THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Union Drilling, Inc. (UDRL)

4/28/2006 Proxy Information

The following discussion identifies the Company’s material relationships and related transactions in which any of the Company’s directors or executive officers, any person known to the Company to own of record or beneficially over 5% of the Company’s Common Stock, or any member of the immediate family of any such persons had, or has, a direct or indirect material interest.

Shareholders agreement

The Company and certain of its stockholders, Union Drilling Company LLC, Steven A. Webster, William R. Ziegler and Wolf Marine S.A., as well as certain investors in Union Drilling Company LLC, have entered into a shareholders agreement covering shares of Common Stock owned by such stockholders.

The shareholders agreement provides, among other things, that the controlling members of Union Drilling Company LLC shall have the right to nominate a number of directors on the Company’s Board of Directors that is proportional to their collective indirect equity ownership (through Union Drilling Company LLC) in the Company, and that the other shareholder parties, acting as a group, shall have the right to nominate a number of directors on the Company’s Board of Directors that is proportional to their direct and indirect (through Union Drilling Company LLC) equity ownership in the Company. The shareholders agreement contains voting agreements among the shareholder parties with respect to the election of the director nominees of the parties and the grant of irrevocable proxies in support of such voting agreements.

In addition, the shareholders agreement provides that, at any time, the shareholder parties may require the Company to effect the registration under the Securities Act of the Common Stock owned by them, subject to certain limitations. The shareholders agreement also provides certain ‘‘piggyback’’ registration rights to such shareholder parties whenever the Company proposes to register an offering of any of its capital stock under the Securities Act, subject to certain exceptions, including pro rata reduction if, in the opinion of the managing underwriter of the offering, such a reduction is necessary to prevent a material adverse effect on the offering, including the offering price of all the securities proposed to be offered. The registration rights section of the shareholders agreement contains customary provisions regarding the payment of registration expenses by the Company and regarding mutual indemnification agreements between the Company and the shareholder parties for certain securities law violations. The shareholders agreement provides for certain transfer restrictions with respect to shares of the Company’s capital stock, co-sale rights in connection with private sales or block trades and the Company’s agreement to reimburse the shareholder parties for reasonable fees and expenses incurred by them or on their behalf incident to their ownership of the Company’s securities.

Other related party transactions and arrangements

During 2005, the Company entered into contract arrangements to provide drilling services to Columbia Natural Resources LLC (‘‘CNR’’). CNR (through various holding companies) was majority owned by Morgan Stanley Dean Witter Capital Partners IV, L.P. (‘‘MSDW IV’’), a private equity fund managed by Metalmark Capital LLC. W. Henry Harmon, the Company’s Vice Chairman of the Board of Directors during 2005, was the Chief Executive Officer of CNR until its sale in November 2005 to a third party in an arm’s-length transaction. During 2005, the Company drilled eight wells for Columbia Natural Resources, generating revenues for the Company of approximately $5.2 million.

Truncheon Investors, L.L.C. is a member of Union Drilling Company LLC, the majority stockholder of the Company, and is entitled to a share of any gain to Union Drilling Company LLC upon a sale by Union Drilling Company LLC of the Company’s Common Stock in excess of a specified return to cash investors. Somerset Capital Partners, the partners of which are William R. Ziegler, Thomas H. O’Neill, Jr., and Steven A. Webster, controls and owns most of the interests in Truncheon Investors, L.L.C. Mr. O’Neill is Chairman of the Board of the Company. In December 1997, J. Michael Poole, Executive Vice President — Operations, was granted 750 units, and in September 2000 Christopher D. Strong, the Company’s President and Chief Executive Officer, was granted 300 units, of Truncheon Investors, L.L.C. If Union Drilling Company LLC distributes to its members the Common Stock that it owns, Mr. Poole and Mr. Strong would be entitled to a share of such Common Stock equal in value to their share of any proceeds of a sale of such Common Stock if it had been sold rather than distributed. If such Common Stock had been sold on April 21, 2006, Mr. Poole and Mr. Strong would have received $881,640 and $231,578, respectively (based upon the closing price of the Company’s Common Stock on the NASDAQ National Market on such date of $15.49). Neither Mr. Poole nor Mr. Strong has any control over the timing or character of any such sale or distribution.

William R. Ziegler, Vice Chairman of the Board (non-executive) of the Company during 2005 and beneficial owner of more than 5% of the issued and outstanding common stock of the Company pursuant to Rule 13d-3 of the Exchange Act, is of counsel to the law firm of Satterlee Stephens Burke & Burke LLP, which has acted as legal counsel to the Company.