(2) Acquisitions

On March 1, 2009, the Company acquired International Lift Systems ("ILS"), a Louisiana limited partnership. As a result of this acquisition, the Company entered into a hold back agreement with the former owners of ILS. The total hold back is $4.5 million payable in three equal installments of $1.5 million each plus interest. Interest is calculated annually at 4% of the remaining balance of the hold back portion. The first installment was paid on March 1, 2010; the second installment, plus interest to date, was paid on March 1, 2011; and the third installment, plus interest to date, is payable on March 1, 2012. These hold back payments are not contingent upon any subsequent events. The liability for this hold back payment is included in accrued liabilities in the Company's consolidated balance sheet. Total purchase price for ILS was $50.0 million and the Company recorded goodwill of $28.6 million in the Oilfield segment. There were no changes to the previously disclosed purchase price allocation.

On November 1, 2010, the Company completed the acquisition of Petro Hydraulic Lift Systems, LLC ("PHL") and certain related companies, based in South Louisiana. PHL specializes in the design, manufacture and leasing of hydraulic rod pumping units for oil and gas wells. In connection with the acquisition, the Company also entered into a royalty agreement with the former owners of PHL. The agreement is for a ten year period, beginning November 1, 2010, and is payable at a rate of 5% for the first five years and 8% for the subsequent five years. Royalties are payable quarterly and are based on product revenues. The fair value of these royalties, which are based on estimates, are included in the purchase price consideration. Any changes in this estimate will impact earnings in future periods. Total purchase price for PHL was $15.9 million and the Company recorded goodwill of $7.8 million in the Oilfield segment. There were no changes to the previously disclosed purchase price allocation.

On September 1, 2011, the Company completed the acquisition of Pentagon Optimization Services, Inc. ("Pentagon"), a Canadian corporation based in Red Deer, Alberta, Canada. Pentagon, a diversified well optimization company serving the oil and gas industry, provides a wide range of products and services, including plunger lift systems and well engineering and testing. The addition of the proprietary "Angel" pump, which can pump both liquid and gas simultaneously without gas locking, will upgrade the Company's product portfolio and provide a cost effective method to produce pressure-depleted gas wells.

In connection with the Pentagon acquisition, the Company entered into a royalty agreement with the former owners of Pentagon. The agreement is for a ten year period, beginning October 1, 2011, and is payable at a rate of 10%. Royalties are payable quarterly and are based on certain product revenues. The fair value of these royalties, which are based on estimates, are included in the purchase price consideration. Any changes in this estimate will impact earnings in future periods.

The Pentagon acquisition was recorded using the acquisition method of accounting, and accordingly, the acquired operations have been included in the results of operations since the date of acquisition. The preliminary purchase price consideration consists of the following (in thousands of dollars):

Cash paid at closing, net	$	18,982
Royalty consideration		2,381
Total consideration paid	$	21,363

The following table indicates (in thousands of dollars) the preliminary purchase price allocation to net assets acquired, which was based on estimated fair values as of the acquisition date. The excess of the purchase price over the net assets acquired, which totaled $11.5 million, was recorded as goodwill in the Company's consolidated balance sheet in the Oilfield segment. Based on the structure of the transaction, the majority of the goodwill related to the transaction is not expected to be deductible for tax purposes.

Purchase price	$	21,363

Receivables		1,763
Inventories		1,183
Other current assets		-
Property, plant and equipment		680
Intangible assets		4,195
Accounts payable		(258	)
Other accrued liabiltiies		2,316

Goodwill recorded	$	11,484

The Pentagon preliminary purchase price allocations, which are based on relevant facts and circumstances, are subject to change upon completion of the final valuation analysis by the Company's management. The final valuations for Pentagon, which are required to be completed by September 2012, are not expected to result in material changes to the preliminary allocations.

On December 1, 2011, the Company completed the acquisition of Quinn's Oilfield Supply Ltd., including certain affiliates ("Quinn's"), a Canadian corporation based in Red Deer, Alberta, Canada. Quinn's is one of the largest reciprocating rod pump manufacturers in North America and, also manufactures and distributes progressive cavity pumps ("PCPs") and related equipment.

The Quinn's acquisition was recorded using the acquisition method of accounting, and accordingly, the acquired operations have been included in the results of operations since the date of acquisition. The preliminary purchase price consideration consists of the following (in thousands of dollars):

Cash paid at closing, net	$	311,003

Total consideration paid	$	311,003

The following table indicates (in thousands of dollars) the preliminary purchase price allocation to net assets acquired, which was based on estimated fair values as of the acquisition date. The excess of the purchase price over the net assets acquired, which totaled $168.4 million, was recorded as goodwill in the Company's consolidated balance sheet in the Oilfield segment. Based on the structure of the transaction, the majority of the goodwill related to the transaction is not expected to be deductible for tax purposes.

Purchase price	$	311,003

Receivables		28,989
Inventories		25,169
Other current assets		1,349
Property, plant and equipment		63,051
Intangible assets		57,400
Accounts payable		(24,345	)
Other accrued liabiltiies		(9,036	)

Goodwill recorded	$	168,426

Quinn's is recognized as a long time leader in the service and repair of reciprocating rod pumps with facilities across Western Canada and facilities situated throughout New Mexico, Texas, Mississippi, California and Alabama. The acquisition of Quinn's will drive sturdy growth for the Company.

The Quinn's preliminary purchase price allocations, which are based on relevant facts and circumstances and are subject to change upon completion of the final valuation analysis by the Company's management. The final valuations for Quinn's, which are required to be completed by December 2012, are not expected to result in material changes to the preliminary allocations.

Supplemental Pro Forma Data

Revenues and earnings to date for the Pentagon acquisition are not material and pro forma information is not provided. Results of operations for all acquisitions have been included in the Company's financial statements for periods subsequent to the effective date of the acquisition. For the one month ended December 31, 2011 Quinn contributed $13.1 million in revenue and $0.7 million of net income. The following unaudited supplemental pro forma data ("pro forma data") presents consolidated information as if the Quinn's acquisition had been completed on January 1, 2010:

Years ended December 31, 2011 and 2010
(Thousands of dollars, except per share data)

	2011		2010

Sales	$	1,070,623	$	761,327

Net earnings	$	75,601	$	39,467

Diluted earnings per share from continuing operations	$	2.45	$	1.36

The pro forma data was prepared based on the historical financial information of Quinn's and Lufkin and has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the transactions, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The pro forma data is not necessarily indicative of what Quinn's results of operations actually would have been had the transactions been completed on January 1, 2010. Additionally, the pro forma data does not project the future results of operations of the combined company nor do they reflect the expected realization of synergies associated with the transactions. The pro forma data reflects the application of the following adjustments:

Additional depreciation and amortization expense associated with fair value adjustments to acquired identifiable intangible assets and property, plant and equipment.

Increase in interest expense resulting from the issuance of debt to finance the purchase price, as well as the amortization of related deferred financing costs.

Elimination of transaction costs incurred in 2011 that are directly related to the transactions, and do not have a continuing impact on the combined company's operating results.