<PAGE>

                                  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 March 31, 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 48,335,502 shares of common stock outstanding as of May 13,
2002.


<PAGE>

                         OIL STATES INTERNATIONAL, INC.

                                      INDEX

                                                         

                         Part I -- FINANCIAL INFORMATION


<Table>
<CAPTION>
                                                                                                 PAGE NO.
                                                                                                 -------- 
<S>        <C>                                                                                   <C>  

Item 1.    Financial Statements:

           Consolidated and Combined Financial Statements
                 Unaudited Consolidated, Combined and Pro Forma Statements of Operations for
                   the Three Months Ended March 31, 2002 and 2001                                       3
                 Consolidated Balance Sheets -- March 31, 2002 (unaudited) and 
                   December 31, 2001                                                                    4
                 Unaudited Consolidated and Combined Statements of Cash Flows for the Three
                   Months Ended March 31, 2002 and 2001                                                 5
           Notes to Unaudited Consolidated, Combined and Pro Forma Financial Statements             6 - 9

           Unaudited Pro Forma Consolidated and Combined Financial Statement                           10
                 Unaudited Pro Forma Consolidated and Combined Statement of Operations 
                   for the Three Months Ended March 31, 2001                                           11
                 Notes to Unaudited Pro Forma Consolidated and Combined Financial Statement       12 - 13


Item 2.    Management's Discussion and Analysis of Financial Condition and Results of        
             Operations                                                                           14 - 19 


Item 3.    Quantitative and Qualitative Disclosures About Market Risk                                  19


                          Part II -- OTHER INFORMATION


Item 1.    Legal Proceedings                                                                           20


Item 2.    Changes in Securities and Use of Proceeds                                                   20


Item 3.    Default Upon Senior Securities                                                              20


Item 4.    Submission of Matters to a Vote of Security Holders                                         20


Item 5.    Other Information                                                                           20


Item 6.    Exhibits and Reports on Form 8-K                                                            20

                 (a) Index of Exhibits                                                            20 - 22

                 (b) Report on Form 8-K                                                                22

                 Signature Page                                                                        23

</Table>



                                       2


<PAGE>


                 OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

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


<Table>
<Caption>
                                                                               THREE MONTHS ENDED MARCH 31, 2001
                                                           THREE MONTHS ENDED  ---------------------------------
                                                             MARCH 31, 2002                    CONSOLIDATED AND
                                                              CONSOLIDATED     PRO FORMA (1)       COMBINED
                                                              ------------     -------------       --------
<S>                                                            <C>             <C>                <C>           
 Revenues ..................................................   $ 150,600         $ 191,494         $ 142,977

 Costs and expenses:
   Cost of sales ...........................................     120,153           153,321           108,179
   Selling, general and administrative expenses ............      12,228            13,437            12,304
   Depreciation expense ....................................       5,233             5,058             4,996
   Amortization expense ....................................          75             1,960             1,368
   Other operating income ..................................        (283)             (135)             (135)
                                                               ---------         ---------         ---------
                                                                 137,406           173,641           126,712
                                                               ---------         ---------         ---------
 Operating income ..........................................      13,194            17,853            16,265

 Interest expense ..........................................      (1,047)           (2,970)           (3,228)
 Interest income ...........................................         108               316               294
 Other income ..............................................         314               264               264
                                                               ---------         ---------         ---------
 Income before income taxes, minority interest, and
   extraordinary item ......................................      12,569            15,463            13,595
 Income tax expense ........................................      (2,766)             (231)             (180)
 Minority interest in income of combined companies and
   consolidated subsidiaries ...............................           5                --            (1,600)
                                                               ---------         ---------         ---------
 Net income before extraordinary item ......................       9,808            15,232            11,815
 Extraordinary loss on debt restructuring, net of
   income taxes ............................................          --              (784)             (784)
                                                               ---------         ---------         ---------
 Net income ................................................       9,808            14,448            11,031
 Preferred dividends .......................................          --                --               (41)
                                                               ---------         ---------         ---------
 Net income attributable to common shares ..................   $   9,808         $  14,448         $  10,990
                                                               =========         =========         =========
 Basic earnings (loss) per share:
   Earnings per share before extraordinary item ............   $     .20         $     .32         $     .32
   Extraordinary loss on debt restructuring, net of
     income taxes ..........................................          --              (.02)             (.02)
   Basic net income per share ..............................         .20               .30               .30

 Diluted earnings (loss) per share:
   Earnings per share before extraordinary item ............   $     .20         $     .32         $     .31
   Extraordinary loss on debt restructuring, net of
     income taxes ..........................................          --              (.02)             (.02)
   Diluted net income per share ............................         .20               .30               .29

 Weighted average number of common shares outstanding:
   Basic ...................................................      48,233            48,156            36,418
   Diluted .................................................      48,637            48,634            38,337
</Table>


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


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


                                       3

<PAGE>



                 OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

 
<Table>
 <Caption>
                                                                     MARCH 31,       DECEMBER 31,
                            ASSETS                                     2002              2001
                                                                   -----------       ------------
                                                                   (UNAUDITED)
<S>                                                                <C>                <C>                             
 Current assets:
   Cash and cash equivalents...............................         $   3,336          $  4,982
   Accounts receivable, net................................           104,036           116,790
   Inventories, net........................................            76,469            76,917
   Prepaid expenses and other current assets...............             4,427             3,932
                                                                    ---------          --------
     Total current assets..................................           188,268           202,621

 Property, plant, and equipment, net.......................           147,639           150,090
 Goodwill, net.............................................           172,991           172,235
 Other noncurrent assets...................................             5,439             4,937
                                                                    ---------          --------
      Total assets.........................................         $ 514,337          $529,883
                                                                    =========          ========

             LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
   Accounts payable and accrued liabilities................         $  74,533          $ 83,528
   Income taxes............................................             3,906             4,267
   Current portion of long-term debt.......................               732             3,894
   Deferred revenue........................................             5,710             2,646
   Other current liabilities...............................             1,569               509
                                                                    ---------          --------
      Total current liabilities............................            86,450            94,844

   Long-term debt..........................................            57,722            73,939
   Deferred income taxes...................................             7,837             8,436
   Postretirement healthcare benefits......................             5,503             5,570
   Other liabilities.......................................             3,009             2,897
                                                                    ---------          --------
      Total liabilities....................................           160,521           185,686

 Stockholders' equity:
   Common stock............................................               483               483
   Additional paid-in capital..............................           326,143           326,031
   Retained (earnings).....................................            34,518            24,710
   Accumulated other comprehensive loss....................            (7,328)           (7,027)
                                                                    ---------          --------
      Total stockholders' equity...........................           353,816           344,197
                                                                    ---------          --------
      Total liabilities and stockholders' equity...........         $ 514,337          $529,883
                                                                    =========          ========
 </Table>


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


                                       4

<PAGE>

                 OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

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


<Table>
<Caption>
                                                                               THREE MONTHS ENDED MARCH 31,
                                                                           -----------------------------------
                                                                               2002              2001
                                                                           ------------     ----------------
                                                                           CONSOLIDATED     CONSOLIDATED AND
                                                                                                COMBINED
<S>                                                                          <C>            <C>     
Cash flows from operating activities:
  Net income before extraordinary item ..................................     $  9,808         $ 11,815
  Adjustments to reconcile net income from continuing operations
    to net cash from operating activities:
    Minority interest, net of distributions .............................           (5)           1,600
    Depreciation and amortization .......................................        5,308            6,364
    Deferred income tax provision .......................................         (909)          (4,577)
    Other, net ..........................................................          813              257
    Changes in working capital ..........................................        7,169          (26,468)
                                                                              --------         --------
      Net cash flows provided by (used in) operating activities .........       22,184          (11,009)

