DI Industries, Inc. announces signing of definitive merger agreements for Equity Infusion and acquisition of ultra heavy rig equipment.

HOUSTON--(BUSINESS WIRE)--May 8, 1996--DI Industries, Inc. ("DI" or the "Company"), (AMEX-DRL) announced that it has entered into two separate definitive merger agreements to effect the previously announced $25 million equity infusion and deep drilling equipment acquisition transaction.

Under the first agreement, R.T. Oliver, Inc. ("RTO") and Land Rig Acquisition Corporation ("LRAC") will merge with a new subsidiary of the Company in exchange for 39,637,378 shares of DI common stock or 31,709,902 if the LRAC and RTO shareholders exercise an option to receive up to $5 million in cash. In addition, warrants will also be issued to acquire up to 1,720,000 additional shares of DI common stock, the exercise of which is contingent upon the occurrence of certain events. These mergers will result in the acquisition of 18 inactive, deep capacity land drilling rigs which includes five 3,000 horsepower and nine 2,000 horsepower land rigs which are rated for depths of 25,000 feet or greater. The Company believes that these rigs can be brought up to operating condition within a reasonable time on an economic basis and that this group of rigs represents a significant concentration of the relatively small number of such deep drilling land rigs currently available in the market.

Under the second agreement, a subsidiary of Somerset Drilling Associates, L.L.C. ("Somerset"), a privately held investment limited liability company, will be merged into the Company in exchange for 39,637,378 shares of DI common stock and warrants to acquire up to 1,720,000 shares of DI common stock, the exercise of which is contingent upon the occurrence of certain events. This merger transaction will result in a $25 million equity infusion into the Company and it is anticipated that these funds will be used for combined rig fleet refurbishment, funding of the above described cash option and general corporate purposes.

The Company believes the transactions will improve its financial position and enable it to significantly expand and upgrade its entire 86 rig fleet, particularly in the higher-margin international and domestic deep gas markets.

Ivar Siem, chairman of DI, stated, "DI will be able to use these strategically important assets to participate in the ongoing consolidation of the U.S. land drilling industry. The marketing leverage provided by the addition of these 'ultra heavy' rigs and the resources to deploy them should provide the Company with attractive opportunities for domestic and international expansion."

There are certain conditions to closing of these dependent transactions including approval by the Company's shareholders and the effectiveness of a registration statement with the Securities and Exchange Commission covering the issuance of the shares. Somerset is currently arranging financing for its equity infusion which it expects to complete within 30 days.

DI Industries, Inc., headquartered in Houston, Texas, is primarily engaged in providing both contract oil and gas and geothermal drilling services, and well workover services in the United States, Mexico, Central America and South America.

Certain of the matters discussed in this press release contain forward looking statements that involve risks and uncertainties. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that anticipated results will occur.

CONTACT: Ivar Siem, chairman and CEO,

DI Industries, Inc., 713/874-0202