin making staffing decisions. As decisions are made, we will keep employees
informed. We expect all staffing decisions to be finalized on or before the merger date. |
15) |
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Q. Will there be severance benefits for employees who lose their job because of the merger? |
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A. |
|
Employees who leave the company due to staffing consolidations and meet certain other
eligibility requirements will receive severance benefits. In addition, for continuing to
work until their duties have been effectively assumed by an employee who will remain with
the company, severance eligible employees will also receive a significant retention
payment. A Summary of Severance and Retention Benefits will soon be distributed to
employees in each companys corporate office and Permian Basin drilling office. Please
refer to this document for a fuller explanation of these benefits and the eligibility
requirements. |
16) |
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Q. Will Grey Wolf, Inc. continue the Permian Plaza project in Midland? |
|
A. |
|
Yes. We will continue to build out the property. We expect at some point to sell the
property to a firm that specializes in developing and managing such properties. |
17) |
|
Q. Will Basics brand name be retained for the Well Services lines of business? |
|
A. |
|
No. All operations will transition to using the Grey Wolf name. This is consistent
with our goal of the combined company being known as a major diversified energy services
company. |
Page 2 of 4
18) |
|
Q. Will our employee benefits be changing? |
|
A. |
|
Both companies have committed to maintaining their respective benefit plans at least
through the end of 2008. Ultimately, employees throughout the company will have the same
health, insurance, and 401(k) plans. We will design those plans to deliver roughly the
same value to employees as they are receiving from their current plans. |
19) |
|
Q. When will the benefits change? |
|
A. |
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That decision has not been made yet. Employees will be informed well in advance of any
benefit changes. |
20) |
|
Q. Will paid time off benefits be changing? |
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A. |
|
Grey Wolf and Basic currently have different approaches to paid time off. At some
point, we will introduce a common approach so employees in similar jobs will have the same
paid time off program regardless of their Basic or Grey Wolf background. To remain
competitive some business segments may be allowed to deviate from the standard approach,
even as they have been allowed within both Grey Wolf and Basic. Any changes to paid time
off benefits will be announced well in advance. |
21) |
|
Q. Will the new company use Basics SAP system as its accounting and management software? |
|
A. |
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Yes. We will migrate the appropriate Grey Wolf applications to SAP over time. |
22) |
|
Q. Will there be a change in pay schedules for either Basic or Grey Wolf employees? |
|
A. |
|
For the immediate future, all employees will continue to be paid on the same schedule
as they were before the merger. As we plan to move all payroll processing to SAP, we will
have to decide what pay cycles will be used. Decisions on this issue will be communicated
to all employees well in advance of any changes. |
Forward Looking Statements and Additional Information
The Company may make statements herein that are forward-looking statements as
defined by the Securities and Exchange Commission (the SEC). All statements, other than
statements of historical fact, included herein that address activities, events or developments that
the Company expects, believes or anticipates will or may occur in the future are forward-looking
statements. These forward-looking statements are subject to risks and uncertainties that may cause
actual results to differ materially, including required approvals by stockholders and regulatory
agencies, the possibility that the anticipated benefits from the proposed mergers cannot be fully
realized, the possibility that costs or difficulties related to integration of the two companies
will be greater than expected, the impact of competition and other risk factors included in the
reports filed with the SEC by Grey Wolf, Inc. (Grey Wolf) and Basic Energy Services, Inc. (Basic
Energy Services). Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. Except as required by law, the Company does not
intend to update or revise its forward-looking statements, whether as a result of new information,
future events or otherwise.
Additional Information and Where to Find It
In connection with the proposed mergers, a registration statement of Horsepower
Holdings, Inc. (Holdings), which will include proxy statements of Basic Energy Services and Grey
Wolf and other materials, will be filed with the Securities and Exchange Commission. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BASIC ENERGY SERVICES, GREY WOLF,
HOLDINGS AND THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of the
registration statement and the proxy
Page 3 of 4
statement/prospectus when they are available and other documents containing information about Basic
Energy Services and Grey Wolf, without charge, at the SECs web site at www.sec.gov, Basic Energy
Services web site at www.basicenergyservices.com, and Grey Wolfs web site at www.gwdrilling.com.