Cash flows from investing activities:
  Acquisitions of businesses, net of cash acquired ......................       (1,405)          (2,120)
  Capital expenditures ..................................................       (3,568)          (4,660)
  Proceeds from sale of equipment .......................................          573            2,425
  Cash acquired in Sooner acquisition ...................................           --            4,894
  Other, net ............................................................           32              (40)
                                                                              --------         --------
      Net cash flows provided by (used in) investing activities .........       (4,368)             499

Cash flows from financing activities:
  Borrowings/(repayments) under revolving credit facility ...............      (15,965)          19,953
  Debt repayments .......................................................       (3,559)         (64,038)
  Preferred stock dividends .............................................           --             (844)
  Proceeds from issuance of common stock ................................           15           84,200
  Repurchase of preferred stock .........................................           --          (21,775)
  Payment of offering and financing costs ...............................           --           (4,511)
  Other, net ............................................................          (43)          (1,665)
                                                                              --------         --------
      Net cash flows provided by (used in) financing activities .........      (19,552)          11,320

Effect of exchange rate changes on cash .................................          253             (102)
                                                                              --------         --------
Net increase in cash and cash equivalents from continuing operations ....       (1,483)             708
Net cash provided by (used in) discontinued operations ..................         (163)             155
Cash and cash equivalents, beginning of year ............................        4,982            4,821
                                                                              --------         --------
Cash and cash equivalents, end of period ................................     $  3,336         $  5,684
                                                                              ========         ========
</Table>


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



                                       5

<PAGE>

                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.



                                       6

<PAGE>

   Changes in the carrying amount of goodwill for the three months ended March
31, 2002, are as follows (in thousands):


<Table>
<Caption>
                                         OFFSHORE         WELLSITE           TUBULAR
                                         PRODUCTS         SERVICES          SERVICES          TOTAL
                                         --------         --------          --------          -----

<S>                                     <C>               <C>               <C>              <C>      
Balance as of January 1, 2002           $  41,585         $  81,156         $  49,494        $ 172,235

Goodwill acquired                              --               808                --              808
Impairment losses                              --                --                --               --
Foreign currency translation and
   other changes                             (101)              (36)               85              (52)
                                        ---------         ---------         ---------        ---------

Balance as of March 31, 2002            $  41,484         $  81,928         $  49,579        $ 172,991
                                        =========         =========         =========        =========
</Table>


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


<Table>
<Caption>
                                                                       FOR THE THREE MONTHS ENDED
                                                         ---------------------------------------------------------
                                                         MARCH 31, 2002                   MARCH 31, 2001
                                                         --------------        -----------------------------------       
                                                                  (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                                                                  CONSOLIDATED AND
                                                          CONSOLIDATED           PRO FORMA            COMBINED
                                                          ------------           ---------            --------
<S>                                                       <C>                  <C>                   <C>       
Reported net income before extraordinary item             $     9,808          $   15,232            $   11,815
Add:  Goodwill amortization                                        --               1,879                 1,288
                                                          -----------          ----------            ----------
Adjusted net income before extraordinary item             $     9,808          $   17,111            $   13,103
                                                          ===========          ==========            ==========

Basic earnings per share:
Reported net income before extraordinary item             $       .20          $      .32            $      .32
Goodwill amortization                                              --                 .04                   .04
                                                          -----------          ----------            ----------
Adjusted net income before extraordinary item             $       .20          $      .36            $      .36
                                                          ===========          ==========            ==========

Diluted earnings per share:
Reported net income before extraordinary item             $       .20          $      .32            $      .31
Goodwill amortization                                              --                 .03                   .03
                                                          -----------          ----------            ----------
Adjusted net income before extraordinary item             $       .20          $      .35            $      .34
                                                          ===========          ==========            ==========
</Table>


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


                                       7

<PAGE>

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.

4. DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

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


<Table>
<Caption>
                                                                                    MARCH 31,   DECEMBER 31,
                                                                                      2002          2001
                                                                                      ----          ----
<S>                                                                                <C>           <C>       
         Accounts receivable:
            Trade........................................................          $  98,140      $115,726
            Unbilled revenue.............................................              6,708        2,674
            Other........................................................              1,381        1,123
            Allowance for doubtful accounts..............................             (2,193)      (2,733)
                                                                                   ---------      -------
                                                                                   $ 104,036      $116,790
                                                                                   =========      ========
</Table>



<Table>
<Caption>
                                                                                    MARCH 31,   DECEMBER 31,
                                                                                      2002         2001
                                                                                      ----         ----
<S>                                                                                <C>           <C>       
Inventories:
   Tubular goods.........................................................          $  38,020      $41,882
   Other finished goods and purchased products...........................             17,689       20,024
   Work in process.......................................................             16,405       12,012
   Raw materials.........................................................              9,698        8,696
                                                                                   ---------      -------

    Total inventories....................................................             81,812       82,614
   Inventory reserves....................................................             (5,343)      (5,697)
                                                                                   ---------      -------
                                                                                   $  76,469      $76,917
                                                                                   =========      =======
</Table>



<Table>
<Caption>
                                                                   ESTIMATED       MARCH 31,   DECEMBER 31,
                                                                  USEFUL LIFE        2002         2001
                                                                  -----------        ----         ----
<S>                                                                <C>             <C>         <C>   
         Property, plant and equipment:
            Land.............................................                      $   4,157    $  4,163
            Buildings and leasehold improvements.............      2-50 years         28,396      27,505
            Machinery and equipment..........................      2-15 years        147,838     147,183
            Rental tools.....................................      3-10 years         25,852      24,876
            Office furniture and equipment...................      1-10 years         10,952      10,667
            Vehicles.........................................       2-5 years          5,669       6,197
            Construction in progress.........................                            300       1,033
                                                                                   ---------    --------

              Total property, plant and equipment............                        223,164     221,624
         Less: Accumulated depreciation......................                        (75,525)    (71,534)
                                                                                   ---------    --------
                                                                                   $ 147,639    $150,090
                                                                                   =========    ========
</Table>



<Table>
<Caption>
                                                                                   MARCH 31,   DECEMBER 31,
                                                                                     2002         2001
                                                                                     ----         ----
<S>                                                                               <C>            <C>    
         Accounts payable and accrued liabilities:
            Trade accounts payable.......................................         $  48,431      $52,386
            Accrued compensation.........................................             6,610       10,317
            Accrued insurance............................................             3,392        3,498
            Accrued interest.............................................               243          248
            Accrued taxes, other than income taxes.......................             2,413        3,314
            Reserves related to discontinued operations, current portion.             4,862        4,976
            Postretirement healthcare benefits current portion...........             1,100        1,100
            Other........................................................             7,482        7,689
                                                                                  ---------      -------
                                                                                  $  74,533      $83,528
                                                                                  =========      =======
</Table>



                                       8

<PAGE>

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.

