THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Bronco Drilling Company, Inc. (BRNC)

4/28/2006 Proxy Information

Administrative Services Agreement and Lease of Space

Effective April 1, 2005, we entered into an administrative services agreement with Gulfport Energy Corporation. Under this agreement, Gulfport agreed to provide certain services to us, including accounting, human resources, legal and technical support services. In return for these services, we agreed to pay Gulfport an annual fee of approximately $414,000 payable in equal monthly installments during the term of this agreement. In addition, we leased approximately 1,200 square feet of office space from Gulfport for our headquarters located in Oklahoma City, Oklahoma for which we paid Gulfport annual rent of $20,880 in equal monthly installments. The services we receive under the administrative services agreement and the fees for such services can be amended by mutual agreement of the parties. In January 2006, we reduced the level of administrative services being provided by Gulfport and increased our office space to approximately 2,500 square feet. As a result, our annual fee for administrative services was reduced to approximately $150,000 and our annual rental was increased to approximately $44,000. The administrative services agreement has a three-year term, and upon expiration of that term the agreement will continue on a month-to-month basis until cancelled by either party with at least 30 days prior written notice. The administrative services agreement is terminable (1) by us at any time with at least 30 days prior written notice to Gulfport and (2) by either party if the other party is in material breach and such breach has not been cured within 30 days of receipt of written notice of such breach. Prior to entry into this administrative services agreement, we reimbursed Gulfport for its dedicated employee time, office space and general and administrative costs based upon the pro rata share of time its employees spend performing services for us. In 2005, 2004 and 2003, we made payments to Gulfport for such services and overhead totaling approximately $353,000, $115,000, and $33,000, respectively. Three of our directors, Mike Liddell, David L. Houston and Phil Lancaster, are also directors of Gulfport and Mr. Liddell is GulfportŐs Chairman. Wexford and its affiliates together own a majority of the outstanding common stock of Gulfport.

Credit Facilities

On July 1, 2004, we entered into a revolving line of credit with International Bank of Commerce with a borrowing base of the lesser of $2.0 million or 80% of current receivables. Our performance obligations under this credit facility were guaranteed by Wexford Partners VI, L.P., a fund controlled by Wexford, and Taurus Investors, LLC, a member of our predecessor company that is also controlled by Wexford. Borrowings under this line bore interest at a rate equal to the greater of 4.0% or JPMorgan Chase prime. Accrued but unpaid interest was payable monthly. On January 1, 2005, we amended our line of credit with International Bank of Commerce to increase the borrowing base to the lesser of $3.0 million or 80% of current receivables. The line of credit had a maturity date of November 1, 2006. At December 31, 2005, our outstanding borrowings under this line of credit were $3.0 million. We repaid all outstanding borrowings under this line of credit in January 2006 with borrowings under our new revolving facility and the line of credit was terminated.

On February 15, 2005, we entered into a $5.0 million revolving credit facility with Solitair LLC, an entity controlled by Wexford. Borrowings under this facility bore interest at a rate equal to LIBOR plus 5.0%. Payments of principal and accrued but unpaid interest were due on the maturity date of the credit facility. In connection with the amendment of our senior credit facility with GECC on April 22, 2005, Solitair entered into a subordination agreement which, among other thing, effectively amended the maturity date of its loan to the later of (1) six months after the actual maturity date of our credit facility with GECC and (2) December 1, 2010. We repaid all $5.0 million of outstanding borrowings under this credit facility on August 22, 2005 with a portion of the proceeds from our initial public offering and the facility was terminated.

On June 30, 2005, we borrowed $13.0 million from Alpha Investors LLC, an entity controlled by Wexford, to fund a portion of our acquisitions of 100% of the membership interests in Strata Drilling, L.L.C. and Strata Property, L.L.C. and a related rig yard for an aggregate of $20.0 million. The outstanding principal balance of the loan plus accrued but unpaid interest was due in full upon the earlier to occur of the completion of our initial public offering and the maturity of the loan on July 1, 2006. Borrowings under our loan with Alpha bore interest at a rate equal to LIBOR plus 5% until September 30, 2005, and thereafter at a rate equal to LIBOR plus 7.5%. We repaid this loan in full on August 22, 2005 with a portion of the proceeds from our initial public offering.

On October 14, 2005, we borrowed $50.0 million from Theta Investors LLC, an entity controlled by Wexford, to fund a portion of the purchase price for the Thomas acquisition. The loan provided for maximum aggregate borrowings of up to $60.0 million that bore interest at a rate equal to LIBOR plus 400 basis points until December 15, 2005 and, thereafter, at a rate equal to LIBOR plus 600 basis points. Payment of principal and accrued but unpaid interest was due on October 15, 2006. Our obligations under the Theta loan were guaranteed by each of our principal subsidiaries. We borrowed $50.0 million under this loan on October 14, 2005. We repaid this facility in full on November 3, 2005, with a portion of the proceeds from our follow-on public offering which closed on November 2, 2005.

Drilling Services

During 2005, we received $2.5 million for drilling services rendered to Windsor Energy Group, LLC, an affiliate of Wexford. On January 26, 2006, we entered into a term contract with Windsor, in which we agreed to provide Windsor a drilling rig for a period of two years. Under the terms of this contract, Windsor agreed to pay us a day work rate of $21,000 for the first twelve months of the contract term and a day work rate of $23,000 for the subsequent twelve months of the contract term. On August 17, 2005, we entered into a term contract with Windsor in which we agreed to provide Windsor a drilling rig for a period of 17 months. Under the terms of this contract, Windsor agreed to pay us a day work rate of $16,000 until January 1, 2006 and a day rate of $17,000 for the remainder of the contract.

Consulting Agreement with Michael O. Thompson

Effective February 28, 2006, Michael O. Thompson resigned from his positions as a member of our board of directors. In connection with his resignation, we entered into a consulting agreement with Mr. Thompson under which Mr. Thompson has agreed to provide us with consulting services for a period of approximately 30 months. Although Mr. Thompson will not receive any additional compensation for providing these services to us, the stock options granted to him under our 2005 Stock Incentive Plan will continue to vest in accordance with their terms.