Copies of the registration statement and the proxy statement/prospectus and the SEC filings that
will be incorporated by reference therein may also be obtained for free by directing a request to
either Investor Relations, Basic Energy Services, Inc., [432-620-5510] or to Investor Relations,
Grey Wolf, Inc., [713-435-6100].
Participants in the Solicitation
Basic Energy Services and Grey Wolf and their respective directors, officers and
certain other members of management may be deemed to be participants in the solicitation of proxies
from their respective stockholders in respect of the mergers. Information about these persons can
be found Grey Wolfs proxy statement relating to its 2008 annual meetings of stockholders as filed
with the SEC on April 8, 2008. Information concerning beneficial ownership of Basic Energy
Services stock by its directors and certain of its executive officers is included in its proxy
statement dated April 5, 2007 and subsequent statements of changes in beneficial ownership on file
with the SEC. Additional information about the interests of such persons in the solicitation of
proxies in respect of the merger will be included in the registration statement and the joint proxy
statement/prospectus to be filed with the SEC in connection with the proposed transaction.
Page 4 of 4
NEWS RELEASE
Grey Wolf, Inc. and Basic Energy Services, Inc. Agree to Combine in Merger of Equals Transaction
Merger Highlights:
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¨ |
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The merger creates a more diverse energy services company with expanded growth opportunities through enhanced scale,
broader geographic reach, balanced commodity exposure and expansion of service offerings |
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The new Grey Wolf will be led by a combination of both companies seasoned management teams |
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Tom Richards from Grey Wolf will be Chairman |
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Ken Huseman from Basic Energy Services will be Chief Executive Officer |
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David Crowley from Grey Wolf will be President and Chief Operating Officer |
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Alan Krenek from Basic Energy Services will be Executive Vice President and Chief Financial Officer |
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The 9-member Board of Directors will have representation approximately proportionate to ownership with 5 directors
nominated by Grey Wolf and 4 nominated by Basic Energy Services |
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The shareholders of both companies will receive a combination of shares in the new company and cash |
HOUSTON, TEXAS, April 21, 2008 (BUSINESS WIRE) Grey Wolf, Inc. (Grey Wolf) (AMEX:GW) and Basic
Energy Services, Inc. (Basic Energy Services) (NYSE:BAS) today announced that their Boards of
Directors have approved a definitive agreement to combine the two businesses in a merger of
equals. Based upon closing prices for each companys common stock as of April 18, 2008, the
estimated enterprise value of the combined company would be approximately $2.9 billion. The
combined company will be named Grey Wolf, Inc., have its corporate offices in Houston, establish
incorporation in the state of Delaware and trade on the New York Stock Exchange under the symbol
GW.
Under the terms of the agreement, Grey Wolf shareholders will receive $1.82 in cash and 0.2500
shares of new Grey Wolf for each share of Grey Wolf they currently own. Based on this exchange
ratio, each stockholder of Grey Wolf will receive one share of new Grey Wolf for each four shares
of Grey Wolf in addition to the cash consideration. Basic Energy Services shareholders will
receive $6.70 in cash and 0.9195 shares of new Grey Wolf for each share of Basic Energy Services
they currently own. The total number of shares outstanding of the combined company, which is
reflective of the above exchange ratios applied to both companies respective current shares
outstanding, will be approximately 85 million shares. Pro forma net debt as of December 31, 2007
will be approximately $960 million. The combined company intends to dedicate a substantial amount
of its free cash flow to the repayment of the debt while at the same time fully funding and
implementing its significant, value-adding growth initiatives.
The greater financial strength of the combined company will enable it to return approximately $600
million in cash to the combined shareholder base while retaining financial flexibility to invest
for future growth. The financing will be provided by affiliates of UBS Investment Bank and Goldman,
Sachs & Co.. The cash is being issued to the two sets of shareholders proportionate to pro forma
ownership of the combined company, which will be approximately 54% owned by current Grey Wolf
shareholders and 46% owned by current Basic Energy Services shareholders.
The combination will create an organization with approximately 7,500 personnel, providing a broad
range of drilling and oilfield well services. The combined company will have 395 well servicing and
130 drilling rigs as well as a suite of other oilfield service assets, pro forma sales and EBITDA
of approximately $1,784 million and $632 million, respectively (for the full year ending 12/31/07).