    Financial information by industry segment for each of the three-month
periods ended March 31, 2002 and 2001 is summarized in the following table (in
thousands):

    
<Table>
    <Caption>
                                         OFFSHORE        WELLSITE         TUBULAR      CORPORATE AND
                                         PRODUCTS        SERVICES         SERVICES      ELIMINATIONS        TOTAL
                                         --------        --------         --------      ------------        -----
<S>                                     <C>            <C>            <C>              <C>                 <C>    
MARCH 31, 2002
   Revenues from unaffiliated
   customers .......................    $  32,737        $  66,593        $  51,270         $      --        $ 150,600
                                        =========        =========        =========         =========        =========
   EBITDA ..........................        4,361           15,227              117            (1,203)          18,502
                                        =========        =========        =========         =========        =========
   Depreciation and amortization ...        1,345            3,807              144                12            5,308
                                        =========        =========        =========         =========        =========
   Operating income (loss) .........        3,016           11,420              (27)           (1,215)          13,194
                                        =========        =========        =========         =========        =========
   Capital expenditures ............        1,381            2,142               45                --            3,568
                                        =========        =========        =========         =========        =========
   Total assets ....................    $ 142,358        $ 248,202        $ 120,098         $   3,679        $ 514,337
                                        =========        =========        =========         =========        =========

MARCH 31, 2001 (Consolidated and
  Combined)
   Revenues from unaffiliated           
     customers......................    $  29,501        $  69,155        $  44,321         $      --        $ 142,977 
                                        =========        =========        =========         =========        ========= 
   EBITDA ..........................        1,787           19,879            2,101            (1,138)          22,629
                                        =========        =========        =========         =========        =========
   Depreciation and amortization ...        1,610            4,076              202               476            6,364
                                        =========        =========        =========         =========        =========
   Operating income (loss) .........          177           15,803            1,898            (1,613)          16,265
                                        =========        =========        =========         =========        =========
   Capital expenditures ............          800            3,721              139                --            4,660
                                        =========        =========        =========         =========        =========
   Total assets ....................    $ 136,821        $ 222,795        $ 131,273         $  65,356        $ 556,245
                                        =========        =========        =========         =========        =========
</Table>


6. COMPREHENSIVE INCOME

    Comprehensive income for the three months ended March 31, 2002 and 2001 was
as follows (in thousands):

 
<Table>
 <Caption>
                                               THREE MONTHS ENDED MARCH 31
                                             2002                       2001
                                             ----                       ----
<S>                                       <C>                         <C>      
 Comprehensive income:
    Net income..........................  $   9,808                   $  11,031
    Cumulative translation                
      adjustment........................       (301)                     (3,074)
                                          ---------                   --------- 
    Total comprehensive income..........  $   9,507                   $   7,957
                                          =========                   =========
</Table>


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 increased asbestos
related litigation. Certain subsidiaries of the Company have been named as
defendants in four cases by plaintiffs seeking damages, including punitive
damages, alleging that our subsidiaries have responsibility for four 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, there can be
no assurance that other asbestos related claims will not 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.



                                       9

<PAGE>


        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 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.



                                       10

<PAGE>

           PRO FORMA CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

                    FOR THE THREE MONTHS ENDED MARCH 31, 2001
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


<Table>
<Caption>
                                                                                      PRO FORMA  
                                                     -----------------------------------------------------------------------------
                                                       SOONER INC.                    MINORITY                        COMBINED AND
                                  CONSOLIDATED AND     (PERIOD FROM    SOONER INC.    INTEREST        OFFERING        CONSOLIDATED,
                                     COMBINED        JAN. 1, 2001 TO   ADJUSTMENTS   ADJUSTMENTS     ADJUSTMENTS      ACQUISITIONS
                                       GROUP         FEB. 14, 2001)     (NOTE 2)      (NOTE 3)     (NOTES 1 AND 4)    AND OFFERING
                                  ----------------   ---------------   -----------  ------------   ---------------    ------------
<S>                                  <C>                <C>             <C>           <C>             <C>              <C>      
Revenue.........................     $ 142,977          $ 48,517        $             $               $                $191,494
Expenses
  Costs of sales................       108,179            45,142                                                        153,321
  Selling, general and                  12,304             1,133                                                         13,437
administrative..................
  Depreciation and amortization.         6,364               188           331           135                              7,018
  Other expense (income)........          (135)                                                                            (135)
                                     ---------          --------        ------        ------          ------           --------
Operating income (loss).........        16,265             2,054          (331)         (135)                            17,853
                                     ---------          --------        ------        ------          ------           --------
Interest income.................           294                22                                                            316
Interest expense................        (3,228)             (585)                                        843(A)          (2,970)
Other income....................           264                --                                                            264
                                     ---------          --------        ------        ------          ------           --------
  Earnings before income taxes..        13,595             1,491          (331)         (135)            843             15,463
Income tax (expense) benefit....          (180)             (542)                                        491(C)            (231)
                                     ---------          --------        ------        ------          ------           --------
Net income (loss) before minority
  interests.....................        13,415               949          (331)         (135)          1,334             15,232
Minority interests, net of taxes        (1,600)               --                                       1,600                 --
                                     ---------          --------        ------        ------          ------           --------
Net income (loss) before
  extraordinary item............        11,815               949          (331)         (135)          2,934             15,232
Extraordinary loss on debt
  restructuring.................          (784)               --                                                           (784)
                                     ---------          --------        ------        ------          ------           --------
Net income (loss)...............        11,031                                                                           14,448
Preferred dividends.............           (41)               --                                          41(B)              --
                                     ---------          --------        ------        ------          ------           --------
Net income attributable to common
  shares........................     $  10,990          $    949        $ (331)       $ (135)         $2,975           $ 14,448
                                     =========          ========        ======        ======          ======           ========
Net income per common share.....
  Basic.........................     $      .30                                                                        $     .30
                                     ==========                                                                        =========
  Diluted.......................     $      .29                                                                        $     .30
                                     ==========                                                                        =========
Average shares outstanding......
  Basic.........................        36,418                                                                           48,156
                                     =========                                                                         ========
  Diluted.......................        38,337                                                                           48,634
                                     =========                                                                         ========
</Table>



                                       11

<PAGE>

                         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 will change prospectively under 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 will change prospectively
under 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 three months
ended March 31, 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):


<Table>
<Caption>
                                             OIL STATES        HWC              PTI            TOTAL
                                             ----------        ---              ---            -----
<S>                                              <C>          <C>             <C>             <C>     
Period from  January 1, 2001 to 
February 14, 2001...................             $72          $ (129)         $(1,543)        $(1,600)
                                                 ===          ======          =======         ======= 
</Table>


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):


<Table>

<S>                                                                                             <C>     
Purchase price...............................................................................   $  69.5 (1)
Less: fair value of net assets acquires......................................................      29.7
                                                                                                -------
Goodwill.....................................................................................   $  39.8
                                                                                                =======

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


---------                 

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


                                       12

<PAGE>


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

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):


<Table>
<Caption>
                                                       OIL STATES      HWC          PTI         COMBINED
                                                      -----------   ----------  -----------   -----------
<S>                                                   <C>           <C>            <C>           <C>   
Common stock issued to minority interests..........     1,418,729    1,359,603    4,204,058     6,982,390
Estimated offering price per share.................   $      9.00         9.00  $      9.00   $      9.00
                                                      -----------   ----------  -----------   -----------
Purchase price of the minority interests...........   $      12.8   $     12.2  $      37.8   $      62.8

Minority interests in fair value of net assets
acquired...........................................          13.8          7.7         15.9          37.4
                                                      -----------   ----------  -----------   -----------
Additional goodwill................................   $     (1.0)   $      4.5  $      21.9   $      25.4
                                                      ===========   ==========  ===========   ===========
Amortization of the additional goodwill for the
  period from January 1, 2001 to February 14,           
  2001.............................................   $     (.015)  $     .020  $      .130   $      .135 
                                                      ===========   ==========  ===========   =========== 
</Table>
                                              
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.



                                       13

<PAGE>


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.

Overview

    We provide a broad range of products and services to the oil and gas
industry through our offshore products, tubular services and well site 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. 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 mix 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. In our well site services
business segment, we provide hydraulic well control services, pressure control
equipment and rental tools and remote site accommodations, catering and
logistics services. Demand for our well site services depends upon the level of
worldwide drilling and workover activity.

    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 though 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 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. This downturn in activity had a material adverse effect on demand
for our products and services, and the results of our operations decreased
significantly. 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. That improvement
in crude oil and natural gas pricing led to increases in the rig count in 2000
and the first half of 2001, particularly in Canada and the United States, where
the rig count reached a high of 1,698 rigs in February 2001. The average North
American rig count was 1,263 and 1,498 during 2000 and 2001, respectively. Crude
oil and natural gas prices decreased significantly from levels reached in early
2001 by the end of 2001. 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. As of March 31,
2002, the rig count in the United States and Canada, as measured by Baker
Hughes, was 1,012, a decline of 40.4% from the high reached in February 2001 and
a decline of 13.1% from 1,165 rigs working at December 29, 2001.

    We have a diversified product and service offering which has exposure
throughout the oil and gas cycle. Demand for our tubular services is highly
correlated to movements in the rig count in the United States and began to
weaken with the overall deterioration of industry fundamentals since the first
quarter of 2001. Certain of our well site services businesses have decreased in
the first quarter of 2002 when the United States rig count declined 7.0%


                                       14

<PAGE>

compared to the fourth quarter of 2001 and 27.9% compared to the first quarter
of 2001. Although the Canadian rig count increased seasonally in the first
quarter of 2002 on average by 100 rigs or 36.3% compared to the fourth quarter
of 2001, it has decreased 133 rigs or 26.1% compared to the first quarter of
2001. Recently, oil and gas prices have increased and rig counts in the U.S.
have begun to increase. The U.S. rig count reached its lowest level since 1999
when it totaled 738 rigs on April 15, 2002. The U.S. rig count has risen since
then and totaled 812 as of May 10, 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 and we expect it to increase
substantially as construction activity in the shallow water regions of the Gulf
of Mexico resumes and as the industry increasingly pursues deeper water drilling
and development projects. Backlog in our offshore products segment increased
from $38.1 million at March 31, 2001 to $72.4 million at December 31, 2001 and
$84.3 million at March 31, 2002. Approximately 95% of our backlog as of March
31, 2002 is expected 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,
the timing of any such recovery is uncertain. We view the recent increases in
actual and forecasted oil and natural gas prices as an important step towards
increased demand for oilfield service activity. Although the diversified nature
of our businesses is expected to moderate the impact of North American drilling
activity declines, we are expecting a 15 -- 20% 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 quarter ended March 31, 2001 reflect the acquisition of Sooner effective as
of January 1, 2001. Following the acquisition of Sooner, we reported under three
business segments.



                                       15

<PAGE>

RESULTS OF OPERATIONS (IN MILLIONS, EXCEPT MARGIN PERCENTAGES)

     
<Table>
     <Caption>
                                                             PRO FORMA THREE MONTHS ENDED
                                                                      MARCH 31,
                                                 --------------------------------------------------------
                                                     2002           2001                  2001
                                                     ----           ----                  ----
                                                 CONSOLIDATED    PRO FORMA      CONSOLIDATED AND COMBINED
                                                 ------------    ---------      -------------------------
<S>                                                <C>            <C>                   <C>    
     Revenues
       Well Site Services.......................   $   66.6       $   69.2              $  69.2
       Offshore Products........................       32.7           29.5                 29.5
       Tubular Services.........................       51.3           92.8                 44.3
                                                   --------       --------              -------
               Total............................   $  150.6       $  191.5              $ 143.0
                                                   ========       ========              =======

     Gross Margin
       Well Site Services.......................   $   20.0       $   25.5              $  25.5
       Offshore Products........................        8.2            6.3                  6.3
       Tubular Services.........................        2.2            6.6                  3.2
       Corporate/Other..........................         --            (.2)                 (.2)
                                                   --------       --------              -------    
               Total............................   $   30.4       $   38.2              $  34.8
                                                   ========       ========              =======

     Gross Margin as a Percent of Revenues
       Well Site Services.......................       30.0%          36.8%                36.8%
       Offshore Products........................       25.1%          21.4%                21.4%
       Tubular Services.........................        4.3%           7.1%                 7.2%
               Total............................       20.2%          19.9%                24.3%

     Operating Income (Loss)
       Well Site Services.......................   $   11.4       $   15.8              $  15.8
       Offshore Products........................        3.0             .2                   .2
       Tubular Services.........................         --            3.9                  1.9
       Corporate/Other..........................       (1.2)          (2.1)                (1.6)
                                                   --------       --------              -------
               Total............................   $   13.2       $   17.8              $  16.3
                                                   ========       ========              =======
     </Table>


    THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO PRO FORMA THREE MONTHS ENDED 
MARCH 31, 2001

    Revenues. Revenues decreased $40.9 million, or 21.4%, to $150.6 million
during the current quarter compared to pro forma revenues of $191.5 million
during the quarter ended March 31, 2001. Tubular Services revenues decreased
$41.5 million, or 44.7%, in the three months ended March 31, 2002 compared to
pro forma revenues in the three months ended March 31, 2001 as a result of
reduced drilling activity in the U.S. Well Site Services revenues declined $2.6
million, or 3.8%, and Offshore Products revenues increased $3.2 million, or
10.8%, 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.

    Cost of Sales. Cost of sales decreased by $33.2 million, or 21.6%, to $120.2
million in the three months ended March 31, 2002 compared to $153.3 million in
the three month period ended March 31, 2001. Decreased Tubular Services revenues
were the principal reason for the corresponding decrease in cost of sales during
the period. Tubular Services cost of sales decreased from $86.2 million in the
first quarter of 2001 to $49.1 million in the first quarter of 2002, a decrease
of $37.1 million, or 43.0%.

    Gross Margin. Our gross margins, which we calculate before a deduction for
depreciation expense, decreased $7.8 million, or 20.4%, from $38.2 million in
the three months ended March 31, 2001 to $30.4 million in the three months ended
March 31, 2002. Well Site Services gross margins decreased $5.5 million, or
21.6%, to $20 million in the three months ended March 31, 2002 compared to the
three months ended March 31, 2001. Within our Well Site Services segment,
shallow drilling and specialty rental tool businesses' gross margins declined
$1.1 million, or 50%, and $0.8 million, or 19.3%, respectively, in the three
months ended March 31, 2002 compared to the three months ended March 31, 2001 as
a result of lower utilization and pricing for our drilling and rental tool
assets. Also in Well Site Services, our remote accommodations, catering and
logistics services and modular building 


                                       16

<PAGE>

construction services gross margins decreased by $3.6 million, or 21.1%, in the
three months ended March 31, 2002 compared to the three months ended March 31,
2001 because a greater mix of revenues were generated from to 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 $1.9 million, or 23.2%, from $6.3
million in the three months ended March 31, 2001 to $8.2 million in the three
months ended March 31, 2002 primarily due to increased revenues and a favorable
mix of our higher-margin connector products versus our lower-margin fabrication
work. Tubular Services gross margins declined to $2.2 million, or 4.3% of
Tubular Services revenues in the three months ended March 31, 2002 compared to
$6.6 million, or 7.1% of Tubular Services revenues, in the three months ended
March 31, 2001 as a result of decreased oil and gas company drilling which
decreased demand for our Tubular products and services.