Pro forma sales (for the full year ending 12/31/07) would be
1
approximately 53% from contract drilling, 19% from well servicing, 15% from fluid services and 13%
from completion and remedial services.
Current Grey Wolf Chairman, President and CEO, Thomas P. Richards, who will serve as Grey Wolf,
Inc.s Chairman following the merger, said: This is an exciting opportunity for our shareholders,
our customers and our people. Grey Wolfs premium land drilling rig fleet complements Basic Energy
Services premium land-based well servicing equipment. With approximately 50% of Basic Energy
Services business focused on oil and approximately 95% of Grey Wolfs business focused on natural
gas, this transaction results in a company with a diversified revenue stream in terms of exposure
to oil and gas opportunities, involvement through the life of the well from drilling to production
to well abandonment and a very broad geographic coverage, all of which is consistent with our
stated strategic goal. We are confident that our valued customers will respond positively to this
merger with the combined companys enhanced ability to satisfy their needs. Grey Wolf has an
outstanding management team, as well as operational and support staff, which when combined with
Basic Energy Services organization, will produce a best-in-class team.
Ken Huseman, who will serve as Chief Executive Officer of Grey Wolf, Inc. after the merger, said,
This combination achieves the goal of moving Basic Energy Services forward in achieving a size
which allows the combined company to compete effectively for expansion opportunities anywhere in
the world while continuing to build upon the existing footprint of both companies. The expanded
operational capability of a more diversified company will produce significant benefits for our
customers and provide substantial growth opportunities for our people. In addition, the cash
consideration allows us to provide each companies shareholders with a meaningful financial return
without unduly limiting the growth potential for the combined entity. This is an ideal fit for the
stakeholders in both companies.
Following the merger, in addition to the executive officers listed above, Bob Proffit, current
Senior Vice President, Human Resources of Grey Wolf, will assume the role of Senior Vice President,
Administration at the combined company and Spencer Armour, current Senior Vice President, Corporate
Development of Basic Energy Services, will remain in the same role at the combined company.
Operating level officers for both companies will continue in their current roles.
Timing
The transaction is expected to close in the third quarter of 2008. Completion of the transaction is
subject to shareholder approval at both Grey Wolf and Basic Energy Services, receipt of financing
proceeds, regulatory approvals and other customary conditions. DLJ Merchant Banking Partners III,
L.P. and its affiliated funds, holders of approximately 44% of the outstanding shares of Basic
Energy Services, have entered into a voting agreement agreeing to vote in favor of the transaction.
Advisors
UBS Investment Bank is acting as exclusive financial advisor to Grey Wolf and Goldman, Sachs & Co.
is acting as exclusive financial advisor to Basic Energy Services. Simmons & Company International
provided a fairness opinion to the Board of Grey Wolf. Tudor, Pickering, Holt & Co. provided a
fairness opinion to the Board of Basic Energy Services. Porter & Hedges, L.L.P. and Gardere Wynne &
Sewell, LLP are acting as legal counsel to Grey Wolf, and Davis Polk & Wardwell and Andrews Kurth
LLP are acting as legal counsel to Basic Energy Services.
Conference Call
The senior management of Grey Wolf and Basic Energy Services will host a conference call on Monday,
April 21, 2008 at 11:00 a.m. Eastern Daylight Time. All individuals interested in participating in
the conference call should dial (800) 761-5415 domestically or (212) 231-2900 internationally 15
minutes prior to the starting time. The reservation number is 21381162. A replay of the call will
be available for 48 hours after the call. The telephone
2
number for the replay of the call is (800) 633-8284 domestically or (402) 977-9140 internationally
and the access code is 21381162.
About Basic Energy Services
Founded in 1992, Basic Energy Services has grown to be the nations third largest well servicing
rig contractor with more than 4,600 employees in 11 states. From drilling to final abandonment,
Basic Energy Services provides a range of well site services to Americas oil and gas drilling and
producing companies that support the entire life cycle of a well. Headquartered in Midland, Texas,
Basic Energy Services operates in the major oil and gas producing markets in the US including South
Texas, the Texas Gulf Coast, the Ark-La-Tex region, North Texas, the Permian Basin of West Texas,
the Mid Continent, Louisiana Inland Waters and the Rocky Mountains. For more information about
Basic Energy Services, go to http://www.basicenergyservices.com
About Grey Wolf
Grey Wolf is the fourth largest provider of contract land drilling services in the United States.