    Selling, General and Administrative Expenses. During the three months ended
March 31, 2002, selling, general and administrative expenses (SG&A) totaled
$12.2 million compared to SG&A of $13.4 million on a pro forma basis for the
three months ended March 31, 2001. Special nonrecurring severance and
restructuring costs totaling $0.7 million were charged to SG&A in the first
three months of 2002. These increased costs were more than offset by cost
containment measures taken because of lower activity levels in 2002 compared to
2001 and the absence of certain nonrecurring charges, totaling $0.3 million, in
our remote site accommodations business that were recorded during the three
months ended March 31, 2001.

    Depreciation and Amortization. Depreciation expense increased $0.2 million
in the first quarter 2002 compared to the first 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 first quarter 2001 to
$0.1 million in the first quarter 2002 due to the adoption of a new accounting
standard that discontinued goodwill amortization (See Note 2 to Financial
Statements contained herein).

    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. Our operating income
decreased $4.6 million, or 25.8%, to $13.2 million for the three months ended
March 31, 2002 from $17.8 million in the three month period ended March 31,
2001. Well Site Services operating income decreased from $15.8 million during
the three months ended March 31, 2001 to $11.4 million for the three months
ended March 31, 2002. Offshore Products operating income increased from $0.2
million during the three months ended March 31, 2001 to $3.0 million for the
three months ended March 31, 2002. Tubular Services operating income was
approximately break-even for the three months ended March 31, 2002 compared to
operating income of $3.9 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 $2.1 million in
2001 to an operating loss of $1.2 million in the three months ended March 31,
2002.

    Interest Expense. Interest expense decreased $1.9 million, or 64.0%, to $1.0
million for the quarter ended March 31, 2002 compared to $2.9 million for the
quarter ended March 31, 2001. Decreased interest expense is attributable to
lower debt levels and interest rates.

    Income Tax Expense. Income tax expense totaled $2.8 million, or 22.0% of
pretax income, in the three months ended March 31, 2002 compared with $0.2
million, or 1.5% of pretax income, in the three months ended March 31, 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.

    THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED 
MARCH 31, 2001

    Refer to Pro Forma Statement of Operations and Related Footnotes on Pages 10
to 14 of this Form 10Q for details of pro forma adjustments made to the
Company's consolidated and combined statement of operations for the three month
period ended March 31, 2001.

    Differences between the March 31, 2001 Consolidated and Combined Statement
of Operations and the March 31, 2001 Pro Forma Consolidated and Combined
Statement of Operations appearing on Page 3 and Page 12 can be 


                                       17

<PAGE>

summarized as follows:

         1.   The Pro Forma Consolidated and Combined Statement of Operations
              include the results of operations for Sooner for the period from
              January 1, 2001 until its acquisition date of February 14, 2001.
              Sooner's revenues, gross margin, gross margin as a percent of
              revenues and operating income during this period were $48.5
              million, $3.4 million, 7.0% and $2.0 million, respectively.

         2.   The Pro Forma Consolidated and Combined Statement of Operations
              include an additional $0.3 million of goodwill amortization
              related to the Sooner acquisition.

         3.   The Pro Forma Consolidated and Combined Statement of Operations
              include an additional $0.1 million of Sooner minority interests in
              income for the period.

         4.   The Pro Forma Consolidated and Combined Statement of Operations
              include adjustments to decrease interest expense by $0.9 million,
              eliminate minority interests in earnings totaling $1.6 million and
              eliminate preferred stock dividends of $0.04 million in the first
              three months of 2001 to reflect the pro forma impact of the
              Offering and the Combination as if each had occurred at the
              beginning of the period. Additionally, the related income tax
              effect for these adjustments was $0.5 million.

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 (used in) operations during the three months ended
March 31, 2002 and 2001 in the amounts of $22.2 million and ($11.0) million,
respectively. Cash provided by operations in 2002 was generated by our net
income and lower working capital invested in our tubular services segment,
partially offset by the seasonal use of working capital in our Canadian
operations. During the three months ended March 31, 2001, there were significant
investments in working capital as a result of tubular inventory increases and
relatively high Canadian seasonal working capital needs.

    Cash was used by investing activities in the amount of $4.4 million during
the three months ended March 31, 2002 primarily as a result of capital
expenditures which totaled $3.6 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 $3.6 million and $4.7 million during the three
months ended March 31, 2002 and 2001, respectively. Capital expenditures during
both these periods consisted principally of purchases of assets for our well
site services businesses. We currently expect to spend a total of approximately
$22.8 million during 2002 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 $19.6 million was used in financing activities during the three
months ended March 31, 2002, primarily as a result of elective debt repayments
under our bank credit facility.

    As of March 31, 2002, we had $50.8 million outstanding under our debt
facility and an additional $7.1 million of outstanding letters of credit,
leaving $92.1 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
$2.4 million at March 31, 2002. Our total debt represented 14.2% of our total
capitalization at March 31, 2002.

    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 any 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.



                                       18

<PAGE>

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.


I
TEM 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.

    Currently, we have floating rate obligations totaling approximately $53.2
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 March 31, 2002 levels, our combined interest
expense would increase by a total of approximately $0.5 million annually.

    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 March 31, 2002, we had Canadian
dollar-denominated debt totaling approximately $18.8 million. We had no interest
rate hedges or forward foreign exchange contracts at March 31, 2002.


                                       19

<PAGE>

                          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 have been named as
defendants in four cases by plaintiffs seeking damages, including punitive
damages, alleging that our subsidiaries have responsibility for four 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, there can be
no assurance that other asbestos related claims will not 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

    None


ITEM 5. OTHER INFORMATION

    None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      INDEX OF EXHIBITS


<Table>
<Caption>
   EXHIBIT NO.                                  DESCRIPTION
   -----------                                  -----------
<S>               <C>   <C>                                                            
       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 
</TABLE>



                                       20

<PAGE>


<Table>
<Caption>
   EXHIBIT NO.                                  DESCRIPTION
   -----------                                  -----------
<S>               <C>   <C>
                 
                        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).

      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). 
</TABLE>



                                       21

<PAGE>


<Table>
<Caption>
   EXHIBIT NO.                                  DESCRIPTION
   -----------                                  -----------
<S>               <C>   <C>                                                            
      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).

      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).
</Table>


---------
*    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.


                                       22

<PAGE>


                                   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:         May 15, 2002      By      /s/  CINDY B. TAYLOR
                  ------------------     -----------------------------
                                                   Cindy B. Taylor
                                        Senior Vice President, Chief Financial
                                                Officer and Treasurer 
                                            (Principal Financial Officer)



      Date:         May 15, 2002      By     /s/  ROBERT W. HAMPTON
                  ------------------     ------------------------------
                                                  Robert W. Hampton
                                       Vice President -- Finance and Accounting
                                               and Secretary (Principal 
                                                 Accounting Officer)



                                       23

<PAGE>

                                 EXHIBIT INDEX


EXHIBIT NO.                       DESCRIPTION
-----------                       -----------

  10.16            --   Form of Executive Agreement between Oil States
                        International, Inc. and named executive officer 
                        (Mr. Trahan).





<PAGE>
                                                                   EXHIBIT 10.16


                               EXECUTIVE AGREEMENT

         This Executive Agreement ("Agreement") between Oil States
International, Inc., a Delaware corporation (the "Company"), and Jay Trahan (the
"Executive") is made and entered into effective as of March 8, 2002 (the
"Effective Date").

         WHEREAS, Executive is a key executive of the Company or a subsidiary;
and

         WHEREAS, the Company believes it to be in the best interests of its
stockholders to attract, retain and motivate key executives and ensure
continuity of management; and

         WHEREAS, it is in the best interest of the Company and its stockholders
if the key executives can approach material business development decisions
objectively and without concern for their personal situation; and

         WHEREAS, the Company recognizes that the possibility of a Change of
Control (as defined below) of the Company may result in the departure of key
executives to the detriment of the Company and its stockholders; and

         WHEREAS, the Board of Directors of the Company has authorized this
Agreement and certain similar agreements in order to retain and motivate key
management and to ensure continuity of key management;

         THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are
 hereby acknowledged, the Company and Executive agree as
follows:

1.       TERM OF AGREEMENT

         A.       This Agreement shall commence on the Effective Date and,
                  subject to the provisions for earlier termination in this
                  Agreement, shall continue in effect through the third
                  anniversary of the Effective Date; provided, however,
                  commencing on the Effective Date and on each day thereafter,
                  the term of this Agreement shall automatically be extended for
                  one additional day unless the Board of Directors of the
                  Company shall give written notice to Executive that the term
                  shall cease to be so extended in which event the Agreement
                  shall terminate on the third anniversary of the date such
                  notice is given.

         B.       Notwithstanding anything in this Agreement to the contrary,
                  this Agreement, if in effect on the date of a Change of
                  Control, shall automatically be extended for the 24-month
                  period following the Change of Control.

         C.       Termination of this Agreement shall not alter or impair any
                  rights of Executive arising hereunder on or before such
                  termination.



<PAGE>


2.       CERTAIN DEFINITIONS

         A.       "Cause" shall mean:

                  (i)      Executive's conviction of (or plea of nolo contendere
                           to) a felony, dishonesty or a breach of trust as
                           regards the Company or any subsidiary;

                  (ii)     Executive's commission of any act of theft, fraud,
                           embezzlement or misappropriation against the Company
                           or any subsidiary that is materially injurious to the
                           Company or such subsidiary regardless of whether a
                           criminal conviction is obtained;

                  (iii)    Executive's willful and continued failure to devote
                           substantially all of his business time to the
                           Company's business affairs (excluding failures due to
                           illness, incapacity, vacations, incidental civic
                           activities and incidental personal time) which
                           failure is not remedied within a reasonable time
                           after written demand is delivered by the Company,
                           which demand specifically identifies the manner in
                           which the Company believes that Executive has failed
                           to devote substantially all of his business time to
                           the Company's business affairs; or

                  (iv)     Executive's unauthorized disclosure of confidential
                           information of the Company that is materially
                           injurious to the Company.

                           For purposes of this definition, no act, or failure
                  to act, on Executive's part shall be deemed "willful" unless
                  done, or omitted to be done, by Executive not in good faith
                  and without reasonable belief that Executive's action or
                  omission was in the best interest of the Company.

         B.       "Change of Control" shall mean any of the following:

                  (i)      any "person" (as such term is used in Section 13(d)
                           and 14(d) of the Securities Exchange Act of 1934, as
                           amended (the "Exchange Act")), (other than a trustee
                           or other fiduciary holding securities under an
                           employee benefit plan of the Company or any
                           affiliate, SCF III, L.P., SCF IV, L.P., or any
                           affiliate of SCF-III, L.P. or SCF-IV, L.P. or any
                           corporation owned, directly or indirectly, by the
                           stockholders of the Company in substantially the same
                           proportions as their ownership of stock of the
                           Company), acquires "beneficial ownership" (within the
                           meaning of Rule 13d-3 under the Exchange Act) of
                           securities of the Company representing 35% or more of
                           the combined voting power of the Company's then
                           outstanding securities; provided, however, that if
                           the Company engages in a merger or consolidation in
                           which the Company or surviving entity in such merger
                           or consolidation becomes a subsidiary of another
                           entity, then references to the Company's then
                           outstanding securities shall be deemed to refer to
                           the outstanding securities of such parent entity;


                                       2

<PAGE>


                  (ii)     a change in the composition of the Board, as a result
                           of which fewer than a majority of the directors are
                           Incumbent Directors. "Incumbent Directors" shall mean
                           directors who either (i) are directors of the Company
                           as of the Effective Date, or (ii) are elected, or
                           nominated for election, to the Board with the
                           affirmative votes of at least two-thirds of the
                           Incumbent Directors at the time of such election or
                           nomination, but Incumbent Director shall not include
                           an individual whose election or nomination occurs as
                           a result of either (1) an actual or threatened
                           election contest (as such terms are used in Rule
                           14a-11 of Regulation 14A promulgated under the
                           Exchange Act) or (2) an actual or threatened
                           solicitation of proxies or consents by or on behalf
                           of a person other than the Board of Directors of the
                           Company;

                  (iii)    the consummation of a merger or consolidation of the
                           Company with any other corporation, other than a
                           merger or consolidation which would result in the
                           voting securities of the Company outstanding
                           immediately prior thereto continuing to represent
                           (either by remaining outstanding or by being
                           converted into voting securities of the surviving
                           entity (or if the surviving entity is or shall become
                           a subsidiary of another entity, then such parent
                           entity)) more than 50% of the combined voting power
                           of the voting securities of the Company (or such
                           surviving entity or parent entity, as the case may
                           be) outstanding immediately after such merger or
                           consolidation;

                  (iv)     the stockholders of the Company approve a plan of
                           complete liquidation of the Company; or

                  (v)      the sale or disposition (other than a pledge or
                           similar encumbrance) by the Company of all or
                           substantially all of the assets of the Company other
                           than to a subsidiary or subsidiaries of the Company.

         C.       "Date of Termination" shall mean the date the Notice of
                  Termination is given unless such termination is by Executive
                  in which event the Date of Termination shall not be less than
                  30 days following the date the Notice of Termination is given.
                  Further, a Notice of Termination given by Executive due to a
                  Good Reason event that is corrected by the Company before the
                  Date of Termination shall be void.

         D.       "Good Reason" shall mean:

                  (i)      a material reduction in Executive's authority, duties
                           or responsibilities from those in effect immediately
                           prior to the Change of Control or the assignment to
                           Executive duties or responsibilities inconsistent in
                           any material respect from those of Executive in
                           effect immediately prior to the Change of Control;

                  (ii)     a material reduction of Executive's compensation and
                           benefits, including, without limitation, annual base
                           salary, annual bonus, and equity incentive



                                       3

<PAGE>

                           opportunities, from those in effect immediately prior
                           to the Change of Control;

                  (iii)    the Company fails to obtain a written agreement from
                           any successor or assigns of the Company to assume and
                           perform this Agreement as provided in Section 9
                           hereof; or

                  (iv)     the Company requires Executive, without Executive's
                           consent, to be based at any office located more than
                           50 miles from the Company's offices to which
                           Executive was based immediately prior to the Change
                           of Control, except for travel reasonably required in
                           the performance of Executive's duties.

                  Notwithstanding the above however, Good Reason shall not exist
                  with respect to a matter unless Executive gives the Company
                  written notice of such matter within 30 days of the date
                  Executive knows or should reasonably have known of its
                  occurrence. If Executive fails to give such notice timely,
                  Executive shall be deemed to have waived all rights Executive
                  may have under this Agreement with respect to such matter.

         E.       "Notice of Termination" shall mean a written notice delivered
                  to the other party indicating the specific termination
                  provision in this Agreement relied upon for termination of
                  Executive's employment and shall set forth in reasonable
                  detail the facts and circumstances claimed to provide a basis
                  for termination of Executive's employment under the provision
                  so indicated.

         F.       "Protected Period" shall mean the 24-month period beginning on
                  the effective date of a Change of Control.