It serves major and independent oil and gas companies with a premium fleet of 121 rigs. Located in
the nations most productive natural gas regions, it operates in South Texas, the Gulf Coast, the
Ark-La-Tex, Mississippi/Alabama, Mid Continent and Rocky Mountain areas on both a daywork and
turnkey basis. Grey Wolf also has two rigs deployed in Mexico. Approximately 95% of the wells
drilled by Grey Wolf are targeted to natural gas. For more information about Grey Wolf, go to
http://www.gwdrilling.com.
Forward Looking Statements and Additional Information
This document may include statements herein that are forward-looking statements as
defined by the Securities and Exchange Commission (the SEC). All statements, other than
statements of historical fact, included herein that address activities, events or developments that
Grey Wolf or Basic Energy Services expect, believe or anticipate will or may occur in the future
are forward-looking statements. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially, including required approvals by
stockholders and regulatory agencies, the possibility that the anticipated benefits from the
proposed mergers cannot be fully realized, the possibility that costs or difficulties related to
integration of the two companies will be greater than expected, the impact of competition and other
risk factors included in the reports filed with the SEC by Grey Wolf and Basic Energy Services.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of their dates. Except as required by law, neither Grey Wolf nor Basic Energy Services
intends to update or revise its forward-looking statements, whether as a result of new information,
future events or otherwise.
Additional Information and Where to Find It
In connection with the proposed mergers, a registration statement of Horsepower
Holdings, Inc. (Holdings), which will include proxy statements of Basic Energy Services and Grey
Wolf and other materials, will be filed with the Securities and Exchange Commission. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BASIC ENERGY SERVICES, GREY WOLF,
HOLDINGS AND THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of the
registration statement and the proxy statement/prospectus when they are available and other
documents containing information about Basic Energy Services and Grey Wolf, without charge, at the
SECs web site at www.sec.gov, Basic Energy Services web site at www.basicenergyservices.com, and
Grey Wolfs web site at www.gwdrilling.com. Copies of the registration statement and the proxy
statement/prospectus and the SEC filings that will be incorporated by reference therein may
3
also be obtained for free by directing a request to either Investor Relations, Basic Energy
Services, Inc., (432) 620-5510 or to Investor Relations, Grey Wolf, Inc., (713) 435-6100.
Participants in the Solicitation
Basic Energy Services and Grey Wolf and their respective directors, officers and
certain other members of management may be deemed to be participants in the solicitation of proxies
from their respective stockholders in respect of the mergers. Information about these persons can
be found in Grey Wolfs proxy statement relating to its 2008 annual meetings of stockholders as
filed with the SEC on April 8, 2008. Information concerning beneficial ownership of Basic Energy
Services stock by its directors and certain of its executive officers is included in its proxy
statement dated April 5, 2007 and subsequent statements of changes in beneficial ownership on file
with the SEC. Additional information about the interests of such persons in the solicitation of
proxies in respect of the merger will be included in the registration statement and the joint proxy
statement/prospectus to be filed with the SEC in connection with the proposed transaction.
CONTACT:
Grey Wolf, Inc.
David Wehlmann, Chief Financial Officer
713-435-6100
Basic Energy Services, Inc.
Alan Krenek, Chief Financial Officer
432-620-5500
DRG&E / 713-529-6600
Jack Lascar/Sheila Stuewe
SOURCES: GREY WOLF AND BASIC ENERGY SERVICES
GREY WOLF, INC.
10370 Richmond Avenue Suite 600 Houston, Texas 77042-4136
(713) 435-6100 Fax (713) 435-6170
www.gwdrilling.com
BASIC ENERGY SERVICES, INC.
500 W. Illinois Suite 100 Midland, TX 79701
(432) 620-5500 Fax (432) 620-5501
www.basicenergyservices.com
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