         G.       "Target AICP" shall mean the targeted value of Executive's
                  annual incentive compensation plan bonus for the year in which
                  the Date of Termination occurs or the fiscal year immediately
                  preceding the Change of Control, whichever is a greater
                  amount.

         H.       "Termination Base Salary" shall mean Executive's base salary
                  at the rate in effect at the time the Notice of Termination is
                  given or, if a greater amount, Executive's base salary at the
                  rate in effect immediately prior to the Change of Control.

3.       NO EMPLOYMENT AGREEMENT.

         This Agreement shall be considered solely as a "severance agreement"
         obligating the Company to pay Executive certain amounts of compensation
         and to provide certain benefits in the event and only in the event of
         Executive's termination of employment for the specified reasons and at
         the times specified herein. The parties agree that this Agreement shall
         not be considered an employment agreement and that Executive is an "at
         will" employee of the Company.



                                       4

<PAGE>


4.       REGULAR SEVERANCE BENEFITS.

         Subject to Section 13, if the Company terminates Executive's employment
         (i) other than for Cause and (ii) not during the Protected Period,
         Executive shall receive the following compensation and benefits from
         the Company:

         A.       Within 15 days of the Date of Termination the Company shall
                  pay to Executive in a lump sum, in cash, an amount equal to
                  one times the sum of Executive's (i) Termination Base Salary
                  and (ii) Target AICP.

         B.       Notwithstanding anything in any Company stock plan or grant
                  agreement to the contrary, all restricted shares and
                  restricted stock units of Executive shall become 100% vested
                  and all restrictions thereon shall lapse as of the Date of
                  Termination and the Company shall promptly deliver such shares
                  to Executive.

         C.       For the 24-month period following the Date of Termination (the
                  "Regular Severance Period"), the Company shall continue to
                  provide Executive and Executive's eligible family members,
                  based on the cost sharing arrangement between the Company and
                  similarly situated active employees, with medical and dental
                  health benefits and disability coverage and benefits at least
                  equal to those which would have been provided to Executive if
                  Executive's employment had not been terminated or, if more
                  favorable to Executive, as in effect generally at any time
                  during such period. Notwithstanding the foregoing, if
                  Executive becomes eligible to receive medical, dental and
                  disability benefits under another employer's plans during this
                  Regular Severance Period, the Company's obligations under this
                  Section 4C shall be reduced to the extent comparable benefits
                  are actually received by Executive during such period, and any
                  such benefits actually received by Executive shall be promptly
                  reported by Executive to the Company. In the event Executive
                  is ineligible under the terms of the Company's health and
                  other welfare benefit plans or programs to continue to be so
                  covered, the Company shall provide Executive with
                  substantially equivalent coverage through other sources or
                  will provide Executive with a lump sum payment in such amount
                  that, after all taxes on that amount, shall be equal to the
                  cost to Executive of providing Executive such benefit
                  coverage. The lump sum shall be determined on a present value
                  basis using the interest rate provided in Section
                  1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended
                  (the "Code") on the Date of Termination.

CHANGE OF CONTROL SEVERANCE BENEFITS

5.       SEVERANCE BENEFITS. Subject to Section 13, if either (a) Executive
         terminates his employment during the Protected Period for a Good Reason
         event or (b) the Company terminates Executive's employment during the
         Protected Period other than for Cause, Executive shall receive the
         following compensation and benefits from the Company:


                                       5

<PAGE>


         A.       Within 15 days of the Date of Termination the Company shall
                  pay to Executive in a lump sum, in cash, an amount equal to
                  two times the sum of Executive's (i) Termination Base Salary
                  and (ii) Target AICP.

         B.       Notwithstanding anything in any Company stock plan or grant
                  agreement to the contrary, (i) all restricted shares and
                  restricted stock units of Executive shall become 100% vested
                  and all restrictions thereon shall lapse as of the Date of
                  Termination and the Company shall promptly deliver such shares
                  to Executive and (ii) each then outstanding stock option of
                  Executive shall become 100% exercisable and, excluding any
                  incentive stock option granted prior to the Effective Date,
                  shall remain exercisable for the remainder of such option's
                  term.

         C.       Executive shall be fully vested in Executive's accrued
                  benefits under all qualified pension, nonqualified pension,
                  profit sharing, 401(k), deferred compensation and supplemental
                  plans maintained by the Company for Executive's benefit,
                  except to that the extent the acceleration of vesting of such
                  benefits would violate any applicable law or require the
                  Company to accelerate the vesting of the accrued benefits of
                  all participants in such plan or plans, in which event the
                  Company shall pay Executive a lump sum amount, in cash, within
                  15 days following the Date of Termination, equal to the
                  present value of such unvested accrued benefits that cannot
                  become vested under the plan for the reasons provided above.

         D.       For the 36-month period following the Date of Termination (the
                  "COC Severance Period"), the Company shall continue to provide
                  Executive and Executive's eligible family members, based on
                  the cost sharing arrangement between Executive and the Company
                  on the Date of Termination, with medical and dental health
                  benefits and disability coverage and benefits at least equal
                  to those which would have been provided to Executive if
                  Executive's employment had not been terminated or, if more
                  favorable to Executive, as in effect generally at any time
                  during such period. Notwithstanding the foregoing, if
                  Executive becomes eligible to receive medical, dental and
                  disability benefits under another employer's plans during this
                  COC Severance Period, the Company's obligations under this
                  Section 5D shall be reduced to the extent comparable benefits
                  are actually received by Executive during such period, and any
                  such benefits actually received by Executive shall be promptly
                  reported by Executive to the Company. In the event Executive
                  is ineligible under the terms of the Company's health and
                  other welfare benefit plans or programs to continue to be so
                  covered, the Company shall provide Executive with
                  substantially equivalent coverage through other sources or
                  will provide Executive with a lump sum payment in such amount
                  that, after all taxes on that amount, shall be equal to the
                  cost to Executive of providing Executive such benefit
                  coverage. The lump sum shall be determined on a present value
                  basis using the interest rate provided in Section
                  1274(b)(2)(B) of the Code on the Date of Termination.

         E.       Throughout the term of the COC Severance Period or until
                  Executive accepts other employment, including as an
                  independent contractor, with a new employer, whichever occurs
                  first, Executive shall be entitled to receive outplacement



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<PAGE>

                  services, payable by the Company, with an aggregate cost not
                  to exceed 15% of Executive's Termination Base Salary, with an
                  executive outplacement service firm reasonably acceptable to
                  the Company and Executive.

6.       PARACHUTE TAX GROSS UP.

         If any payment (including without limitation any imputed income) made,
         or benefit provided, to or on behalf of Executive pursuant to this
         Agreement, including any accelerated vesting or any deferred
         compensation or other award, in connection with a "change in control"
         of the Company (within the meaning of Section 280G of the Code) results
         in Executive being subject to the excise tax imposed by Section 4999 of
         the Code (or any successor or similar provision) the Company shall
         promptly pay Executive an additional amount in cash (the "Additional
         Amount") such that the net amount of all such payments and benefits
         received by Executive after paying all applicable taxes (including
         penalties and interest) on such payments and benefits, including on
         such Additional Amount, shall be equal to the net after-tax amount of
         the payments and benefits (excluding the Additional Amount) that
         Executive would have received if Section 4999 were not applicable to
         such payments and benefits. Such determinations shall be made by the
         Company's independent certified public accountants.

7.       ACCELERATED VESTING OF OPTIONS UPON A CHANGE OF CONTROL.

         Notwithstanding any provisions of any Company stock option plan or
         option agreement to the contrary, upon a Change of Control all
         outstanding unvested stock options, if any, granted to Executive under
         any Company stock option plan (or options substituted therefor covering
         the stock of a successor corporation) shall be fully vested and
         exercisable as to all shares of stock covered thereby effective as of
         the date of the Change of Control.

8.       MITIGATION.

         Executive shall not be required to mitigate the amount of any payment
         provided for in this Agreement by seeking other employment or otherwise
         nor, except as provided in Section 4C and Section 5D, shall the amount
         of any payment or benefit provided for in this Agreement be reduced by
         any compensation earned or benefit received by Executive as the result
         of employment by another employer or self-employment, by retirement
         benefits, by offset against any amount claimed to be owed by Executive
         to the Company or otherwise, except that any severance payments or
         benefits that Executive is entitled to receive pursuant to a Company
         severance plan or program for employees in general shall reduce the
         amount of payments and benefits otherwise payable or to be provided
         under this Agreement.

9.       SUCCESSOR AGREEMENT.

         The Company will require any successor (whether direct or indirect, by
         purchase, merger, consolidation or otherwise) to all or substantially
         all of the business and/or assets of the Company to assume expressly
         and agree to perform this Agreement in the same manner and to the same
         extent that the Company would be required to perform if no succession


                                       7

<PAGE>

         had taken place. Failure of the successor to so assume shall constitute
         a breach of this Agreement and entitle Executive to the benefits
         hereunder as if triggered by a termination by the Company other than
         for Cause.

10.      INDEMNITY.

         In any situation where under applicable law the Company has the power
         to indemnify, advance expenses to and defend Executive in respect of
         any judgements, fines, settlements, loss, cost or expense (including
         attorneys fees) of any nature related to or arising out of Executive's
         activities as an agent, employee, officer or director of the Company or
         in any other capacity on behalf of or at the request of the Company,
         then the Company shall promptly on written request, indemnify
         Executive, advance expenses (including attorney's fees) to Executive
         and defend Executive to the fullest extent permitted by applicable law,
         including but not limited to making such findings and determinations
         and taking any and all such actions as the Company may, under
         applicable law, be permitted to have the discretion to take so as to
         effectuate such indemnification, advancement or defense. Such agreement
         by the Company shall not be deemed to impair any other obligation of
         the Company respecting Executive's indemnification or defense otherwise
         arising out of this or any other agreement or promise of the Company
         under any statute.

11.      NOTICE.

         For the purpose of this Agreement, notices and all other communications
         provided for in this Agreement shall be in writing and delivered by
         United States certified or registered mail (return receipt requested,
         postage prepaid) or by courier guaranteeing overnight delivery or by
         hand delivery (with signed receipt required), addressed to the
         respective addresses set forth below, and such notice or communication
         shall be deemed to have been duly given two days after deposit in the
         mail, one day after deposit with such overnight carrier or upon
         delivery with hand delivery. The addresses set forth below may be
         changed by a writing in accordance herewith.

         Company:                                  Executive:

         Oil States International, Inc.            Jay Trahan
         333 Clay Street, Suite 3460               20202 Atascocita Lake Drive
         Houston, Texas 77002                      Humble, TX  77346
         Attn: Chairman of the Board

12.      ARBITRATION.

         The parties agree to resolve any claim or controversy arising out of or
         relating to this Agreement, including but not limited to the
         termination of employment of Executive, by binding arbitration under
         the Federal Arbitration Act before one arbitrator in Houston, Texas,
         administered by the American Arbitration Association under its
         Commercial Arbitration Rules, and judgment on the award rendered by the
         arbitrator may be entered in any court having jurisdiction thereof. The
         fees and expenses of the arbitrator shall be borne solely by the
         non-prevailing party or, in the event there is no clear prevailing
         party, 


                                       8

<PAGE>

         as the arbitrator deems appropriate. Except as provided above, each
         party shall pay its own costs and expenses (including, without
         limitation, attorneys' fees) relating to any mediation/arbitration
         proceeding conducted under this Section 12.

13.      WAIVER AND RELEASE.

         As a condition to the receipt of any payment or benefit under this
         Agreement, Executive must first execute and deliver to the Company a
         binding general release, as prepared by the Company, that releases the
         Company, its officers, directors, employees, agents, subsidiaries and
         affiliates from any and all claims and from any and all causes of
         action of any kind or character that Executive may have arising out of
         Executive's employment with the Company or the termination of such
         employment, but excluding (i) any claims and causes of action that
         Executive may have arising under or based upon this Agreement, and (ii)
         any vested rights Executive may have under any employee benefit plan or
         deferred compensation plan or program of the Company.

         Executive knowingly and voluntarily releases the Company, HWC Energy
         Services, Inc., SCF Partners, their parent and affiliated companies,
         subsidiaries, divisions, successors and assigns, including present and
         former employees, supervisors and other agents or representatives from
         any and all claims Executive may have under the terms of that certain
         letter agreement between Executive and SCF Partners dated November 24,
         1997.

14.      EMPLOYMENT WITH AFFILIATES.

         Employment with the Company for purposes of this Agreement includes
         employment with any entity in which the Company has a direct or
         indirect ownership interest of 50% or more of the total combined voting
         power of all outstanding equity interests, and employment with any
         entity which has a direct or indirect interest of 50% or more of the
         total combined voting power of all outstanding equity interests of the
         Company. For purposes of this Agreement, "Good Reason" shall be
         construed to refer to Executive's positions, duties, and
         responsibilities in the position or positions in which Executive serves
         immediately before the Change of Control, but shall not include titles
         or positions with subsidiaries and affiliates of the Company that are
         held primarily for administrative convenience.

15.      GOVERNING LAW.

         (a)      THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
                  WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
                  CONFLICTS OF LAW PRINCIPLES.

         (b)      EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
                  JURISDICTION OF THE STATE AND FEDERAL COURTS IN HARRIS COUNTY,
                  TEXAS, FOR THE PURPOSES OF ANY PROCEEDING ARISING OUT OF THIS
                  AGREEMENT.



                                       9

<PAGE>


16.      ENTIRE AGREEMENT.

         This Agreement is an integration of the parties' agreement and no
         agreement or representation, oral or otherwise, express or implied,
         with respect to the subject matter hereof have been made by either
         party which are not set forth expressly in this Agreement. This
         Agreement hereby expressly terminates, rescinds and replaces in full
         any prior agreement (written or oral) between the parties relating to
         the subject matter hereof, including, without limitation, that certain
         letter Agreement between Executive and SCF Partners dated November 24,
         1997.

17.      WITHHOLDING OF TAXES.

         The Company shall withhold from all payments and benefits provided
         under this Agreement all taxes required to be withheld by applicable
         law.

18.      BENEFICIARY.

         In the event Executive dies before receiving the lump sum severance
         payment to which Executive was entitled hereunder, Executive's spouse
         or, if there is no spouse, the beneficiary designated by Executive
         under the Company-sponsored group term life insurance plan, shall
         receive such payment. IN WITNESS WHEREOF, the Company and Executive
         have executed this Agreement effective for all purposes as
         of the Effective Date.



                                      OIL STATES INTERNATIONAL, INC.



                                      By: /s/ CINDY TAYLOR   
                                         ---------------------------------------
                                      Name:   Cindy Taylor         
                                            ------------------------------------
                                      Title:  Senior VP, Chief Financial Officer
                                             -----------------------------------


                                       EXECUTIVE

                                       /s/ JAY TRAHAN
                                       -----------------------------------------
                                       Jay Trahan





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